House Standing Committee on Economic Development & Technology

Good? Alright. Thank you. Okay.

We're in an informational briefing. Right now, it's 01:00PM, Tuesday, 08/18/2026. We're in Conference Room 309 at the City Capital and this session is also available via by Zoom video conference, as well. I guess I'm sorry. YouTube.

I'm Ikaika Hussey. I'm the Vice Chair of the Economic Development Technology Committee. And unfortunately, the only one available to join us this afternoon. Today, we have the Hawaii Broadband and Digital Equity Office from DBEDT as well as, as well as the Creative Industries Division from DBEDT as well. So let's start with, the Broadband.

Thank you, vice Chair. I see. My name is Chung Chang. I'm the Head of the State Broadband Office. Just wanted to clarify real quick that as of July last year, our office has moved from DBEDT to DAGS.

And so we're a DAGS agency. And just for clarity, you also adjusted our office name to the Hawaii Broadband Office. So we dropped the digital equity part. So just wanted to point that out. So thank you.

Thank you.

With me today, I have Garrett Ushimi who represents University of Hawaii and DEBDT, and Jared Tangon who represents Department of Foreign Homeland and our Tribal Connectivity. Today, I would like to present how broadband responsibilities are divided across the state and who is responsible for each portion. Can we look at the slides?

Sorry. Let me read to the slides.

Next slide, please. Hawaii is currently seeing an unprecedented level of broadband investment. These investments are federal grants administered by state entities, such as the Broadband Office, University of Hawaii, and DHHL, and the private sector. Our responsibility as government is to make sure that these investments are coordinated or statewide objectives on providing reliable broadband access.

Next slide, please.

And multiple agencies are involved to ensure proper expertise is represented in the work. Broadening work is our work supports health care, education, workforce development, economic development, public safety, government services, and emerging technologies. Our work is not just an IT issue or a telecommunications issue. It is a statewide infrastructure that supports the needs of our communities and businesses.

Next slide, please.

As you can see in all the logos that are represented on this slide, all of the agencies here are currently they have active role in broadband here in the state. Our office provides statewide coordination and policy leadership. University of Hawaii is responsible for fairly funded infrastructure programs, particularly in the Hawaiian Island Fiber Leak and feed.

Department of Hawaiian Homelands administers broadband programs specifically servicing the Hawaiian homelands. The counties bring local knowledge and coordination and community engagement.

Private builders build, own, operate, and maintain much of their telecommunications infrastructure, and federal and private partners bring additional funding and infrastructure into Hawaii. And just wanted to point out, unfortunately, we're gonna lose our partnership with OER because they've shut down and they've announced that, their technology section is not going to be worked on, going into the future.

Next slide.

Connect Kakou is the umbrella statewide broadband initiative. It provides common statewide framework under which various responsible entities coordinate their work to ensure our residents have access, devices, and skills needed to participate in the digital world. So I wanna point out the three pillars that we are focusing on. Access devices, so proper devices. People have access to devices that they need.

And then the skills. So three pillars that drive what we do, with our partners. Next slide, please. Just as our state digital equity plan was developed through community engagement, our partners continue to engage the community directly through the broadband buoy participation, public outreach, and events like the annual broadband buoy kit.

I just have some pictures up here to show some of the community events that we're participating in the last few years. Next slide, please.

This diagram shows in a very simple way how the Internet reaches an individual or business. The first mile connects Hawaii to the global Internet. The middle mile, number 2 in this diagram, connects all of the islands.

And the last mile represented by number 3 here on the diagram connects the homes, businesses, and the community institutions. As I've mentioned the different entities earlier, they all have a role in getting Hawaii connected and individuals and businesses connected. Next slide, please.

One example that I wanna show is the Google effort. This is a large private investment called Google Pacific Connect initiative for the First Mile. Google has is investing a billion dollars in new Transpacific submarine cable infrastructure, connecting Hawaii with Continental US and other Pacific locations.

Next slide, please.

The middle mile that is involved in, the Hyper Project is supported by a $115,500,000 US Treasury grant that will connect our islands with six landing sites.

Next slide, please.

UHS is also responsible for implementing DBEDT last mile deployment. It's a $149,500,000 US Department of Commerce NTIA funding to reach unserved and underserved locations throughout the state. Is managing the programmatic work associated with scoping, contracting, permitting, deployment, and community engagements.

Next slide, please. Another example of private investment coupled with federal funding to expand fiber throughout Hawaii is Hawaiian Telcom's middle mile called the Kunuha North Project and then last mile deployment.

So they're involved in both middle and last mile deployments. Hawaiian Telcom announced I'm sorry. This slide wasn't updated. They announced $1,800,000,000 in private investment to position Hawaii as a first fiber enabled state in the nation. So recently, Hawaiian Telcom has announced a 100% fiber coverage for Kauai, Molokai, Lanai, and most recently Maui.

Next slide, please. DHHL I'm sorry. Can you go two slides up? Okay. DHHL has received $89,000,000 from NTIA's tribal connectivity program for broadband infrastructure and digital opportunity programs serving the Home community.

So they have funding to do both infrastructure and programmatic. I'm sorry. Can you go back to to the hybrid? Okay. So now we we come to Hawaii Broadband Office that is established under HRS section 227.

Our core rules are statewide broadband coordination, policy planning, partnership, and digital opportunities. Some past achievements include completing the FCC affordable connectivity program, publishing the State Digital Equity Plan, which serves as a a plan for all the other programs to model after if they wanna deploy digital equity programmatic plans, co hosting the annual Broadband Hoike. This year's one will be in October on Maui. We passed had co hosted on Kauai and here in Honolulu the past, in the past three years.

And then the ongoing Broadband HUI collaboration.

Next slide, please. It's fairly small, but the information is available on our website, broadband.hawaii.gov. Achieving digital equity in our state means responsible strategic deployment through civic engagement and inclusive digital adoption programs. The best way to do it say it is that we are always engaging the community to get feedback before we start developing programs and projects.

Some of the immediate work that's coming up for our office is, Army's Telecom Assessment Planning Grant, Congressional Directed Funding, also known as Congressional Earmark, and collaboration with University of Hawaii on AI Hub and supporting the community because recently, NDIA has won their lawsuit against The US Administrate Trump administration so that the competitive grants can be released.

So we're going to work with the community on helping, prepare those applications. And lastly, I just want to share that, you know, we're always looking for ways to help, especially the legislature. I think one of the, one of the ways that we help was in the background, we evaluated all of the AI bills that were moving through the legislature to make sure that these bills didn't affect any federal funding that was coming into the state.

And so, and I was gonna point that out to the Chair who was here. I had reached out to the Chair to let him know that there were some problematic bills, and so we needed to either correct them or defer them to make it better in the future.

And so so I did that with the House as well as the Senate. So we're always working in the background to help the legislature and I hope that, you know, that the committee will look at us as such a better expert and reach out if there are any questions about broadband or even AI related bills.

So last slide is, Mahalo. Thank you for this time and we'll be able to answer any questions you have about Broadband.

I have a couple of elementary questions.

Yes.

One is, what is the relationship between broadband, which I, which I understand to be essentially a series of cables, fiber and etcetera, and wireless, which is really, I think, how most people get access to the Internet. What is the relationship between these these two?

Well, it really is I think it's what you've identified as, you know, the need. Right? How do you, how do you get the Internet in is important. Like, wireless could be either, like, a WiFi or your cell or wired. So really depends on your, depends on your need.

Like, so I just gotta give you one example. It's like I'm a gamer. Right? So there's a big need for connectivity, so I wouldn't be able to do that with the wireless necessarily. I would need a wired connection.

But if I'm just my need is just to browse Internet, send emails, then I think wireless, even a cell phone would be mean.

Sorry. I guess we're trying to ask more of an infrastructure question. In terms of our in terms of Hawaii's infrastructure, and I'm thinking about this in the context of the hurricane that we're still, you know, dealing with and people people's experiences in trying to get basic things like connectivity and electricity functioning again.

What is the relationship between, you know, all of our AT &Ts and Verizons and T Mobiles and all of that wireless infrastructure and the broadband infrastructure, which your office helps to coordinate and allocate resources for.

All of those signals, regardless of wired or wireless, there there's a backbone. Right? There's wire coming in and connected somewhere. So in that sense, yeah, there is a some kind of wired infrastructure supporting all of that.

And it's just a last deployment of how you get that. Right? Either you do get it through the wired or wired. So

So these wireless companies are they're buying bandwidth on the, on the first mile and middle mile infrastructure.

Is that is that right?

Alright.

Yes.

So there's wired infrastructure backbone infrastructure.

Chair, may I add a comment to your question?

Please.

Also in time of a disaster, when Internet is out, whether you're wireless or you're connected, power needs to be established before the Internet provider is able to work on their system. So sometimes the lag or the delay is because the power is cut off, and the utility is trying to establish power. Once the power is established, then the Internet provider is able to work on establishing that connection, whether you have a wireless or a wired connection.

Thank you.

And the last status I received was that there are pockets of outages. There isn't, like, a statewide outage just because of the last event. There are pockets. So it could be down power that needs to be reestablished or just some, you know last mile infrastructure that needs to be repaired. But that's a good thing.

Right? There isn't a statewide outage. It's just pockets of outages throughout the state.

May I ask you one more question?

Yes, please.

And this is totally outside of your portfolio. But it's, but it's related, which is we have a series of cables coming, you know, submarine cables coming to Hawaii, and then there's submarine cables connecting the islands for broadband. Right?

Why is it not possible to collate to co locate that cable broadband cable with power infrastructure as well? So essentially, having power and and data.

I have Garrett, who's more familiar with

I appreciate it. Sir. Thanks.

Vice Chair. Garrett Yoshimi with University of Hawaii. So the one of the answers is the kinds of physical facilities those transpacific cables need to come ashore. And in all of those cases, the physical location of where the cables come ashore are actually located specifically to make sure they can get access to the power they need. And then in all of the cases, especially for the Transpacific cables, in all the cases, they also have on-site generation capability to back up the local commercial power as well.

So it's a matter of finding the right physical approach to the shore.

And then interconnection with the rest of the terrestrial facilities to make sure we can take that capacity and pass it on to other places, including to other transpacific cables.

They also when the, the long haul folks make these connections, they're also pretty aware of not wanting to put all of their assets in one physical location, so to speak. So you'll see several different locations around in particular, around the island of Oahu where these cables come ashore.

They actually don't wanna all be in the same place because that creates a single point of failure, but they do want to be interconnected, including at critical points within the power grid, as Chair as Chair just mentioned, to make sure that they also have power to run these cables as well. The transpacific cables, are actually power cables, and where they come ashore is actually where that power is injected to power the rest of the cable that's under the water. Does that help?

It does. You're talking about the Transpacific cables coming from, like New Zealand to Hawaii and US. Japan to Hawaii, etcetera. But I guess I'm asking more about the the cables connecting the Hawaiian Islands.

So in the, in the case of the interconnect cables, these cables are actually called repeaters cables. So they're the distances are short enough so that the cables themselves don't have to be powered. So that the fiber that runs between the islands is actually passive. It's non powered cables. So they actually don't need power at the landing station points.

They have to come up to a place that the terrestrial networks can interconnect. Power is required at those points, and those points will have generation capability in addition to support from commercial power.

But could we, if we wanted to have electrical, you know, power transmission cables running essentially in parallel to the data cables.

There's, the, the impacts and the, the engineering of those underwater power cables is significantly different than the engineering for if you've ever seen the submarine cables that go underwater conditions. It's actually the signal only ones are like this, literally like this. The power ones are much bigger. They have to be shielded.

For safety as well. Right. You know, so the impacts of the interline and power distribution cables will be substantially more, versus the ones for signal only. But that that's totally an option, you know, in terms of being able to provide interline connections for power. And, you know obviously, we have islands of generation as well, right? from a power standpoint. So just it's another way to address the the capabilities from an infrastructure point of view.

I think the previous attempt to do Internet power had not been successful, but that it that remains a possibility.

Okay. Thank you.

Thanks.

Okay. Anything else on broadband?

No. Unless the committee has any more questions.

Yeah. Are there any other questions?

I have, I have a question, Chair. Thank you, Chair. I want to also just piggyback on that question regarding power and fiber. Just so I understand. Oh, actually before I go into that, [inaudible], thank you for the presentation.

Those slides were very helpful. Regarding the fiber cable, are you saying that the fiber cables, it's very hard to just, right off the bat, install a power cable into the conduit that they have? Is that what you're saying? Because what I've heard is that the power cables are much bigger and requires a more intensive infrastructure to actually make and you can't just add that into a fiber cable.

Yeah. That is that is absolutely correct. In particular, if you have to provide transmission capability to support terrestrial use of the power, the engineering of the cable itself, in terms of both the shielding as well as the size of the cable, and then the potential impacts when you put it out to see, were also significantly different for power cables as opposed to transmission.

Is that what you're saying?

Thank you. I just want to be very clear about that because as policymakers, we are confronted with the question of those power cables. And there are strong opinions about them. And just so we're clear, we're not creating those power cables. We're creating fiber connections.

That is correct.

Perfect. Alright. I have some general questions. Carty, to start off at the top, I see millions and billions of dollars. Actually, maybe it's no less than $2,000,000,000.

But we're dealing with a whole lot of money. Most of it is private that's spread out in different organizations. And who's, who's in charge of overseeing everything? Is it your department, Hawaii Broadband Office, or is it the University? Who's in charge?

I'm very curious.

Thank you for the question, Chair.

So all of the funding and grants, you know, we have responsible entities. For example, the bid is UH is responsible for that. And travel connectivity, funding, DHHL is responsible for that. And so all of and then we have our set of programs, program programmatic funding that comes directly to us or through budget and finance, just as an example. So we're responsible for that and then we do report that up, to as part of the Connect Kakou.

And so that initiative is still with the Lieutenant Governor's Office.

And that's really why I'm asking this question is because with what's going on with the Lieutenant Governor's Office, we were relying on that leadership to handle a lot of this broadband issues. And I just wanna make sure like, we're having these oversight hearings to to ensure taxpayer money is spent correctly and being used for what they're supposed to be used for. So I guess what I'm trying to get to is it looks like [inaudible] is in charge of a $149,500,000.

And how does your office interact with the [inaudible] and are are you guiding the direction of infrastructure? Or are they guiding the like, who's if there was some sort of conflict and disagreement of how the first mile, middle mile, and last mile gets fed, how does that get resolved?

Are there any specific problems that you're aware of? Because hypothet, it's hard to to respond to hypothetical, I mean, if there anything specific. Because right now, all the projects are proceeding as scheduled, as expected. And like I said, the Lieutenant Governor's Office is still in charge of the Connect Kakou, and we do have an acting Lieutenant Governor who is making sure that the administrative, you know, roles and tasks are carried out. And so that none of that has changed.

The reporting and the responsibilities are all in still in place and and projects are proceeding.

Perfect. So Connect Kakou is really the umbrella for all the different projects. Is that what I'm hearing?

Yes. Currently, it is. Yes.

And that's under the Lieutenant Governor's Office?

Yes.

And I just wanted to spend some time on that because these are big infrastructure projects. And these are projects that we've already acquired.

What about potential funding that's available at the federal level? I'm hearing things that there's gonna be future funding available. Is that gonna be the job of the Lieutenant Governor who's going to be seeking that those fundings? Is it your office? What's the opportunity there?

Because we're talking about large sums of money here.

Yeah. So depending on what kind of funding is available and who it's directed to. So just as I pointed out earlier, the competitive grant, NTIA's competitive grant is expected to open up the notice of funding opportunity scheduled expected to be released sometime in December. And so our office plays a consultant role in working with the community partners.

So we've already had some preliminary discussions in the Broadband HUI meeting a couple of weeks ago to say that we're available to be a consultant and help with the application process. And so that's one that's that we're expecting that's coming up.

I mean, I'm not aware of any other funding opportunities but really, it depends on who the funding opportunities are directed to. You know, we're always on the lookout for funding opportunities. So you can say we're responsible, but we always will report that to the Lieutenant Governor's Office on the the Connect Kakou structure.

The job that you have done really well is bringing all the different stakeholders together and presenting an application to these grant opportunities or funding opportunities and sharing that need. So I really like what Hawaii Broadband Office has been doing in the HUI that you've created. Is I I've heard that is HUI still the same system? Is there a new leader in the HUI? Who's what's going on there?

Yeah. So we it the HUI calls are done first and third Wednesdays of every month. And so our office doesn't have the capacity to hold those. So as you know, Bert retired, and he's continuing to lead that and do the hold those meetings. So we help with, you know, giving direction as necessary, but, it's pretty much the same. Like the discussion of, you know, broadband stuff, the broadband universe for State of Hawaii. So, yes, it's still going on. So, in fact, there's one tomorrow.

Good.

My last question is regarding AI. I think we're all trying to figure out how to, how to be able to address some of the concerns in AI. How I think every single office has been looking at AI. Do you see your office, Hawaii Broadband Office, compared to,let's say, ETS with Christine Tsukuda. Like, where do we get the standard in the like, the guidance of who's the expert matter in this topic?

Like, who are we relying on? Do you think it's your office? Do you think it's Christine's office? Like, as a state, as a state agency, we rely on DHHL to be building homes for Hawaiians. We're relying on different departments to do their role as an expert matter.

Like, where do you think AI falls into? Do you think it's in your office? You think it in others?

I think for our office, part of AI, specifically on digital, you know, skills and adoption because we have that in our statute as part of, you know, our responsibility is, you know, digital adoption. Right? And so not so much regulation. I mean, we can help with the conversation about, you know, the policies, but I think, if I'm not mistaken, ETS does have an interest in that role.

And I know we're gonna collaborate with University of Hawaii on the NSF grant for state so there's an application that's being worked on.

So there, so things are kind of gelling at this point, and so there are a lot of it's pretty scattered, as far as, you know, various efforts. But to answer your question, Chair, I don't know if we wanna be the the main AI, clearing house or center, but we do wanna have a part in it because our statutory responsibility calls us out for, you know, the digital skills and adoption. So

Or the digital skills and adoption, do you have funding to be able to provide those type of workshops throughout the state?

We do not. And so one of the as you know, back in late April, you know, we had put on a week a one week AI awareness workshop. And luckily, the nonprofit that came and helped with that were able to fund the entire thing, but we don't have funding to put anything like that together.

What sort of baseline funding would you need to have these workshops, let's say, in Hawaii Island, Maui, Kauai, Oahu?

We we can certainly have that conversation, Chair, as we talk about the budget, but you know, we're still working with same budget from 2022. And so we're really underfunded. And so and then plus, when we lost federal funding, we lost a position that provided admin support.

So we're kinda trying to kind of right the ship a little bit, but well, we can certainly talk have that conversation about funding, various projects that you may wanna you know, this committee may be interested in, having us, you know put together, but we can have that conversation as we get closer to the legislative session.

I just wanna make a final comment, and that is it's great that we're building out this infrastructure and that your department's helping with the coordination with the I think for most people, the marketing or the awareness, seeing you in their community, providing these workshops and skill training would help really promote your department even more. And it's really a balance between working with a [inaudible] personnel and just being able to sustain the programs that you have.

So it's good to know that you'd had a budget since the same budget since 2022 that gives us awareness that we need to advocate for more funding for your department so that you're able to provide more better services. I am interested in the skills and adoption workshop. And if we need to start off with a pilot project in Hawaii Island, I'll be more than happy to start there.

Alright, thank you for your presentation.

Thank you.

Thanks very much.

Thank you.

Good afternoon. Good afternoon, Chair. Hope you're safe on Hawaii Island.

Georja Skinner, Head of Creative Industries for the state. I'd like to introduce our team this year, our Branch Chief for Arts and Culture, Rick Manayan. Our lead for the tax credit unit. That's David Kaliko and our film tax specialist, Brett Ambe. Well, thank you guys for being here today.

All right. Well, thank you very much. We're going to go through at least an overview of how long the program has been around, what we have been doing. It is a complex program, so bear with me and we'll try not to take too long so we can get to your questions. If you do wanna interrupt me while I'm speaking, please do.

I like the interaction that way rather than waiting till the end since it's not a formal hearing. Alright. Then I'll get started. So, next slide, please. Creative Industries was founded in 2003.

I came on board in 2007 and our mission, as you can see is to really we've redefined this several times and that's because the creative economy in the state has changed and changes when industry changes drastically. And so our focus now is not only to attract film production, which is an anchor of the creative industries, but also to really invest more in the export of our creative IP across all the creative sectors, including media, music, creative, and of course fashion and design. Next, please.

We have two main branches. That's the Hawaii Film Office, which you're all familiar with. We are currently in recruitment, active recruitment for the film manager. Our prior manager retired, and so hopefully we will have a new film commissioner prior to session, and then the Arts and Culture Development Office.

In addition to this, we've added the Tax Credit Unit, and that was important because the responsibility of that statute and the transparency required, required more expertise and a stronger team to lead it. And I really give David his kudos for doing such a good job in that way. Next slide, please.

So these three pillars and focus areas that we really wrap our initiatives around is creative and cultural development. That's strict business development. And that means it's not just about going to work for somebody else. It's about helping our gig workers survive and be able to thrive without having to leave home to do it. Creative IP and export ecosystem, we'll talk a little bit more about in more detail and then, of course, film production attraction and management.

We're doing this with a fairly small team, speaking of capacity. So next slide, please. It is important that we build what we oh, next slide. That means you, Charles.

Can you repeat the slide?

Thank you.

It's okay. Alright. So, this is to introduce you to our staff. The Arts and Culture Development branch has three employees in it, a manager and two support team.

We have a special projects unit with another employee that reports directly to me. We have the Hawaii Film Office, which currently has two vacancies and the Tax Credit Unit, of course, with three and our operations team. The reason that we had to restructure like this, and we are going through a re-org next slide, Charles. Next slide. Thank you.

Is because we have new priorities that we need to emphasize, and that's not only the attraction of the film industry, but what we're doing for the rest of the creative sectors, which is the export facing model. And all of this is done in concert with the philosophy and the framework that DBEDT is developing. So it is something that is integrated with other programs within the state, and also with other programs within our department.

I wanted to draw the correlation of what is an import ecosystem because what that means is business traction and we have the tools now to better do that. A competitive incentive thanks to this body, the Senate, the Governor, the industry, and of course the leadership of our department.

Workforce and skills development, which is not always going to work for someone else, but it is, especially in the industry where we want to get more workers to really meet those new obligations that we have in the 80% local hire threshold to add that 5%. Infrastructure, because we really still only have two facilities. You'll hear about those later when Rick talks about that. Digital modernization. So we have now invested in a very important system for our online film permitting.

It hasn't been done before and it needs to integrate so that people on the back end and our counties can work with us a little bit more closely. And then film and tourism marketing, that's something new with Hawaii Tourism Authority. So that is a subcommittee of the new structure of Hawaii Tourism Authority. And then our export IP ecosystem, which is a nascent program, but we look to strengthen that right now. The workforce and skills development is also a focus there, but in a different way.

Again, building entrepreneurial skills versus working for someone else. So access to capital and all the things you see there, that's to give the committee when they have, when you have more time to review this, give you a reference point so as we go into session you'll kind of remember these themes when they come up. Next slide. Thank you. So we have some new statutory requirements.

So the first three that we're addressing, of course, is the Film Tax Credit, consolidated film permitting, and the Hawaii Film and Creative Industries Development Fund. Now we have a slew of new requirements and in some cases the department will be doing Hawaii administrative rules and that is a lot of lift, but we're really grateful that we have the passage of all of these measures this session next, this past session. Oh, yeah. Sorry. Sorry, Charles.

Okay. So film industry development. I'm gonna turn it over right now to, David Kirillokai who's gonna go in a deep dive to let you know what's happening now with the legislation that you passed and where we are with Firdos.

Thanks, Georgia. Hello, everybody. My name is David Kirillokai. I manage the Hawaii Film Tax Credit Program as well as the Research and Development Tax Credit Program.

Main focus is Hawaii Film. Next slide, please. Okay. So we're gonna go over at first, I wanna go over, how we were previously run a managing Film Tax Credit Program based on the rules prior to SB 2580. Next slide, please.

Alright. So prior to the SB 2580, the tax rates were at 22% to 27%. So we had 22% on Oahu and then 27% on the neighbor islands. We tracked all the costs not all, but most of the production costs that qualified were subject to general excise tax. There were there were some caveats including, certain costs that were on state and county facilities.

They may not be subject to GET, but they may be able to claim on that as production costs. Out of state costs as well. As long as from dull tax, the cost is up to the generalized tax or income tax.

Next slide, please.

Now a little history, for the total spend and economic impacts.

For 2023, we had 25 productions. And out of oh, that's kinda small. Out of the out of the 25 productions, we had a total spend of a 168,700,000. And Hawaii residents received 56,500,000 in wages and salaries. Film production supported over 9,000 jobs and also 84.8% or 7,700 were filled by Hawaii residents.

For 2024, we had 32 productions, a 169,000,000 reported spend, 73% was spent in state or paid to residents, where they hired over 7,600 Hawaii residents, including over 4,000 extras. Now for 2025, it was a struggle. The reasons due to we had the writer strike. We had an actor strike. The film industry was going through a struggle overall.

I don't know if you guys heard, but about Georgia, State of Georgia, California. We're losing productions to out of country, New Zealand, UK, Canada. And so, which is the reason why we we spurred on the SB 2582. But for 2025, we had a overall production spend of 46,700,000, which was below the 50,000,000 cap of tax credits. So this is a spend overall.

27 productions applied, but there are mainly medium to smaller productions, which we just finished a review. And we only had 11,000,000 tax credit cleaned, which left us about 39,000,000 of tax credits unclean. So 2024, we had just about 300,000 remaining. And for 2025, we had about 39,000,000 remaining. Okay.

So next slide, please.

Sorry. One more.

So we're gonna go over some of the key changes under act 185 SB 2580. Next slide, please.

Okay. One of the biggest changes that we had is the 80% local workforce. So this is an excellent rules, rule change for the Film Tax Credit Program and the film industry overall. So there's a 5% tax credit uplift if productions are to bring in 80% of workforce overall. So that increases the Oahu Tax Credit Claim from 22 to 27% and the neighbor islands from 27 to 32%. This will make us more competitive to draw on bigger productions from Hawaii, including the Disney's, Netflix, the Warner Brothers.

And we've actually been getting calls and interest on this already from before the bill was signed. So we're hoping that with these increased rates, that we'll bring in more productions moving forward. Next slide, please. {Okay. So one of the other rule changes was the increase to the aggregate and per production cap.

So prior, we had a 50,000,000 cap. We increased it by 10,000,000. So now we're at overall annual cap of 60,000,000, and then we have a per production cap. So I don't know if you guys remember that issue with, Chief of War to where they pulled up because they weren't able to claim their tax credit in its entirety. We needed an answer to that, and this was the answer.

So previously, we're at 17,000,000 cap. We increased that to 20,000,000. But on top of that, any cost any production cost that are over 60,000,000, we remove the cap altogether. So that'll allow productions to be able to claim the additional tax credits needed. I can tell you there's a few productions that are, have filed for 2026 that are gonna be able to claim majority of the tax credits because of this rule change.

Next slide, please.

There's some additional smaller changes. Streaming we're able to define what streaming productions look like, limiting up to eight episodes. Anything past an eight episode mark, they'll be able to clean or another tax credit.

We're able to extend the sunset date from 01/01/2033 to 01/01/2038. Next slide, please.

So this is one of the more interesting ones. I'll go over the CPA first. So we're now gonna require all productions to go through a CPA audit or a CPA review.

This helps our office out a lot because, usually, we'll have like, maybe 50% of the productions will go through a CPA audit. And what that does is it cleans up their application process or support documentation. I know that it's we know legislature has been concerned about, how are we checking the receipts? How are we making sure that they're claiming whatever the backup that they're claiming? And so we would actually check it internally, which we do still.

But having the CPA audit do that review just as an extra review step on top of it. We wanna make sure that we're as accurate as possible to make sure that, state funds are being spent properly. And one of the more important changes in the bill is a General Excise Tax Exemption. So back in 2024, we've had there were issues with third party payroll companies to where what would happen is the production would get with a third party payroll company.

And so they wouldn't pay their employees directly.

They go through that third party payroll company. That transaction between the third party payroll company and the production would be subject to GET. But the only thing that third party payroll company is doing is just paying off their workers, the employees on the back end. And so they're getting hit with that excise tax. And the issue was that is that the third party payroll companies would turn it around and charge the productions again.

So essentially the productions would be paying twice for that tax. So this is actually going to exempt the third party payroll company. So they're not gonna get hit with that excise tax goal, which will hopefully draw in bigger productions as we go through. Next slide, please.

Okay. And so one of the other greater changes that happened for SB2 580 is we're able to carry over. So I mentioned previously about 2024 and 2025, but we had 300,000 remaining. And then 2024, we I'm sorry. 2025, we had about 39,000,000 remaining. It's not lost.

So it's not gonna be set back to zero. We're actually gonna be able to clean that or carry it over to the following year. So for 2026, as of now, we have roughly about 90,000,000 that we're gonna be able to utilize for the Film Tax Credit Program. So things like removing the cap altogether for the productions that are spending more than 60,000,000, we'll be able to afford it now.

We'll be able to actually to include it within the single year, and we also still have our deferred costs.

So if we go over the 90,000,000 for the productions, we can still defer the costs the following year. So that gives us a little more leeway, especially with this that 39,000,000 pretty much like an extra additional funds, a safety net, I would say. We're able to afford bigger productions like the Disney's and the Netflix's to come in. Next slide, please.

Okay. So I went over the General Tax Criticism. I'll pass it back to Georgia to go over a little more away from industry updates.

Thank you, David. Okay. So currently, we have a number of productions in state. And since the end of 2025, the tide did turn a bit, but it wasn't until the bill passed that we really saw the activity increase. There are several that David mentioned already that have been in touch with us when the bill was signed.

So and that press release ran out. So, these are the current productions. Lilo and Stitch 2 will start up soon. The others have completed their filming, and I'm not sure exactly of the air dates for finding Jared. But using our facilities, whether it was Kalailoa, hiring local hires, those numbers will be proven.

And I think that'll be something that we wanna share with the legislature when we come back in January. Next slide.

So to put this in context, I mean a lot of this is about, well, what do we do and who's doing it and why we're doing it. Well, we know that, but the ROI and global positioning for Hawaii can't be underestimated because it does drive cross industry jobs in tourism, tech, and education. There's lots of other examples of this in other states and countries.

And also, I think another element of this that's important is I think that there is something about film that is more than storytelling. It's a strategy for resilience. And what that means is continue to attract business from offshore while building our own content creators and develop that entire film industry that's homegrown from here. Thereby, if something does fall off with the mainstream people, we still have a thriving industry to support. Next slide.

So film and creator economy industry trends. There is, this is for context and I won't go into deep detail on each of these slides, but I do encourage the community here and the committee, as well as others in the building to take a look at this. Next slide, please.

So Hawaii originated productions is one of our key long term goals, and you'll see the key objectives here: original content ownership, self sustaining industry, export ready production, and promotion and visibility.

All of those things will position Hawaii as a hub of sorts, which is very similar to if you look at Korea and how it's developed its own brand and marketing and export of creative IP is a great model, even though it is a country. Next.

So this involves what really is happening currently in the industry. In the not so distant past, maybe ten years ago, the film industry had a very, very different model. We would train people to get an agent to have an original document to or excuse me, not document, but a script, and then pitch that to someone in hopes that it would either be licensed or bought and then the goodbye to the creator. Okay.

But now fast forward on the far right, what we're seeing is those middle steps on the left, which was the traditional model, is rapidly evolving to direct to consumer and compensation for that. So that's why we want to monitor what is happening overall in the industry, how we protect our people, but in addition to that, how do we make sure they earn a living at it? So next slide.

Just some headlines that you can, take a look at.

I mean, this is the exodus of The U. S. Film market and what happened, as David mentioned, after not only the pandemic, but then the strikes coming up and the threat of another labor strike in 2023, which then tipped everything on its axis. Next slide.

So now we have a landscape that's very different.

We have media mergers and content trends that are tracking at the same time. There'll be an intersection of this and you're already seeing it in some cases where Netflix is optioning things from YouTube, other even TikTok creators are getting their own deals. You know, there's people having really high valuations on their own persona online, if you will. But this is something to pay attention to. And close to home is, of course, the Skydance acquisition of Paramount now and their move for Warner Brothers.

So it brings a lot of, it behooves us all to be educated about what's going on in the greater market place. Alright. Next slide, please.

This is something to take a look at. We, you know, we've talked about the creative economy.

It really is morphing now and pivoting to a creator driven economy. This is from CBL Economics. They have a really solid, analytic look at the industry and also in music and fashion. So, if anyone's interested, happy to link them up from the committee on that. Next slide, please.

So this is just a hardcore example of where things are. If you look at this chart, The platforms and providers on your set box at home used to be called over the top television with the boxes that you would get your, your programming through from Netflix. But you'll see that YouTube is outpacing Netflix in terms of viewership. Pretty interesting to monitor and keep a look at. Next slide.

And then just focusing on the far right, the next Hollywood is everywhere. We need to take that to heart for Hawaii because of our indigenous population, the whole notion of storytelling and what it means to own your own IP and control where you show it. Next, please.

Thank you. So these are some strategic actions ahead.

Really training in the business. This is the export market focus. So training in the business of the industry, investment through the Hawaii Film and Creative Industries Fund, also being able to regionalize facilities by leveraging relationships with the access channels, for example, on all islands. So that we're building infrastructure, workforce development, training and skills at the same time as we're providing access to capital and that makes up our ecosystem for creative IP. Next.

Alright. And I'm gonna have Rick come up and talk a little bit about these other areas that are keen to us and that are also relevant and everything comes together in an interesting kind of way. I'll let Rick tell you about it.

Thank you, Georgia.

Aloha, Chairs Hussey and Ilagan and the rest of the committee who are doing it elsewhere. Welcome to our world, the creative entrepreneurial ecosystem. Next slide, please.

The system represents over 55,000 small businesses and entrepreneurs that comprise a new area of economic development for the state, and it contributes over 4,000,000,000 annually to Hawaii's annual GDP. Some of our industry partners are listed there. Next slide, please.

And, some of the sponsors, the big ones that participate and we support year after year are the Hawaii International Film Festival, our own creative lab programs, Story Experience Show, which is a new storytelling kind of software development system that we have started with our local schools.

And, the Ohina and Shoot Summit and ICANS, Hisako Labs, they're all industry partners that we work with and support year after year. Next, please.

The three pillars that we are tasked with charting on the force for and reviewing this thriving creative economy in Hawaii and which we focus on are three areas, access to capital development, infrastructure development and facilities, and workforce development. Next slide please.

Yeah. So this is this is basically where creativity meets capital. That's the underpinning of what digital natives do. And again, it's a fundamental restructuring of who holds the influence, who captures the value, and who shapes the stories that define our culture, and that sure sounds like Hawaii to me.

[inaudible]

Yeah. It's also a fundamental restructuring of this creative economy, which is very different from the old model that we, that we used to follow. So next slide, next slide please.

We, we recently put out a pilot project RFP to the local creative community for a total of $400,000 for shorts, web series features and we had an overwhelming response to the RFPs. 115 responses we received.

And after our selection committee, we had a special evaluation committee select the finalists. 23 projects were awarded, total of $400,000, $100,000 in short features, and over and $300,000 in feature fill features. Next, please. So the next pillar is facilities and infrastructure. Next slide.

Our priority is to expand infrastructure by partnering with one of the ways to do it is partnering with our existing creative and tech sectors on all islands. So our priorities to are to address higher material costs that presents challenges to productions here in Hawaii, to incentivize the private investment in post graduate, post production virtual effects, and expand market and local rental inventory because equipment is expensive to buy on right off the top. Next slide, please.

As I mentioned, we have a statewide plan to expand the creative economy, and we'd like to start first where we've gained some early traction on the Island of Kauai. There's the Kauai Creative Tech Center on Maui.

There's the Akakau Community TV. The this is done with in collaboration with High-tech Development Corp, which is one of the attached agencies for DBEDT. And then on the big island is Na Leo Community TV, which we're trying to set up, you know, our first on the ground studio with Na Leo.

On Oahu, we do have a rather robust development facilities here, including Kalaeloa Navy Stages, the creative space, at the Entrepreneur Sandbox in Kaka'ako, our Hawaii Film Studio at Diamond Head, Olelo Community TV is another fast and growing facility with a lot of community participation. And then we also have the West Oahu ACM or Academy for Creative Media building that was that the legislature funded, several years ago.

And, next slide, please.

At the UH Oahu Academy for Creative Media UH. We just recently signed, an MOU in September 2025, and we are working closely with UH to enact an implementation plan for that. I think we got some feedback from legislators, and this is where we went out and reached out to UH to create the MOU. So I think with this joint partnership, we'll be developing new programs and training sessions out at UH Oahu. Next slide, please.

Our creative space at the Sandbox, in the Entrepreneur Sandbox in Kakaako, was recently, we we recently signed an agreement with Vtoku, and we entered into a user and management agreement with them. Vtuko was Hawaii's first Native Hawaiian and woman owned virtual production studio. We're bringing some entirely new technology to Hawaii through Vtoku and that I think that's the only studio in Hawaii that specializes in real life and virtual content motion capture technology.

So this technology came from Korea and it's backed by Naver from South Korea, Naver and powered by Nvidia, Nvidia. Sorry.

But it specializes in motion capture and lidar technology. So they're the only studio in Hawaii and one of the first to distribute in the whole US this technology. And you're gonna see some new things coming about from our creative space studio in Kakaako in the next year. What are the next next slide next slide. What are the next, impacts?

Well, the goal for Vtoku is to create an end to end virtual production infrastructure right here in Hawaii, so that local content creators can be trained and experts can be trained as well on this new technology. And the content creators can own their entire pipeline, the motion capture part to the engine processing and to the finished product, and this can all happen in that environmental space called Creative Space Hawaii. Next slide, please.

Our Hawaii film studio is one of our main filming production facilities.

It is probably our largest and well not the largest, but it is by far the most comprehensive film service film production studio here in Hawaii, comprising of seven and a half acres.

Currently, Disney is utilizing this to produce Lilo and Stitch 2, and that's on the grounds of the Diamond Head Studio. Okay. Next slide.

I don't know if you heard the new the big headline news lately, but Governor Green last week released or issued a press release that allows the Department of the Navy will be initiating the process to return nearly 44 acres back to the State of Hawaii.

That will include the 13.7 acre campus that you see on that picture there, which we call our Kalaeloa State Studio, and I think Chair Hussey went on a tour of that studio facility last year.

So this is groundbreaking blockbuster news because now we can all we will all the State of Hawaii will own its second studio location at this site. As you know, Jason Momoa just recently I think George had mentioned earlier, but Jason Momoa just recently completed his Protecting Jared film and they just wrapped there on the Kalaeloa stage. It's a it's gonna be a film, streamed by Netflix, I believe but it's an action comedy. It should be funny. Next, please.

Oh, yeah, so I think on workforce development, I'm gonna turn it back to Georgia, but you know, we did work with the University of Hawaii System on this three year Good Jobs Hawaii project and it was basically to create jobs and pathways within our educational system using UHS 10 campus system and we created sector partnerships, but I'm gonna turn it over to Georgia to explain that. Thank you.

Okay, getting close to the end. So workforce development. Next slide, please.

As Rick mentioned, this was an important partnership, with our team at UHS assisting them with the writing of the grant initially for creative sectors, but good jobs. Although it is sunset now and it's over, we're continuing to do the work because the framework really made a difference in how we engage with the industry and how we engage with ways to build this curriculum pathway within the education system. Next slide.

These are some of the conveners, and also the collaboration of our multiple agencies and counties as well. Next slide.

So a total of 233 students at the time of this particular metric pull, which was in a report to the EDA, shows that a lot of the a high number of 67% completed the course studies whether they were for credit or for non credit.

83 completed and received new employment and what was most exciting is working with the designated agency both Chamber of Commerce Hawaii as well as Maui Economic Development Board to fund labor costs for the hiring of our trained people in the program.

So, for example, ICAN and Protecting Jared use people from the program that were trained as production assistants or production accountants and in other skill areas. So this is how we start weaving this together to make sense and complement what education is doing, but get these kids into a career that can thrive in. Next slide.

This is just an overview of the steering committee that we had.

So assembling people from marketing, film, television, publishing, fashion, music, sector wide, which is, IATSE local 665, visual arts, esports, digital media, and video games, making up a full complement of what the creative economy and our creator economy can be. Next slide, please.

So the very this model is great for application for any kind of building of consensus and building of partnerships where you put industry at the center and business at the center of the table, and then you surround it with community colleges, DOE, and other non credit programs, and then start looking at the gaps in education and the gaps that we might need to fill in internships on these productions, which then in turn is part of the Film Tax Credit Program as well.

So, we are looking at workforce development, enhancements to our film tax credit. Next slide. This is a complicated chart, but look at it at your leisure.

I think that it's important because it gives you the pathways that I was just talking about. Skills are transferable in many areas and you'll see that there's intersections with technology and with creative industries as well as other disciplines. Next slide.

This gives you an example of some of the more practical things that we have done.

Education, again, workforce development, moving them into that pathway, production and internships, which then builds relationships with the productions, whether they're indie, local productions, or big productions, and then studio facilities, where we will use the facilities that we have to train.

So for example, during the session talking with IATSE and our labor unions from the Teamsters, wanting to be able to perhaps look at Kalaeloa when it's not being utilized as a training ground. So, those kinds of things will be built and baked into our overall strategic plan for building out the infrastructure and the training with lessons learned from good jobs. Next slide.

So overall, how do we build this sustainable ecosystem, incentivize large studio productions, and invest in local productions, regional facilities to export creative IP.

It all boils down to that. Next slide.

And then a really important project that also is taking a page from the playbook of the value add center that is really redefining how to get products to market and help define, I think our own sustainable ag system. We're going to apply that same theory to a facility that was the result of HCR 184 and a couple sessions ago and that is hyperlinked so the members can take a look at the report. But basically, thank you.

What that does is takes an the overall intent here is to look at what industry needs, which we have done extensively and I thank Thomas Chalk and Tracy Young for their work on the report, and that basically gave us a roadmap and now we're looking at facilities and spaces, either state or other ownership, to be able to put this facility together.

It would do the same thing and it would be a micro manufacturing facility. Next slide.

So this just gives you the track of and the overall philosophy of that. Basically, how do we get to exports? We need the facilities and we need the training and we need the connectivity to market. Next slide.

And so the Creative Micro Manufacturing Center will follow the same pattern of partnerships that the value add center did. Next slide. This is just for reference because I wanted to show that other areas of DBEDT, whether it's BDSD, business management, advanced manufacturing, energy, Us of course, and then Ag with the value add center, all of us are working along similar pathways, which I think is an important thing.

I've been in the state almost 20 years, and I've never seen this kind of integration before, so really encouraging and very exciting.

Next slide please. These are our priorities. You know, you probably can't read everything and it's okay, But, what is important is to understand that for our operations, we have a Hawaii film office leadership change that will then trigger a re-org. We'll come back to the ledge with that re-org next session.

Statutory changes for our Hawaii administrative rules for the incentive as well as the other component of HB 1576, which is to have the studio management of Hawaii Film Studio managed by the Department and the Director approving that rather than the Board of Land and Natural Resources.

And then also the importance of the public notification. So we are we've already engaged Tyler, Communications on building that system so we can fulfill that statute as well. So that's important because that was something that this Committee, brought forward and just wanted to let you know we've, we've already started the framework of what that needs to be in order to, effectuate that law. And then the rest, the initiatives are pretty self explanatory. We've touched on most of them.

I guess the one that I do want to highlight though is that the standard film permitting is a core function of the film office. It is a labyrinth that works with other state agencies and the counties, and so this online system is seeking to standardize that, be able to have better reporting, better metrics, and also have a backend that the counties can see when productions that are, approved for the state are coming to their jurisdiction, if we haven't spoken to them already.

We do have an MOA with the counties, all County Film Offices and Offices of Economic Development as well. So thank you very much. That is the end of the presentation for today, and I welcome your questions.

Thank you. Chair Ilagan, do you have any questions?

Thanks, Chair. Georgia, thank you for the presentation. It looks like your office has a lot of work to do.

Yes. We do. A little capacity stretched, but yes, that's correct.

I'm glad that you're covering the arts, culture, media, music, design. You know, I we've invested a lot in the film industry. And our investment in the arts and culture and music and fashion needs to be also re-energized. I think you drew in some of those points, And there isn't much funding available, but you did mention that you put out some grant opportunities.

Could you, in the future share with our committee members when those applications are posted and so we know to share them with our community and with our network.

Could you make sure that we are notified about that?

Yes. And I don't know that there was a press release, but a lot of times when the RFP is posted, it it needs to be spread wide. So we'll make sure we do that. And, I did want to mention about the Fund, that the Fund is actually self funded. There's no appropriation in it.

So, the monies that are utilized to, for example, do these contracts with 23 individuals and creatives, the funding comes from the rent from Kalaeloa and also from the Entrepreneur Sandbox Creative Space. And that is something we would like to change, I think next session, but we have to prove ourselves first. So we understand that, but currently, it isn't funded by appropriation. And that's something we'd like to explore.

Great. Give us your proposal, and we'll look into it. The other areas that you mentioned I mean, I want to just, I guess leave with a comment. I'm glad that you're you're collaborating. I see that you collaborated with the ACM facility.

I'm glad the tour was insightful and productive in that in that manner. I see that there is a lot of things that could be done. And I guess my personal interest, I would like to gain some ground on is possibly creating a film motion picture museum here in Hawaii. And I would like to see some sort of effort in figuring that project out. What's your thoughts?

Yeah. Thank you for bringing it up. I was reminded of that when we were going through creating the deck. So it's a very important thing. I will say that, prior to my coming on board, our film office prior leadership, Georgette Diemer, and the current leadership that has just retired from government, Donnie Dawson had have amassed a lot of material that is worthy of exhibiting.

Also, when you look at air and sources of funding, I think that that's a really important thing to look at the airports for because airports are regional and those productions on neighbor islands should be highlighted, whether it's Water World or Chief of War on Hawaii Island. You know, I mean, I think that there are ways in which we can, enhance not only the experience for visitors, but for our residents.

And so I like the idea and, I believe that before our director came to us, there was an early discussion about something in the airports. And I think if we brought in, perhaps, now our State Foundation on Culture and the Arts, as well as Hawaii Tourism Authority Film Committee, perhaps we can really bring together a good plan that we could entertain that.

That's a great idea to start off with, having mini museums or showcase in the airports as a way to I think Maui has something already in place that I've seen done pretty well. And that way, we can accumulate and aggregate some inventory. And eventually, there would be a brick and mortar museum someplace, but just to even start off.

And the reason why I'm thinking about this too, I know you're coming up with some sort of business plan for the Kalaeloa site. But like, managing the inventory and the things that these film production leave behind, I think as you start approving these credits, I want you to be mindful of once they leave, it'd be nice to have some memorabilia from them

For these museums. And that could be negotiated even, during production and just giving them the vision. And I'm pretty sure they'd be more than happy to donate something for the cause. So just wanna put that in the top of your mind.

Oh, yeah.

Oh, yes. Well and I can tell you that it is a practice that has happened, long before I started, and it continues. So it is something that productions do, in particular, Lost and others who have left some significant pieces, Magnum PI and others. So and Hawaii 50. The original and the latter, the reboot.

Perfect. Yeah. So I think it's something we don't have to make it a condition. It is something that is just in good business. I mean, because I am technically at the moment serving as both the Head of the Division as well as the film program, it's something that we all we can mention when we meet with productions.

And David as well because he is talking daily to heads of studios and smaller indie productions that are looking to come. So it is something. Once we know we've locked somebody, yeah. I think that's a good dialogue to have.

Thank you, Georgia. Appreciate it. Thanks, Chair.

Sure.

Yeah. I think also the Inspiration Museum downtown here

Yes.

Is a, it's a great spot to showcase them.

That's a great that's a great site. And then I'm curious whatever happened with the Hawaii Museum of Music and Dance. So that's another area because it isn't this, but that should happen too separately, as its intended purpose was I think, initially funded for. So yeah, thank you for the time today. Any other questions?

I have no further questions.

If not, we can wrap.

Okay. Thank you very much. Thank you, gentlemen.

Thank you.