Establishes County Development Commissions and Neighborhood Business District Advisory Committees to construct housing. Also creates the County Housing Development Tax Credit.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the islands of Kauai, Oahu, Maui, and Hawaii have their own distinct network of small towns and neighborhood business districts. These small towns and neighborhoods have declined economically in recent years and have been unable to adequately provide for their housing needs.

The legislature also finds that in order to revitalize existing neighborhoods, support historic preservation, and create new jobs, there needs to be a new public-private partnership with these communities; a partnership that can build new and renovate existing low-income, transitional, elderly, and homeless housing projects.

The purpose of this Act is to provide more and better housing for Hawaii's small towns and neighborhoods by providing tax incentives to the private sector to build new and renovate existing housing projects, and to create county development commissions and small town/neighborhood business district advisory committees to administer these projects.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- County development commissions and neighborhood business district advisory committees; qualifications; purpose; compensation. (a) A county development commission and neighborhood business district advisory committee, consisting of nine members each, no more than the minimum required for a quorum of whom shall belong to the same political party at the time of appointment, shall be created for the counties of Kauai, Maui, Hawaii, and the city and county of Honolulu. The mayor of each county shall nominate, and by and with the advice and consent of the legislative body of the county, shall appoint the members of the commissions and committees; provided that each commission shall include among its nine members, a representative from each of the following county administrative departments: planning, transportation, water, and budget. The mayor of each county, by and with the advice and consent of the legislative body of the county, may remove from office any of the members. The commission and committee shall designate one of its members as chairperson. Each member shall be a citizen of the United States and shall have resided in the county for which appointed for at least three years immediately preceding the date of the member's appointment.

(b) Commission and committee members shall serve a term of five years, and upon the expiration of the term of each commissioner or committee member, the commissioner's or committee member's successor shall be appointed for a term as provided in subsection (a), to expire five years from the date of the expiration of the preceding term.

Any vacancy shall be filled by appointment for the remainder of the unexpired term. No person shall be a member of any commission or committee who is an elected officer of the state or county government or who presents oneself as a candidate for election to any public office during the term of the person's appointment hereunder. This provision shall be enforced by the mayor of the county by the removal of the disqualified member whenever the disqualifications shall appear.

(c) Each commission shall establish rules, pursuant to chapter 91, to administer a housing project program to construct homeless shelters, transitional housing, elderly housing, low-income housing, and affordable housing. The commission shall also adopt rules, pursuant to chapter 91 to administer the county housing development tax credit under section 235-   . The advisory committee of each county shall advise its respective commission on issues of housing and community revitalization.

(d) The amount of compensation and reasonable expenses for travel and other costs necessarily incident to the discharge of the members' duties shall be established by each county commission.

(e) Each member of the commission or committee, before entering upon the duties of the member's office, shall take and subscribe to an oath that the member shall faithfully perform such duties according to law, which written oath shall be filed with the elected executive head of each county."

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- County housing development tax credit. (a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter or chapter 237, a tax credit that may be claimed for taxable years beginning after December 31, 2005, for qualified costs in the new development or improvement of qualified housing projects.

The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter and, at the election of the taxpayer, from the tax liability imposed by chapter 237.

(b) The tax credit earned shall be equal to a percentage of the qualified costs as specified in subsection (c) that is incurred from January 1, 2006, through December 31,     , up to a maximum of $           of credits in the aggregate for all qualified taxpayers for all years; provided that notwithstanding the amount of tax credits earned in any year, a maximum of $           of tax credits in the aggregate for all qualified taxpayers may be used in any one taxable year. The credits over $           shall be used as provided in subsection (d).

(c) The tax credit is based on the following percentages of the qualified cost for the following types of housing projects:

(d) In the case of a partnership, limited liability company, S corporation, estate, trust, or other legal entity, the tax credit allowable is for qualified costs incurred by the entity. The costs upon which the tax credit is computed shall be determined at the entity level.

(e) To qualify for the tax credit, a taxpayer shall have expended qualified costs for the new development or renovation of an existing qualified housing project.

(f) If the tax credit under this section exceeds $           in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's tax liability under this chapter or chapter 237, in any year for which the credit is taken, the excess of the tax credit may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted; provided that the taxpayer may continue to claim the credit provided in this section if the qualified costs are incurred before January 1,     , subject to the monetary ceilings in subsection (b).

(g) Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(h) If, at any time during the period in which tax credits are earned under this section, the costs incurred no longer meet the definition of qualified costs, the credits claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credits claimed under this section for the preceding taxable year; provided that the amount of the credits recaptured shall apply only to those costs that no longer meet the definition of qualified costs. The amount of the recaptured tax credits determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(i) If any credit is claimed under this section, then no taxpayer shall claim a credit under any chapter other than chapter 235 or 237 for the same qualified costs for which a credit is claimed under this section.

(j) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(k) Every qualified taxpayer, no later than March 31 of each year in which qualified costs were expended in the previous taxable year, shall submit a written, certified statement to the director of taxation, identifying:

(l) The department of taxation shall maintain records of the names of taxpayers eligible for the credits and the total amount of qualified costs incurred from January 1, 2006, through December 31,     . The department of taxation shall verify all qualified costs and, upon each determination, shall issue a certificate to the taxpayer certifying:

The department of taxation shall certify no more than $           in credits in the aggregate for all taxpayers for each taxable year; provided that the department shall certify qualified costs of no more than $           in the aggregate, from January 1, 2005, through December 31,     . The taxpayer shall file the certificate with the taxpayer's return with the department of taxation.

(m) As used in this section:

"Qualified costs" means any costs for the plans, design, construction, or equipment that is permanently affixed to a building or structure that are related to a qualified housing project constructed pursuant to federal, state, and county laws or ordinances, up to a total of $          , in the aggregate, incurred after December 31, 2005, and before January 1,     ; provided that "qualified costs" shall not include land acquisition costs.

"Qualified housing project" means any project that involves the new construction of renovation of an existing structure that is approved by a county development commission established under section 46-   .

"Qualified taxpayer" means a person who fulfills the requirements of subsection (e)."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.