STAND. COM. REP. NO.  296

Honolulu, Hawaii

                , 2015

RE:   H.B. No. 716

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Sir:

     Your Committees on Economic Development & Business and Tourism, to which was referred H.B. No. 716 entitled:

"A BILL FOR AN ACT RELATING TO INNOVATIVE BUSINESS INTERACTION,"

beg leave to report as follows:

The purpose of this measure is to promote economic development by facilitating the interaction of innovative local and out-of-state businesses, investors, and talent through an organized interaction program held in conjunction with a larger event.  Specifically, this measure:

     (1)  Establishes an Innovative Business Interaction Program for Investors and Talent under the Department of Business, Economic Development, and Tourism (Program); and

     (2)  Increases the transient accommodations tax revenues deposited into the Tourism Special Fund by $500,000 to provide funds for the Program.

The Hawaii Strategic Development Corporation testified in support of this measure.  The Department of Business, Economic Development, and Tourism, and High Technology Development Corporation supported the intent of this measure.  The State Procurement Office, Department of Budget and Finance, and Tax Foundation of Hawaii provided comments.

     Your Committees find that Hawaii needs to improve its reputation as a place for innovation and a place to do business.  One way to accomplish this is to emphasize and support the growth of innovative businesses through the building of relationships between investors and innovative talent.  Enabling the State to contract with the organizer of an annual event in Hawaii to include an element that encourages interaction between innovative business talent and potential investors accomplishes this objective.

     Your Committees find that establishing the Program would bring together businesses, the investment community, and tourism sector and allow for the establishment of a framework, including messaging and marketing, to attract global interest and showcase Hawaii as an innovation and creative business hub of the Pacific.

     However, your Committees understand the concerns raised by the State Procurement Office that certain provisions in this measure may be unnecessarily restrictive of competition by specifying qualification criteria that may be construed as having the appearance of favoring one specific organizer.  In addition, this measure is contrary to administrative rules, where specification should identify the minimum requirements and allow for competition. 

Accordingly, your Committees have amended this bill by:

     (1)  Removing the requirement that the Department of Business, Economic Development, and Tourism award one contract to a single event organizer for a period of five years;

     (2)  Removing provisions specifying the eligibility criteria for the contract;

     (3)  Changing its effective date to February 19, 2025, to encourage further discussion; and

     (4)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     Your Committees want to stress that, should this measure be enacted, the Department of Business, Economic Development, and Tourism, should emphasize its cost-benefit analysis of the Program in its reports to the Legislature.

     As affirmed by the records of votes of the members of your Committees on Economic Development & Business and Tourism that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 716, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 716, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Economic Development & Business and Tourism,

____________________________ TOM BROWER, Chair

____________________________ DEREK S.K. KAWAKAMI, Chair