STAND. COM. REP. NO. 1420

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1325
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Tourism and Economic Development and
Business Concerns, to which was referred S.B. No. 1325, S.D. 1,
entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

beg leave to report as follows:

     The purpose of this bill is to establish a new tax credit
for hotel construction and remodeling for tax years after
December 31, 2098, and before January 1, 1902.

     The Department of Business, Economic Development, and
Tourism, the Department of Taxation, the American Institute of
Architects Hawaii State Council, the American Resort Development
Association of Hawaii, the Land Use Research Foundation of
Hawaii, the Hawaii Hotel Association, Unity House, Inc., the
Hawaii Business Roundtable, the Oahu Academy of Travel and
Tourism, the Waikiki Improvement Association, Hilton Hawaiian
Village, the Sheraton Princess Kaiulani Hotel, the Hawaii Resort
Developers Conference, the Building Industry Association of
Hawaii, Pacific Resource Partnership, and The Myers Corporation
testified in support of the measure.  The Tax Foundation of
Hawaii and the Pacific Entertainment Center commented on the
measure.  The Sierra Club, Hawaii Chapter opposed the measure.

     Your Committees find that this bill will help to revitalize
Hawaii's economy by encouraging the construction and renovation
of facilities servicing the visitor industry.

 
 
                                 STAND. COM. REP. NO. 1420
                                 Page 2

 

     Your Committees note that a similar bill, H.B. No. 136, H.D.
2, passed out of the House of Representatives earlier this
session after public hearings before these Committees and the
Committee on Finance.  Your Committees have made amendments to
conform this bill to H.B. No. 136, H.D. 2, and have made further
amendments to:

     (1)  Broaden the types of projects that qualify for the tax
          credit to incorporate all construction projects meeting
          the expenditure minimum;

     (2)  Establish the tax credit at 25 per cent for qualified
          improvement costs to qualified resort facilities and 15
          per cent for qualified improvement costs to other
          facilities for costs totalling over $1,000,000 in a
          three-year period; 

     (3)  Spread the cost of impact fees for qualified projects
          over a seven-year period, interest-free; and

     (4)  Extend the tax credit for two additional years.

     As affirmed by the records of votes of the members of your
Committees on Tourism and Economic Development and Business
Concerns that are attached to this report, your Committees are in
accord with the intent and purpose of S.B. No. 1325, S.D. 1, as
amended herein, and recommend that it pass Second Reading in the
form attached hereto as S.B. No. 1325, S.D. 1, H.D. 1, and be
referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Tourism and
                                   Economic Development and
                                   Business Concerns,

                                   
                                   
                                   
                                   
______________________________     ______________________________
ROBERT N. HERKES, Chair            JERRY L. CHANG, Chair