SB3081 HD1.DOC

SECTION 1. The legislature finds that innovative business growth in Hawaii requires relationships between investors and innovative talent. To accomplish this, capital and talent must be provided with opportunities to interact. The legislature has learned that these opportunities need not occur at trade, scientific, commercial, or technology-focused events. For example, South by Southwest in Austin, Texas, is primarily a music and media festival. An ancillary effect, however, is that South by Southwest also serves as a venue of interaction for persons interested in investing in innovative businesses and persons seeking capital for these businesses. Hawaii has hosted events of similar type that may serve as the foundation for innovative business interaction. This Act enables the State to contract with the organizer of an annual event in Hawaii to add a component that encourages the interaction of innovative business investors and talent.

The purpose of this Act is to promote economic development by:

(1) Establishing an innovative business interaction program under the Hawaii tourism authority to increase the opportunity for interaction between innovative business investors and innovative business talent from out-of-state and in-state; and

(2) Increasing the transient accommodations tax revenues deposited into the tourism special fund to provide funds for the program.

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

"§201B- Innovative business interaction program for investors and talent. (a) For the purpose of this section:

"Event organizer" or "organizer" means a person who organizes and operates a cultural, art, entertainment, culinary, or athletic event held annually in Hawaii and marketed both within and outside of the State that attracts visitors and residents.

"Innovative business" means a business that is engaged or intending to engage in providing a service or manufacturing a product, wholly or partially in Hawaii, using a technology or scientific technique that improves efficiency, cost-effectiveness, or sustainability.

"Innovative business investor" means an individual who invests or is a principal or employee of an entity that invests in an innovative business.

"Innovative business talent" means an individual who is a principal or employee of an innovative business.

"Principal" means a director, partner, sole proprietor, officer, or manager of a business.

(b) The authority shall use a portion of its funds to increase the opportunity for out-of-state and in-state innovative business investors and innovative business talent to personally meet and interact with each other. To achieve this purpose, the authority shall contract with an event organizer to add to its event an interaction component designed and operated to be especially attractive, overtly or subtly, to innovative business investors and innovative business talent. The interaction component may be provided in a social or entertainment setting, without any formal educational or commercial program and may be open to all event attendees.

Beginning July 1, 2014, of the revenues received by the authority pursuant to section 237D-6.5(b)(2)(B), $500,000 or so much as may be necessary shall be expended by the authority for the innovative business interaction program established under this section.

(c) The authority shall award one contract to a single event organizer for a term of five years, commencing from 2015, with an option for the authority to extend the contract for a subsequent five-year period. Under the contract, the authority shall require the organizer to add the interaction component described under subsection (b) to the same event annually. The authority shall award the contract in accordance with chapter 103D to an event organizer that meets the requirements of subsection (d). The authority shall include terms and conditions in the contract that are not in conflict with this section.

(d) An event organizer may qualify for the contract awarded under this section if:

(1) The organizer, or any successor who assumes control of the event, has held the event in Hawaii annually from 2010 to 2014; provided that an organizer that, on July 1, 2014, has scheduled, but not yet held, the event in 2014 shall be deemed to comply with this paragraph;

(2) The event held by the organizer has attracted visitors from out-of-state, as well as residents of Hawaii;

(3) The event is held for at least three consecutive days; and

(4) The organizer commits to publicizing or marketing the event internationally and nationally as well as locally.

The authority may require the organizer to comply with other criteria that are not inconsistent with this section.

(e) The authority shall include in its annual report to the legislature a section on the innovative business interaction program.

(f) Before the regular session of 2020, the authority shall submit to the governor and legislature a report on the impact, benefit, and cost of the innovative business interaction program. The authority shall recommend in the report whether the program should be continued beyond 2020, with or without modification, or be repealed."

SECTION 3. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Revenues collected under this chapter shall be distributed as follows, with the excess revenues to be deposited into the general fund:

(1) $33,000,000 shall be allocated to the convention center enterprise special fund established under section 201B-8;

(2) [~~$82,000,000~~] $ shall be allocated to the tourism special fund established under section 201B-11; provided that:

(A) Beginning on July 1, 2012, and ending on June 30, 2015, $2,000,000 shall be expended from the tourism special fund for development and implementation of initiatives to take advantage of expanded visa programs and increased travel opportunities for international visitors to Hawaii;

(B) Of the [~~$82,000,000~~] $ allocated:

(i) $1,000,000 shall be allocated for the operation of a Hawaiian center and the museum of Hawaiian music and dance at the Hawaii convention center; [~~and~~]

(ii) 0.5 per cent of the [~~$82,000,000~~] $ shall be transferred to a sub-account in the tourism special fund to provide funding for a safety and security budget, in accordance with the Hawaii tourism strategic plan 2005-2015; and

(iii) Beginning on July 1, 2014, $500,000 shall be expended annually for an innovative business interaction program, pursuant to section 201B- ; and

(C) Of the revenues remaining in the tourism special fund after revenues have been deposited as provided in this paragraph and except for any sum authorized by the legislature for expenditure from revenues subject to this paragraph, beginning July 1, 2007, funds shall be deposited into the tourism emergency trust fund, established in section 201B-10, in a manner sufficient to maintain a fund balance of $5,000,000 in the tourism emergency trust fund;

(3) $93,000,000 shall be allocated as follows: Kauai county shall receive 14.5 per cent, Hawaii county shall receive 18.6 per cent, city and county of Honolulu shall receive 44.1 per cent, and Maui county shall receive 22.8 per cent; provided that commencing with fiscal year 2018-2019, a sum that represents the difference between a county public employer's annual required contribution for the separate trust fund established under section 87A-42 and the amount of the county public employer's contributions into that trust fund shall be retained by the state director of finance and deposited to the credit of the county public employer's annual required contribution into that trust fund in each fiscal year, as provided in section 87A-42, if the respective county fails to remit the total amount of the county's required annual contributions, as required under section 87A-43; and

(4) Of the excess revenues deposited into the general fund pursuant to this subsection, $3,000,000 shall be allocated subject to the mutual agreement of the board of land and natural resources and the board of directors of the Hawaii tourism authority in accordance with the Hawaii tourism authority strategic plan for:

(A) The protection, preservation, and enhancement of natural resources important to the visitor industry;

(B) Planning, construction, and repair of facilities; and

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection.

As used in this subsection, "fiscal year" means the twelve-month period beginning on July 1 of a calendar year and ending on June 30 of the following calendar year."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	3081
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 1
STATE OF HAWAII		H.D. 1