STAND. COM. REP. NO. 3117

Honolulu, Hawaii

RE:    H.B. No. 2486

       H.D. 3

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Economic Development, Environment, and Technology, to which was referred H.B. No. 2486, H.D. 3, entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

     The purpose and intent of this measure is to establish a Kapolei Jobs Initiative program to increase the number of jobs in Kapolei by creating incentives for businesses to establish themselves or relocate to the Kapolei region.

     Your Committee received testimony in support of this measure from the Chamber of Commerce Hawaii; Land Use Research Foundation of Hawaii; Kapolei Chamber of Commerce; Hawai‘i Construction Alliance; James Campbell Company LLC; Pacific Resource Partnership; Gentry Investment Properties; Hunt Development Group, LLC; Hawaii Laborers-Employers Cooperation and Education Trust; Avalon Group; International Union of Bricklayers and Allied Craftworkers Local #1 of Hawaii; Palehua Townhouse Association; Chuck E. Cheese's Hawaii; Hawaii Operating Engineers Industry Stabilization Fund; and twenty-four individuals.  Your Committee received comments on this measure from the Department of Labor and Industrial Relations; Department of Taxation; Department of Business, Economic Development, and Tourism; and Tax Foundation of Hawaii.

     Your Committee finds that job growth in the Kapolei region on Oahu is a matter of community and state concern that affects employers and employees alike as households continue to outgrow the number of employment opportunities in the region.  Your Committee further finds that the state enterprise zone program is restrictive and participation in the program has been relatively low, particularly in the Leeward enterprise zone.  Your Committee also finds that there is the potential for the Kapolei Jobs Initiative program to encourage businesses to close a location currently in business elsewhere on Oahu and relocate to the Kapolei region.  Your Committee does not support the closure of current businesses and believes that the tax credit should only be available to those who open new businesses or new business locations in Kapolei.

     Your Committee has amended this measure by:

     (1)  Limiting the Kapolei Jobs Initiative income tax credit to five years, rather than ten years, including by changing the repeal date to December 31, 2021;

     (2)  Specifying that the tax credit is available to a business that establishes itself or opens a new location within the Kapolei region, rather than a business that relocates;

     (3)  Amending section 1 to reflect its amended purpose; and

     (4)  Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Economic Development, Environment, and Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2486, H.D. 3, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2486, H.D. 3, S.D. 1, and be referred to your Committees on Judiciary and Labor and Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development, Environment, and Technology,

________________________________

GLENN WAKAI, Chair