THE SENATE

S.B. NO.

989

THIRTIETH LEGISLATURE, 2019

S.D. 2

STATE OF HAWAII

H.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM.

 

 

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

 


PART I

SECTION 1. The legislature recognizes the economic and tourism benefits of Hawaii's film and creative industries, which represent fifty-four thousand entrepreneurs and businesses in the film, media, arts, culture, music, design, interactive, literary, broadcasting, and publishing industries. These industries are the foundation of Hawaii's creative economy. Anchored by the State's film industry, which had a record year in 2018 of an estimated $477,000,000 in production expenditures, these collective industry clusters, along with technology, are integral to the State's innovation economy. Representing $3,600,000,000 of Hawaii's gross domestic product and cited as one of the State's emerging industry clusters in a recent report from the research and economic analysis division of the department of business, economic development, and tourism, the legislature sees the creative sectors as key facets of the State's innovation strategy. With local screenwriters and songwriters from Hawaii island to Hanalei successfully pitching and having their work produced for networks, such as Lifetime Television, and licensing original songs for placement in many television series, such as Fox's "Empire" or CW's "Nashville", the growth of entrepreneurial creative sector jobs in film and media is accelerating, aided by initiatives such as Creative Lab Hawaii, Ohina Labs, Hawaii Women and Film, and Pacific Islanders in Communications.

The creative industries division of the department of business, economic development, and tourism has grown beyond the startup phase in 2003 into a catalyst for our innovation economy through its expanded responsibilities to develop talent, infrastructure, and access to capital. The creative industries division focused on key initiatives including strengthening operations at the Hawaii film office, developing a pipeline of creative talent and workforce, providing creative access to decision-makers in media, music, and fashion design, providing creative co-working sites, and partnering with the university of Hawaii and the private sector to develop a commercial creative media sound stage and incubator facility in west Oahu, which will generate a pipeline of opportunities for students, generating high-wage jobs in creative media sectors statewide and in the region.

The creative industries division is comprised of the Hawaii film office, as well as the arts and culture development branch. The legislature finds that a restructuring of these organizations is needed to better provide growth in jobs within the State's creative sectors. The legislature also recognizes the need to better serve the neighbor islands to ensure that they are integrated into an overall strategy of growth for the State's creative economy. Therefore, it is in the interest of the State to rename the creative industries division as the office of creative film and media industries Hawaii, and transfer the employees and resources of the Hawaii film office to the office of creative film and media industries Hawaii.

Furthermore, the legislature finds that the creative industries division and the Hawaii film office have also been responsible for meeting the statutory requirements of film permitting and management with regard to the motion picture, digital media, and film production income tax credit. It is crucial to ensure that the State's investment in these industries will continue to be managed by accounting and audit staffing in the office of creative film and media industries Hawaii. As recommended in the department's response to a 2016 state auditor's report, the legislature concurs that additional positions dedicated to management, data collection, tracking, and reporting are critical to protecting the State's investment in this core industry. Therefore, the legislature finds that to adequately fulfill and strengthen Hawaii's creative economy, the office of creative film and media industries Hawaii must be provided with adequate staffing.

Accordingly, the purpose of this Act is to:

(1) Rename the creative industries division as the office of creative film and media industries Hawaii and establish the office in statute;

(2) Provide that the Hawaii film office and the arts and culture development branch shall be agencies of the office of creative film and media industries Hawaii;

(3) Specify that the office of creative film and media industries Hawaii shall include an administrative officer; an accountant for the film tax credit program; a general professional position for infrastructure, creative ecosystems, and workforce development; a film industry development specialist; and employees as necessary to operate the office;

(4) Transfer Hawaii film office employees to the office of creative film and media industries Hawaii without any consequence to their employment benefits or status;

(5) Define "creative industries" and "creative media";

(6) Rename the Hawaii television and film development special fund as the creative film and media development special fund, and amend the uses of the fund to support creative intellectual property and related infrastructure development within the department of business, economic development, and tourism;

(7) Provide appropriations for positions within the office of creative film and media industries Hawaii; and

(8) Provide additional appropriations for activities related to the development of creative film and media industries in Hawaii.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to part IX to be appropriately designated and to read as follows:

"201-   Office of creative film and media industries Hawaii; administration; Hawaii film office. (a) There is established an office of creative film and media industries Hawaii within the department. The office of creative film and media industries Hawaii shall have:

(1) An administrative officer who shall report to the chief officer of the office of creative film and media industries Hawaii;

(2) An accountant position to support activities with regard to the motion picture, digital media, and film production income tax credit program;

(3) A general professional position to support infrastructure, creative ecosystems, and workforce development;

(4) A film industry development specialist to support development of online systems for film permitting; and

(5) Employees as necessary to operate the office.

(b) The Hawaii film office and the arts and culture development branch shall be agencies of the office of creative film and media industries Hawaii."

SECTION 3. Chapter 201, Hawaii Revised Statutes, is amended by amending the title of part IX to read as follows:

"[[]PART IX.[] HAWAII TELEVISION] CREATIVE FILM AND MEDIA INDUSTRIES AND FILM DEVELOPMENT"

SECTION 4. Section 201-111, Hawaii Revised Statutes, is amended to read as follows:

"[[]201-111[]] Definitions. As used in this part:

["Applicant" means a person applying for a grant or venture capital investment from the board under this part.

"Board" means the Hawaii television and film development board.

"Eligible Hawaii project" or "project" means an entertainment project in which at least seventy-five per cent of the budget for the production costs, excluding salaries and costs for the producer, director, writer, screenplay, and actors in the project, is dedicated for the purchase or lease of goods or services from a vendor or supplier who is located and doing business in the State.]

"Creative industries" means sectors which comprise the State's creative economy, including but not limited to arts, culture, music, design, fashion, publishing, animation, and interactive and emerging media.

"Creative media" includes film, motion pictures, television, interactive, over-the-top direct-to-consumer television, virtual reality, multi-player videogames, and other digitally developed content for theatrical or digital distribution, streaming, mobile, and broadcast media.

"Department" means the department of business, economic development, and tourism.

"Fund" means the [Hawaii television and film] creative film and media development special fund.

["Venture capital investment" means any of the following investments in a project:

(1) Common or preferred stock and equity securities without a repurchase requirement for at least five years;

(2) A right to purchase stock or equity securities;

(3) Any debenture, whether or not convertible or having stock purchase rights, which is subordinated, together with security interests against the assets of the borrower, by their terms to all borrowings of the borrower from other institutional lenders, and that is for a term of not less than three years, and that has no part amortized during the first three years; and

(4) General or limited partnership interests.]"

SECTION 5. Section 201-113, Hawaii Revised Statutes, is amended to read as follows:

"[[]201-113[] Hawaii television and film] Creative film and media development special fund. (a) There is established in the state treasury the [Hawaii television and film] creative film and media development special fund into which shall be deposited:

(1) Appropriations by the legislature;

(2) Donations and contributions made by private individuals or organizations for deposit into the fund;

(3) Grants provided by governmental agencies or any other source; [and

(4) Any profits or other amounts received from venture capital investments.]

(4) Thirty-five per cent of all revenues, fees, and charges from the rental and operation of Hawaii film studios and post-production facilities operated or managed by the department, effective on July 1, 2019;

(5) All revenues, fees, and charges from the processing of film permits pursuant to section 201-14, effective on July 1, 2020; and

(6) All revenues, fees, and charges from the processing of the motion picture, digital media, and film production income tax credit pursuant to section 235-17, effective January 1, 2020.

(b) The fund shall be used by the [board to assist in, and provide incentives for, the production of eligible Hawaii projects that are in compliance with criteria and standards established by the board in accordance with rules adopted by the board pursuant to chapter 91. In particular, the board shall adopt rules to provide for the implementation of the following programs:

(1) A grant program. The board shall adopt rules pursuant to chapter 91 to provide conditions and qualifications for grants. Applications for grants shall be made to the board and shall contain such information as the board shall require by rules adopted pursuant to chapter 91. At a minimum, the applicant shall agree to the following conditions:

(A) The grant shall be used exclusively for eligible Hawaii projects;

(B) The applicant shall have applied for or received all applicable licenses and permits;

(C) The applicant shall comply with applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, or physical handicap;

(D) The applicant shall comply with other requirements as the board may prescribe;

(E) All activities undertaken with funds received shall comply with all applicable federal, state, and county statutes and ordinances;

(F) The applicant shall indemnify and save harmless the State of Hawaii and its officers, agents, and employees from and against any and all claims arising out of or resulting from activities carried out or projects undertaken with funds provided hereunder, and procure sufficient insurance to provide this indemnification if requested to do so by the department;

(G) The applicant shall make available to the board all records the applicant may have relating to the project, to allow the board to monitor the applicant's compliance with the purpose of this chapter; and

(H) The applicant, to the satisfaction of the board, shall establish that sufficient funds are available for the completion of the project for the purpose for which the grant is awarded; and

(2) A venture capital program. The board shall adopt rules pursuant to chapter 91 to provide conditions and qualifications for venture capital investments in eligible Hawaii projects. The program may include a written agreement between the borrower and the board, as the representative of the State, that as consideration for the venture capital investment made under this part, the borrower shall share any royalties, licenses, titles, rights, or any other monetary benefits that may accrue to the borrower pursuant to terms and conditions established by the board by rule pursuant to chapter 91. Venture capital investments may be made on such terms and conditions as the board shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of this part.]

department to provide for:

(1) A grant program to provide seed capital for creative intellectual property development projects for export, as determined by the department;

(2) Programs that expand the skills of the State's resident workforce in the creative industries; and

(3) Marketing programs that attract business opportunities within the creative film and media industries in the State."

SECTION 6. Section 201-114, Hawaii Revised Statutes, is repealed.

["[201-114] Inspection of premises and records. The board shall have the right to inspect, at reasonable hours, the plant, physical facilities, equipment, premises, books, and records of any applicant in connection with the processing of a grant to the applicant."]

SECTION 7. Notwithstanding the renaming of the creative industries division as the office of creative film and media industries Hawaii as provided in this Act, the office of creative film and media industries Hawaii shall continue to be maintained without any reduction in staffing or funding, and all officers and employees of the office shall continue to perform their functions and duties under this Act.

SECTION 8. All rights, powers, functions, and duties of the Hawaii film office of the creative industries division are transferred to the office of creative film and media industries Hawaii.

All employees who occupy civil service positions and whose functions are transferred to the office of creative film and media industries Hawaii by this Act shall retain their civil service status, whether permanent or temporary. Employees shall be transferred without loss of salary, seniority (except as prescribed by applicable collective bargaining agreements), retention points, prior service credit, any vacation and sick leave credits previously earned, and other rights, benefits, and privileges, in accordance with state personnel laws and this Act; provided that the employees possess the minimum qualifications and public employment requirements for the class or position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

Any employee who, prior to this Act, is exempt from civil service and is transferred as a consequence of this Act may retain the employee's exempt status, but shall not be appointed to a civil service position as a consequence of this Act. An exempt employee who is transferred by this Act shall not suffer any loss of prior service credit, vacation or sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act; provided that the employees possess legal and public employment requirements for the position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable employment and compensation laws. The chief officer of the office of creative film and media industries Hawaii may prescribe the duties and qualifications of these employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.

SECTION 9. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii film office relating to the functions transferred to the office of creative film and media industries Hawaii shall be transferred with the functions to which they relate.

SECTION 10. 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 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021 for the establishment of the following positions within the office of creative film and media industries Hawaii:

(1)       full-time equivalent (      FTE) administrative officer position;

(2)       full-time equivalent (      FTE) accountant V position;

(3)       full-time equivalent (      FTE) film industry development specialist IV position; and

(4)       full-time equivalent (      FTE) general professional VI position for infrastructure, creative ecosystems, and workforce development,

exempt from chapters 76 and 89, Hawaii Revised Statutes, and for other expenses related to these positions.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 11. 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 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021, to be expended by the department of business, economic development, and tourism as follows:

(1) $         to support creative media laboratory programs on neighbor islands; and

(2) $         for website development for the office of creative film and media industries Hawaii.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 12. 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 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021, for equipment and staffing for creative media co-working sites on multiple islands statewide.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

PART II

SECTION 13. There is established a State of Hawaii office of the business development and support division in Guangzhou, Guangdong, China to promote trade in Hawaii, to be administratively placed under the department of business, economic development, and tourism.

SECTION 14. There is appropriated out of the general revenues of the State of Hawaii the sum of $200,000 or so much thereof as may be necessary for fiscal year 2019-2020 to establish a State of Hawaii office of the business development and support division in Guangzhou, Guangdong, China to promote trade in Hawaii pursuant to this part.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this part.

PART III

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect on July 1, 2112.



 

Report Title:

DBEDT; Office of Creative Film and Media Industries Hawaii; Creative Film and Media Development Special Fund; Business Development and Support Division; Appropriation

 

Description:

Establishes the Office of Creative Film and Media Industries Hawaii and provides that the Hawaii Film Office and Arts and Culture Development Branch shall be agencies of the Office. Requires Hawaii Film Office employees to be transferred to the Office without any consequence to employment benefits or status. Renames the Hawaii Television and Film Development Special Fund as the Creative Film and Media Development Special Fund and expands the funding sources and uses of the Fund. Establishes and appropriates funds for staffing within the Office. Appropriates funds for operations and programs. Establishes and appropriates funds for a State of Hawaii Office of the Business Development and Support Division in Guangzhou, Guangdong, China. (SB989 HD1)

 

 

 

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