STAND. COM. REP. NO. 3243

Honolulu, Hawaii

RE: H.B. No. 2369

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred H.B. No. 2369, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII COMMUNITY-BASED ECONOMIC DEVELOPMENT TECHNICAL AND FINANCIAL ASSISTANCE PROGRAM,"

begs leave to report as follows:

The purpose and intent of this measure is to increase the maximum interest rate on Community-Based Economic Development loans to ten percent.

Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism.

Your Committee received testimony in opposition to this measure from one individual.

Your Committee finds that under existing law the interest rate allowable on Community-Based Economic Development (CBED) business loans is between three and six percent, and that the CBED program uses federal funds to leverage or supplement these loans. Your Committee further finds that federal rules require an interest rate floor according to market conditions, which is defined by the Wall Street Journal (WSJ) prime rate minus four percent. Your Committee additionally finds that the WSJ prime rate is currently at 8.5 percent and that the federal floor may approach or overtake the CBED maximum interest rate in the future, which would make it impossible to use federal funds for these loans. This measure increases the CBED maximum rate to ten percent and ensures the CBED loan program has the flexibility to offer low interest loans to comply with federal requirements.

Your Committee has amended this measure by inserting an effective date of January 1, 2060, to encourage further discussion.

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 H.B. No. 2369, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2369, H.D. 1, S.D. 1, 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,

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LYNN DECOITE, Chair