STAND. COM. REP. NO. 1073

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 136
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred H.B. No. 136, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to provide a tax credit for
improvements made a hotel and resort properties. 

     Testimony in support of this measure was received form the
Department of Business, Economic Development, and Tourism,
Department of Taxation, Unity House, Inc., AIA Hawaii State
Council, Dwyer Imanaka Schraff Kudo Meyer & Fujimoto, Land Use
Research Foundation of Hawaii, Sheraton Princess Kaiulani, Hilton
Hawaiian Village, The Myers Corporation, Waikiki Improvement
Association, Hawaii Hotel Association, and Hawaii Resort
Developers Conference.  The Tax Foundation of Hawaii and Pacific
Entertainment Center submitted comments on this measure.

     Your Committee finds that tax credits for expenditures on
construction will stimulate not only the construction industry,
but also Hawaii's overall economy.  Owners and developers will be
encouraged to create new construction projects and rebuild or
renovate existing buildings.  This measure focuses on hotel and
resort properties and would encourage improvement of Hawaii's
aging visitor industry facilities.  However, your Committee finds
that greater economic benefits can be obtained by broadening the

 
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                                   STAND. COM. REP. NO. 1073
                                   Page 2


scope of the tax credits to allow tax credits for construction
costs on all commercial facilities, including hotels.

     Therefore, your Committee has amended this measure by
replacing the contents with the provisions of S.B. No. 944,
S.D. 1, with an amendment, that allows an income tax credit of
thirty percent of the construction costs on any commercial
facility completed after December 31, 1999, and before January 1,
2007.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 136, H.D. 2, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B.
No. 136, H.D. 2, S.D. 1, and be referred to the Committee on Ways
and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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