SB2816 SD1

SECTION 1. The legislature finds that the State enterprise zones program was established in 1986 for the purpose of stimulating business activity, job growth, and job retention in areas where they are needed the most. These areas, known as enterprise zones, are designated by the counties and approved by the governor. Qualified companies that establish themselves in enterprise zones receive benefits that include state tax credits and tax waivers, as well as additional incentives provided by the counties.

The legislature finds that incentivizing private-sector investment through enterprise zone designation will accelerate clinical research and trials, medical device development, and the commercialization of new treatments and technologies. Co‑locating these activities alongside academic medicine, health systems, and technology incubation resources strengthens industry clustering, attracts investments and new business development, fosters high-wage job creation for local residents, and expands access to advanced clinical services for Hawaii patients. This growth will support the State's long-term economic diversification strategy by positioning Hawaii as a globally competitive health care technology hub and increasing export-oriented economic activity.

The legislature finds that supporting economic activity around innovative sectors will attract investment, create high-skilled jobs, and diversify Hawaii's economy consistent with the State's economic and workforce development goals.

Accordingly, the purpose of this Act is to maximize the utilization of state-owned properties through the creation of innovation enterprises that support targeted industries and stimulate the surrounding census tracts by:

(1) Authorizing the department of business, economic development, and tourism to declare up to two census tracts in the State that contain an innovation enterprise to be designated as an enterprise zone, subject to the governor's approval;

(2) Requiring the department of business, economic development, and tourism to conduct a comprehensive in-house review, in consultation with the department of taxation, of the state enterprise zones program established under chapter 209E, Hawaii Revised Statutes; and

(3) Requiring a report to the legislature.

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

1. By adding one new definition to be appropriately inserted and to read:

""Innovation enterprise" means an area located on property owned by the State that is intended to support, or currently contains, businesses primarily engaged in biomedical or life sciences research, clinical trials, medical technology development, pharmaceutical manufacturing, aerospace technology research and development, space domain awareness, or information technology design and production services."

2. By amending the definition of "eligible business activity" to read:

""Eligible business activity" means the:

(1) Manufacture of tangible personal property, the wholesale sale of tangible personal property as described in section 237-4, or a service business as defined in this section;

(2) Production of agricultural products where the business is a producer as defined in section 237-5, or the processing of agricultural products, all or some of which were grown within an enterprise zone;

(3) Research, development, sale, or production of [~~all~~]:

(A) All types of [~~genetically-engineered~~] medical, agricultural, or maritime biotechnology products; [or] and

(B) Medical and health care services;

(4) Production of electric power from wind energy for sale primarily to a public utility company for resale to the public;

(5) Research and development of aerospace technology; or

(6) Information technology design and production services;

provided that medical cannabis dispensary activities pursuant to chapter 329D shall not be considered an eligible business activity for the purposes of this chapter."

SECTION 3. Section 209E-4, Hawaii Revised Statutes, is amended to read as follows:

"§209E-4 Enterprise zone designation. (a) The governing body of any county may apply in writing to the department to have an area declared to be an enterprise zone. 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.

(b) 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. 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. The census tract or tracts within which each enterprise zone is located also shall meet at least one of the following criteria:

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

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

(c) The department may declare up to two census tracts in the State that contain an innovation enterprise to be designated as an enterprise zone, subject to the governor's approval."

SECTION 4. (a) The department of business, economic development, and tourism, in consultation with the department of taxation, shall conduct an in-house comprehensive review of the state enterprise zones program established under chapter 209E, Hawaii Revised Statutes.

(b) The comprehensive review shall include:

(1) An evaluation of the economic impact of the program, including the number of jobs created and the types of industries supported;

(2) An assessment of whether existing enterprise zones continue to meet the statutory eligibility criteria for designation; and

(3) Revenues generated by participating companies for each county.

(c) The department of business, economic development, and tourism shall submit a report of its findings to the legislature no later than twenty days prior to the convening of the regular session of 2027.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2816
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII