SECTION 1. The legislature finds that the Hawaii strategic development corporation was established in 1990 to encourage and foster the development of small and emerging businesses and to use the revenues from innovation rights for the benefit of the citizens of Hawaii. Since then, the corporation has grown into an entity that supplies one segment of the venture capital economy and has become a self-investing fund with a narrow scope generating only indirect benefits to social programs and education.

The legislature further finds that while the corporation's role of stimulating investment in local companies is important, the divisions and other attached agencies of the department of business, economic development, and tourism fulfill those needs. Accordingly, the corporation should return to its original intent of generating funds through strategic investments with a portion of the returns expended for the benefit of Hawaii's citizens.

The legislature also finds that public resources should not support firearms and fossil fuels companies in those industries significantly contribute to the deterioration of the world's political, social, and environmental well-being.

The purpose of this Act is to:

(1) Prohibit the Hawaii strategic development corporation from investing in firearms and fossil fuel companies; and

(2) Set aside a portion of the revenues generated by the Hawaii strategic development corporation for education.

SECTION 2. Section 211F-1, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""Firearm" shall have the same meaning as in section 134-1.

"Firearm company" means a company that processes raw materials or parts into firearms, firearm ammunition, or finished parts of firearms or firearm ammunition.

"Fossil fuel company" means a company that is identified by a global industry classification system code in one of the following sectors:

(1) Coal and consumable fuels;

(2) Integrated oil and gas; or

(3) Oil and gas exploration and production."

SECTION 3. Section 211F-5, Hawaii Revised Statutes, is amended to read as follows:

"§211F-5 Hawaii strategic development corporation revolving fund. (a) There is established the Hawaii strategic development corporation revolving fund. The following moneys shall be deposited into the Hawaii strategic development corporation revolving fund and shall not be considered part of the general fund: all moneys appropriated by the legislature, received as repayments of loans, earned on investments, received pursuant to a venture agreement, received as royalties, received as premiums or fees charged by the corporation, or otherwise received by the corporation[.]; provided that per cent of the moneys earned on investments, received pursuant to a venture agreement, received as royalties, or received as premiums or fees charged by the corporation shall be deposited into a subaccount of the revolving fund and shall not be expended by the corporation.

(b) At the end of each fiscal year, the director of finance shall transfer, as a gift, the entirety of the subaccount to the gifts and donations trust fund of the department of education or another appropriate fund as determined by the superintendent of education. The amount transferred may be expended for any department of education expense approved by the superintendent of education."

SECTION 4. Section 211F-7, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The corporation shall not make direct investments in individual businesses except upon a two-thirds vote of the board in each case considered. When deciding whether to enter into a direct investment, the corporation shall consider whether:

(1) The project is economically sound;

(2) The project can be successfully completed;

(3) The project will promote economic diversification;

(4) The project is located in or will locate in the State and has a reasonable potential to create desirable employment opportunities for residents of the State;

(5) The project has been unable to obtain sufficient funding on reasonable terms through ordinary means; and

(6) The project can be partially financed through ordinary means at reasonable terms.

The corporation shall not acquire securities to an extent that would provide the corporation effective voting control of any enterprise after giving effect to the conversion of all outstanding convertible securities of the enterprise. The corporation shall not make investments in the corporate obligations, preferred or common stocks, or other securities or futures contracts of any fossil fuel company or firearm company."

SECTION 5. The board of directors of the Hawaii strategic development corporation shall:

(1) Identify all holdings in fossil fuel and firearm companies by December 31, 2019;

(2) Refrain from acquiring new assets or securities in fossil fuel and firearm companies;

(3) Divest all holdings in all publicly traded fossil fuel and firearm companies identified under paragraph (1) within five years at a divestment rate of twenty per cent each year as follows:

(A) December 31, 2020 Twenty per cent;

(B) December 31, 2021 Forty per cent;

(D) December 31, 2023 Eighty per cent; and

(E) December 31, 2024 One hundred per cent; and

(4) Beginning on December 31, 2019, and annually thereafter, post on its website a list of all fossil fuel and firearm companies in which it has holdings.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2019; provided that the amendments made by sections 2 and 4 of this Act shall take effect on January 1, 2025.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	342
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII