Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Tourism and Economic Development, to which was referred S.B. No. 1174 entitled:

beg leave to report as follows:

The purpose of this measure is to extend the hotel construction and remodeling tax credit for costs incurred before July 1, 2008. The measure also changes the credit from nonrefundable to refundable, and allows commercial buildings and facilities within a qualified resort area to take the credit.

Testimony in support of this measure was received from the Hawaii Tourism Authority, Hawaii Chapter of the American Resort Development Association, The Pacific Resource Partnership, Land Use Research Foundation of Hawaii, PLA Incorporated, Chamber of Commerce of Hawaii, Outrigger Hotels & Resorts, Ko Olina Resort & Marina, Pahio Resorts, Laborers' International Union of North America Local 368, Hawaii Resort Developers Conference, Cendant Corporation/Fairfield Resorts, Waikiki Improvement Association, Hawaii Construction Industry Association, and Hawaii Hotel Association. Testimony in opposition was received from the Department of Taxation. Comments were received from the Tax Foundation of Hawaii.

Your Committees find that the hotel construction and remodeling tax credit which applies to costs incurred before July 1, 2003, is an excellent means to boost Hawaii's tourism and construction industries. Your Committees further find that the credit should be extended if hotels which benefit from the credit assume some of the responsibility of promoting Hawaii products to tourists who comprise a captive audience in hotels.

Your Committees acknowledge the concerns raised at the hearing that the State's wage and hour law for public works should be adapted and incorporated into this measure. However, your Committees believe that such a provision could be considered at a later time in the legislative process for inclusion in this measure, and request the Committee on Ways and Means to consider adding such a provision.

Your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Tourism and Economic Development that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1174, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1174, S.D. 1, and be referred to the Committee on Ways and Means.