Hawaii-2019-HB1511-Amended

SECTION 1. The legislature finds that private for-profit start-up agricultural businesses encounter many impediments in acquiring financial assistance for infrastructure including fences, water delivery systems, access roads, equipment, and agriculture buildings.

The legislature further finds that the community-based economic development advisory council, within the department of business, economic development, and tourism, is best suited to evaluate the available means and barriers to obtain loans and grants to fund infrastructure projects for private for-profit start-up agricultural businesses. The department of business, economic development, and tourism works with federal agencies, counties, and other state agencies to assist in the development of agriculture in Hawaii.

According to the 2018 Community-Based Economic Development Program Annual Report, the community business economic development revolving fund program continued its partnership with the department of agriculture’s micro-loan fund program. In addition, in fiscal year 2018, the community-based economic development technical and financial assistance program provided business training and informational workshops that assisted many community-based organizations, cooperatives, and small businesses, including the co-sponsorship of the annual Hawaii small business fair, sponsorship of the native Hawaiian small business resources fair held in conjunction with the council for native Hawaiian advancement's annual convention, and other outreach initiatives on all the major islands.

The legislature further finds that because start-ups are not established businesses with a financial track record, access to funds for infrastructure projects poses a major impediment to their development and economic growth.

The legislature further finds that it is time to evaluate how the State of Hawaii can assist private for-profit start-up agricultural businesses in funding their infrastructure projects.

The purpose of this Act is to direct the community-based economic development advisory council to evaluate the available means and barriers to accessing funding sources by private for-profit start-up agricultural businesses to finance their infrastructure projects.

SECTION 2. (a) The community-based economic development advisory council shall retain professional research and analysis services to evaluate the means and barriers to accessing funding sources by private for-profit start-up agricultural businesses to finance their infrastructure projects. The council shall have oversight over the evaluation process.

(b) The evaluation shall include:

(1) An analysis by the community-based economic development advisory council of the definitions of "small business" in Hawaii according to the federal Small Business Administration, Hawaii Revised Statutes, and county ordinances, and the impact of these definitions, if any, on the acquisition of funds for infrastructure projects;

(2) An analysis of the current requirements and qualifications, and their impact, for loans and grants to private for-profit start-up agricultural businesses for the purpose of financing infrastructure projects;

(3) An analysis of current incentives for lenders, such as tax credits, and of potential economically feasible incentives including a tax credit that:

(A) May be transferred or sold;

(B) May be awarded to a private, for-profit, startup agricultural business organized as any form of business entity;

(C) Shall be available only to a taxpayer practicing farming and not to a taxpayer that is an owner of real property that does not itself practice farming;

(D) Considers the size of the farming operation based on annual revenues, property size, intensity of farming activity, and other relevant characteristics; and

(E) Includes a certification process and technical requirements to determine whether a taxpayer practices farming;

(4) Research on the inequalities in the allocation of available funds, such as urban farming versus rural farming. The research shall also include an assessment of the effectiveness and relevancy of specifying agricultural competence as a condition to qualify for infrastructure financing;

(5) Critical policy language that recognizes and acknowledges the situation encountered by private for-profit start-up agricultural businesses in financing infrastructure projects; and

(6) Any other matters relevant to the purposes of this Act.

(c) For purposes of this Act, "infrastructure" means agriculturally related fences, water delivery systems, access roads, equipment, and buildings. "Infrastructure" shall not include housing or the purchasing or leasing of land.

SECTION 3. The community-based economic development advisory council shall report its findings and recommendations, including any proposed legislation, based on the evaluation conducted by the professional research and analysis services retained by the council, to the legislature. A preliminary report on the progress of the evaluation shall be submitted to the legislature no later than thirty days prior to the convening of the regular session of 2020 and a final report shall be submitted by June 30, 2020.

SECTION 4. 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 for professional research and analysis services to perform the evaluation pursuant to section 2 of this Act.

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

SECTION 5. This Act shall take effect on July 1, 2150.

HOUSE OF REPRESENTATIVES	H.B. NO.	1511
THIRTIETH LEGISLATURE, 2019		H.D. 2
STATE OF HAWAII