State Enterprise Zones; Agribusiness
Changes qualifications for an agricultural business in state enterprise zone: (1) substitutes 2% cumulative average annual gross revenue increase for 10% average annual increase in employment; (2) allows additional 7 years participation; (3) invokes force majeure to prevent disqualification. (SD1)
TWENTY-SECOND LEGISLATURE, 2004
STATE OF HAWAII
A BILL FOR AN ACT
relating to state enterprise zones.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that agriculture in Hawaii is a vital component of Hawaii's economy. It provides the State with export products, a diversity of employment opportunities, a stage for tourism, and land and water stewardship. The legislature further finds that to encourage further economic development in rural areas, agriculture must be given the opportunity to prosper. While thousands of acres of agricultural land lie idle, new and existing agricultural ventures must be encouraged to expand and develop. More incentives must be provided to give agricultural entrepreneurs the opportunity to build long-lasting businesses in Hawaii.
The legislature finds that the state enterprise zone program is one method that provides business incentives to encourage agricultural activity. However, employment requirements to qualify for this program discourage many agricultural businesses from applying or qualifying. While agricultural businesses are confronted by challenges similar to those faced by other small businesses, agricultural businesses labor under unique circumstances that compound the complexity of building a successful agricultural business. Agricultural employment is dependent on the local and global marketplace, seasonal crops, labor availability, and weather conditions. It is very difficult for agricultural businesses to meet the existing employment requirements in the state enterprise zone program. Therefore, the legislature finds that action needs to be taken to allow more agricultural businesses the opportunity to participate in the state enterprise zone program.
The purpose of this Act is to address the unique circumstances of agricultural businesses.
SECTION 2. Chapter 209E, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§209E-A Agricultural business; extension of tax incentives. The department may extend all tax incentives provided under this chapter to existing qualified agricultural businesses for no more than an additional seven years.
§209E-B Force majeure; agricultural businesses. If an agricultural business is wholly or partially prevented from maintaining eligibility requirements under section 209E-9, or if the agricultural business is interrupted by reason of or through any act of God, including but not limited to fire, flood, lava flow or volcanic activity, drought, tidal wave, hurricane, or without limiting or restricting the foregoing in any way, any other similar or dissimilar cause reasonably beyond its control and not attributable to its neglect, then the agricultural business shall not be disqualified under this chapter. The agricultural business shall remain eligible for all tax incentives under this chapter during any period caused by an event of force majeure. The agricultural business shall be as prompt and diligent as practical in providing the department with notice of a force majeure event or of any situation that may lead to a force majeure event."
SECTION 3. Section 209E-9, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) Any business firm may be eligible to be designated a qualified business for purposes of this chapter if the business:
(1) Begins the operation of a trade or business within an enterprise zone;
(2) During each taxable year has at least fifty per cent of its enterprise zone establishment's gross receipts attributable to the active conduct of trade or business within the enterprise zone;
(3) Increases its average annual number of full-time employees by at least ten per cent by the end of its first tax year of participation; provided that in the case of an agricultural business, the requirement to increase employment shall be replaced by a requirement to increase its cumulative average annual gross revenues by at least two per cent by the end of the first tax year of participation; and
(4) During each subsequent taxable year, at least maintains that higher level of employment[
.] or gross revenues pursuant to paragraph (3).
(b) A business firm also may be eligible to be designated a qualified business for purposes of this chapter if the business:
(1) Is actively engaged in the conduct of a trade or business in an area immediately prior to an area being designated an enterprise zone;
(2) Meets the requirements of subsection (a)(2); and
(3) Increases its average annual number of full-time employees employed at the business' establishment or establishments located within the enterprise zone by at least ten per cent annually[
.]; provided that in the case of an agricultural business, the requirement to increase employment shall be replaced by a requirement to increase its cumulative average annual gross revenues by at least two per cent."
SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval.