Report Title:

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

Description:

Attracts private sector resources to the Hawaii strategic development corporation by creating a program whereby investors, including insurers, in the Hawaii technology investment program would be eligible to claim a high technology business investment tax credit under section 235-110.9, Hawaii Revised Statutes. Requires insurers to invest in the Hawaii technology investment program to be eligible for the high technology business investment tax credit. (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 creating a program whereby investors in the Hawaii technology investment program would be eligible to claim a high technology business investment tax credit under section 235-110.9, Hawaii Revised Statutes.

SECTION 2. Section 211F-52, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The corporation may implement the Hawaii technology investment program through a regulated investment company under the terms and conditions established by this section. The corporation may make changes to the program as required for participants to obtain the federal and state income tax benefits or treatment provided by sections 851 to 855 of the federal Internal Revenue Code of 1986, as amended.

The corporation may establish a program in which the dividends distributed by the regulated investment company are exempt from income taxation under chapter 235.

The corporation shall establish a program in which any investment made through the Hawaii technology investment program by an accredited investor shall qualify for the high technology business investment tax credit which is deductible from the accredited investor's net income tax liability pursuant to section 235-110.9. For purposes of this section, "accredited investor" means any bank, bank holding company, savings institution, trust company, insurance company, investment company registered under the Federal Investment Company Act of 1940, financial services loan company, pension or profit-sharing trust or other financial institution or institutional buyer, licensee under the Federal Small Business Investment Act of 1958, or any person, partnership, or other entity of whose resources a substantial amount is dedicated to investing in securities or debt instruments and whose net worth exceeds $250,000.

If the corporation establishes a program that is proposed to be exempt from income taxation under chapter 235, it shall furnish sufficient information and notify the department of taxation and investors of the tax exempt status of that program."

SECTION 3. Section 431:7-209, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:7-209[]] High technology business investment tax credit. The high technology business investment tax credit provided under section 235-110.9 shall be operative for this chapter on July 1, 1999[.]; provided that after July 1, 2003, only the amounts invested by an insurer in the Hawaii strategic development corporation through the Hawaii technology investment program established pursuant to 211F-52(b) shall qualify for the high technology business investment tax credit."

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, 2003.