STAND. COM. REP. NO. 274

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1607
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred S.B. No. 1607 entitled: 

     "A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT AND
     PRIVATE INVESTMENT ATTRACTION,"

begs leave to report as follows:
     
     The purpose of this measure is to appropriate $10,000,000 to
the Hawaii Strategic Development Corporation Revolving Fund for
investments primarily in high technology companies.

     Your Committee received testimony in support of this measure
from the Department of Business, Economic Development, and
Tourism, the High Technology Development Corporation, Hawaii
Venture Capital Association, and PremierCapital Advisors, LLC.
The Hawaii Strategic Development Corporation submitted comments.

     Your Committee finds that the need for venture capital in
Hawaii is well demonstrated by successful local companies, such
as Verifone, Aloha Networks, and Digital Island, which were all
financed primarily with mainland capital.  In the short term, the
shortage of venture capital in Hawaii makes it substantially more
difficult, if not impossible, for local companies to begin
operations.  Over the long term, if these companies are
successful, local investors have lost an opportunity and Hawaii's
economy loses the potential for long term capital accumulation
and reinvestment.


 
a                                                     SB1607 SD1
 
                                   STAND. COM. REP. NO. 274
                                   Page 2


     Your Committee is in support of these efforts to build a
stronger Hawaii venture capital market, and notes that this
measure will require a dollar-for-dollar match by private sector
investment.  However, your Committee believes that given pending
budget restrictions, the appropriation amount should be further
discussed in the Committee on Ways and Means.  Your Committee has
amended this measure accordingly to replace the dollar amounts
with unspecified sums.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 1607, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 1607,
S.D. 1, and be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
a                                                     SB1607 SD1