SB1297 SD1

PART I

SECTION 1. The legislature finds that, in light of the State's ongoing economic recovery from the outbreak of the coronavirus disease 2019 (COVID-19), the State must accelerate its economic diversification efforts through substantial, strategic, coordinated investments.

This Act establishes a policy framework for Hawaii technology development corporation projects that will ensure economic success. The legislature finds that the implementation of this framework will not require a significant additional investment in overhead resources but will require funds for specific projects that are identified collaboratively by the legislature and the Hawaii technology development corporation. The implementation will also require the establishment of specific goals that these projects shall address and reports to the legislature that assess the effectiveness of the projects in meeting those goals.

The legislature finds that through this Act, the Hawaii technology development corporation will serve as a facilitative catalyst for innovation in the State and will help to align the State with the emerging knowledge-based, zero‑emission, and digital global economy while putting Hawaii on the path toward economic prosperity.

The purpose of this Act is to promote economic recovery and diversification by:

(1) Establishing state goals for economic growth fueled by innovation and technology;

(2) Appropriating funds to the Hawaii technology development corporation to implement specific projects that address those goals;

(3) Requiring the Hawaii technology development corporation to submit annual reports to the legislature that summarize:

(A) The progress of projects assigned to the Hawaii technology development corporation by this Act;

(B) The outcomes of the projects assigned to the Hawaii technology development corporation, including an assessment of each project's effectiveness in achieving state goals; and

(4) Re—establishing the two—year Hawaii office of naval research grant program.

PART II

SECTION 2. (a) The legislature declares that the projects for which funds are appropriated pursuant to sections 4 and 5 of this Act align with one or more of the following goals that address economic diversification:

(1) Economic diversification through participation in the digital economy: projects shall address economic diversification by strengthening Hawaii's participation in the digital economy, including:

(A) Accessing new markets and market opportunities;

(B) Strengthening business capacity and readiness to participate in the digital economy;

(D) Strengthening digital economy infrastructure including broadband affordability and coworking facilities; and

(E) Increasing the number of businesses, revenue, and employees dedicated to the digital economy.

(2) Economic diversification through strengthened trade activities: projects shall address economic diversification by strengthening traded activities that redistribute Hawaii's gross domestic product, including:

(A) Increasing the export of goods manufactured in the State;

(B) Increasing the export of knowledge-based professional services;

(C) Increasing the value of knowledge-based professional services through research and development and intellectual property;

(D) Strengthening the post-production capacity for value-added agriculture and manufacturing; and

(E) Increasing the number of businesses, revenue, and employees in traded sectors.

(3) Economic diversification through increase in activity to reduce and mitigate climate change: projects shall address economic diversification by focusing on activities at the intersection of technology development and climate change mitigation, including:

(A) Making renewable energy more affordable;

(B) Retaining and strengthening businesses that are increasing revenues through solutions to reduce climate change;

(D) Increasing the number of businesses, revenue, and employees in renewable energy sectors.

(b) The Hawaii technology development corporation shall implement the projects for which funds are appropriated in sections 4 and 5 of this Act for the purpose of meeting the goals described in subsection (a); provided that the Hawaii technology development corporation may work with any other state or county agency for the implementation of the assigned projects.

(c) No later than twenty days prior to the convening of the regular sessions of 2024, 2025, and 2026, the Hawaii technology development corporation shall submit a report to the legislature that includes:

(1) A summary of the progress of the projects assigned to the Hawaii technology development corporation by this Act;

(2) The outcomes of the projects assigned to the Hawaii technology development corporation by this Act, including an assessment of each project's effectiveness in achieving the goals described in subsection (a); and

(3) Any findings and recommendations, including any proposed legislation.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $5,000,000 or so much thereof as may be necessary for fiscal year 2023-2024 to be deposited into the strategic development programs revolving fund.

SECTION 4. There is appropriated out of the strategic development programs revolving fund the sum of $5,000,000 or so much thereof as may be necessary for fiscal year 2023-2024 for the purposes of stimulating private capital investments into small businesses in Hawaii and for administrative support of the state small business credit initiative.

The sum appropriated shall be expended by the Hawaii technology development corporation for the purposes of this Act.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $11,000,000 or so much thereof as may be necessary for fiscal year 2023-2024 for the purpose of economic diversification, as described in section 2(a) of this Act as follows:

(1) $2,000,000 to accelerate economic diversification by supporting and enhancing existing accelerator grant programs and encouraging new accelerator programs;

(2) $2,000,000 to support economic development opportunities with the trade sector, especially for products manufactured in Hawaii, by working with strategic partners to build awareness of Hawaii-made products outside of the State;

(3) $2,000,000 for operations, administration, and awarding of grants by the Hawaii small business innovation research program;

(4) $2,000,000 to support economic development opportunities with the defense sector including aerospace and supporting companies conducting small business innovation research to transition past grants into large contracts;

(5) $1,500,000 for operations, administration, and awarding of grants by the manufacturing assistance program; and

(6) $1,500,000 to reduce and mitigate climate change through renewable energy technology demonstration projects such as hydrogen, geothermal, or clean ground, air, and sea transportation in support of Hawaii's hydrogen hub proposal to the United States Department of Energy.

The sum appropriated shall be expended by the Hawaii technology development corporation for the purposes of this Act.

SECTION 6. The appropriation made for projects authorized by section 5 of this Act shall not lapse at the end of the fiscal biennium for which the appropriation is made; provided that all moneys from the appropriation unencumbered as of June 30, 2025, shall lapse as of that date.

PART III

SECTION 7. (a) There is established within the department of business, economic development, and tourism, a two-year Hawaii office of naval research grant program to provide grants to qualified businesses conducting research and development in alternative energy. The purpose of the program shall be to promote the research and development of alternative energy in Hawaii by authorizing the Hawaii technology development corporation to provide matching grants to businesses that meet criteria established in subsection (b).

(b) Subject to the availability of funds, the Hawaii technology development corporation may provide a grant to any business that:

(1) Has been awarded a competitive contract from the Department of Defense Office of Naval Research that is related to research on alternative energy and energy efficiency technologies in the fields of geothermal, solar, wind, ocean power, hydrodynamics, bioenergy, biomass, solid waste, smart grids, transportation, or demand response;

(2) Is sixty per cent or more resident-owned; provided that for purposes of this paragraph, "resident" shall have the same meaning as defined in section 235-1, Hawaii Revised Statutes;

(3) Is a for-profit entity organized under the laws of the State;

(4) Has been doing business in the State for not less than one year;

(5) Agrees to expend all grant funds awarded pursuant to this Act in the State; and

(6) Conducts research in alternative energy that has a high technology readiness level or high potential for implementation as evidenced by a contract, funded by moneys designated by the United States Congress as funding for alternative energy and a national defense budget funding directive, with the Department of Defense Office of Naval Research that is existing and active or was granted within three years prior to the effective date of this Act;

provided that the amount of any grant awarded pursuant to this Act shall not exceed fifty per cent of the amount of the grant awarded to the business by the Department of Defense Office of Naval Research; provided further that the business shall not be eligible for a grant pursuant to this section if the business has obtained any other state grant for the same research, other than the grant awarded to the business by the Department of Defense Office of Naval Research, at the time of or during the duration of the grant from the Hawaii office of naval research grant program.

(d) The department of business, economic development, and tourism shall adopt rules, pursuant to chapter 91, Hawaii Revised Statutes, necessary for the purposes of implementing the Hawaii office of naval research grant program.

SECTION 8. There is established the alternative energy research and development revolving fund for the purpose of promoting alternative energy research and development in Hawaii.

The alternative energy research and development revolving fund shall be abolished on June 30, 2025, and all unencumbered balances shall lapse to the credit of the general fund.

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 to be deposited into the alternative energy research and development revolving fund.

SECTION 10. There is appropriated out of the alternative energy research and development revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 for the purpose of the Hawaii office of naval research grant program; provided that the moneys appropriated by this Act shall not lapse at the end of the 2024-2025 fiscal year; provided further that any moneys that remain unencumbered on June 30, 2025, shall lapse on that date.

The sums appropriated shall be expended by the Hawaii technology development corporation for the purposes of this Act.

SECTION 11. This Act shall take effect on July 1, 2023.

THE SENATE	S.B. NO.	1297
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII