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HomeMy WebLinkAboutMIN GREDC 2019/11/19 2018-2020Committee on Governmental Relations and Economic Development 15th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii November 19, 2019 CALL TO The regular meeting of the Committee on Governmental Relations and Economic ORDER: Development was called to order at 1:19 p.m., in the Council Chambers, Kailua-Kona, by Ms. Ashley L. Kierkiewicz, Chair. ROLL CALL: Present: Ms. Ashley L. Kierkiewicz, Chair Ms. Susan L. K. Lee Loy, Vice Chair (came in later) Mr. Aaron S. Y. Chung, Member Ms. Maile Medeiros David, Member Ms. Karen Eoff, Member (came in later) Mr. Matt Kaneali`i-Kleinfelder, Member (came in later, via videoconference from Hilo) Ms. Valerie T. Poindexter, Member (came in later) Mr. Herbert M. "Tim" Richards III, Member Ms. Rebecca Villegas, Member STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) CHR KIERKIEWICZ: Seeing no testifiers, I will be closing public testimony at this time and moving on to business of the day. Mr. Clerk, if you could please read in Communication 49.11. COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 49.11: HAWAII STATE ASSOCIATION OF COUNTIES' OCTOBER 10, 2019, EXECUTIVE COMMITTEE MEETING MINUTES From Council Member Ashley L. Kierkiewicz, dated October 31, 2019. Motion to Close File: Mr. Richards moved to close file on Comm. 49.11. Seconded by Ms. David. GREDC-15 Vote on Comm. 49.11 Filed November 19, 2019 CHR KIERKIEWICZ: Any questions? If you need me to provide a quick snapshot, I can. But if not it's a pretty detailed overview of the meeting that occurred on October 10th, and we put in for the legislative package for our body to celebrate in December. Okay, seeing no questions or comments, all in favor to close file on Comm. 49.11, please say "aye." The motion to close file on Comm. 49.11 was carried by the following voice vote: Ayes: Committee Members Chung, David, Richards, Villegas, and Chair Kierkiewicz – 5. Noes: None. Absent: Committee Member Eoff, Kaneali`i-Kleinfelder, Lee Loy, Poindexter – 4 Excused: None. CHR KIERKIEWICZ: Communication 600, please. Comm. 600: REQUESTS A PRESENTATION BY ECONOMIC DEVELOPMENT SPECIALIST JANE HORIKE FROM THE DEPARTMENT OF RESEARCH AND DEVELOPMENT, REGARDING THE HAWAII ENTERPRISE ZONE PROGRAM From Council Member Herbert M. "Tim" Richards III, dated October 30, 2019. Motion to Close File: Mr. Richards moved to close file on Comm. 600. Seconded by Ms. Villegas. CHR KIERKIEWICZ: Mr. Richards. MR. RICHARDS: Thank you, Chair. This ties into the next order of business concerning the re -designation of a North Kohala Enterprise Zone. And rather than me trying to explain something that Jane is far better at explaining, let's just bring her up and have a conversation—and the presentation and then the conversation. So Chair, I yield. Jane please come forward. CHR KIERKIEWICZ: I believe the mics are already on. Hi Jane, nice to see you. (Note: At this time, Economic Development Specialist Jane Horike came forward to address the members of the Committee.) MS. HORIKE: Good afternoon, I'm Jane Horike. CHR KIERKIEWICZ: You can pull it down just a little bit more. Perfect, thank you so much. Page 2 GREDC-15 November 19, 2019 MS. HORIKE: Thank you for allowing me to share about the re -designation of the North Kohala Enterprise Zone, and a little bit about the program. (Note: At this time, Ms. Horike provided a PowerPoint presentation to the members of the Committee. For viewing of the presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office. A copy of the PowerPoint presentation is made a part of the record, see Comm. 600.01) CHR KIERKIEWICZ: Thank you, Jane, so much for explaining all of that to us. It's a great tool to have in our quiver. I'm going to turn it over to Mr. Richards, since he brought this communication forth. MR. RICHARDS: Thank you, Chair. First of all Jane, I really appreciate you being here to explain this. A little bit confusing, if you're not aware of the program coming forward. But this is stacking up, into all of the things that we as a Council are trying to get done for our county going forward. And Jane and I have met and talked story about this. It's a little puzzling to me the area that we're not going to be able to re -designate, and that's not something that's out of our control. I'm kind of disappointed that we can't do the Kawaihae Harbor economic area, the light industrial area, whatever you want to call it. Because that to me is a logical place for this to occur, and we have yet to get a real good explanation of why that's not being designated. That being said, the reason this is coming up for designation is, we're at the end of the 20 years. And as Jane just pointed out, 2015 is from the other forward named. This one is coming up, and I got to think it's got to go back probably after struggling times from the closure of Kohala Sugar and trying to encourage economic growth in there. So I am a big supporter of this, I think this is something that's going to be continuing to be beneficial for the greater area there. And the maps are a little weird, I'm still trying to puzzle in why they are the way they are, but that's the way they are. So I'm going to ask for my, well actually when we get to the next piece of legislation. So this is a great time to ask questions about this. Essentially what we're talking about, you saw the benefits with the program, it's to stimulate economic growth not just for short term but in perpetuity. And the thing I like about this, is they worked really hard to keep little businesses up and running and help with that. And so with that, Chairman turn back over and let my colleagues ask questions. CHR KIERKIEWICZ: Great. Thank you, Mr. Richards. Ms. Poindexter. Page 3 GREDC-15 November 19, 2019 MS. POINDEXTER: Yeah. So on the enterprise zone the same thing Jane, still where even if you have a business outside of the zone itself but where your mail is delivered is in the zone, they qualify? MS. HORIKE: Okay, I want to correct that a little bit. What it is, is where the point of sale occurs, it's not where you pasture your cows. So if you pasture your cows outside of the zone, but you're selling your cows from inside the zone, the transaction of the company is inside the zone, then it qualifies. MS. POINDEXTER: So that's important to know. MS. HORIKE: Right. MS. POINDEXTER: Because there's a lot of people along my coastline, because we went through this several years ago. Where they weren't in the zone, but because of where they were doing their point of sale, which happened to be at the post office. MS. HORIKE: Okay. MS. POINDEXTER: You know, invoicing, non -invoicing whatever. So I just want the public to know that, so there are different loopholes I would call it. I don't know if you would call a loophole, but an opportunity I would say. Other opportunities if you don't for some reason because of the census, because the zones are based off of the census, correct? MS. HORIKE: Yes. Designated areas. MS. POINDEXTER: Right. And so the census was people didn't participate well enough in the census then they weren't afforded the zone. But still know that they may need this opportunity, so there is a way to do it which is this avenue. So thank you, thank you for clarifying that. MS. HORIKE: And through a point where, the point of sale is. MS. POINDEXTER: Point of sale is, thank you. Thank you, Madam Chair. I yield. CHR KIERKIEWICZ: Thank you, Ms. Poindexter. Any other questions or comments for Ms. Horike on this program? I just have a few questions and I'm going to be very cognizant of time. You want me to go first? MR. RICHARDS: Yes, that's fine. You're Chair. I just have one quick question. Page 4 GREDC-15 November 19, 2019 CHR KIERKIEWICZ: Oh, okay. Thank you, Jane. Just PSA (Public Service Announcement) out there to everyone, when you get the census please take it. Because it's very important that we get our fair share of federal funding. And these enterprise zones were developed with census status, so important for folks to participate. I'm just curious after the upcoming census is complete, will these enterprise zone boundaries be redrawn to reflect the low moderate income? MS. HORIKE: If we do that, I would have to expand zones. However, if it's designated if it's already a designated zone, and the numbers change it will be grandfathered in for a period of 20 years. However, if it is an area that could be in the zone because of the new census boundaries, I would have to go through the process of coming before you again and expanding a particular zone, and saying okay, this particular area now can encompass this additional area. And you would be the ones to designate that particular area. CHR KIERKIEWICZ: Okay, that's helpful to know. So we could expand, but potentially retract in some areas based on the data? MS. HORIKE: Yeah. CHR KIERKIEWICZ: Great. Thank you, Jane. Are you able to estimate for us how many businesses are taking advantage of the enterprise zone program? MS. HORIKE: Currently I have about—okay, last year was 60, but I had some additional. Through the years for the 25 years, there has been over 350 companies that have participated in the program. CHR KIERKIEWICZ: Was there a particular activity that they were participating in? MS. HORIKE: I think agriculture is the highest. CHR KIERKIEWICZ: Agriculture production. MS. HORIKE: Yes. CHR KIERKIEWICZ: Okay. MS. HORIKE: And then of course it's wholesaling and manufacturing, many times related to agriculture. CHR KIERKIEWICZ: Sure, that makes sense. Okay, but there's tons of opportunities here, it seems. Telecommunications, medical research, IT, biotechnology, lots of things. Any limitations with the manufacturing piece, they're not limited as to what item they manufacture? Page 5 GREDC-15 November 19, 2019 MS. HORIKE: No. As long they're manufacturing, and there is a product. Like for example, if they're generating energy and there's no product then that is not considered manufacturing. If there is a biofuel that can be sold off, then that can be considered as manufacturing. So manufacturing does need a product to be sold to someone. CHR KIERKIEWICZ: Okay, great. Thank you, Jane, appreciate it. I believe Mr. Richards has a couple more questions. MR. RICHARDS: Just a quick follow up Jane. Your statement there must have a product to sell. For instance if you are growing coffee and then you are roasting it and packaging it, that's considered a product that you are manufacturing there? MS. HORIKE: Yes. MR. RICHARDS: Okay. And then follow up on that the new businesses, and increasing staff You start up a business and let's say you hire three people, how does that hiring more staff, how does that stack into a brand new business? MS. HORIKE: Okay. If you register into the program and you have one employee, then we count from that one employee—and you're a new business all you have to do is increase by 10 percent of one person. So that would require you to hire one person, so if you hire three people then you qualify for benefits in the program. And if you maintain that one employee for seven years, you qualify for all benefits for the period of seven years. MR. RICHARDS: Okay, so it's whatever the growth is, as long as you get 10 percent. MS. HORIKE: Yes. We start with the number that you enter the program with, and then we go 10 percent and 15 percent over that. MR. RICHARDS: Okay. MS. HORIKE: Okay. One person the first year, which as opposed to agriculture, we're saying you need to increase gross sales by two percent each year. So we take your gross sales from this year, and you need to increase that by two percent. And next year we would take your gross sales from that year, and you need to increase it by two percent the following year. And not two percent each year from when you entered the program. MR. RICHARDS: Okay, thanks. I yield. CHR KIERKIEWICZ: Thank you, Mr. Richards. Matt, I wanted to check in to see if you had any questions in Hilo? If you're speaking I can't hear you. Page 6 GREDC-15 November 19, 2019 MR. HENRICKS: Staff please make sure that mics are unmuted, we cannot hear Mr. Kaneali`i-Kleinfelder at this time. Thank you. MR. KANEALI`I-KLEINFELDER: Can you hear me? CHR KIERKIEWICZ: Yes, thank you. MR. KANEALI`I-KLEINFELDER: Thank you, sorry about that. Jane, wonderful to see you. My question Jane, for a business that's existing, can an existing business come and take advantage of this program if they didn't start off in the enterprise zone program? MS. HORIKE: Okay, could you repeat the question, please. MR. KANEALI`I-KLEINFELDER: If there's an existing business that didn't take advantage of the enterprise zone program could they come in and apply with you at any time during, you know, their years of business? MS. HORIKE: Yes. In fact I'd like to share the program with various businesses, and I kind of tell them to put this as a strategy in their basket. Because if they're building it's best to come in before they build. Sometimes because in their strategy it would be better for them to wait to participate, so they could look at the benefits off the program and how it would benefit the business. This is a program that doesn't give them money, but helps them to keep their own money. And if they can analyze how best the program will work for them that would be the time for them to enter the program. MR. KANEALI`I-KLEINFELDER: Yeah, just looking at some of the benefits from this, you know, 100 percent general excise tax (GE) exemption for seven years, non-refundable state income tax credits against liability, 80 percent. Just these would be incredibly helpful for a small business getting started or already in process, especially when it comes to the more you've made the less you're going to pay when it comes to GE. And you know, personally we would benefit greatly from this. And I think a lot of small business may not know about it, and if they don't they should be jumping to get in this program if they qualify. MS. HORIKE: That is correct. However remember this program does not allow retail service, or hospitality businesses to participate in the program. There is a list of businesses that can participate in the program, and that is true. And what we did try to do legislatively, was to help agriculture business, so that is correct. We even encourage family businesses that are agriculturally based that many times there is one person that does agriculture, and maybe friends and family do harvesting and planting. But if they can increase their gross by two percent each year, they can enjoy the benefits of the program. And this is what the program is Page 7 GREDC-15 November 19, 2019 about, providing funding so that the businesses can grow and expand through the years. MR. KANEALI`I-KLEINFELDER: Yeah. I mean there's manufacturing, wholesale distribution, ag production or value added. These businesses just those three, I think a lot of local businesses qualify in that area. Because we're very food centered on the Big Island as far as some our big exports from the island or just within the islands. So this is amazing, and I hope businesses are watching and I hope this word gets out there. And thank you, to Mr. Richards, who brought this forward. I believe, yes, Mr. Richards? CHR KIERKIEWICZ: Yes, it is Mr. Richards. MR. KANEALI`I-KLEINFELDER: Good job, Mr. Richards. Thank you, I appreciate that. So small businesses hope you're watching, and take advantage of this program. And if we can help, we can help you. Thank you. CHR KIERKIEWICZ: Thank you. Any other questions or comments? Ms. David. MS. DAVID: Mahalo, Chair. Ms. Horike, I just have one question. You stated that island -wide the number of participants that we have is that number broken down by districts? MS. HORIKE: Yes. MS. DAVID: It is? MS. HORIKE: Yes, and I can get you that information. MS. DAVID: Okay, great. Thank you very much. I yield. CHR KIERKIEWICZ: Thank you, Ms. David. Anyone else, questions or comments? Jane, thank you so much for the presentation. I'm wondering if you could transmit an electronic copy to all of us, because I'm already thinking, you know, as Chair of this committee I wanted to post it out to my networks and get it out to the chambers. And I'm wondering if maybe you'd be interested in doing a segment with Stacy Higa, at Na Leo, Aupuni Connections. And maybe we can get some of the program participants to provide that, you know, personal testimonial. I think that would be really excellent. And I also wonder if there's an opportunity to match up enterprise zone with opportunity zones. There's a lot zone potential. Okay, motion on the floor to close file Communication 600. All in favor please say "aye." Page 8 GREDC-15 November 19, 2019 Vote on Comm. 600: The motion to close file on Comm. 600 was carried by (Filed) the following voice vote: Ayes: Committee Members Chung, David, Eoff, Kaneali`i-Kleinfelder, Lee Loy, Poindexter, Richards, Villegas, and Chair Kierkiewicz — 9. Noes: None. Absent: None. Excused: None. CHR KIERKIEWICZ: Motion carries, thank you. Okay, point of personal privilege, go ahead. Point of Personal MR. RICHARDS: Thank you. Point of personal privilege. Jane are you leaving Privilege: right now, or are you going to stay for the next piece? Okay, thank you. CHR KIERKIEWICZ: Mr. Clerk, if we could move on to Order of Resolution, please. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 400-19: NOMINATES THE NORTH KOHALA ENTERPRISE ZONE FOR RE -DESIGNATION BY THE GOVERNOR Requests the Governor to re -designate the North Kohala Enterprise Zone to allow eligible businesses to receive County and State tax exemptions and reductions to stimulate business and industrial growth. Reference: Comm. 601 Intr. by: Mr. Richards Motion to Approve: Mr. Richards moved to recommend adoption of Res. 400-19. Seconded by Ms. Lee Loy. CHR KIERKIEWICZ: Mr. Richards, go ahead. MR. RICHARDS: Thank you, Chair. I don't need to do a lot of conversation on this, because we just had a lot of conversation on this. I think this is one of those things that every once in a while government does really good to help out, and this is one of those deals. I really appreciate the fact that Jane brought forth the PowerPoint and the presentation, so we can better understand it. Because the first time you hear it, it's a little bit confusing. But I hope this cleared up for a lot of people. We are ahead of the curve because this is such an old enterprise zone, and Page 9 GREDC-15 November 19, 2019 appreciate the fact that we're going to be re -designating this area. Does have to go through the Governor's office, but I'm confident we're going to get it thorough there. Jane, on a personal note I really want to thank you for driving over from Hilo to come here, I know it's a little bit of a drive. But from the Council standpoint, I much prefer to have you here to answer face to face rather than over the video. So again, from a personal standpoint, thank you very much. So with that Chair, I'm going to ask that my colleagues support this resolution going forward. I yield. CHR KIERKIEWICZ: Thank you, Mr. Richards. Any questions or comments. Okay, seeing none. Mr. Richards, thank you so much for looking out for your community, it's a very beneficial program. And thank you, Jane, for being here and providing this really important presentation to the Council. We have a motion on the floor to approve Resolution 400-19, all in favor please say "aye." Vote on Res. 400-19 The motion to recommend adoption of Res. 400-19 was (Approved): carried by the following voice vote: Ayes: Committee Members Chung, David, Eoff, Kaneali`i-Kleinfelder, Lee Loy, Poindexter, Richards, Villegas, and Chair Kierkiewicz — 9. Noes: None. Absent: None. Excused: None. BILLS FOR The Chair directed the Committee to proceed to the next order of business, Bills ORDINANCES: for Ordinances. (There were none.) CHR KIERKIEWICZ: Can I have a motion to adjourn? Page 10 GREDC-15 A n TOT TR N- MENT: November 19, 2019 There being no further business, at 1:18 p.m., Ms. Lee Loy moved to adjourn the meeting. Seconded by Mr. Richards and carried by the following voice vote: Ayes: Committee Members Chung, David, Eoff, Kaneali`i-Kleinfelder, Lee Loy, Poindexter, Richards, Villegas, and Chair Kierkiewicz — 9. Noes: None. Absent: None. Excused: None. CHR. KIERKIEWICZ: The Committee on Governmental Relations and Economic Development is adjourned at 1:50 p.m. App ed: Ms. Ashley L. Kierkiewicz, Chair Governmental Relations and Economic Development Committee (Vl�[ (9 (Date) Page 11