Establishes an investment tax credit for qualified investments in the motor sports recreation, public safety training, educational, and medical facility to be developed at Kalaeloa, parcel 9; provides certain limitations. (HB994 HD2)

A BILL FOR AN ACT

SECTION 1. The State and the city and county of Honolulu have established and implemented plans to direct growth to the secondary urban center of Kapolei.

The State and the city and county of Honolulu conducted and participated extensively in the closure process of the Barber's Point Naval Air Station, the largest single event affecting growth in the secondary urban center. In the base closure process, the State and city and county of Honolulu recognized the need to replace the existing motor sports facility at Campbell Industrial Park.

The legislature finds that the existing motor sports facility provides a vital service to the community by keeping racing and all of its inherent dangers off our public streets and freeways. The existing facility provides an inexpensive place for racing motorized vehicles under safe conditions and with proper supervision. It draws thousands of racers who may otherwise race on our public streets and freeways. Although the existing facility meets minimum safety standards, it was built over forty years ago, and is not able to meet many of the more desirable safety standards that would be incorporated into a new facility developed today. The remaining term of the park lease is set to expire on April 30, 2006, and will not provide enough time to amortize any major costs. Additionally, any rebuilding of the existing facility will require its closure for at least a few months, which would likely increase racing in the streets during that time.

The legislature also finds that the existing facility also aids in public safety by providing a safe place to train law enforcement personnel of the city and county of Honolulu and the State, as well as the general public.

The legislature further finds that the closure of the Barber's Point Naval Air Station removed approximately two thousand eight hundred military personnel from the area, as well as hundreds of employees of businesses serving the base. This has caused a severe loss of jobs and paychecks for the residents in the area, resulting in personal hardships and greater demands on the State for social and other types of services.

As a result, the base closure commission directed that a portion of the former military base be redeveloped into a motor sports facility. The location was specified as Kalaeloa, parcel 9, and the project was processed through a federal environmental impact statement. The development of the planned motor sports facility will provide a temporary boost in planning and construction jobs, and provide permanent jobs during the ongoing operations of the new facility.

Additionally, the legislature finds that the airport facilities at Kalaeloa, if confirmed as the terrorist response center, will require extensive training and medical facilities, which may be provided at the motor sports facility.

The legislature further finds that, should the current United States Navy study for the home porting of a naval carrier task force, which is now scheduled for completion at the end of the third quarter of 2005, determine that the home porting of a naval carrier task force in Hawaii is feasible and that the carrier air wing should be stationed at the Kalaeloa airport, the study should include the feasibility of joint-use with the motor sports facility. The federal Base Realignment and Closure process under which parcel 9 was designated a motor sports complex and subsequent agreements to exchange or sell Kalaeloa lands should not be held up pending the outcome of the study. The department of Hawaiian home lands should complete the executed exchange agreement or sell parcel 9 at the value established in the exchange agreement.

The purpose of this Act is to establish an investment tax credit for taxpayers that invest in the development of the motor sports recreation, public safety training, educational, and medical facility at Kalaeloa, parcel 9.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Motor sports recreation, public safety training, educational, and medical facility investment tax credit; Kalaeloa parcel 9. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a motor sports recreation, public safety training, educational, and medical facility investment tax credit that shall be applied to the taxpayer's net income and general excise tax liability, for the five taxable years beginning after December 31, 2008; provided that the credit is properly claimed, does not exceed the limits as specified under subsection (b), and is limited by the amount of general excise and transient accommodation tax generated as further specified under this section.

(b) The tax credit shall be equal to the qualified investment made by the taxpayer in the motor sports recreation, public safety training, educational, and medical facility at Kalaeloa, parcel 9, for any one or more taxable years in the three consecutive years beginning after June 30, 2005.

(c) Notwithstanding the amount of tax credit earned in any year, a maximum of $1 of tax credit in the aggregate for all qualified taxpayers may be used in any one taxable year; provided additionally that the amount of tax credit used in any one taxable year shall be limited to the amount of general excise and transient accommodation tax generated in that year by the construction and operation of the motor sports recreation, public safety training, educational, and medical facility. Any tax credits over $1 for any year shall be used as provided in subsection (e). The total tax credit claimed shall not exceed $1 in the aggregate for all qualified taxpayers for all five years.

(d) If the amount of general excise and transient accommodation taxes generated by the motor sports recreation, public safety training, educational, and medical facility is less than $1 in any year, the tax credit may be claimed beyond December 31, 2013; provided the total tax credit shall not exceed $1 in the aggregate for all qualified taxpayers for all years claimed.

(e) If the tax credit under this section exceeds $1 in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's income tax liability for any year for which the tax credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's income or general excise tax liability in subsequent years until exhausted.

(f) 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 tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

(g) If at any time during the five-year period in which the investment tax credits may be claimed under this section the investment no longer meets the definition of qualified investment due to the following events:

(h) If at any time during the five-year period in which the investment tax credits may be claimed under this section the project no longer qualifies as a qualified project, no tax credit may be claimed for investments in the project.

(i) 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 credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

Every qualified taxpayer, no later than March 31 of each year following the year in which qualified investments were made, shall submit a written, certified statement to the director of business, economic development, and tourism, identifying:

Any other law to the contrary notwithstanding, the statement submitted under this subsection shall be a government record.

The department of business, economic development, and tourism shall calculate the amount of tax credit allowed in any one year by using existing models to determine the amount of general excise tax and transient accommodation tax earned as a percentage of construction, commerce, and visitor counts directly generated by the construction and operation of the motor sports recreation, public safety training, educational, and medical facility. The department of business, economic development, and tourism shall maintain records of the names of taxpayers eligible for the credit and the total amount of qualified investments incurred in the three consecutive taxable years beginning after June 30, 2005. The department of business, economic development, and tourism shall verify all qualified investments and, upon each determination, shall issue a certificate to the taxpayer certifying:

The department of business, economic development, and tourism shall certify no more than $1 in credits in the aggregate for all taxpayers for each taxable year in which the credit may be claimed. The taxpayer shall file the certificate with the taxpayer's return with the department.

(j) As used in this section:

"Kalaeloa, parcel 9" or the "project", means the property identified in the Naval Air Station Barbers Point Community Redevelopment Plan and Amendment (Helber Hastert & Fee, Planners, March and December 1997) and as designated in the special area plan of the city and county of Honolulu on which the motor sports recreation, public safety training, educational, and medical facility is to be developed.

"Qualified investment" means any investment in the qualified project.

"Qualified project" means the development of a motor sports recreation, public safety training, educational, and medical facility at Kalaeloa, parcel 9, including expenditures for land acquisition and closing costs, studies, design and engineering, infrastructure, and construction directly related thereto, including:

"Qualified taxpayer" means a taxpayer who makes a qualified investment and fulfills the requirements of this subsection."

SECTION 3. Section 235-2.45, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Section 704 of the Internal Revenue Code (with respect to a partner's distributive share) shall be operative for purposes of this chapter; except that section 704(b)(2) shall not apply to:

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2099, and shall apply to qualified investments, as defined in section 2 of this Act, incurred after June 30, 2005.