Senate Standing Committee on Housing

Good afternoon. It's 01:04PM, and welcome to the time slot of the economic development and tourism committee. There are gonna be several agendas today, but the first one is gonna be the 1PM agenda of the Committee on Housing and jointly with the Committee on Economic Development and tourism. I'd like to welcome our Members, Senator Fevella and Senator Rhoads. Welcome to the Economic Development and Tourism Committee.

Thank you. Senator DeCoite. Thank you, Chair.

We also have Vice Chair Hashimoto.

We have one bill on this agenda today. It's HB 916 HD1 relating to the low income housing tax credit, which allows tax credits claimed under the state loan from housing tax credit program to be used to offset taxes imposed

by the state transient accommodations tax law. Specifies that tax credit amounts applied to state transient accommodations taxes will be limited to state transient accommodation taxes imposed in the same county in which the qualified loan building is located and makes permanent act 129 SLH 2016. First testifier is HHFDC in support.

Good afternoon, Chair, Vice Chair, Members, and Members of the Federal Government.

Thank you. Hawaii Department of Taxation with comments. Thank you. Tax Foundation of Hawaii with comments.

Not present on Zoom, Chair.

And Mark Development Inc in support. Is there anyone else wishing to testify on HB 916?

Sorry, Chair. We do have a latecomer, mister Tom Yamachika on Zoom.

Okay.

Go ahead, Tom.

Well, I'm up already. Okay. Thank you, Chairs, Vice Chairs, Members of the committees. Tom Yamachika from Tax Foundation. We think that this bill, if enacted, would create all kinds of operational difficulties as for the described in our testimony.

Happy to answer any questions. Thank you.

Thank you very much. Anyone else wishing to testify on HB 916? If not, any questions or discussion numbers?

Actually, I go I go on for Tom. Tom. IT, can you bring Tom back on?

I'm here. Thank you very much.

Tom, what is the estimated revenue loss to the state of the bill passed?

I have no idea, Chair.

Our foundation doesn't have the experience to estimate revenue loss. I believe DOTAX does.

Okay. Or maybe you should check the seat?

Yeah. You should you can yeah.

It's so I'm based on my knowledge, I think it's about 20 to $40,000,000 a year that this tax credit cost the state, and then this wouldn't expand it. It would just yeah.

Thanks. Thanks, Tom.

Okay. Are we ready to go into decision making now?

Yeah.

Okay. Alright.

So we're ready to go into decision making. Having conferred, the chair's recommendation will be to pass this measure with amendments. We acknowledge that this is a is a work in progress. So we'll take the DOTAX amendment to apply this act to taxable years beginning after 12/31/2027 to provide sufficient time to make the sufficient necessary form, instruction, and system changes to expand the use of the low income housing tax credit.

And will further amend by inserting language, notwithstanding any provision of law to the contrary, including section two thirty seven dash 41.5 hours.

The tax credits utilized to offset transient accommodation taxes under this act shall not be subject to personal liability for key individuals as described in section two thirty seven dash 41.5, HRS, and shall be deemed fully compliant if applied in accordance with the provisions of this act. Further, we'll note in the committee report that DOTAX concerns about administrative verification and tracking challenges. We'll note the consumer protection issue that consumers will be paying the TAT, but the accommodation owners will be the ones receiving the tax credit.

We'll also note that the state received 60¢on the dollar for this tax credit, and it would be more fiscally efficient to replace the tax credit with a direct appropriation. And further note suggestions and testimony for alternatives to this concept like making the credit refundable.

Members, any discussion? Okay. Seeing none for HB 916 HD one, chair's recommendation is to pass with amendments, chair votes aye.

Members, Chair's recommendation is to pass HB 916 with amendments. [Roll Call] Chair recommendations adopted.

Thank you so much.

Thank you. Community of economic development and tourism, same request. Members, any discussion? Seeing none, Vice Chair Wakai for the vote. Chair goes Aye.

[Roll Call] Chair, your recommendation is adopted.

Thank you. And with that, we are adjourned.

Hello, and welcome to a joint hearing with the Senate Committee, Economic Development, Tourism and Indian Intergovernmental Affairs. Today is Tuesday, 03/24/2026, and this is our 01:01 P.M. Agenda. We are in conference room 229 . This hearing is being streamed live on YouTube. Joining me is, Chair Glenn Wakai. Sorry, I have a bad word.

Is Len Wakai and his committee members. We have a one minute time limit for all testifiers as we have various agendas to get through this afternoon. This agenda has only one bill, HB 2423 HD3 relating to biodiesel. First up on the testifiers list, we have the state energy office.

Aloha Chairs, Vice Chairs. Munashe Chando for the Hawaii State Energy Office, and we stand on our written testimony providing comments to HB 2423 HD3. I'll be here if you have any questions. Thank you. Thank you.

Next up, Robert King, Founder and President of Pacific Biodiesel Technologies.

Thanks, Chair and Chair. This bills gives a bio diesel a a set amount to to function with every year, which is really important to keep a position of the the plant going steady. Do you want to report where the least expensive diesel fuel in the state of Hawaii this week? As at 100% biodiesel.

If I only recommend that we take away the requirements for DBEDT to do a survey at this 5% level. 5% is in fact, d 975 diesel fuel. It's been allowed for a long time. I would guess that today in The U.S every gallon of diesel fuel is B five because it's cheaper and they'll put in the cheapest blend stock they can.

So which is it's actually an excellent blend stock as well. So, remove Section three and everything else would be awesome. Thank you.

Thank you. Next up, Carla Cool, testifying for Hawaii Island Chamber of Commerce in support. Tina Yamaki, Hawaii Transportation Association also in support. Johnny May Perry in support. And Glenn Kagamita, in support.

Anyone else wishing to testify on this measure? Seeing no members, any questions? Yes. Senator Fevella.

Excuse me. What do you want again? Any off road highway vehicles?

No. This as written, this is only on highway vehicles.

Then I guess the other concern would be, you know, construction and trucking industries are worrying that later on, this is gonna be a grand that later on, they're gonna feel it at the pump. Is that a possibility? Or or it's gonna go it go hours or it's gonna be

It it's we've been pretty steady, So it's just about the same all the time, unlike diesel where it goes up and down. So one thing that does give them is that at least a little bit of it is gonna be the same price, and then they know how to bid their jobs. Right.

So then again, if we're gonna do this biodiesel, do we have enough, I guess, product for doing this or to be importing majority of the biodiesel?

No. We we have a capacity of 6,000,000 gallons a year on a big island, Hilo. And last year, we only made 4,000,000 because we had we just didn't have customers for it. So 2,200,000 is what this is gonna be. So it's right in our wheelhouse to get the plant to full production.

All of this field will be made in the state of Hawaii.

So I mean, sir, the local for the production, we don't have enough to be able to continue to make the biodiesel with our import?

No. No imports needed for this.

Okay. Yeah. Alright. Thank you, Chair.

Senator Kim.

How will compliance be monitored and enforced across distributors distributors?

I guess it'd be up to the to the that the the department that's regulating the fuel now. It's really as far as the blend amount goes, what we've done what other states have done and what what we've done in other states is that you just you just ask here's how much diesel fuel they sold. Here's how much biodiesel they purchased to put in there. It there's nothing more to do than that. It's super simple.

They do have to put put you know where where they got their fuel anyway. So, it's it's the accounting for it is super easy. You can test the fuel to see if it's got 5% in it, but, for us, it really doesn't matter if it's 5%, 7%, 4% as long as the overall it's 5% and the engines don't carry there.

Now you have a problem now with with testing whether premium regular. I mean, I know there's people who have complained about the fact that, some of the companies are selling selling fuel with a higher octane. Yet if if you go and you measure it and they measure it, it doesn't match up and there's not a lot of enforcement going on. So I'm not sure if this also would be part of that whole argument that is viewing.

Yeah. I think I think this is unlike that. It's how they make the fuel. In this case, it's just the quantity of biodiesel to fossil diesel. So it's I think it's much much, much simpler to.

How does this help the consumer and help the economy? I know it helps you guys. But how does it help the general pub;ic?

So in a case like this week, it's it's at least 5% of that fuel. It's the same price it was all year, so nothing changed. But it also this all this money stays in the community. This is agriculture. This is jobs.

We have a 100 employees doing this. It's waste disposal. We're collecting all the cooking oil to make this out of. There's so many aspects of this that are good for the community. The cost to a trucking company for 5% even if it varies a bit, over diesel because diesel is going up and down.

It's just 5% It's not like 50 or 100% that would become a real economic impact at certain times. So all the money stays in the community. It's jobs in the community, and it's waste waste reduction and agriculture.

As far as the fuel itself concerned, how does that?

The fuel is actually excellent for engines. It's it's got much more lubricity than, than ultra low sulfur diesel. When ultra low sulfur diesel came out originally, way back ten years ago, in Oregon, we were selling biodiesel to the rack as the lube additive for their ultra low sulfur. It's it's very good for the engine. These new high pressure engines, so the engines last longer on on the b five.

And the cost per gallon is gonna be?

Cheaper today.

Okay. Thank you.

Maybe last week, it was, you know, in 3or 4¢more significantly cheaper today.

Some thought. So the same cost would apply if we were still using for off road?

Yeah. If if we wanted to go to off road, it would be that.

You get capacity for off road?

Right now, if we do the b five on road, that that'll that's the we all the rest of our deal mostly is sold off road to the utility for power generation.

K.

So we're doing both already. The off road, we have kinda handled under, PUC fuel things. So the on road is where we'd like to, walk into. Yeah.

Okay. So there is no mandate for this 5% blend. Do you have any market for your biodiesel fuel?

It it'll go on and off.

So Reflection.

This this week, we'll have a lot of market for it, but then, you know, we're a little we're a little business. We can't just turn turn it on and off. It's we gotta keep our employees going all year long.

Okay. Thank you. Senator Wakai.

So, Ken, you know, I was here twenty years ago when lawmakers were sold snake oil. At that time, it was called ethanol. It was we were told, like, this is gonna save sugar. Sugar is gone. We were told that we would have all kinds of processing plants, got tax credits for it.

Nothing nothing materialized. It was so embarrassing. We had to, like, repeal the entire ethanol mandate. How's your approach any different from from that embarrassing effort?

Yeah. I saw a lot of danger in that one back when when that was put in. It's a much different mix with ethanol and gasoline than it is with biodiesel and diesel. And I'm a mechanic. That's my background.

So I understand that this to the engine. This looks like just really nice diesel fuel. Ethanol looked way different than gasoline to the engine And boat fuel tanks and things like that. So, even up to be 20 is used in a lot of states. Summertime mandate be 20 all lots of places, and they don't have any problems with it whatsoever.

So we've got a lot we've had a thirty year experience of using biodiesel in Hawaii, and the B five is really transparent. There's no there's there's no operational issues of any kind with B five. So it's it's a much different animal than and I appreciate that, and it it yeah. It's a it's a hard one to work on.

That would be that ethanol piece. Yeah.

Yeah. Ethanol was a disaster for the state. And so you mentioned how going back to the pricing of your fuel because a barrel of oil is well north of a $120 today that your these biodiesel will provide stability. But, you know, after the Iran War is Powell and then we go back to recalibrate where oil is, your your additive is actually more expensive than a than a barrel oil at $60 to $80 a barrel. Yeah.

I'm not sure where it crosses over at, but it's it is a little bit more expensive. Yes. Again, it's for the state for the because when 85% of what we when you buy a biodiesel, about 85¢on the dollar stays in the state of Hawaii. And with the petroleum, it's the opposite. So it's still circulating in our economy.

And if we get into agriculture, we are getting into agriculture. It's not a it's not a maybe. We are. And and then it's more jobs and it's more food because the meal and the co products that come out of that is actual food. So there's lots of good things that not besides just the energy portion with biodiesel.

Right. But the people on the big right. The big island is where you

sell your biodiesel. Sell it throughout the state. Yeah.

Okay. But right now, the public has a choice to go with your biodiesel or to fill up with whatever is at the gas station. This doesn't give them a choice. This says you will buy this, and you will pay x cents more per gallon.

Yeah. When we talk to the trucking the trucking industries who buys most of the diesel, not not consumers, but the trucking industry, and and they they they like the idea of biodiesel. They're very much like it compared to electric or hydrogen. But they wanted to be fair for everybody. So if one guy's running biodiesel at a, you know, a nickel more and his competitor is not, then he's at a competitive disadvantage when he fits markets.

If everybody has the same fuel, they're all good because now everybody's got the same price to to bid into that market with. And The industry is doing something positive for their environmental footprint. So it's just about fair for everybody to it's fair for everybody when I was, Mandy like this. I know mandate is a bad word too, but it's a blend requirement like this.

So I look at that as completely opposite. It's totally unfair that people don't have a choice. They they will be mandated to buy your more expensive fuel. So leveling the landscape by saying, oh, everyone's gonna pay more. So now everything is even.

I think that's that I don't agree with that approach to trying to figure out how to get to a more biofuel consumption. It should be a choice. It should either make it cheaper, make it more plentiful or something, sell it on your own rather than asking government to help you sell your biofuels.

Well the bottom line though is that, and we've we've been in the business thirty years, and we've seen this with our the rest of our our companies on the Mainland. All the all the fossil fuel guys have to do is is lower the price for a year, Two years. And anybody that's not well funded is out of business. Then they jack it back up again. So I say we've been keeping the price of fossil fuel down because there's there's nationally an option.

It's almost 6,000,000,000 gallons a year of renewable diesel biodiesel. It's made in The US, and the oil companies have to look at that and go, maybe we ought to be just a little bit more careful with our pricing, because otherwise, they'll do a lot more of this. But the the game is tank the price for enough time that everybody goes out of business and then jack it back up to higher than it was before. That's what's happened.

So that's what we're trying to prevent is get just keep it a little bit.

This isn't a lot. This is a little bit. Let's keep the base alive here and so that we we have an option as a state of where we wanna go next.

Thank you. Thank you. Sure. With this whole the the reason why I have a little bit issue with this. I used to work for the city.

Yeah. They brought in these trucks that was gonna be better efficient, but they had to put this additive within the tank. Yeah?

Right.

And, they only could buy it from one distributor. You saw that they're cheap. After the contract ended, guess what? He was the only game in town. He jacked it up.

So what is the parameters that once we do this, that it's not gonna happen here? Because we all know in the fact that there's no competition. Yeah. There's no competition because we're mandating, like Senator was saying, that they wanna go buy your type of fuel. To have something like that is almost like having Spectrum or Hawaiian Electric.

Yeah. They're the only game in town. I think that's gonna be an issue for for my community, especially my community that are a lot of them is truckers. That's the voice that they concern. But, again, I've seen this because I was at the time with a refuse inspector.

I've seen this when they brought these trucks in, and I was laughing. Now, of course, nobody go listen to me. I'm a capital graduate. I know nothing. I'm not an engineer.

Guess what happened when the contract went in? Exactly what I told them what happened. Now city of course, because the city had deep pockets. Again, it's not the city. It's the taxpayers.

So, of course, they will continue to use these machines even though they know it's not feasible for the taxpayers' money and and for bank for the bucks. So how is this gonna be? Again, there's no parameters. There's no guarantee that we're gonna be in a predicament that we are when we bought the ugly trucks and brought them in and getting ripped off from these guys.

And right up to this day, the guy is the only one have that additive for that for the trucks to run-in in, Hawaii, unless they're gonna change the whole fleet.

That's the issue I have. So how are we gonna guarantee that that's gonna happen for our trucking industry? On my side of the island, the West Side, we have the we're the biggest. From Pearl City to Makaha, those guys are the ones that were seeing their concern that they're gonna get stopped at the pump being more high a few prices.

But we've been pretty fair on pricing for thirty days.

I understand you're giving us some

distance. If any if if we did get out of line let's say we did get out of line. There's a lot of fuel on the West Coast, biodiesel. And all of the majors bring stuff in from the West Coast, so they just have to bring it in from the West Coast.

They're

and and they will. They won't.

They don't. But the man these guys maybe go suspend the out outsourcing of biofuel. But then again, you see what what you're saying is that so now we're gonna go with you guys because it's local. You're providing farm jobs. You're providing all of these great things.

Great job. Now our locals will get but if we don't want off biofuel, we can bring them in. Are we doing that now with diesel?

Yeah. You are bringing diesel fuel.

Okay. So the concern that we have is, again, we're giving money to a lot of state. So then you're telling me if we don't wanna buy diesel, then we're gonna do the same thing that we're doing now.

Yeah. I I mean, that's a possibility.

And and the price could be different because it's gonna be more expensive because the biodiesel is is costly.

So my job is to keep keep our price competitive so they don't do that. So we keep running, keep using

our Understand. But how

long will

you think you're gonna be in a position in your industry?

Well, I don't know. We'll see.

Yeah. But that's what I'm saying.

But, you you know, you guys could still change.

No. No.

I'm I'm just saying this

is because of okay. You keep all the guarantees, keeping the prices down for the last thirty years. But when you're gone and Joe will come in and go say, you know

Yeah. Let's do it. And and the petroleum companies, did they guarantee you they'd keep their price low?

No. We're not we're not eliminating all playing field. You wanna eliminate, not you, but the bill eliminates any other oh, we have to buy your fuel. You have to buy biodiesel.

Bio diesel.

Not your fuel, but the biodiesel. That that is not leveling the playing field.

And then and then if there's not enough biodiesel, I think is this the one no. Yeah. I think this one says did it say does it say that it could also be renewable diesel if there's no biodiesel available? I yes. It does say you can have renewable diesel.

So now there's two players. There's if we can't provide biodiesel, then Parr can provide renewable diesel. Now there's two players in Hawaii. There's still renewable fuel. And there's there's just gonna be a little more expensive than mine, but it's there.

It's probably still cheaper than bringing it up from the Mainland.

Well, thank you, Chair. Appreciate it.

Thank you. So should we so I keep going on. So I guess my question is, so because renewable fuel is there, should we do the mandate for the 5% with renewable as well as biodiesel?

Yeah. If it's if it allows renewable diesel or biodiesel, then it will be renewable diesel because they're the petroleum company. That's

but that's that's the option. Yeah. So if

Now it says if biodiesel is not available, then they can jump in with that renewable diesel.

They can put renewable diesel in right now without anything because it's it is, in fact, t 975 diesel.

But but

Yeah. But this would make it at the 5%, like, mandate. Yeah. So I guess my question is, have you partnered up with other farmers to to grow fuel for bio biodiesel?

We're definitely trying to. We're showing everybody that wants to come look at our operation. This is what it is. And and I think there's I think they're finally starting to see that this is something that we could do at scale in Hawaii, you know, post sugar and

How much how much acreage do you need on another farmer? And what is the time for the harvest of your few?

So it's about a 120 days from planting to harvest. And as long as there's shared machinery in the area, you can grow it all the way down into, I don't know, 10 acres, 20 acres. Below that, it gets difficult.

So a small farm of 10 and 20 acres would be an ideal bumper crop?

It'd be a rotational crop for them. Yeah.

How much water you need for your crop?

Well, like, with the rain, none. But it'll take about 20 inches of of water

Plant to harvest.

For for the whole cycle. Yeah.

And then, I guess, my last question is, how much subsidies and grants have you received today to run the operation?

On the on the on the biodiesel side, not not very much, As far as grants. On the farming side, we got this whole farm operation that we're setting up in Kauai. We got, an appropriation for that to

just You have a number behind that approach?

It's about 9,000,000 that we've invested over there.

What about on the processing of the bio biodiesel?

The plant cost us about 20,000,000 to build, and that was no more than 1,000,000 of that was Correct. Was grants or or actually actually was an investment by the state of Hawaii, and they're still a partner in the plant. But the rest of it's all private capital.

So so to to the how much is the state invested income between that and tax credits?

Oh, I don't know. The tax credits. I know that when we claim when we earn tax credits, about a third of them are actually used, and the other actually used. And the other two thirds of our investors really don't have the tax liability to use the credits. So they they're there, but they don't they don't use them.

Okay. If there was any other questions, I'll shortly assist.

Hi. Returning back for decision making. HB 2423, HD three relating to biodiesel.

Recommendation is to pass with an SD1 by making this bill only apply to the Island Of Hawaii and re defecting the effective date to 07/01/3050. Members, any questions? Any discussions? Seeing none, Vice Chair Wakai for the vote. Chair goes Aye.

Roll Call] Chair, your recommendation is adopted.

Oh, sorry. I forgot. Oh, yeah. Okay. Same recommendation for Members of ERG. Any discussion? If not, Senator DeCoite, I vote yes.

[Roll Call] Thank you. Chair recommendation is adopted.

Thank you.

And with that, we are adjourned. Hello, and welcome to hearing with Senate coming in economic economic development tourism. This is our 1:04PM agenda. We have a one minute time limit for all testifiers. This agenda has three bills.

First up is Senate Bill 2429 relating to tax expenditure evaluation. First up on the testifiers list, we have an initiative, Georgia Skinner, from the Department of Business, Economic Development, and Tourism.

Thank you, Chair, Vice Chair, Members of the committee, Georgia Skinner, Creative Industries. Stand here with comments, and I'm here to answer any questions.

Thank you. Next up, Tom Yamachika testifying on behalf of the Tax Foundation of Hawaii on Zoom.

Good afternoon, Chair, Vice Chair, Members of the committee. Tom Yamachika from Tax Foundation. I think there are lots of problems with this bill as written. Periodic reviews of tax expenditures are totally fine, but you can do them without creating a requirement to file a second public tax return on pay on pain of losing the benefits that do the legislature has already given them.

We we we think that much better solution is, to create the information pipeline from DOTAX to DBEDT similar to what the IRS has in place in terms of pipeline to the Department of Commerce as we've mentioned in our testimony.

Thank you very much. And I'll be available for question.

Thank you. Next up, Johnny Mae Perry with comments. Isaac Choi in support. Georgia Skinner with comments. He just signed.

Sorry. Okay. Members, any questions? Oh, Tom.

Tom. So you point out that DOTAX and the auditor's office already revealed these tax credits and exemptions. So do you think the bill is unnecessary?

Thank you for the question, Chair. I'm I'm wondering myself what kind of other information is contemplated by the opponents of this bill because we were already doing a lot of the review work every year as I pointed out and as you as Chair pointed out.

Okay. Thank you, all Members. Any questions? Okay. Seeing none, moving on to HB 2546.

First up, Georgia Skinner with Creative Industries.

Thank you, Creative Industries and support for your parting questions.

Thank you. Next up, with Hawaii Technology Development Corporation.

Good afternoon, Chair, Vice Chairs for this committee, agency standards.

Thank you. Nixup, Department of Taxation.

Good afternoon. Garrison for Department of Taxation. We'll stand on our testimony to provide comments. I'm here if you have questions.

Thank you. Next up, Leah Ablin with MacKay Ocean Engineering.

Hi. Good afternoon, and aloha Chair and Members of the committee. I'm Leah Ablin from Makai Ocean Engineering. I'm the CFO of the company, and we are locally owned Hawaii company. Been in the business for over fifty years, and I'm here and wish to know to everyone that we strongly support this bill.

And I thank you. I'm here for any questions.

Thank you. Next up, Tom Yamachika for Tax Foundation of Hawaii.

Thank you, Chair, Vice Chair, Members of the committee. Tom Yamachika for Tax Foundation. We'll stand on our written testimony, providing comments and give you a vote for questions.

Thank you. Next up, Maui Chamber of Commerce, Pam Tupap in support, Herman Cougar, individual in support, Naomi Cookock, Simon Petrie Enterprises in support. Patrick Sullivan, founder and CEO, testifying for Ocean Net in support. We have seven of the individuals in support and one with comments. Anybody else wishing to testify on this measure?

Thanks, Ken. Anyone else wishing to testify on the measure? Seeing none members, any questions? Ken, can you come up, please? Thank you for being here.

Thank you. So having been in the high-tech business for over forty years with Ocean Ed, how much more should we invest in this area by expanding the type of tax credit or through direct appropriations to increase and replicate the type of success in OceNet has experienced?

Your question is what more can you do? We need a lot of help. And OCEANET has been successful because we really hustle for federal funding, for other funding. So this tax credit is very, very helpful to us. We invest every dollar into innovation, expanding our product development, funding new jobs.

It also supports our community outreach activities, STEM outreach, including our summer internship. So, anything you can do would be greatly appreciated. Thank you.

Members, any other questions? Senator Kim?

So we have been investing in high-tech, and I wish Annette has done an excellent job. But to attract other other types of high-tech companies, is it enough for them to just make a profit? I mean, we have to recognize that investments are made because they wanna make a profit. But here in Hawaii, because of the cost of doing business and and the cost of land and the cost of everything else, is a tax credit enough that's going to attract these businesses?

I know, Shannette, it's been here a long time, but if you're looking at I know that's one of the arguments for these tax credits is to attract others to come, but we have other problems, right, that a tax credit alone may not be attractive enough.

I would agree with you, Senator. But I think the tax credit, I think we'd consider it as a minimum to help us sustain and grow, especially with the disruption in the Federal Government, which a lot of companies like us depend on. So especially right now, we are, you can, I could say, strained for for support?

How many high-tech companies here locally are actually making process?

Oh, I think there are many. Yeah. I wish there were more compared to when Senator Noe was helping out in in Capitol Hill. It's it's a struggle, but there are very good companies. MacKay Engineering is is one of them.

Do you know if the state actually has, done examined the results over, I don't know, what, twenty years, twenty years of the tax credit?

I think so. No. I think it's included in the YouHiro report, a couple of them, and also the reports. And I think they demonstrate the numbers demonstrate there is a good ROI.

Okay. Thank you.

Members, any other questions? Thank you.

Thank you.

Thank you. HHTDC, please. So Trump, if you had an unlimited budget to fund research activities and commercialize innovation technologies in innovation technologies in Hawaii, how much would that be, and what is your budget for the current?

Let me take it backwards. My current budget, if you exclude the funding for the accelerator map and SIPR is about 1,400,000. Total inclusive, that is about $4.3- 4.4 million dollars for my entire budget. If I had unlimited budget you know, I actually don't know if we need unlimited budget. So the beauty of this R and D tax credit is what it does is it supports local companies trying to create new technologies here.

And what we're trying to do at HCC is we're trying to focus those activities into areas we think we could be competitive in, which is ocean and space. And if we are able to do that and focus our efforts, the R and D tax credit allows companies to build technologies because when you're doing R and D, you're you're you're not earning a lot of revenue yet because you're still doing research. So it takes a lot of capital to come up with these new ideas.

So having these tax credits allows yes. It attracts companies to come to Hawaii if they're interested in the tax credits, but more importantly, it allows local companies to start here and ensure that when they're spending money and doing this research, that we are supporting them to get them to a place where they can start commercializing.

And we're seeing some companies reach that stage now. Obviously, MacKay and Ocean have been around for a while, but we're seeing a lot of younger companies now reaching the stage where they're seeing a lot of federal contracts or other contracts upwards of almost a $100,000,000 coming down the pipeline because we support them during the r and d phase.

So, you know, I know that you've just come to HTDC. So of that time you've been here, give me a list of some of the low hanging fruit that you've grabbed at and, any of the attractions of people looking into the high-tech sector That has taken interest in Hawaii and doing business here.

You know, since I started, we we spent a lot of time listening to the community. We gathered over a 100 different organizations, 80 plus in ocean alone, trying to understand what is our competitive advantage. If we're gonna attract companies, we can't attract every company, but what are the companies we could attract? So looking at low hanging fruit is understanding what our competitive advantage is, what people are seeing, because we we are one or two layers removed from the people doing the actual work in the ecosystem.

So we wanna listen to them because they're the experts.

Right? So focusing on space and ocean allows us to not only do things where we are competitive in, but it allows us to do things that are aligned with our place and our culture as well. So I would say low hanging fruit is just building this foundational layer of, like, what kind of place do we want to create as a technology ecosystem? Like, we're not going to be Silicon Valley. We're not going to be New York.

We're going to be Hawaii. Right? But there there is a tech and innovation version of Hawaii that we want to become. I've reset a lot of our programs to try and focus them because we have been very broad supporting, trying to support all technology, which is great, but we don't have that kind of resources to support all technology. So we're shifting our existing programs like MAP and our SEBIR to try and aim it more towards the ocean and space.

I think places where the state can provide support, and then we could see a lot of successes. Going forward, we're trying to create the strategies around the state as a whole for technology innovation and workforce, but also around ocean, around space, around health care. Like, what what are the focus areas we're gonna we're gonna prioritize? So those kind of things I've worked on the last nine months.

So so talk to me about space. You know? You know? At some point, it's like, you know, we like space, but we shouldn't be taking up space. So

Right.

You know, when you you know, I look into Maui. Right? You know, Kihei, it's, technology division. Tell me some of those projects that

Sure.

Have taken taken light in.

So so space is very broad, like ocean, but, you know, we have when we're an island in the middle of nowhere, being having all this open airspace above us is actually an advantage for space technology.

On Maui at Lipoa area, we're doing what's called space domain awareness, which is taking the data from all the satellites, not just looking out at the stars or other satellites, but also looking at our oceans and using that data, analyzing it with AI, with other things to figure out, okay, what what is the economic value of this, what can do with this data, and what kind of jobs we can create? And HDDC is prioritizing high paying jobs.

We're we're trying to only create jobs that earn a 100,000 and above because Hawaii doesn't have a job shortage. It has a shortage of high paying jobs.

So that's what we're doing in Maui. On other islands like Hawaii Island, we're trying to look at using Hilo as a horizontal launch facility to help get satellites, cubesats, out into space. It's still very early, but we're doing preliminary work in that area. We're using the positions that were given to us by legislators, aerospace coordinator and assistant coordinator, which which I was able to fill during my short time here to try and push in aerospace as well. Astronomy is still on table is what I'm told.

There's still a lot of talk about that. I think we have to understand that there's a cultural aspect. And one of the things I brought on when I joined HCDC was making sure that native Hawaiian values and, regenerative, wealth practices are front and center of what we do at HCDC.

Probably get about 40 more questions, but I know we're not one of time, so I'll just ask the committee at the end any follow-up questions. I

have a center case. Yes. I don't know how germane it is, but, how many innovation centers do we have roughly?

Under HTDC, we currently have two. We have the entrepreneur sandbox and the Maui research.

Has what? Three? Four? Shire.

They have the Manoa Innovation Center. They have the African one. They have Potentially. I'm

I'm unaware.

The state. What? 15 innovation centers, perhaps? Something like that?

I don't have a number for you unfortunately, I'm sorry, but that sounds about right now. Okay.

So the question I'm leading to is how many of these innovation centers have really materialized into these companies that can utilize the tax credits and that are successful in making a profit. You know?

Before I was at the state, maybe about a decade ago, I was a tenant at the Manoa Innovation Center. And during my time there, I saw about 20 or 30 companies in there, and I believe a lot of them became successful through the incubation program that was the HCC was running through the Innovation Center. I do know there are some companies at at NELHA, which I would consider an innovation center as well.

What happened to them? They are they do they leave Hawaii and go elsewhere, Or do we have a do we have any kind of inventory? And

I don't have that data for you. I know a lot of them are still here. Okay. Well I see them all the time.

Perhaps maybe that should be part of the data you can provide to us as to how successful these innovation centers are and whether or not the tax credit is even helping or and and whether they stay here in Hawaii or leave because Yeah. Everything else is too expensive and tax credit is not enough to keep them there.

Yeah. And and that's part of the reason why we're trying to focus on ocean and space because those are sectors where when companies do get successful, there's not a strong pull for them to leave the state.

Sir, you're welcome.

You know, Trump, HTDC is a economic development arm of government. Help me understand, like, why we're putting so much money into research. We gotta create your your obligation and mission is to create companies, not to go fund research that may or may not materialize into any jobs in Hawaii. We have a long standing history of funding research and seeing no jobs come out of any of that research.

At a certain point, like, we gotta cut bait that whatever you've been studying for five years is no longer worth funding.

So with with your limited resources, what's your priority? We're gonna fund research that may amount to zero jobs, or we're gonna actually fund, you know, venture capital and, you know, take some risk on germinating businesses that are actually gonna create jobs for our people. What's your role?

HCDC's role, we're we're focused on creating high high paying jobs and economic growth for the state. You know, when when r and d can take some time, but, classified under r and d is actually software development. Any kind of software development now is considered r and d. So if you have a software engineer and they're doing work for you, that that actually counts as r and d, technically.

So it's not just the kinda, like, the the deep science research that takes multiple decades before something comes out of it.

R and D could lead to results in as little as a year, two years. So it's it's not just the deep science that we're talking about funding for this tax credit.

But many companies that feed on your research have been doing so for years and years and years and spun out no companies. So I I mean, you're just like that. Right? You're just funding research. You're not actually making jobs.

Your job and obligation at HTDC is to create jobs. And at a certain point, like, if you're keep on funding stuff and you're not that that that recipient of those grants are not spinning out companies, they're adding nothing to the betterment of the state.

HCC's role is focused on the commercialization side of a lot of these technologies, technologies, but we understand the importance of r and d when it comes to creating these technologies. But I agree with we're a 100% focused on ensuring that the r and d that does happen here does turn into good paying jobs and economic return for the state.

K. So when is the cutoff point after, you know, a company is dabbling in research year after year after year, and you know it's never gonna amount to anything. How how do you determine, like, how are you? Your your dream is never gonna materialize. I need to put my resources into somebody else who might have greater potential than you who've been feeding at this trough of 510 years.

I think one of the amendments I really like about the r and d tax credit is it doesn't cap it by, like, a first come, first serve mentality where if you were early enough to apply, you got all the tax credit and everyone else was left behind. It's a pro rata share, so any company that's doing r and d will get some amount of money.

So what this tax credit does provide is allows a lot of companies who want to participate in r and d, but maybe in the past were unable to because there were other companies that maybe took a lion's share of it. So companies decided it wasn't worth starting here. Now you're gonna see a lot of companies being started here with with this bill.

I do think we have to have a bit of r and d, but how do it's our job at HCC to accelerate the transition from r and d to commercialization. And I'm working with a lot of organizations to ensure that actually happens, whether it's from the venture capital side, like you said, whether it's with the University of Hawaii and the Office of Innovation and Commercialization to figure out a way to transition a lot of their technologies over to commercialization sooner.

Trust your Trump.

Thank you. Last question. Senator Kim?

So how long is this credit being extended to?

I believe in a I don't know if it's in this bill, but might be in a separate bill. There is a sunset clause for a a the tax credit to 2029. 2029. 2029.

So this extends it to 2029.

I will have to check. Let me get a reminder.

Okay. Let me get get that information. So it's sunsetted already, and we're extending it, or it's still in effect?

No. It's it has not sunset yet.

It's going to sunset. That's why we're gonna extend it.

I gotta pull up the other bill that it's it's R and D tax is is is included where you guys are not actually sunsetting it, but it's it's up for a review.

For review, I guess.

Yeah. Yeah. So it's but it's actually that review is actually past sunset date, what we're currently at. I'm sorry. I'll pull it up, and then I can send you the information out here.

That's fine.

We're going to decision making or something like that. Okay. No. No. Go ahead. That's okay. Yeah. We have another Yeah.

We gotta do another thing. They will come back.

Okay. Okay. Let me pull that up. Thank you so

Thank you. Any other questions? Seeing none. Okay. Moving on to hospital 1576 relating to filming.

First off, Creative Industries, Georja Skinner. Thank you. Next up, Genaro Gol Rama for testifying for Teamsters Local 996. Thank you, Ale. Next up, Sandra Decoy Chung, Hawaii Teamsters Local 996 in support.

I would tell you, do you guys have 50 people in support to an opposition to a comment? So I'm just going to ask, does anyone in the room want to speak on behalf of the measure? Seeing none, members, any questions? Senator Fevella.

I think just a mechanical issue that can be overcome. We understand from our labor unions the need and what they're asking for. So I think the only concern is just to work with the introducers of the measure and the legislature to be able to refine it. Just there are some layers because it's not a one stop.

So, for example, on a large production like any of those that are happening right now, it is important that, you understand the process of when the information comes into us and the five day limit that's mentioned.

That may be a challenge because we're waiting on the departments, Department of Transportation, Department of Land and Natural Resources and their divisions to approve those parts of those permits. So they're multilayered. It's not like going to get a driver's permit, for example. It is a lot of sections to it. So I think it's just in the rules or how we would adopt it that we would have to be clear on that.

Also have three different kinds of, permitting. Open and accessible permits are very small production. So are they included in this notification as well? The e mail intake will be operationally something that we need to work on. It's going to be a little bit of a challenge.

We only have really one person now and one other person handling the permitting once we hire them. So that's just those are some of the housekeeping things that are a little bit tricky. The intent, as I understand it, is that both for the tax credit notification, which we are already doing, we understand that part of it, and I think that that makes sense.

I think in the permitting aspect, though, it's just challenging for us currently to be able to see how it will benefit and be, I think, respectful of the intent of what we're needing to see here. So, in talking with some of our labor collaborators, we do understand the need and where they're going with some of their comments also.

So I think in terms of permitting, it's just though be aware committees should be aware that there are multiple stops. So the five day may be a challenge.

The orders are a bit of more pieces that I understand is multilayers to the permitting process. But I I think what they're trying to explain that they wanna be in the beginning of the process. We know we understand that there's multilayers. You gotta go to all these other department. But to be notified within the five days, the permitting is coming up for, you know, Hawaii 502982 or whatever.

Right? Through that, you know, the process. And then, of course, later on, when you guys get DOT and all that, then you guys can continue to collaborate with the with the trades.

But what I'm saying is that that's what they I think the intent of this bill is to have them making sure that they're notified soon as these things are happy so they can mobilize and kinda strategize in how they're gonna, you know, get get people out there if the team does go through driving, you know, all these other positions that they would

need to positions,

things like that. Right. Yeah.

Yeah.

And I think to your point, Senator, and and, for the members of the committee, it is something that we we feel we have a really good partnership now with all of our labor unions and the activity that we have put into place because it was brought up several years ago that it was an issue, and that that is happening.

Could be, something that, as you apply it to permits, happening at the front end would be, I think, something that is intended to be achieved by this measure.

Yeah. So a couple of concerns. The only reason why you're saying is because I I know in the previous past, I don't know movie. I don't wanna name the movie. But they had set up production ready to go along the bay, and the person that's in permitting and I wanna say state or city.

I don't wanna single on anybody. Pull the plug. Pull the plug. Just like that. All the preparation, all the money and time went into it, and they pull the plug.

Whatever reasons that I feel at the time you know, we can talk later on more a little bit more in detail. Sure.

But I just wanna make sure that the the trades have this oversight because when these kinds of stuff happen, they gotta prepare to in going forward, especially with the minimum of what's happening because having somebody that oversees I don't know how much you guys have in your guys' permitting department, but other places, I think they have one person, making a lot of decisions, and that's the issue, that I think we we have in in in in, permitting and not having the levers into the whole situation.

So

Yeah. I think the notification, is understandable. I think we can work

on the nuances of what's in in the measure currently and maybe work with our legislators to finesse some of the language so it's a little more, clear. The intent is notification at the beginning when they come. If they leave, that's, you know, something that we can also possibly post, but it's not necessarily a common practice to do it. So I get it.

Yeah. Sorry. My my colleagues, they vote already because we won't pass them.

But so you Okay. Sorry. So but before we do that, I just I just want you to know that based on your testimony, you know, as you as DBAA looks to work collaboratively with the partners and legislature, I hope we can kind of address some other concerns because I think once you figure out the different multi layer of different agencies, you should be able to kind of project out, you know, the time span. So I think, you know Sure.

And for discussion reasons, we wanted to move it forward.

Happy to provide language and and be supportive.

Really, that's the only way I could get him to stop talking. No. So thank you for your testimony.

I'd like to hear more about the Nava Bay. Okay.

We're going to all Thank you. Get the Yeah. Idea. Thirty first twenty twenty ninth. Okay. Thank you.

Thank you. Again, we'll go straight into decision if you need. Okay. First off, HB 2,429. We will be passing this with an SD one by re defecting defective date to 07/01/3050 and incorporating the additional amendments requested by the former tax director.

Members, any discussion? Seeing none, Vice Chair Wakai for the vote. Chair goes Aye.

[Roll Call] Chair, your recommendation is adopted.

Thank you. Next up, HB 2,546 relating to tax credit for research activities. Again, you know, for discussion reasons, I wanna move this forward. I think there is a lot of value behind, research and activities, and, it'll allow us for more, talk, discussion going forward. So I'm gonna pass this out with an SD1 by re defecting the effective date to 07/01/3050, incorporating the amendments recommended by DOTAX on page two of their testimony.

Members, any discussion? Seeing none, Vice Chair votes Aye.

[Roll Call] Chair, your recommendation is adopted.

Thank you. And lastly, HB 1576 relating to film. As you know, film has been one of our top priorities. This body has taken it very seriously that we take action on these measures. We wanna continue to work with the industry as well as as well as creative industries, and, of course, we wanna be able to address many of the concerns and the very little concerns that a team can easily tweak.

So I'm gonna pass this with an SD one and re defecting the date to 07/01/3050. Members, any discussion? Seeing none, Vice Chair for the vote, Chair goes Aye.

[Roll Call] Chair, your recommendation's adopted.

Thank you. Members, thank you for joining us and for to the public, thank you all for being here and participating. With that, we are adjourned.