Archive for February, 2010

TECH BILLS MOVE THROUGH LEGISLATURE

February 17th, 2010
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The legislature opened on January 20th and will close on April 29th. We’re a month in, and in the thick of it, right now. It’s a great time to take a look at what’s pending in tech, energy and entertainment.

It’s a budget crisis year and leadership is again focused on balancing the budget, especially because last year’s budget was never balanced. No one wants to make it worse.

And, of course, this is an election year. The whole House and some of the Senate have to run. No one wants to stand out as a budget wrecker or the supporter of something unpopular.

We haven’t heard much from the administration on tech, energy and entertainment, and although it’s possible that they’ll make headlines on some mid-term issue, more likely they’ll wait until veto-time.

After the Hawaii Energy Policy Forum Legislative Report on January 8th and Crucible 2010 on January 19th, quite a few bills were introduced and a number of them are working there way through the process.

Thanks to Senator Carol Fukunaga and Rep. Angus McKelvey for following up on earlier discussions among the Tech Coalition, and for following through on so many tech, energy and entertainment bills.

Thanks to each of them and their respective staffs for posting an excellent spreadsheet at www.capitol.hawaii.gov/session2010/lists/Rptpkg.aspx?pkg=72. And thanks to Yuka Nagashima, CEO of HTDC, for her comprehensive listing.

Here are some brief descriptions of only a few of the ones worth tracking:

There are a number of State Private Investment Fund bills. These are directed at incentivizing private investment. Although they are not all the same, the legislature is paying a lot of attention to them, and there’s a fair chance one will pass. That’s a good thing – we need venture capital in Hawaii. One big issue seems to be who will manage the money – HSDC or a new SPIF agency.

There is an “enabling environment” bill that gives a 5% preference for high tech goods and services provided by Hawaii business. This is a good and important bill that should be passed.

Although 221 will sunset this year, there’s a bill that extends the R&D tax credit to 2011. The bill also creates a High Tech R&D Task Force to draft legislation to improve or propose alternatives to the credit. A recent amendment would also repeal all other 221 tax credits, as if 221 weren’t dead enough.

One energy bill expands the income tax credits for renewable energy projects on commercial properties, reduces the credit reduction for taxpayers seeking a refundable credit, allows the tax credit to be transferred, and amends the law to allow insurance companies to claim renewable energy income tax credits.

There’s an energy bill that permits renewable energy projects in State Enterprise Zones, and another that allows them in State Conservation Districts. And there’s a one that requires state agencies to accept renewable energy project applications for processing within 10 days.

Another energy bill requires that applications for exemption of renewable energy facilities from subdivision requirements be deemed approved if not disapproved within 90 days. I like that one a lot.

One film bill creates a Media Task Force to develop legislation to incentivize development of projects in film, TV, recording and digital media. Another renames the Hawaii Television and Film Development Special Fund to the Hawaii Film Office Special Fund, and requires a certain portion of film tax revenues to be deposited in that fund.

A telecom bill carried over from 2009 would create the Hawaii Broadband Commission in order to promote and maximize availability of broadband services in the state. This bill was considered a “mess” last year, and it’s important that we finally get to it this year.

And finally there’s the bill that would rewrite Chapter 343, the Hawaii Environmental Protection Act. That’s ambitious, and complex, and it’s also in trouble. I wrote about this in my ThinkTech column last week. There’s more work to be done on this before things settle down.

If you care about any of these, you’ll check up on them at capitol.hawaii.gov and submit testimony when they come up for hearing. A number of them are coming up for critical hearings in the next few days, so it’s all a moving target. If you don’t care, other people will surely decide their fate without you.

These are only some of the bills affecting tech, energy and entertainment. There are more, some good and some bad. Many of these bills have gotten through a committee or two and could become law.

The increased number of bills affecting tech, energy and entertainment is impressive, and could indicate more active constituencies and greater legislative interest than before. It remains to be seen whether those constituencies are effective and whether that interest will ripen into thoughtful policy and good law. We can only hope.

But things seem more organized this year, largely because of the efforts of Carol Fukunaga and Angus McKelvey. In any event, the legislature is the legislature and the process is the process. You can’t avoid a certain level of fragmentation and, as hard as you try, it still feels a lot like the Wild West.

We’ll know more about the success of these efforts in early March at crossover.

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TAX POLICY CONTRADICTS STATE ENERGY INITIATIVE

February 9th, 2010
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The recession is settling in, and the signs of it are becoming more deep seated and profound all the time. The Tax Office is trying really hard to increase revenues to the state to do what it can to ameliorate the budget crisis. But sometimes that’s downright destructive, and goes too far.

In recent years, 221 was used most often for energy projects - appreciated or not, it was a friend of Linda Lingle’s Clean Energy Policy. Now, the indigenous tax incentives of 221 are gone, leaving federal tax benefits to incentivize energy investment, but the Lingle Administration is attacking them too.

According to a memo circulated this week by accountant Alan Schlissel of KMH LLP, the State Tax Office is taxing the federal tax incentives. Although it doesn’t have the power to affect the federal benefits directly, it’s moving to make them smaller by imposing state tax on them.

More specifically:

• The Tax Office will now subject cash rebates of the federal renewable energy credit to the general excise tax of 4.5% or more if it is increased.

• The Tax Office could also subject the energy credit to state income tax. They have not yet said they will make it exempt. Hawaii’s maximum income tax is 11% for individuals and 6.4% for corporations.

• At present, the renewable energy credit is not available to insurance companies. Before, they made large investments in high tech companies and thus contributed to the growth of the industry. Absent an incentive to invest locally, they will invest on the mainland.

Schlissel concludes that these issues will have a significant impact on whether energy projects can be financed and built here, and points out that although Linda Lingle has set ambitious goals for fossil fuel reduction, these issues could have an effect on whether we can meet those goals.

While we can certainly sympathize with the administration’s desire to increase tax revenues in the face of the burgeoning budget crisis, taxing the federal energy incentives after killing 221 only adds insult to injury. Why does the administration still insist on cutting these critical incentives?

When the administration rolled out the Momentum Commission and the Innovation Economy, every talking head in government was sent on the campaign trail. But talk it only was, and six months later no one could find any indication that the administration had actually done anything.

The jury is still out on whether the administration’s Clean Energy Initiative will succeed, and the question of the day is what effect the administration’s inconsistent policies on energy will have on its remaining credibility, on the growth of the industry and on the reputation of the state.

We need policy that’s consistent. If you believe in energy, why not support it whenever and wherever possible. Why undermine it year after year by cutting off the supply of capital to local entrepreneurs. Doing that, if we have energy, we’ll have it from outside but not local interests.

When will we learn that large projects invariably require government support, that growing local companies is better for our economy than inviting companies from elsewhere, that local capital is preferable to capital from offshore, and that consistent and focused policy is better than the bunny trail policy we so often see in Hawaii.

Given the record of this administration, it looks like the Clean Energy Initiative could easily go the way of the Momentum Commission and the Innovation Economy. We can wait and hope that future administrations will know better, but that won’t help us repair the current inconsistency.

Sadly, we already know that in Hawaii, Aloha often means standing aside and letting things evolve at their own pace. That way we don’t have to get in anybody’s face, and it all works out the way it was supposed to - by a series of impressive sound bites, soon fading and quickly forgotten.

Forgetting those sound bites does us all a disservice – after all, he who can’t remember the past is doomed to repeat it. On the other hand, he who can remember the past really needs to do something about the future.

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TIME TO LOOK AT ELECTRIC BIKES

February 3rd, 2010
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I saw this David Goodman article in the New York Times about electric bikes a few days ago, and it made me sad. If you hadn’t noticed, electric bikes are now being manufactured and ridden all over the world, but not here. Why is Hawaii ignoring this global phenomenon? Aren’t we the best suited for it?

NINE MILLION BICYLES IN BEIJING

Remember the song Nine Million Bicycles in Beijing, well there are now many more electric bikes than that, even in this the Day of the Car in China. In fact, there are now 120 million electric bikes throughout China. They are replacing conventional bikes and motorcycles.

200,000 electric bikes were sold in the U.S. last year. Best Buy is selling them in the West. They help in dealing with traffic, they’re effortless, cheap and good for the environment. Spurred by the electric bike explosion in China, electric bikes have been proliferating and are now an $11 billion global industry.

Millions are switching to electric bikes, especially the aging population. They’ve helped the bike industry because they incorporate components that require regular replacement. They cost less than $500 in China, and up to $3,000 in the West. New York has a dedicated electric bike dealer, and business is good

One kind is a standard bicycle with pedals and an electric motor that engages on command or when the cyclist pedals. These are most popular in the U.S.and Europe. In China, electric bikes have evolved into bigger machines that look more like a moto scooter.

They travel up to 30 miles per hour with a range of 50 miles. These larger models are a problem for planners. Are they green transportation or a hazard? City governments haven’t yet figured out what to do with them. While they certainly have fewer emissions, they do use lead batteries with a significant potential for environmental damage. It’s a choice.

CYCLING IN HAWAII

Cycling in general has never been very popular in Hawaii. I was sad in Paris too, where I saw so many people riding bikes, and signing up for the program that allows you to ride them from one bike stand to another. It’s impressive.

At our Neighborhood Board meeting last month, someone asked if the police could keep the cyclists off the sidewalks. Other people want to keep them off the streets. Cyclists have so few friends in Hawaii, and the Hawaii Bicycling League hasn’t been able to do much about it.

I remember a jury trial involving an accident where a car struck a cyclist on the sidewalk. On voir dire, half the jurors didn’t like bikes on the sidewalk and the other half didn’t like them on the street. The case settled fast.

I also remember Frank Fasi’s bike lanes, long time passing. That was the most ambitious bike lane program we ever had, but the lanes are old and overridden. We gave up on them, didn’t we? That’s what I call a magnificent squander.

We do have the best climate and topography in the world for bike commuting, but we don’t do it. More often, motorists just don’t or can’t see them and run them over. The Dick Evans Bike Race was named for a racer I knew who was killed some years ago by a bus across Pearlridge. People are afraid of that.

DANGEROUS RESENTMENT

No one wants to ride anymore – there are no bike lanes and it’s dangerous. I remember the way HPD once handled a peleton at Kapiolani Park – the officer thought he’d make his point by cutting in front of them and stopping. Well, they all crashed into his squad car and wound up in the hospital.

Lots of people resent cyclists. They want them to disappear. The net effect is that we don’t have much cycling in Honolulu, even though it’s a natural for bicycle commuting most days of the year. But as the city develops, without bike lanes, the chance that people will take to bicycle commuting dwindles. This possibility is all but gone.

What about the mopeds? They might have been a good choice for commuting, but it hasn’t worked out that way, and they’re used by tourists or students, but not commuters. Drivers don’t like when they’re used rambunctiously and now there’s a bill in the legislature that would crack down on them. Worse, they’re fossil fuel and noisy. Not exactly the green approach, and not exactly popular.

Can you imagine how much better the traffic would be if commuters switched to electric bikes? There would be an immediate and uplifting improvement. We’d save a fortune in gas, just plugging in at home. We’d spend less time in traffic jams and get to work faster, and we’d have less trouble parking. The bikes would be silent, fast, convenient and inexpensive to buy and operate.

Sure, you can be injured or killed on an electric bike. But if we all promised to be considerate and to respect the riders, electric bikes could be almost as safe as cars. If there are lots of electric bike riders, they would be easier to see and therefore safer to drive. Yes, there is safety in numbers.

WHAT WILL IT TAKE

120 million Chinese electric bicycle riders can’t be wrong. These high tech bikes are worlds better than any small commuter vehicle we’ve had before, and with their luxurious speed and range they’d be perfectly swell for city driving.

Hawaii has long had a love affair with big cars. That will undoubtedly continue. But wouldn’t it be wonderful if a critical mass of people could take a chance and get out there with electric bikes. They could save money, save the environment, save time and save our city. How hard would that be?

Although there are millions of electric bikes in the world, I have not actually seen any here. So I searched Electric Bike Hawaii on Google and to my surprise I found that yes there are a number of shops that do sell them here. You can look those shops up too, and that’s probably a good place to start.

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