Bill Text: HI HB590 | 2017 | Regular Session | Amended

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Bill Title: Relating To The Creative Media Industry.

Spectrum: Partisan Bill (Democrat 12-0)

Status: (Engrossed - Dead) 2017-03-24 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. [HB590 Detail]

Download: Hawaii-2017-HB590-Amended.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	590
TWENTY-NINTH LEGISLATURE, 2017		H.D. 1
STATE OF HAWAII		S.D. 1

A BILL FOR AN ACT

 

 

RELATING TO THE CREATIVE MEDIA INDUSTRY.

 

 

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

 

     SECTION 1.  The purpose of this Act is to:

     (1)  Establish a statewide creative industries advisory group within the department of business, economic development, and tourism to support the development of the creative and media industries;

     (2)  Repeal the Hawaii television and film development board, which has been inactive for about ten years, along with the grant and venture capital programs that were implemented by the board;

     (3)  Rename the Hawaii television and film development special fund as the creative media and film infrastructure special fund;

     (4)  Broaden the sources of revenue for the creative media and film infrastructure special fund;

     (5)  Amend the purposes for which the creative media and film infrastructure special fund may be used, in order to enable the department of business, economic development, and tourism to fulfill its statutory and business development duties regarding the creative industries, film and media programs; and

     (6)  Exempt certain amounts received related to improvements to and operations of the Hawaii film studio from the general excise tax and the use of certain items for the Hawaii film studio from the use tax.

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

     "§201-    Hawaii creative industries advisory group; establishment.  (a)  There is established the Hawaii creative industries advisory group, which shall be placed within the department for administrative purposes only.

     (b)  The Hawaii creative industries advisory group shall be composed of thirteen members appointed by the director of business, economic development, and tourism.  The members shall include:

     (1)  The administrator of the department's creative industries division;

     (2)  The branch chiefs of the Hawaii film office and the arts and culture development branch;

     (3)  The county film commissioners representing the counties of Maui, Kauai, Honolulu, and Hawaii, or their designated representatives, who shall serve as ex officio voting members;

     (4)  A representative from a labor organization whose members provide services to the film industry;

     (5)  A representative from a labor organization whose members provide services to the music industry;

     (6)  Two members from the University of Hawaii career and technical education center and academy for creative media program; and

     (7)  Two members selected from the community on the basis of their knowledge and experience in the creative and media industries.

     (c)  The director shall serve as chairperson of the Hawaii creative industries advisory group, and all members shall serve without compensation.

     §201-    Powers and duties.  The Hawaii creative industries advisory group shall:

     (1)  Recommend programs and initiatives for creative and media industry development;

     (2)  Recommend programs which expand the skill sets of Hawaii's resident workforce, above and below the line, in the creative and media industries; and

     (3)  Recommend infrastructure development and expansion to support the creative and media industries in Hawaii.

     The advisory group shall be exempt from section 26-34 and chapter 92."

     SECTION 3.  Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§237-    Exemption of certain amounts related to the Hawaii film studio.  (a)  This chapter shall not apply to amounts received for:

     (1)  Making improvements to the Hawaii film studio under a financing agreement pursuant to chapter 37D; or

     (2)  Operations of the Hawaii film studio.

Application for the exemption provided by this section shall first be made to the department of business, economic development, and tourism.  The taxpayer shall provide the taxpayer's name, general excise tax license number, and the amounts received for making improvements to or operations of the Hawaii film studio to the department of business, economic development, and tourism, which shall certify the total amount of the exemption for each taxable year.  Upon each determination, the department of business, economic development, and tourism shall issue a certificate to the taxpayer verifying the amount of improvements to or operations of the Hawaii film studio and the exemption amount certified for each taxable year.  The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation."

     SECTION 4.  Chapter 201, Hawaii Revised Statutes, is amended by amending the title of part IX to read as follows:

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

     SECTION 5.  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.

     "Fund" means the Hawaii television and film 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.]

     "Creative media" includes film, motion pictures, television, and digital media as defined in section 235-17.

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

     "Improvements" mean any repair or maintenance related to the Hawaii film studio."

     SECTION 6.  Section 201-113, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§201-113[]  Hawaii television] Creative media and film [development] infrastructure special fund.  (a)  There is established in the state treasury the [Hawaii television] creative media and film [development] infrastructure 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)  All revenues, fees, and charges from the rental and operation of the Hawaii film studio;

     (5)  All revenues, fees, and charges from the processing of film permits pursuant to section 201-14; 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.

     (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)  Operations, repair, and maintenance of the Hawaii film studio;

     (2)  Support for the operations of the department's film industry branch;

     (3)  Programs and initiatives for creative media industry development; and

     (4)  Programs that expand the skill sets of Hawaii's resident workforce in the creative media and film industries."

     SECTION 7.  Section 235-17, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

     "(f)  To receive the tax credit, the taxpayer shall first prequalify the production for the credit by registering with the department of business, economic development, and tourism and paying a processing fee established by the department during the development or preproduction stage.  Failure to comply with this provision may constitute a waiver of the right to claim the credit."

     SECTION 8.  Section 238-1, Hawaii Revised Statutes, is amended by amending the definition of "use" to read as follows:

     ""Use" (and any nounal, verbal, adjectival, adverbial, and other equivalent form of the term) herein used interchangeably means any use, whether the use is of such nature as to cause the property, services, or contracting to be appreciably consumed or not, or the keeping of the property or services for such use or for sale, the exercise of any right or power over tangible or intangible personal property incident to the ownership of that property, and shall include control over tangible or intangible property by a seller who is licensed or who should be licensed under chapter 237, who directs the importation of the property into the State for sale and delivery to a purchaser in the State, liability and free on board (FOB) to the contrary notwithstanding, regardless of where title passes, but the term "use" shall not include:

     (1)  Temporary use of property, not of a perishable or quickly consumable nature, where the property is imported into the State for temporary use (not sale) therein by the person importing the same and is not intended to be, and is not, kept permanently in the State.  For example, without limiting the generality of the foregoing language:

         (A)  In the case of a contractor importing permanent equipment for the performance of a construction contract, with intent to remove, and who does remove, the equipment out of the State upon completing the contract;

         (B)  In the case of moving picture films imported for use in theaters in the State with intent or under contract to transport the same out of the State after completion of such use; and

         (C)  In the case of a transient visitor importing an automobile or other belongings into the State to be used by the transient visitor while therein but which are to be used and are removed upon the transient visitor's departure from the State;

     (2)  Use by the taxpayer of property acquired by the taxpayer solely by way of gift;

     (3)  Use which is limited to the receipt of articles and the return thereof, to the person from whom acquired, immediately or within a reasonable time either after temporary trial or without trial;

     (4)  Use of goods imported into the State by the owner of a vessel or vessels engaged in interstate or foreign commerce and held for and used only as ship stores for the vessels;

     (5)  The use or keeping for use of household goods, personal effects, and private automobiles imported into the State for nonbusiness use by a person who:

         (A)  Acquired them in another state, territory, district, or country;

         (B)  At the time of the acquisition was a bona fide resident of another state, territory, district, or country;

         (C)  Acquired the property for use outside the State; and

         (D)  Made actual and substantial use thereof outside this State;

          provided that as to an article acquired less than three months prior to the time of its importation into the State, it shall be presumed, until and unless clearly proved to the contrary, that it was acquired for use in the State and that its use outside the State was not actual and substantial;

     (6)  The leasing or renting of any aircraft or the keeping of any aircraft solely for leasing or renting to lessees or renters using the aircraft for commercial transportation of passengers and goods or the acquisition or importation of any such aircraft or aircraft engines by any lessee or renter engaged in interstate air transportation.  For purposes of this paragraph, "leasing" includes all forms of lease, regardless of whether the lease is an operating lease or financing lease.  The definition of "interstate air transportation" is the same as in 49 U.S.C. 40102;

     (7)  The use of oceangoing vehicles for passenger or passenger and goods transportation, from one point to another within the State, as a public utility as defined in chapter 269;

     (8)  The use of material, parts, or tools that are imported or purchased by a person licensed under chapter 237 [which] and are used for aircraft service and maintenance[,] or the construction of an aircraft service and maintenance facility as those terms are defined in section 237‑24.9;

     (9)  The use of services or contracting imported for resale where the contracting or services are for resale, consumption, or use outside the State pursuant to section 237-29.53(a); [and]

    (10)  The use of property, services, or contracting imported by foreign diplomats and consular officials who are holding cards issued or authorized by the United States Department of State granting them an exemption from state taxes[.]; and

    (11)  The use of material, parts, or tools that are imported or purchased by a person licensed under chapter 237 and are used for improvements to the Hawaii film studio under a financing agreement pursuant to chapter 37D or operations of the Hawaii film studio; provided that application for the exemption provided by this section shall first be made to the department of business, economic development, and tourism.  The taxpayer shall provide the taxpayer's name, general excise tax license number, and the amounts of the material, parts, or tools used for improvements to or operations of the Hawaii film studio to the department of business, economic development, and tourism, which shall certify the total amount of the exemption for each taxable year.  Upon each determination, the department of business, economic development, and tourism shall issue a certificate to the taxpayer verifying the amount of improvements to or operations of the Hawaii film studio and the exemption amount certified for each taxable year.  The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation.

     With regard to purchases made and distributed under the authority of chapter 421, a cooperative association shall be deemed the user thereof."

     SECTION 9.  Section 201-112, Hawaii Revised Statutes, is repealed.

     ["[§201-112]  Hawaii television and film development board.  (a)  There is established the Hawaii television and film development board.  The board shall be attached to the department of business, economic development, and tourism for administrative purposes only.  The board shall administer the grant and venture capital investment programs and the Hawaii television and film development special fund established under this part.  The board shall also assess and consider the overall viability and development of the television and film industries and make recommendations to appropriate state or county agencies.

     (b)  The board shall be composed of nine members, four of whom shall be appointed by the governor pursuant to section 26-34, and all of whom shall serve four-year staggered terms.  One of the governor's appointments shall be made from a list of nominees submitted by the president of the senate and another appointment shall be made from a list of nominees submitted by the speaker of the house of representatives.  The four appointed members shall possess a current working knowledge of the film, television, or entertainment industry.  The director of business, economic development, and tourism, and the chairs of the four county film commissions or its equivalent, shall serve as ex officio voting members, who may be represented on the board by designees.

     The chairperson and vice chairperson of the board shall be selected by the board by majority vote.  Five members shall constitute a quorum, whose affirmative vote shall be necessary for all actions by the board.  The members shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

     (c)  The film industry branch development manager shall serve as the executive secretary of the board.

     (d)  The board may adopt rules pursuant to chapter 91 to effectuate the purposes of this part."]

     SECTION 10.  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 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 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 to be deposited into the creative media and film infrastructure special fund.

     SECTION 12.  There is appropriated out of the Hawaii television and film development special fund, renamed as the creative media and film infrastructure special fund pursuant to this Act, 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 the fund.

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

     SECTION 13.  Notwithstanding the establishment of the Hawaii creative industries advisory group as provided in this Act, the film industry branch within the department of business, economic development, and tourism and the creative industries division shall continue to be maintained without any reduction in staffing or funding, and all officers and employees in the branch shall continue to perform their functions and duties under this Act.

     SECTION 14.  The University of Hawaii and the department of business, economic development, and tourism shall collaborate to provide a report to the legislature, no later than twenty days prior to the convening of each regular session, providing evidence of financial or in-kind contributions to workforce development efforts of the University of Hawaii through its system-wide creative media programs and projects, in furtherance of the local film, television, and digital media industries.  The report shall also include:

     (1)  How funds are being spent on workforce development;

     (2)  Statistics on numbers of:

         (A)  Elementary and secondary students participating in creative media programs and projects affiliated with the University of Hawaii;

         (B)  Elementary and secondary students whose projects received state, national, or international creative media awards within the previous year; and

         (C)  Public and private schools and organizations participating in creative media programs and projects affiliated with the University of Hawaii;

     (3)  Numbers of graduates obtaining jobs in the film, television, and digital media industries in Hawaii and outside of Hawaii; and

     (4)  The numbers of new jobs created and dollar value of projects developed in Hawaii and outside of Hawaii as a result of the contributions.

     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, 2038; provided that the general excise tax and use tax exemptions established by this Act shall apply to taxable periods beginning after December 31, 2017.

 

Report Title:

Creative Media Industry; Creative Media and Film Infrastructure Special Fund; General Excise Tax; Use Tax; Appropriation

 

Description:

Establishes the Hawaii Creative Industries Advisory Group while retaining the Film Industry Branch and Creative Industries Division of DBEDT.  Repeals the Hawaii Television and Film Development Board along with the grant and venture capital programs that were implemented by the Board.  Renames the Hawaii Television and Film Development Special Fund as the Creative Media and Film Infrastructure Special Fund.  Expands funding sources for the Creative Media and Film Infrastructure Special Fund to support creative industries development within DBEDT.  Amends the purposes for which the Creative Media and Film Infrastructure Special Fund may be used.  Provides general excise and use tax exemptions for operations and improvements of the Hawaii Film Studio.  Requires the University of Hawaii and DBEDT to report to the legislature.  Makes an appropriation.  Effective 7/1/2038.  (SD1)

 

 

 

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