RELATING TO HAWAIIAN HOME LANDS.

HB313

HOUSE OF REPRESENTATIVES

H.B. NO.

313

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to hawaiian home lands
.

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

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SECTION 1.
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The legislature finds that the great
disparity in income is per capita income between native Hawaiians and the state
population, leading to higher poverty rates for native Hawaiians.
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In 2020, the median household income of
lessees of Hawaiian home lands was lower than the State's median household
income by approximately $8,000.

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The legislature finds the current
structure for state enterprise zones undermines planning for native Hawaiian
communities.
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The current designated
enterprise zones exclude the majority of homestead lots awarded pursuant to the
Hawaiian Homes Commission Act 1920, as amended.
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Businesses on homestead lots are unable to
derive the benefits and incentives provided for
businesses authorized and situated in an enterprise zone
, including one
hundred per cent exemption from the general excise tax, non-refundable income
tax credits, priority business permit processing, and waiver of permit fees.

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On account of lack of business
incentives, most individuals living on homestead lots opt to work outside their
community in the construction, public administration, and education sectors.
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The legislature finds that expanding the
state enterprise zone program to homestead lots will promote new businesses in
areas where economic stimulation is most needed.

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The purpose of this Act is to
provide incentives to start businesses on homestead lots by (1) designating
eligible homestead lots as a state enterprise zone;(2) exempting businesses on
homestead lots from the existing eligibility and qualification requirements for
the state enterprise zone program, and (3) creating separate eligibility and
qualification requirements for businesses on homestead lots.

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SECTION
2
.
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Section 209E-4,
Hawaii Revised Statutes, is amended to read as follows:

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"
�209E-4
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Enterprise zone
designation.
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(a)
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The governing body of any county may apply in
writing to the department to have an area declared to be an enterprise
zone.
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The application shall include a
description of the location of the area or areas in question, and a general
statement identifying proposed local incentives to complement the state and any
federal incentives.

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(b)
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The governor, upon the recommendation of the director, shall approve the
designation of up to six areas in each county as enterprise zones for a period
of twenty years.
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Any such area shall be
located in one United States census tract or two or more contiguous United
States census tracts in accordance with the most recent decennial United States
Census.
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The census tract or tracts within
which each enterprise zone is located also shall meet at least one of the
following criteria:

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(1)
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Twenty-five per
cent or more of the population have incomes below eighty per cent of the median
family income of the county; or

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(2)
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The unemployment
rate is 1.5 times the state average.

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(c)
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In addition to the areas approved under (b),
the governor, upon the recommendation of the director, shall approve the
designation of all eligible homestead lots as enterprise zones for a period of
twenty years.

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"Homestead lot" means a
lot of residential, agricultural, or pastoral use to be awarded pursuant to the
Hawaiian Homes Commission Act, 1920, as amended, including but not limited to
on- and off-site infrastructure requirements, appurtenances, and dwelling
units.
"

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SECTION
3
.
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Section 209E-9,
Hawaii Revised Statutes, is amended to read as follows:

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�209E-9
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Eligibility; qualified
business; sale of property or services.
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(a)
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Any business firm may be
eligible to be designated a qualified business for purposes of this chapter if
the business:

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(1)
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Begins the
operation of a trade or business in an eligible business activity within an
enterprise zone;

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(2)
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During each
taxable year has at least fifty per cent of its enterprise zone establishments'
gross receipts attributable to the active conduct of trade or business within
enterprise zones located within the same county; and

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(3)
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Either:

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(A)
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Increases its
average annual number of full-time employees employed at the business'
establishment or establishments within enterprise zones located within the same
county by at least ten per cent by the end of its first tax year of
participation, and during each subsequent taxable year at least maintains that
higher level of employment; or

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(B)
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Increases
its gross sales of agricultural crops produced, or agricultural products
processed within enterprise zones located within the same county by two per
cent annually.

For
business firms engaged in producing or processing agricultural products,
receipts from value-added products made from crops grown within enterprise
zones located within the same county and sold at retail pursuant to the limits
of subsection (e) shall count toward the gross receipts requirement under
paragraph (2).

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(b)
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A business firm may also be eligible to be designated a qualified
business for purposes of this chapter if the business:

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(1)
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Is actively
engaged in the conduct of a trade or business in an eligible business activity
in an area immediately prior to the area being designated an enterprise zone;

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(2)
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Meets the
requirements of subsection (a)(2); and

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(3)
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Either:

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(A)
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Increases its
average annual number of full-time employees employed at the business'
establishment or establishments within enterprise zones located within the same
county by at least ten per cent
by
the end of the first year of operation, and by at least fifteen per cent by the
end of each of the fourth, fifth, sixth, and seventh years of operation, and
for businesses eligible for tax credits extending past the seventh year, at
least maintains that higher level of employment during each subsequent taxable year;
provided that the percentage increase shall be based upon the employee count at
the beginning of the initial year of operation within the enterprise zone or
zones; or

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(B)
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Increases its
gross sales of agricultural crops produced, or agricultural products processed
within enterprise zones located within the same county by two per cent
annually.

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(c)
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After designation of an enterprise zone, each qualified business firm in
the zone shall submit annually to the department an approved form supplied by
the department that provides the information necessary for the department to
determine if it may certify the applicability of the tax credits and exemptions
provided in this chapter for the business firm.
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The approved form shall be submitted by each business to the governing
body of the county in which the enterprise zone is located, then forwarded to the
department by the governing body of the county.

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(d)
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The form referred to in subsection (c) shall be prima facie evidence of
the eligibility of a business for the purposes of this section.

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(e)
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Tangible personal property shall be sold at an establishment of a
qualified business within an enterprise zone and the transfer of title to the
buyer of the tangible personal property shall take place in an enterprise zone
located within the same county in which the tangible personal property is
sold.
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Services shall be sold at an
establishment of a qualified business engaged in a service business within an
enterprise zone.

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(f)
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For any fiscal year that includes September 11, 2001, a business may use
its average annual number of full-time employees as of August 31, 2001--rather
than its average annual number at the end of its fiscal year including
September 11, 2001--if necessary to meet the requirements of subsection (a)(3)
and (4) or (b)(3).
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A business may also
use its average annual number of full-time employees at the end of its fiscal
year that includes September 11, 2001, as its base number of full-time
employees if necessary to meet the requirements of subsection (a)(3) and (4) or
(b)(3) in future fiscal years.

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(g)
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This section shall not apply to the homestead
lots designated under
section

209E-4(c).
"

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SECTION 4.
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Chapter 209E, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

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"
�209E-
�
��
Hawaiian home lands.
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(a)

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Any business firm on homestead lots may
be eligible to be designated a qualified business for purposes of this section
if the business:

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(1)
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Begins the
operation of a trade or business in an eligible business activity within an
enterprise zone; and

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(2)
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During each
taxable year has at least fifty per cent of its enterprise zone establishments'
gross receipts attributable to the active conduct of trade or business within
enterprise zones located within the same county.

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(b)
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A business firm on homestead lots may also be
eligible to be designated a qualified business for purposes of this section if
the business is actively engaged in the conduct of a trade or business in an
eligible business activity in an area immediately prior to the area being
designated an enterprise zone.

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(c)
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After designation of an enterprise zone, each
qualified business firm in the zone shall submit annually to the department an
approved form supplied by the department that provides the information
necessary for the department to determine if it may certify the applicability
of the tax credits and exemptions provided in this chapter for the business
firm.
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The approved form shall be
submitted by each business to the governing body of the county in which the
enterprise zone is located, then forwarded to the department by the governing
body of the county.

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(d)
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The form referred to in subsection (c) shall
be prima facie evidence of the eligibility of a business for the purposes of
this section.

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(e)
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Tangible personal property shall be sold at
an establishment of a qualified business within an enterprise zone and the
transfer of title to the buyer of the tangible personal property shall take
place in an enterprise zone located within the same county in which the
tangible personal property is sold.
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Services shall be sold at an establishment of a qualified business
engaged in a service business within an enterprise zone.
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SECTION 5.
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New statutory material is underscored.

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SECTION 6.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Hawaiian
Home Lands; State Enterprise Zones; Business

Description:

Allows designation of eligible homestead lots as
enterprise zones for a period of twenty years.
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Provides state and local incentives to qualified businesses on homestead
lots.

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