Hawaii SB 2360: RELATING TO STATE ENTERPRISE ZONES.

Bill Text

THE SENATE
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII S.B. NO. 230O
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_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ JAN 2 1 2026_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
A BILL FOR AN ACT
RELATING TO STATE ENTERPRISE ZONES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
PART I
SECTION 1. The legislature finds that the enterprise zone
program was established in 1986 for the purpose of stimulating
business, agricultural, and industrial growth in areas to
revitalize neighborhoods by providing public benefits to local
companies. In addition to stimulating business activity, the
enterprise zone program also promotes job preservation and job
creation in areas designated by the counties and approved by the
governor. Benefits for local companies include permitting and
zoning assistance, fee waivers, tax relief, and more.
The legislature further finds that the most common
industries participating in the enterprise zone program are
agricultural production or processing, manufacturing, and
wholesaling and distribution. Other eligible industries include
aviation or maritime repair or maintenance; telecommunications
switching and delivery systems; information technology design
and production; medical research and clinical trials; for-profit
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S.B. NO. 2.3% o
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training programs in international business management or
environmental remediation; biotechnology research, development,
production, or sales; repair or maintenance of assisted
technology equipment; certain call centers; and wind energy
producers.
The legislature additionally finds that, for decades, a
manufacturer of tangible products has only been eligible for
enterprise zone program benefits if over one-half of the gross
sales of its products are to wholesalers and the sale takes
place within the enterprise zone. This qualification was
established before modern revolutions in manufacturing and
retail sales. Since the program's establishment, business
models have significantly changed, and local manufacturers now
often skip selling to wholesalers and go directly to retail,
making those manufacturers ineligible to participate in the
enterprise zone program. Allowing local manufacturers that sell
directly to retail to be eligible for the enterprise zone
program will help lift local businesses and promote job creation
and job preservation for local families looking to thrive in
Hawaii.
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S.B. NO. 2360
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Accordingly, the purpose of this part is to modernize the
enterprise zone program by allowing additional activities within
an enterprise zone to qualify for enterprise zone benefits,
specifically:
(1) Retail and wholesale activity by a local manufacturer
made within the enterprise zone;
(2) The processing of value-added agriculture products;
and
(3) The provision of professional services by health care
professionals in health-care related sectors.
SECTION 2. Section 209E-2, Hawaii Revised Statutes, is
amended as follows:
1. By adding two new definitions to be appropriately
inserted and to read:
""Tangible personal property" means property that can be
touched or felt and can be relocated. "Tangible personal
property" does not include electricity, real property, or
intellectual property.
"Value-added agricultural product" means a product that has
been processed, enhanced, or otherwise modified beyond its raw
state in a manner that increases its economic value and that
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S.B. NO. 236©
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meets the criteria established for the seal of quality program
by the department of agriculture and biosecurity under section
148-63."
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, the sale of tangible
personal property manufactured and sold at retail in
the enterprise zone for consumption or use by the
purchaser and not for resale, 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, [er] the
processing of agricultural products[] or value-added
agricultural products, all or some of which were grown
within an enterprise zone;
(3) Research, development, sale, or production of all
types of genetically-engineered medical, agricultural,
or maritime biotechnology products; [er]
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S.B. NO. 2300
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(4) Production of electric power from wind energy for sale
primarily to a public utility company for resale to
the public; or
(5) The provision of professional services by health care
professionals in health-care r