Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Economic Development and Business Concerns and Tourism and Culture, to which was referred H.B. No. 938 entitled:

beg leave to report as follows:

The purpose of this bill is to provide tax incentives to tenants and building owners to redevelop and improve older established commercial districts.

Your Committees find that despite recent improvements in the economy, commercial stagnation still lingers in our community. It is incumbent upon the Legislature to continue to provide local businesses with financial incentives to not only boost economic growth, but to also enhance business opportunities for local merchants.

This bill is a means to achieve that objective by providing tenants and building owners with a commercial and remodeling tax credit to improve older established commercial districts like Hilo town, Kailua-Kona, Wailuku, Kahului, Lahaina, Lihue, Kaimuki, Kapahulu, Waikiki, McCully, Kapiolani-Keeaumoku, Kakaako, downtown Honolulu-Chinatown, Kalihi, Aiea, Pearl City, Waipahu, Wahiawa, Haleiwa, the Honolulu Airport Industrial area, and Mapunapuna. The tax credit would not only allow businesses to better compete with larger new shopping centers, but also stimulate economic growth and revitalize the personal pride that was and still is the backbone and genesis of commerce in Hawaii.

Your Committees, however, are also concerned with providing tax relief to the general public, especially the less fortunate. Inasmuch as economic growth through tax incentives to businesses will ultimately benefit the public in general, more direct assistance to the average citizen is also needed.

Therefore, your Committee has amended the bill by increasing the state tax standard deduction and by providing tax credits for low-income households. These amendments will provide a balanced approach to economic growth to assist both businesses and individual taxpayers as well.

Your Committees received favorable testimony on the bill as received by your Committees from the Hawaii Tourism Authority, the American Institute of Architects and the Commercial Real Estate Coalition. Comments on the bill were also received from the Tax Foundation of Hawaii and the Department of Taxation.

As affirmed by the records of votes of the members of your Committees on Economic Development and Business Concerns and Tourism and Culture that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 938, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 938, H.D. 1, and be referred to the Committee on Finance.