HOUSE OF REPRESENTATIVES	H.B. NO.	2529
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO CREATIVE MEDIA.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Hawaii's creative economy is dependent on the vibrancy of its arts, culture, music, film, television, and digital and new media sectors.  In 2008, Hawaii's creative sectors collectively contributed $4,000,000,000 to Hawaii's gross domestic product.  Hawaii's film industry branch within the department of business, economic development, and tourism was established in 1978 and has been the central agency to manage functions relating to the development and expansion of the film industry.

     The film industry branch has provided production services, marketing, film permitting services, and recently tax incentive co-management with the department of taxation.  However, Hawaii must find new ways to fund and support key initiatives that are the cornerstones of developing our innovation infrastructure.

     The purpose of this Act is to establish the Hawaii creative media commission, which formally provides a foundation for expanding the resources and potential of this lucrative sector in our economy.  This Act also renames and expands the Hawaii television and film development special fund into the creative media development special fund, which helps the commission to carry out its creative industries functions in a self-sufficient manner.

     SECTION 2.  Part IX and section 201-111, Hawaii Revised Statutes, are amended to read as follows:

     "[[]PART IX.[]] [HAWAII TELEVISION AND FILM] CREATIVE MEDIA DEVELOPMENT

     [[]§201-111[]] Definitions.  As used in this part:

     "Applicant" means a person applying for a grant [or venture capital investment from the board] from the commission under this part.

     ["Board"] "Commission" means the Hawaii [television and film development board.] creative media commission.

"Department" means the department of business, economic development, and tourism.

     "Eligible Hawaii-based project" or "project" means an entertainment project in which at least seventy-five per cent of the budget for the production costs, excluding salaries and costs for the producer, director, writer, screenplay, and actors in the project, is dedicated for the purchase or lease of goods or services from a vendor or supplier who is located and doing business in the State.

     "Fund" means the Hawaii [television and film] creative media development special fund.

     ["Venture capital investment" means any of the following investments in a project:

(1)  Common or preferred stock and equity securities without a repurchase requirement for at least five years;

(2)  A right to purchase stock or equity securities;

(3)  Any debenture, whether or not convertible or having stock purchase rights, which is subordinated, together with security interests against the assets of the borrower, by their terms to all borrowings of the borrower from other institutional lenders, and that is for a term of not less than three years, and that has no part amortized during the first three years; and

(4)  General or limited partnership interests.]"

     SECTION 3.  Section 201-112, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201-112[]] Hawaii [television and film development board] film and digital media commission. (a) There is established [the Hawaii television and film development board.] a Hawaii creative media commission to assist the department in developing and promoting film, television, digital media, and related creative industries in Hawaii.  The [board] commission shall be attached to the department [of business, economic development, and tourism] for administrative purposes only.  The [board] commission shall administer the grant [and venture capital investment programs and the Hawaii television and film development special fund] program established under this part[.] and advise the department on the uses of the film and digital media development special fund.  The [board] commission shall also [assess and consider the overall viability and] assist and help to promote the development of the film, television [and film,] digital media, and other creative industries and make recommendations to the department and other appropriate state or county agencies.

     (b)  The [board] commission shall be composed of nine members, four of whom shall be appointed by the governor pursuant to section 26-34, and all of whom shall serve four-year staggered terms.  One of the governor's appointments shall be made from a list of nominees submitted by the president of the senate and another appointment shall be made from a list of nominees submitted by the speaker of the house of representatives.  The four appointed members shall possess a current working knowledge of the film, television, digital media, or [entertainment] creative industry[.] sectors, including financial management.  The director of business, economic development, and tourism, and the chairs of the four county film [commissions] offices or [its] their equivalent, shall serve as ex officio voting members, who may be represented on the [board] commission by designees.

     The chairperson and vice chairperson of the [board] commission shall be selected by [the board by] majority vote.  Five members shall constitute a quorum, whose affirmative vote shall be necessary for all actions by the [board.] commission.  The members shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

     (c)  [The film industry branch development manager shall serve as the executive secretary of the board.

(d)]  The [board] commission may adopt rules pursuant to chapter 91 to effectuate the purposes of this part."

     SECTION 4.  Section 201-113, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201-113[]] [Hawaii television and film] Creative media development special fund.  (a)  There is established in the state treasury the [Hawaii television and film] creative  media development special fund into which shall be deposited:

     (1)  Appropriations by the legislature;

     (2)  Donations and contributions made by private individuals or organizations for deposit into the fund;

     (3)  Grants provided by governmental agencies or any other source; and

     (4)  [Any profits or other amounts received from venture capital investments.] All revenues, fees, rents, and charges, including but not limited to, from tenants and other users of the Hawaii film studio, and from the consolidated film permit processing provided in section 201-14, and the motion picture, digital media, and film production income tax credit provided in section 235-17.

     (b)  The fund shall be used by the [board to assist in, and provide incentives for, the production of eligible Hawaii projects that are in compliance with criteria and standards established by the board in accordance with rules adopted by the board pursuant to chapter 91.  In particular, the board shall adopt rules to provide for the implementation of the following programs:] department to carry out its functions and operations in developing, promoting, and assisting film, television, digital media, and other creative industries in Hawaii.

    [(1)  A grant program.]  (c) The fund may be used to assist in, and provide incentives for, the production of eligible Hawaii-based projects that are in compliance with criteria and standards established by the Hawaii creative media commission.  The [board] commission shall adopt rules pursuant to chapter 91 to provide conditions and qualifications for grants[.] to film, television, digital media, and other creative industries entities.  Applications for grants shall be made to the [board] commission and shall contain such information as the [board] commission shall require by rules adopted pursuant to chapter 91.  At a minimum, the applicant shall agree to the following conditions:

[(A)](1)  The grant shall be used exclusively for eligible   Hawaii-based projects[;] that support the development and export of Hawaii creative media products;

[(B)](2)  The applicant shall have applied for or received all applicable licenses and permits;

[(C)](3)  The applicant shall comply with applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, or physical handicap;

[(D)](4)  The applicant shall comply with other requirements as the [board] commission may prescribe;

[(E)](5)  All activities undertaken with funds received shall comply with all applicable federal, state, and county statutes and ordinances;

[(F)](6)  The applicant shall indemnify and save harmless the State of Hawaii and its officers, agents, and employees from and against any and all claims arising out of or resulting from activities carried out or projects undertaken with funds provided hereunder, and procure sufficient insurance to provide this indemnification if requested to do so by the department;

[(G)](7)  The applicant shall make available to the [board] commission all records the applicant may have relating to the project, to allow the [board] commission to monitor the applicant's compliance with the purpose of this chapter; and

[(H)](8)  The applicant, to the satisfaction of the [board,] commission, shall establish that sufficient funds are available for the completion of the project for the purpose for which the grant is awarded[; and

(2)  A venture capital program.  The board shall adopt rules pursuant to chapter 91 to provide conditions and qualifications for venture capital investments in eligible Hawaii projects.  The program may include a written agreement between the borrower and the board, as the representative of the State, that as consideration for the venture capital investment made under this part, the borrower shall share any royalties, licenses, titles, rights, or any other monetary benefits that may accrue to the borrower pursuant to terms and conditions established by the board by rule pursuant to chapter 91.  Venture capital investments may be made on such terms and conditions as the board shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of this part]."

     SECTION 4.  Section 201-114, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201-114[]] Inspection of premises and records.  The [board] commission shall have the right to inspect, at reasonable hours, the plant, physical facilities, equipment, premises, books, and records of any applicant in connection with the processing of a grant to the applicant."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2010.

INTRODUCED BY:	_____________________________
	By Request

Report Title:

Hawaii Creative Media Commission; Special Fund

Description:

Replaces the Hawaii Television and Film Development Board with the Hawaii Creative Media Commission and renames and expands the Hawaii Television and Film Development Special Fund into the Creative Media Development Special Fund.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.