REPORT TITLE:
Economic Development


DESCRIPTION:
Specifies the terms and conditions, and amount of qualified
improvement tax credits, allowed for qualified improvement costs
for property designated primarily for resort or hotel use by the
counties, or property in which the primary purpose is for hotel
or resort use or commercial or recreational use to support or
service a hotel or resort use.  Disallows the transient
accommodations tax credits from qualified improvement costs.
Requires the director of taxation to develop procedures for the
distribution and share of the tax credits.  Authorizes the
director of taxation to develop for each qualified taxpayer, a
plan that phases in over a ten year period, the qualified
improvement tax credits claimed by the taxpayer.  Partially
exempts the Hawaii tourism authority from the environmental
impact statements (EIS) law.  Amends the definition of "action"
under the EIS law to exclude any marketing and promotional
program that does not require a discretionary permit (SB3032 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3032
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO ECONOMIC DEVELOPMENT.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 201B, Hawaii Revised Statutes, is
 
 2 amended by adding a new section to be appropriately designated
 
 3 and to read as follows:
 
 4      "§201B      Environmental impact statement law.  The
 
 5 authority shall not be subject to chapter 343, including the
 
 6 preparation of an environmental assessment or an environmental
 
 7 impact statement, whether in draft or final form, except for any
 
 8 authority action that requires another agency's approval, as
 
 9 defined in chapter 343." 
 
10      SECTION 2.  Section 235D-1, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "[[]§235D-1[]]  Definitions.  Whenever used in this chapter,
 
13 unless the context otherwise requires:
 
14      "Net income tax liability" means income tax liability
 
15 reduced by all other allowed credits, as determined under chapter
 
16 235.
 
17      ["Qualified general facility" means any building or
 
18 improvement that is not a qualified resort facility.]
 

 
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 1      "Qualified improvement costs" means any capitalized costs
 
 2 for construction and equipment of a permanent nature [related to
 
 3 a qualified resort facility or a qualified general facility,
 
 4 including infrastructure costs,]:
 
 5      (1)  On property designated primarily for hotel or resort
 
 6           use by the applicable county zoning ordinances or
 
 7           general plan; or
 
 8      (2)  On property not so designated, but the primary purpose
 
 9           of which is for:
 
10           (A)  Hotel or resort use; or
 
11           (B)  Commercial or recreational use to support or
 
12                service a hotel or resort use;
 
13 but shall not include the costs for which another tax credit was
 
14 claimed for the taxable year.
 
15      ["Qualified resort facility" means any building or
 
16 improvement located or to be located:
 
17      (1)  On property designated primarily for resort or hotel
 
18           use by the applicable county zoning ordinances or
 
19           general plan; or
 
20      (2)  On property not so designated, but the primary purpose
 
21           of which is for commercial or recreational use to
 
22           support or service a hotel or resort use, such as a
 
23           golf course, golf course clubhouse, or retail center.]"
 

 
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 1      SECTION 3.  Section 235D-2, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "[[]§235D-2[]]  Qualified improvement tax credit.(a)
 
 4 There shall be allowed to each taxpayer subject to the taxes
 
 5 imposed by chapters 235, 237, [237D,] and 239, a qualified
 
 6 improvement tax credit, which shall be available to reduce the
 
 7 taxpayer's net income tax liability, general excise tax,
 
 8 [transient accommodations tax,] or public service company tax
 
 9 imposed by these chapters.
 
10      (b)  [The total amount of the qualified improvement tax
 
11 credit shall be determined by applying the applicable credit
 
12 percentage to the qualified improvement costs paid by the
 
13 taxpayer in the taxable year.]  For qualified improvement costs
 
14 [to a qualified resort facility totalling $1,000,000 or more over
 
15 a three-year period, the applicable credit percentage shall be
 
16           per cent.  For qualified improvement costs to a
 
17 qualified general facility totalling $1,000,000 or more over a
 
18 three-year period, the applicable credit percentage shall be
 
19           per cent.] totalling over a three-year period:
 
20      (1)  $1,000,000 and over, but not over $5,000,000, the
 
21           applicable credit percentage shall be ten per cent;
 
22      (2)  Over $5,000,000, but not over $10,000,000, the
 
23           applicable credit percentage shall be fifteen per cent;
 
24           and
 

 
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 1      (3)  Over $10,000,000, the applicable credit percentage
 
 2           shall be twenty per cent; provided that the taxpayer
 
 3           shall:
 
 4           (A)  Pay all employees the prevailing wages if the
 
 5                taxpayer is the general contractor on the project;
 
 6                or
 
 7           (B)  Provide, in any contract let in connection with
 
 8                the project, stipulations requiring that the
 
 9                contractor and any subcontractor pay the
 
10                prevailing wages for the employees working on the
 
11                project.
 
12      To qualify for a credit of fifteen per cent or more under
 
13 this section, any taxpayer who purchases an operating hotel and
 
14 closes the hotel for renovation shall retain nonsupervisory,
 
15 nontipped employees on the payroll for at least six months
 
16 following the closure of the hotel.
 
17      (c)  [The] Each tax credit allowed under this chapter may be
 
18 taken over a period not to exceed ten consecutive taxable years.
 
19 The taxpayer shall elect the period and annual allocation of
 
20 [the] each tax credit in the initial year for which the credit is
 
21 claimed.
 

 
 
 
 
 
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 1      (d)  In the case of a partnership, S corporation, estate, or
 
 2 trust, the allowable tax credit is for qualified improvement
 
 3 costs incurred by the entity for the taxable year.  The costs
 
 4 upon which the tax credit is computed shall be determined at the
 
 5 entity level.  Distribution and share of the tax credit shall be
 
 6 determined by [rules adopted pursuant to section 235D-4.]
 
 7 procedures developed by the director of taxation.
 
 8      (e)  If a deduction is taken under section 179 (with respect
 
 9 to election to expense depreciable business assets) of the
 
10 Internal Revenue Code of 1986, as amended, no tax credit shall be
 
11 allowed for that portion of the qualified improvement costs for
 
12 which the deduction is taken.
 
13      (f)  The basis of eligible property for depreciation or
 
14 accelerated cost recovery system purposes for state income taxes
 
15 shall be reduced by the amount of credit allowed and claimed
 
16 under this chapter.
 
17      (g)  [The] Each tax credit allowed under this chapter shall
 
18 be claimed against any or all net income tax liability, general
 
19 excise tax, [transient accommodations tax,] or public service
 
20 company tax for the taxable [years over] year in which the credit
 
21 is claimed.
 

 
 
 
 
 
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 1      (h)  The director of taxation may develop for each qualified
 
 2 taxpayer, a plan that phases in over a ten-year period, the
 
 3 credits claimed by the taxpayer under this section."
 
 4      SECTION 4.  Section 235D-3, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "[[]§235D-3[]]  No refund; failure to file.  If the amount
 
 7 of the tax credit claimed [in any year] exceeds the total of the
 
 8 taxpayer's net income tax liability, general excise tax,
 
 9 [transient accommodations tax,] or public service company tax
 
10 payable for [that] the taxable year, the excess of credit over
 
11 liability shall not be refunded to the taxpayer.  All claims for
 
12 a tax credit under this chapter shall be filed on or before the
 
13 end of the twelfth month following the close of the [initial]
 
14 taxable year for which the credit [may be] is claimed.  Failure
 
15 to [comply with] meet the filing requirements of this section
 
16 shall constitute a waiver of the right to claim the credit."
 
17      SECTION 5.  Section 235D-4, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "[[]§235D-4[]]  Forms; rules.  The director of taxation
 
20 shall prepare forms and procedures as may be necessary to claim a
 
21 tax credit under this chapter.  The director of taxation may also
 
22 require the taxpayer to furnish information to ascertain the
 

 
 
 
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 1 validity of a claim for a tax credit made under this chapter [and
 
 2 may adopt rules necessary to effectuate the purposes of this
 
 3 chapter pursuant to chapter 91]."
 
 4      SECTION 6.  Section 343-2, Hawaii Revised Statutes, is
 
 5 amended by amending the definition of "action" to read:
 
 6      ""Action" means any program or project to be initiated by
 
 7 any agency or applicant[.] but excludes any marketing and
 
 8 promotional program that does not require a discretionary
 
 9 permit."
 
10      SECTION 7.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 8.  This Act shall take effect upon its approval.