Film Production Funding

Establishes State of Hawaii film special fund within DBED&T;
exempts amounts received from construction of an entertainment
industry production facility from GET; amends definition of "use"
to include material, parts, tools, or equipment imported or
purchased for use in the entertainment industry; appropriations.

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 2
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Chapter 201, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and to
 3 read as follows:
 4      "201-     State of Hawaii film special fund; established.
 5 There is established the State of Hawaii film special fund into
 6 which shall be deposited all moneys that may be appropriated by
 7 the legislature, received in repayment of loan principal, payment
 8 of interest, or fees, or that may be loaned or granted by the
 9 department of business, economic development, and tourism under
10 this section.  All moneys shall be used to fund and assist
11 independent filmmakers in Hawaii to produce films in the State,
12 and to attract independent filmmakers outside of Hawaii to
13 produce films in Hawaii using primarily local creative and
14 technical personnel, and from which the department may fund
15 Hawaii film projects under agreements with any state or county
16 agency or other organizations.  The department may use all
17 appropriations and other moneys in the special fund not
18 appropriated for a designated purpose to make grants or loans;
19 provided that at no time shall the department reallocate funds

Page 2                                                     37
                                     H.B. NO.           H.D. 1
                                                        S.D. 2

 1 from the loan program to the grant program so that insufficient
 2 funds remain available to make loans."
 3      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 4 by adding a new section to be appropriately designated and to
 5 read as follows:
 6      "237-     Entertainment industry production facilities.
 7 (a)  This chapter shall not apply to amounts received from the
 8 construction of an entertainment industry production facility in
 9 the State.
10      (b)  As used in this section:
11      "Entertainment industry production facility" means a
12 facility on not less than one hundred acres including production
13 and ancillary facilities for motion picture production and
14 television production, such as sound stages, sound studios, a
15 backlot, warehouse space, and related administrative and employee
16 space.
17      "Motion picture production" means all of the activities
18 necessary to take a commercial motion picture from concept to
19 finished product suitable for distribution and exhibit.
20      "Television production" means all of the activities
21 necessary to take a program from concept to finished product
22 suitable for broadcast and viewing."

Page 3                                                     37
                                     H.B. NO.           H.D. 1
                                                        S.D. 2

 1      SECTION 3.  Section 238-1, Hawaii Revised Statutes, is
 2 amended by amending the definition of "use" to read as follows:
 3      ""Use" (and any nounal, verbal, adjective, adverbial, and
 4 other equivalent form of the term) herein used interchangeably
 5 means any use, whether the use is of such nature as to cause the
 6 property to be appreciably consumed or not, or the keeping of the
 7 property for such use or for sale, and shall include the exercise
 8 of any right or power over tangible personal property incident to
 9 the ownership of that property, but the term "use" shall not
10 include: 
11      (1)  Temporary use of property, not of a perishable or
12           quickly consumable nature, where the property is
13           imported into the State for temporary use (not sale)
14           therein by the person importing the same and is not
15           intended to be, and is not, kept permanently in the
16           State (as for example without limiting the generality
17           of the foregoing language:  (A) in the case of a
18           contractor importing permanent equipment for the
19           performance of a construction contract, with intent to
20           remove, and who does remove, the equipment out of the
21           State upon completing the contract; (B) in the case of
22           moving picture films imported for use in theaters in

Page 4                                                     37
                                     H.B. NO.           H.D. 1
                                                        S.D. 2

 1           the State with intent or under contract to transport
 2           the same out of the State after completion of such use;
 3           (C) in the case of a transient visitor importing an
 4           automobile or other belongings into the State to be
 5           used by the transient visitor while therein but which
 6           are to be used and are removed upon the transient
 7           visitor's departure from the State); 
 8      (2)  Use by the taxpayer of property acquired by the
 9           taxpayer solely by way of gift;
10      (3)  Use which is limited to the receipt of articles and the
11           return thereof, to the person from whom acquired,
12           immediately or within a reasonable time either after
13           temporary trial or without trial; 
14      (4)  Use of goods imported into the State by the owner of a
15           vessel or vessels engaged in interstate or foreign
16           commerce and held for and used only as ship stores for
17           the vessels; 
18      (5)  The use or keeping for use of household goods, personal
19           effects, and private automobiles imported into the
20           State for nonbusiness use by a person who (A) acquired
21           them in another state, territory, district, or country,
22           (B) at the time of the acquisition was a bona fide

Page 5                                                     37
                                     H.B. NO.           H.D. 1
                                                        S.D. 2

 1           resident of another state, territory, district, or
 2           country, (C) acquired the property for use outside the
 3           State, and (D) made actual and substantial use thereof
 4           outside this State; provided that as to an article
 5           acquired less than three months prior to the time of
 6           its importation into the State it shall be presumed,
 7           until and unless clearly proved to the contrary, that
 8           it was acquired for use in the State and that its use
 9           outside the State was not actual and substantial; 
10      (6)  The leasing or renting of any aircraft or the keeping
11           of any aircraft solely for leasing or renting to
12           lessees or renters using the aircraft for commercial
13           transportation of passengers and goods;
14      (7)  The use of oceangoing vehicles for passenger or
15           passenger and goods transportation from one point to
16           another within the State as a public utility as defined
17           in chapter 269; [and]
18      (8)  The use of material, parts, or tools imported or
19           purchased by a person licensed under chapter 237 which
20           are used for aircraft service and maintenance, or the
21           construction of an aircraft service and maintenance
22           facility as those terms are defined in section

Page 6                                                     37
                                     H.B. NO.           H.D. 1
                                                        S.D. 2

 1           237-24.9[.]; and
 2      (9)  The use of material, parts, tools, or equipment
 3           imported or purchased by a person licensed under
 4           chapter 237 that are used in an entertainment industry
 5           production facility, or the construction of an
 6           entertainment industry production facility as those
 7           terms are defined in section 237-    .
 8      With regard to purchases made and distributed under the
 9 authority of chapter 421, a cooperative association shall be
10 deemed the user thereof."
11      SECTION 4.  Statutory material to be repealed is bracketed.
12 New statutory material is underscored.
13      SECTION 5.  This Act shall take effect on July 1, 1999.