A bill that would encourage businesses to open shop in Kapolei passed Thursday, but not without facing hostility from some state lawmakers.

House Bill 2659 would create a five-year jobs initiative pilot program that creates tax incentives for businesses to start or open a new location in Kapolei.

The purpose of the bill is to create more job opportunities for West Oahu residents, in part so they can avoid lengthy commutes. 

In 2015, Kapolei had 34,341 households and a population of approximately 107,234, according to estimates from the state Department of Planning and Permitting and Plasch Econ Pacific.

Kapolei aerial photo1

An aerial photo of fast-growing Kapolei. Lawmakers are considering a bill to create tax incentives for businesses that locate in the West Oahu city.

Cory Lum/Civil Beat

But lawmakers say these numbers are expected to increase to more than 50,000 households and a population of 164,556 by 2035.

Without additional job growth, traffic congestion will continue to escalate for West Oahu residents who have to commute to Honolulu.  

“Another great benefit is it would reduce the need for people to drive into town and battle traffic to get to work,” said Rep. Ty Cullen, who introduced the bill. “If we can save people an hour of their time in traffic, then that is an extra hour that they can spend with their children and families.”

The measure defines a “qualified business” as one that creates a business within the 96706, 96707 and 96709 zip codes, has a minimum of 10 full-time employees, provides annual salaries of $35,000 or more to at least half of its employees and earns at least half of its revenue from its Kapolei location.

The program also excludes retail businesses, unless more than 50 percent of their sales go to the state general excise tax licensees, and businesses already participating in the state enterprise zone program.

Opponents of the bill say it’s unfair to exclude other parts of the state. They also say that the enterprise zone program already does a good job of helping areas of high unemployment.

Enterprise Zone Program

The Hawaii Enterprise Zones Partnership Program is a state-county partnership created to help increase business activity and employment in areas of high unemployment.

Businesses that qualify for the program receive tax and other incentives.

Tax Foundation of Hawaii President Tom Yamachika said Kapolei was previously enrolled in the program but “dropped off” after employment rates improved.

“Like so many things when the incentive drops off over time the communities want to come back and say ‘hey you were giving us this, why don’t you give it to us some more,’” Yamachika said. “Then my response is ‘what about the other communities that have high unemployment? Don’t they need some help as well?”

But Kiran Polk, executive director of the Kapolei Chamber of Commerce,  said the pilot program will be implemented in other areas if successful and differs from the enterprise zone program because it creates professional, “living wage” jobs. 

“The intent of the two programs differ substantially,” Polk said. “While the enterprise zone’s intent is to stimulate job growth for economically distressed areas; the Kapolei jobs initiative pilot program’s intent is to stimulate professional job growth.”

A joint hearing was held Thursday by the Senate Economic Development, Tourism and Technology Committee and the Senate Labor Committee.

Sen. Laura Thielen expressed concern that the bill would encourage businesses to relocate to Kapolei just to reap the program’s benefits, which provides a “more generous” incentive than the enterprise zone program.

“I would like to bring more businesses into the state,” Thielen said. “This bill isn’t designed to bring in more business to the state, it’s designed to look at Kapolei.”

Labor Committee Chair Sen. Jill Tokuda said she appreciated the bill’s attempt to bring in more jobs that would provide livable wages for residents.

“We know right now that seven out of 10 children have two family members that have to work,” Tokuda said. “I would have to guess right now that at Kapolei many of their kids have mommy and daddy working right now so they’re going to need to have livable wages.”

Both committees passed the measure Thursday with amendments.

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