Report Title:

Hawaii Strategic Dev. Corp.; High Tech Investment; Tax Credit

Description:

Provides that any professional investor that invests in the HSDC shall be considered a taxpayer that has invested in a qualified high technology business pursuant to section 235-110.9(e). (SD1)

THE SENATE

S.B. NO.

358

TWENTY-SECOND LEGISLATURE, 2003

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to ECONOMIC DEVELOPMENT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the development of technology businesses in Hawaii depends on the availability of venture capital. Venture capital funding is typically provided to companies with proven concepts as opposed to very early stage start-up companies. Over the last decade, the Hawaii strategic development corporation (HSDC) has provided funds to venture capital firms who have, in turn, invested in more than fifty companies in Hawaii--a direct result of which was an increase in economic development and diversity in Hawaii.

The legislature further finds that the success of the HSDC further evidences the need to support programs that create venture capital opportunities within the State. The success of Hawaii's companies should not have to depend on investments from mainland venture capital firms.

For Hawaii's innovative companies involved in globally competitive industries such as technology, agriculture, and biotechnology, their survival, growth, and success largely depends upon the availability of venture capital in Hawaii. The new University of Hawaii medical school and biomedical research facilities will surely produce new products and services and spawn new companies. The availability of additional venture funding would support their successful commercialization, and strengthen the biotechnology industry and the Hawaii economy as a whole.

The purpose of this Act is to attract private sector resources to the Hawaii strategic development corporation by designating the corporation as a qualified high technology business when a professional investor invests in the corporation. Subsequently, the professional investor would be eligible to claim a high technology business investment tax credit under section 235-110.9, Hawaii Revised Statutes.

SECTION 2. Chapter 211F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§211F-   Corporation; designated qualified high technology business. Any professional investor that invests in the corporation by depositing money into the Hawaii strategic development corporation fund for use by the corporation shall be considered a taxpayer that has invested in a qualified high technology business pursuant to section 235-110.9(e)."

SECTION 3. Section 235-110.9, Hawaii Revised Statutes, is amended by amending by amending the definition of "qualified high technology business" in subsection (e) to read as follows:

""Qualified high technology business" means [a]:

(1) A business, employing or owning capital or property, or maintaining an office, in this State; provided that:

[(1)] (A) More than fifty per cent of its total business activities are qualified research; and provided further that the business conducts more than seventy-five per cent of its qualified research in this State; or

[(2)] (B) More than seventy-five per cent of its gross income is derived from qualified research; and provided further that this income is received from:

    [(A)] (i) Products sold from, manufactured in, or produced in this State; or

    [(B)] (ii) Services performed in this State[.]; or

(2) The Hawaii strategic development corporation pursuant to section 211F- ."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.