CONFERENCE COMMITTEE REP. NO. 227-26

Honolulu, Hawaii

, 2026

RE: S.B. No. 2360

S.D. 1

H.D. 2

C.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir and Madam:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 2360, S.D. 1, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO STATE ENTERPRISE ZONES,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to:

(1) Amend the definition of "eligible business activity" for the purposes of the Enterprise Zone Program to include certain retail sales of tangible personal property, processing of certain value-added agricultural products, the Hawaii Food and Product Innovation Network, and the provision of certain professional services by health care professionals;

(2) For taxable years beginning after December 31, 2026, extend the eligibility period of the state business tax credit for qualified businesses within state enterprise zones; and

(3) Beginning January 1, 2028, extend the eligibility period of the general excise tax exemption for qualified businesses within state enterprise zones.

Your Committee on Conference finds that the Enterprise Zone Program was established to increase economic growth by providing tax and regulatory incentives to businesses operating in designated areas in the State. Since the Program's establishment, however, additional sectors that are assets to statewide economic goals and would benefit from inclusion have emerged, such as health care services and value-added agricultural production. This measure therefore expands and modernizes the Enterprise Zone Program to promote long-term economic diversification and resilience.

Your Committee on Conference has amended this measure by:

(1) Amending the definition of "Hawaii food and product innovation network" to include entities engaged in research, development, testing, production, or commercialization of value-added food products derived from agricultural crops, rather than those derived only from local agricultural crops;

(2) Inserting a definition of "innovation enterprise";

(3) Deleting language that would have required a "value-added agricultural product" to meet the criteria established for the seal of quality program managed by the Department of Agriculture and Biosecurity pursuant to section 148-63, Hawaii Revised Statutes;

(4) Amending the definition of "eligible business activity" to also include:

(A) Research, development, sale, or production of all types of medical products and medical and health care services;

(B) Aerospace research and development activities; and

(5) Authorizing the Department of Business, Economic Development, and Tourism to declare up to two census tracts on state land that contain an innovation enterprise to be designated as an enterprise zone, subject to the Governor's approval and notwithstanding certain conditions;

(6) Requiring the Department of Business, Economic Development, and Tourism, in consultation with the Department of Taxation, to conduct a comprehensive review of the State Enterprise Zones Program and submit a report of its findings to the Legislature no later than twenty days prior to the convening of the Regular Session of 2027;

(7) Amending section 1 to reflect its amended purpose;

(8) Inserting an effective date of July 1, 2026; and

(9) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 2360, S.D. 1, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 2360, S.D. 1, H.D. 2, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ GREGGOR ILAGAN Co-Chair		____________________________ LYNN DECOITE Chair
____________________________ MATTHIAS KUSCH Co-Chair		____________________________ TROY N. HASHIMOTO Co-Chair
____________________________ IKAIKA HUSSEY Co-Chair