SB2144 SD2.DOC

PART I

SECTION 1. The purpose of this part is to assign television and film industry activities to the Hawaii tourism authority.

SECTION 2. Chapter 201B, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . HAWAII FILM OFFICE

§201B-A Definitions. As used in this part:

"Applicant" means a person who proposes to make a motion picture, television show, television commercial, or other visually recorded production at one or more sites on state or county lands.

"Authority" means the Hawaii tourism authority.

"Office" means the Hawaii film office.

§201B-B Hawaii film office; consolidated film permit processing. (a) There is established in the authority a Hawaii film office that shall be the central agency to coordinate film permit activities in the State. The office shall consult with state and county agencies to identify sites that can be used for making visually recorded productions under terms and conditions as may be determined by the state or county agency having jurisdiction over the sites.

(b) The office may accept an application from any person who proposes to make a motion picture, television show, television commercial, or other visually recorded production at one or more sites on state or county lands, whether or not set aside under section 171-11.

(c) The applicant shall identify the sites to be covered by the permit and provide other information as may be required by the office.

(d) The office may approve and issue a permit to film at any of the sites identified by the appropriate state or county agency under subsection (a). If any site requested for use by the applicant is not identified in accordance with subsection (a), the office shall consult with the appropriate state or county agency having jurisdiction over the site to obtain a permit. If the matter of a permit cannot be resolved in this manner, the office shall refer the application to the appropriate state or county agency to obtain a permit.

(e) The office is authorized to make changes to, and extensions of, any approved permits so long as the changes and extensions do not conflict with the policies, terms, and conditions set forth by the agency having jurisdiction over the site in question.

(f) Nothing in this section shall be construed as waiving the authority of any county or the authority of transportation of the State to require a person to obtain a permit from the authority or county where the production takes place on or from a public highway.

(g) A vessel engaged in temporary use for film production purposes in accordance with a film permit issued by the office shall not be considered to be a "commercial vessel" within the meaning of section 200-9, 200-10, or 200-39; provided that:

(1) The period of temporary use does not exceed fourteen hours per day, five days per week, excluding weekends, and for a period not to exceed thirty calendar days; and

(2) The office may make allowances to include weekends for film production purposes due to inclement weather conditions during the weekday period.

§201B-C Hawaii film office special fund. (a) There is established in the state treasury the Hawaii film office special fund, into which shall be deposited:

(1) Appropriations by the legislature;

(2) Rents from usage of the Hawaii film studio operated by the Hawaii film office;

(3) Fees collected by the authority for processing taxpayer letters pursuant to section 235‑17;

(4) Any other fees for processing certifications for tax credits authorized by the legislature;

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

(6) Grants provided by governmental agencies or any other source.

(b) Moneys in the fund shall be used for the operations of the Hawaii film office, including the costs of processing taxpayer letters pursuant to section 235‑17.

(c) For purposes of this section, the Hawaii tourism authority shall report annually to the legislature, beginning January 1, 2011, on the deposits, appropriations, and balance in the Hawaii film office special fund."

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

"§201-3 Specific research and promotional functions of the department. Without prejudice to its general functions and duties, the department of business, economic development, and tourism shall have specific functions in the following areas:

(1) Industrial development. The department shall:

(A) Determine through technical and economic surveys the profit potential of new or expanded industrial undertakings;

(B) Develop through research projects and other means new and improved industrial products and processes;

(C) Promote studies and surveys to determine consumer preference as to design and quality and to determine the best methods of packaging, transporting, and marketing the State's industrial products;

(D) Disseminate information to assist the present industries of the State, to attract new industries to the State, and to encourage capital investment in present and new industries in the State;

(E) Assist associations of producers and distributors of industrial products to introduce these products to consumers; and

(F) Make grants or contracts as may be necessary or advisable to accomplish the foregoing;

(2) Land development. The department shall:

(A) Encourage the most productive use of all land in the State in accordance with a general plan developed by the department;

(B) Encourage the improvement of land tenure practices on leased private lands;

(C) Promote an informational program directed to landowners, producers of agricultural and industrial commodities, and the general public regarding the most efficient and most productive use of the lands in the State; and

(D) Make grants or contracts as may be necessary or advisable to accomplish the foregoing;

(3) Credit development. The department shall:

(A) Conduct a continuing study of agricultural and industrial credit needs;

(B) Encourage the development of additional private and public credit sources for agricultural and industrial enterprises;

(C) Promote an informational program to acquaint financial institutions with agricultural and industrial credit needs and the potential for agricultural and industrial expansion, and inform producers of agricultural and industrial products as to the manner in which to qualify for loans; and

(D) Make grants or contracts as may be necessary or advisable to accomplish the foregoing;

(4) Promotion. The department shall:

(A) Disseminate information developed for or by the department pertaining to economic development to assist present industry in the State;

(B) Attract new industry and investments to the State; and

The industrial and economic promotional activities of the department may include the use of literature, advertising, demonstrations, displays, market testing, lectures, travel, motion picture and slide films, and other promotional and publicity devices as may be appropriate; and

(5) Self-sufficiency standard. The department shall establish and update biennially a self-sufficiency standard that shall incorporate existing methods of calculation, and shall reflect, at a minimum, costs relating to housing, food, child care, transportation, health care, clothing and household expenses, federal and state tax obligations, family size, children's ages, geography, and the number of household wage earners. The department shall report to the legislature concerning the self-sufficiency standard no later than twenty days prior to the convening of the regular session of 2009, and every odd-numbered year thereafter. The recommendations shall address, among other things, the use of any federal funding that may be available for the purposes of establishing and updating the self-sufficiency standard.

[~~The department shall be the central agency to coordinate film permit activities in the State.~~]"

SECTION 4. Section 235-17, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (f) to read:

"(f) To receive the tax credit, the taxpayer shall first prequalify the production for the credit by registering with the [~~department of business, economic development, and tourism~~] Hawaii film office during the development or preproduction stage. Failure to comply with this provision may constitute a waiver of the right to claim the credit."

2. By amending subsections (h) and (i) to read:

"(h) Every taxpayer claiming a tax credit under this section for a qualified production shall, no later than ninety days following the end of each taxable year in which qualified production costs were expended, submit a written, sworn statement to the [~~department of business, economic development, and tourism,~~] Hawaii film office, identifying:

(1) All qualified production costs as provided by subsection (a), if any, incurred in the previous taxable year;

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

(3) The number of total hires versus the number of local hires by category (i.e., department) and by county.

(i) The [~~department of business, economic development, and tourism~~] Hawaii film office shall:

(1) Maintain records of the names of the taxpayers and qualified productions thereof claiming the tax credits under subsection (a);

(2) Obtain and total the aggregate amounts of all qualified production costs per qualified production and per qualified production per taxable year; and

(3) Provide a letter to the director of taxation specifying the amount of the tax credit per qualified production for each taxable year that a tax credit is claimed and the cumulative amount of the tax credit for all years claimed.

Upon each determination required under this subsection, the [~~department of business, economic development, and tourism~~] Hawaii film office shall issue a letter to the taxpayer, regarding the qualified production, specifying the qualified production costs and the tax credit amount qualified for in each taxable year a tax credit is claimed. The taxpayer for each qualified production shall file the letter with the taxpayer's tax return for the qualified production to the department of taxation. Notwithstanding the authority of the [~~department of business, economic development, and tourism~~] Hawaii film office under this section, the director of taxation may audit and adjust the tax credit amount to conform to the information filed by the taxpayer."

3. By amending the definition of "qualified production costs" in subsection (1) to read:

""Qualified production costs" means the costs incurred by a qualified production within the State that are subject to the general excise tax under chapter 237 or income tax under this chapter and that have not been financed by any investments for which a credit was or will be claimed pursuant to section 235‑110.9. Qualified production costs include but are not limited to:

(1) Costs incurred during preproduction such as location scouting and related services;

(2) Costs of set construction and operations, purchases or rentals of wardrobe, props, accessories, food, office supplies, transportation, equipment, and related services;

(3) Wages or salaries of cast, crew, and musicians;

(4) Costs of photography, sound synchronization, lighting, and related services;

(5) Costs of editing, visual effects, music, other post-production, and related services;

(6) Rentals and fees for use of local facilities and locations;

(7) Rentals of vehicles and lodging for cast and crew;

(8) Airfare for flights to or from Hawaii, and interisland flights;

(9) Insurance and bonding;

(10) Shipping of equipment and supplies to or from Hawaii, and interisland shipments; and

(11) Other direct production costs specified by the department in consultation with the [~~department of business, economic development, and tourism.~~] Hawaii film office."

SECTION 5. Section 201-14, Hawaii Revised Statutes, is repealed.

["~~§201-14~~ Consolidated film permit processing. (a) The department shall consult with state and county agencies in order to identify sites that can be used for making visually recorded productions under terms and conditions as may be determined by the state or county agency having jurisdiction over the sites.

(b) The department may accept an application from any person who proposes to make a motion picture, television show, television commercial, or other visually recorded production at one or more sites on state or county lands, whether or not set aside under section 171-11.

~~(c) The applicant shall identify the sites to be covered by the permit and provide other information as may be required by the department.~~

(d) The department may approve and issue a permit to film at any of the sites identified by the appropriate state or county agency under subsection (a). If any site requested for use by the applicant is not identified under subsection (a), the department shall consult with the appropriate state or county agency having jurisdiction over the site to obtain a permit. If the matter of a permit cannot be resolved in this manner, the department shall refer the application to the appropriate state or county agency to obtain a permit.

(e) The department is authorized to make changes to, and extensions of, any approved permits so long as the changes and extensions do not conflict with the policies, terms, and conditions set forth by the agency having jurisdiction over the site in question.

~~(f) The department may establish memoranda of agreement or adopt rules to implement the intent and purposes of this section.~~

(g) Nothing in this section shall be construed as waiving the authority of any county or the department of transportation of the State to require a person to obtain a permit from the department or county where the production takes place on or from a public highway.

(h) A vessel engaged in temporary use for film production purposes in accordance with a film permit issued by the department shall not be considered to be a "commercial vessel" within the meaning of section 200-9, 200-10, or 200-39; provided that:

~~(1)~~ ~~The period of temporary use does not exceed fourteen hours per day, five days per week, excluding weekends, and for a period not to exceed thirty calendar days; and~~

~~(2)~~ ~~The department may make allowances to include weekends for film production purposes due to inclement weather conditions during the weekday period.~~"]

SECTION 6. Part IX of chapter 201, Hawaii Revised Statutes, is repealed.

SECTION 7. All rights, powers, functions, and duties related to Hawaii television and film development are transferred from the department of business, economic development, and tourism to the Hawaii tourism authority.

All officers and employees whose functions are transferred by this part shall be transferred with their functions and shall continue to perform their regular duties upon their transfer; provided that the transferred officers and employees shall be subject to the provisions of section 201B-3(7), Hawaii Revised Statutes.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this part; provided that no break in service has occurred.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 8. All appropriations, records, equipment, machines, files, supplies, contracts, memoranda of agreement in existence prior to the effective date of this Act, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of business, economic development, and tourism relating to the functions transferred to the department of Hawaii tourism authority shall be transferred with the functions to which they relate.

PART II

SECTION 9. The purpose of this part is to amend the uses of the Hawaii community-based economic development revolving fund to include operational funding and a funding mechanism for the enterprise zone program.

SECTION 10. Section 210D-4, Hawaii Revised Statutes, is amended to read as follows:

"§210D-4 Hawaii community-based economic development revolving fund; established[.]; funding of community-based economic development program staff, nonprofit community-based organizations, and for-profit entities in enterprise zones. (a) There is established a revolving fund to be known as the Hawaii community-based economic development revolving fund from which moneys shall be loaned or granted by the department under this chapter. All moneys appropriated to the fund by the legislature, received as repayments of loans, payments of interest or fees, and all other moneys received by the fund from any other source shall be deposited into the revolving fund and used for the purposes of this chapter.

(b) The department [~~may~~] shall use all appropriations and other moneys in the revolving fund not appropriated for a designated purpose to [~~make grants or loans.~~]:

(1) Fund the operations of the community-based economic development program and the enterprise zone program established under chapter 209E, and the personnel costs of those programs' staff positions existing on November 1, 2009; provided that the use of moneys from the fund for current and future personnel costs shall be limited to those employees performing specialized duties and assigned solely to the community-based economic development program or the enterprise zone program; and

(2) Make grants and loans in accordance with this chapter."

PART III

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2070.

THE SENATE	S.B. NO.	2144
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 2
STATE OF HAWAII