HOUSE OF REPRESENTATIVES

H.B. NO.

1449

TWENTY-NINTH LEGISLATURE, 2017

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO INNOVATION BUSINESS INTERACTION.

 

 

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

 


SECTION 1. The legislature finds that to be successful in the twenty-first century global economy, Hawaii must position itself as a leader in technology development, transfer, and commercialization. Significant progress has been made over the last few years through programs supported by federal and state initiatives, such as programs administered by the high technology development corporation, Hawaii strategic development corporation, and the Hawaii technology development venture, but more is required to advance Hawaii's technology industry to achieve local technology commercialization. Innovation in science and technology fields will not only enable the State to succeed in the global marketplace, but will also support the State's sustainable economic development goals to include a viable and vibrant technology and manufacturing labor force.

The purpose of this Act is to build on the successes of Hawaii's science and technology industries and establish a commercialization loan program, to be known as the impact loan fund for Hawaii to support Hawaii-based small businesses in the fields of dual-use technologies, tourism-technology, agriculture-technology, ocean recreational-technology, finance-technology, building and construction-technology, life science-technology, biomedical engineering-technology, aerospace-technology, and other cross-industry collaborations, excluding energy generation technology, with Hawaii's technology sector.

SECTION 2. Chapter 206M, Hawaii Revised Statutes, is amended by adding two new sections to part I to be appropriately designated and to read as follows:

"206M-A Impact loan fund for Hawaii; HI-impact loan program; established. (a) There is established within the development corporation, the impact loan fund for Hawaii, to be also known as the HI-impact loan program, to support Hawaii-based small businesses in the fields of dual-use technologies, tourism-technology, agriculture-technology, ocean recreational-technology, finance-technology, building and construction-technology, life science-technology, biomedical engineering-technology, aerospace-technology, and other cross-industry collaborations, excluding energy generation technology.

(b) The purposes of the HI-impact loan program shall be to:

(1) Develop, implement, and operate a comprehensive loan program to support product development, technology transfer, and commercialization;

(2) Provide capital to support accelerated commercialization activities in the fields of dual-use technologies, tourism-technology, agriculture-technology, ocean recreational-technology, finance-technology, building and construction-technology, life science-technology, biomedical engineering-technology, aerospace-technology, and other cross-industry collaborations, excluding energy generation technology;

(3) Provide capital to sustain high-potential business infrastructure development to assist the enterprise towards commercial success;

(4) Promote high-quality, high-income job opportunities for Hawaii's residents and graduates of Hawaii's educational institutions;

(5) Reverse the loss of qualified workers to other states by providing jobs to retain existing Hawaii technology employees and enable highly qualified scientists and engineers to return to living-wage jobs in Hawaii; and

(6) Keep technology companies in Hawaii by limiting the need to seek out-of-state venture capital, which dilutes local ownership and increases the probability of high-potential technology companies moving from Hawaii.

(c) The board may hire an administrator for the HI-impact loan program, who shall be known as the HI-impact administrator. The board may set the salary for the HI-impact administrator. The HI-impact administrator position shall be exempt from chapter 76.

(d) The development corporation may model the HI-impact loan program after the Maryland technology development corporation technology commercialization fund, which became the seed funding program. The HI-impact loan program's responsibilities may include but not be limited to:

(1) Providing funding specifically for a first investment of up to $         to provide funds for critical product development that enables a business to achieve significant product development and technical milestones;

(2) Making program eligibility dependent upon the following criteria:

(A) The business shall be a for-profit entity located in the State with fewer than sixteen full-time equivalent employee positions; and

(B) The business shall be pre-revenue or have received less than an aggregate of $500,000 in equity investments; and

(3) Offering the loans in the form of a convertible note bearing eight per cent interest.

(e) To receive funding, a Hawaii-based business shall:

(1) Submit qualified proposals to the development corporation for funding in accordance with program requirements specified by the development corporation; provided that a majority of the work under the award shall be performed in the State;

(2) Submit to the HI-impact administrator a commercialization budget, corporate business plan, corporate financials, pro forma statements, and other information required by the HI-impact administrator;

(3) Secure a contract or purchase order from a customer company equal to or greater than ten per cent of the convertible debt loan;

(4) Submit to the HI-impact administrator a technical budgeted plan of work to meet the customer's needs;

(5) Include a justification letter of commitment from the customer company explaining how the business case will help the company and its commitment to purchase;

(6) Sign a promissory note when the loan is made;

(7) Execute agreements as required by the HI-impact administrator; and

(8) Submit reports and updates of project progress and other required documents as required by the HI-impact administrator.

(f) The HI-impact administrator shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session on the activities and expenditures of the loan program and the HI-impact special fund.

(g) The development corporation may adopt rules pursuant to chapter 91 necessary to carry out the purposes of this section.

206M-B HI-impact special fund. (a) There is established in the treasury of the State of Hawaii the HI-impact special fund to be administered by the development corporation.

(b) The revenues of the special fund shall consist of loan repayments, fees, fines and penalties, legislative appropriations for the program or the special fund, and interest accrued upon the funds in the special fund.

(c) The special fund shall be used to make loans to support Hawaii-based small businesses in the fields of dual-use technologies, tourism-technology, agriculture-technology, ocean recreational-technology, finance-technology, building and construction-technology, life science-technology, biomedical engineering-technology, aerospace-technology, and other cross-industry collaborations, excluding energy generation technology; provided that no more than fifteen per cent of the moneys may be expended for administration and program oversight of the program awardees; provided further that funds received from loan operations shall be used in accordance with this section and section 206M-A."

SECTION 3. 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 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 for deposit into the HI-impact special fund.

SECTION 4. There is appropriated out of the HI-impact special fund the sum of $         or so much thereof as may be necessary for fiscal year 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 for the purposes of this Act.

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

SECTION 5. 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 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2038.


 


 

Report Title:

High Technology Development Corporation; Impact Loan Fund for Hawaii; HI-impact Loan Program; Appropriation

 

Description:

Establishes the impact loan fund for Hawaii (HI-impact loan program) in the High Technology Development Corporation to support dual-use technology small businesses. Establishes the HI-impact special fund.  Appropriates funds. Effective July 1, 2038. (HB1449 HD1)

 

 

 

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