STAND

STAND. COM. REP. NO. 391-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2809

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Tourism and Culture, to which was referred H.B. No. 2809 entitled:

"A BILL FOR AN ACT RELATING TO THE HOTEL PROJECT TAX CREDIT,"

begs leave to report as follows:

The purpose of this bill is to stimulate large hotel and commercial construction, renovation, and redevelopment projects by establishing a qualified hotel project income tax credit (Credit), in which qualified costs are certified by the Department of Business, Economic Development, and Tourism (DBEDT).

The Hawaii Tourism Authority, Paul Louie & Associates, Inc., Outrigger Hotels, Waikiki Improvement Association, Hawaii Hotel & Lodging Association, and Land Use Research Foundation of Hawaii submitted testimony in support of this measure. Ko Olina Resort & Marina, and Goodsill Anderson Quinn & Stifel, supported this measure with amendments. The Department of Taxation opposed this measure. DBEDT offered comments.

Your Committee has amended this bill by:

(1) Setting the cap of $140,000,000 on total tax credits earned over a ten-year period;

(2) Extending the Credit to be applied not only against income tax liability but also the transient accommodations tax;

(3) Increasing the aggregate tax credits allowed for all qualified taxpayers in any one taxable year from $10,000,000 to $14,000,000;

(4) Requiring DBEDT to apportion the annual $14,000,000 tax credit proportionately among taxpayers claiming the Credit;

(5) Preventing taxpayers from claiming the Credit for the same qualified hotel project costs claimed under any chapter contained in title 14;

(6) Expanding the definition of "qualified hotel project area" to include parcels zoned for hotel, hotel/hotel-condo, or time share uses;

(7) Extending the geographic areas of qualified hotel project areas to include Kailua-Kona to Keauhou and Hilo on Hawaii, Lahaina to Kaanapali on Maui, Molokai, the Coconut Plantation on Kauai, and other areas jointly designated by DBEDT and any county council;

(8) Requiring any qualified hotel project to pay laborers and mechanics employed in the project no less than the prevailing wages established by the Department of Labor and Industrial Relations; and

(9) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Tourism and Culture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2809, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2809, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Tourism and Culture,

		____________________________ JERRY L. CHANG, Chair