STAND. COM. REP. NO. 2024

Honolulu, Hawaii

RE: S.B. No. 2808

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred S.B. No. 2808 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII TECHNOLOGY DEVELOPMENT CORPORATION,"

begs leave to report as follows:

The purpose and intent of this measure is to appropriate $1,500,000 to the Hawaii Technology Development Corporation for the State Small Business Credit Initiative Program.

Your Committee received testimony in support of this measure from the Hawai‘i Technology Development Corporation, Hawaii Green Infrastructure Authority, Chamber of Commerce Hawaii, Hawaii Food Industry Association, and Maui Chamber of Commerce. Your Committee received comments on this measure from the Department of Budget and Finance.

Your Committee finds that the State Small Business Credit Initiative Program is a program that will provide federal funds in three tranches over the next seven years for states to expand and develop certain programs to provide access to capital to small businesses. According to testimony received by your Committee, Hawai‘i Technology Development Corporation (HTDC), in partnership with the Hawaii Green Infrastructure Authority (HGIA), will be launching:

(1) A collateral support program to provide cash collaterals to lending institutions to cover the collateral of:

(A) Mid-market sized companies;

(B) Companies of hard-to-finance industries; and

(C) Companies of socially and economically disadvantaged individuals; and

(2) A loan participation program to:

(A) Directly lend to projects with community impact; and

(B) Support community development financial institutions to provide loans to very small businesses and businesses in underserved markets.

Your Committee notes that neither HTDC nor HGIA currently have the necessary staff positions, such as compliance consultants or auditors, to implement these programs.

According to testimony from HTDC, if state funds are not available to cover necessary expenses that are ineligible under federal funds, the collateral support program and the loan participation program may be scaled back and delayed. Your Committee further notes that the reduction and delay of these programs may affect the State's ability to receive the second round of federal funding aimed at socially and economically disadvantaged businesses, as funding from the second tranche will not be available to the State until eighty percent of the first tranche is utilized.

Your Committee believes that this measure is essential for small businesses to not only recover from the economic effects of the coronavirus disease 2019 pandemic, but to grow and expand within the State.

As affirmed by the record of votes of the members of your Committee on Energy, Economic Development, and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2808 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy, Economic Development, and Tourism,

________________________________

GLENN WAKAI, Chair