Bill Text: HI SB1293 | 2016 | Regular Session | Introduced

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Bill Title: Agricultural Lands; Tax; Agribusiness Development Corporation

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced - Dead) 2016-01-21 - Re-Referred to WLA/EET, WAM. [SB1293 Detail]

Download: Hawaii-2016-SB1293-Introduced.html

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THE SENATE	S.B. NO.	1293
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII

A BILL FOR AN ACT

 

 

Relating to Agriculture.

 

 

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

 

     SECTION 1.  The legislature finds that the State must meet its constitutional mandate of conserving agricultural lands.  Article XI, section 3, of the Constitution of the State of Hawaii outlines the State's responsibilities to conserve and protect agricultural lands.  It also charges the State with the responsibility of promoting diversified agriculture, increasing agricultural self-sufficiency, and assuring the availability of agriculturally suitable lands.  The State established the agribusiness development corporation in 1994, and tasked it with a top priority of transitioning Hawaii's agriculture industry from a dominance of sugar and pineapple to a greater diversity of crops. 

     Hawaii's environmental response, energy, and food security tax provides a funding source for energy and food security initiatives.  Of the $1.05 per barrel tax on petroleum products other than aviation fuel only 45 cents are allocated to supporting environmental response, energy, and food security.  The remaining 60 cents are deposited in the general fund.

     The purpose of this Act is to align the environmental response, energy, and food security tax with its original intent by reallocating a portion of the tax from the general fund to the agribusiness development corporation to fund additional positions within the corporation and to fund the purchase of agricultural land.

     SECTION 2.  Section 243-3.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In addition to any other taxes provided by law, subject to the exemptions set forth in section 243-7, there is hereby imposed a state environmental response, energy, and food security tax on each barrel or fractional part of a barrel of petroleum product sold by a distributor to any retail dealer or end user of petroleum product, other than a refiner.  The tax shall be $1.05 on each barrel or fractional part of a barrel of petroleum product that is not aviation fuel; provided that of the tax collected pursuant to this subsection:

     (1)  5 cents of the tax on each barrel shall be deposited into the environmental response revolving fund established under section 128D-2;

     (2)  15 cents of the tax on each barrel shall be deposited into the energy security special fund established under section 201-12.8;

     (3)  10 cents of the tax on each barrel shall be deposited into the energy systems development special fund established under section [[]304A-2169.1[]]; [and]

     (4)  15 cents of the tax on each barrel shall be deposited into the agricultural development and food security special fund established under section 141-10[.]; and

     (5)        cents of the tax on each barrel shall be deposited into the Hawaii agricultural development revolving fund established under section 163D-17.

     The tax imposed by this subsection shall be paid by the distributor of the petroleum product."

     SECTION 3.  Section 163D-17, Hawaii Revised Statutes, is amended to read as follows:

     "§163D-17  Hawaii agricultural development revolving fund; established; use of corporation funds.  (a)  There is established the Hawaii agricultural development revolving fund, to which shall be credited any state appropriations to the fund or other moneys made available to the fund, to be expended as directed by the corporation.

     (b)  The corporation shall hold the fund in an account or accounts separate from other funds.  The corporation shall invest and reinvest the fund and the income thereof to:

     (1)  Purchase qualified securities issued by enterprises for the purpose of raising seed capital; provided that the investment shall comply with the requirements of this chapter;

     (2)  Make grants, loans, and provide other monetary forms of assistance necessary to carry out the purposes of this chapter; and

     (3)  Purchase securities as may be lawful investments for fiduciaries in the State.

     All appropriations, grants, contractual reimbursements, and other funds not designated for this purpose may be used to pay for the proper general expenses and to carry out the purposes of the corporation.

     (c)  Any moneys deposited into the fund pursuant to section 243-3.5 shall be expended at the sole discretion of the executive director for the following purposes:

     (1)  To fund the position of project manager;

     (2)  To fund the position of property manager; and

     (3)  To acquire agricultural lands.

     [(c)] (d)  The corporation shall purchase qualified securities issued by an enterprise only after:

     (1)  Receiving:

         (A)  An application from the enterprise containing a business plan, which is consistent with the business and agricultural development plan, including a description of the enterprise and its management, product, and market;

         (B)  A statement of the amount, timing, and projected use of the capital required;

         (C)  A statement of the potential economic impact of the enterprise, including the number, location, and types of jobs expected to be created; and

         (D)  Any other information as the corporation shall require;

     (2)  Determining, based upon the application submitted, that:

         (A)  The proceeds of the investment will be used only to cover the seed capital needs of the enterprise, except as authorized in this section;

         (B)  The enterprise has a reasonable chance of success;

         (C)  The enterprise has the reasonable potential to create employment within the State and offers employment opportunities to residents;

         (D)  The coordinating entrepreneur and other founders of the enterprise have already made or are prepared to make a substantial financial and time commitment to the enterprise;

         (E)  The securities to be purchased are qualified securities;

         (F)  There is reasonable possibility that the corporation will recoup at least its initial investment; and

         (G)  Binding commitments have been made to the corporation by the enterprise for adequate reporting of financial data to the corporation, which shall include a requirement for an annual or other periodic audit of the books of the enterprise, and for control by the corporation that it considers prudent over the management of the enterprise, in order to protect the investment of the corporation, including membership on the board of directors of the enterprise, ownership of voting stock, input in management decisions, and the right of access to the financial and other records of the enterprise; and

     (3)  Entering into a binding agreement with the enterprise concerning the manner of payback by the enterprise of the funds advanced, granted, loaned, or received from the corporation.  The manner of payback may include the payment of dividends, returns from the public sale of corporate securities or products, royalties, and other methods of payback acceptable to the corporation.  In determining the manner of payback the corporation shall establish a rate of return or rate of interest to be paid on any investment, loan, or grant of corporation funds under this section.

     [(d)] (e)  If the corporation makes a direct investment, it shall also find that a reasonable effort has been made to find a professional investor to make an investment in the enterprise as a coventure, and that the effort was unsuccessful.  The findings, when made by the corporation, shall be conclusive.

     [(e)] (f)  The corporation shall not make investments in qualified securities issued by an enterprise in excess of the following limits:

     (1)  Not more than $500,000 shall be invested in the securities of any one enterprise, except that more than a total of $500,000 may be invested in the securities of any one enterprise, if the corporation finds, after its initial investment, that additional investments in that enterprise are required to protect the initial investment of the corporation, and the other findings set forth in subsections (d) and (e) are made as to the additional investment;

     (2)  The corporation shall not own securities representing more than forty-nine per cent of the voting stock of any one enterprise at the time of purchase by the corporation after giving effect to the conversion of all outstanding convertible securities of the enterprise, except that in the event of severe financial difficulty of the enterprise, threatening the investment of the corporation in the enterprise, a greater percentage of those securities may be owned by the corporation; and

     (3)  Not more than fifty per cent of the assets of the corporation shall be invested in direct investments at any time.

     [(f)] (g)  No investment, loan, grant, or use of corporate funds for the purposes of this chapter shall be subject to chapter 42F."

     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, 2015.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Agricultural Lands; Tax; Agribusiness Development Corporation

 

Description:

Amends the environmental response, energy, and food security tax to allocate a greater portion of the proceeds toward agricultural diversification activities.  Directs funds deposited into the Hawaii agricultural development revolving fund through the environmental response, energy, and food security tax to be expended to fund positions within the corporation and to acquire agricultural land.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.