STAND. COM. REP. NO. 2899

Honolulu, Hawaii

RE: S.B. No. 2816

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2816, S.D. 1, entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to promote the development of innovative industries in the State.

More specifically, this measure:

(1) Expands the definition of "eligible business activity" under the State Enterprise Zones Program to include certain research and development activities and information technology design and production services;

(2) Authorizes 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;

(3) Requires the Department of Business, Economic Development, and Tourism to conduct an in-house comprehensive review, in consultation with the Department of Taxation, of the State Enterprise Zones Program established under chapter 209E, Hawaii Revised Statutes; and

(4) Requires a report to the Legislature.

Your Committee received written comments in support of this measure from the Department of Business, Economic Development, and Tourism; Business Development and Support Division of the Department of Business, Economic Development, and Tourism; Hawaii Technology Development Corporation; Chamber of Commerce Hawaii; Pacific Rim Land, Inc.; and one individual.

Your Committee received written comments on this measure from the Department of Taxation.

Your Committee 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. 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. Your Committee also finds that incentivizing private-sector investment through enterprise zone designation could be used to accelerate clinical research and trials, medical device development, and the commercialization of new treatments and technologies. Your Committee further 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.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2816, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

DONOVAN M. DELA CRUZ, Chair