Exempts developers of certain HCDA-sponsored low-income housing from general excise taxes.

A BILL FOR AN ACT

SECTION 1. Chapter 206E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§206E-   Exemption from general excise taxes. (a) In accordance with section 237-29, the authority shall approve and certify for exemption from general excise taxes any qualified person or firm involved with a newly constructed, or moderately or substantially rehabilitated, project developed under this part for purchase by residents with income at or below eighty per cent of the United States Department of Health and Human Services poverty guidelines, as amended.

(b) All claims for exemption under this section shall be filed with and certified by the authority and forwarded to the department of taxation. Any claim for exemption that is filed and approved shall not be considered a subsidy for the purpose of this part.

(c) For the purposes of this section:

"Moderate rehabilitation" means rehabilitation to upgrade a unit to a decent, safe, and sanitary condition, or to repair or replace major building systems or components in danger of failure.

"Substantial rehabilitation" means the improvement of a property to a decent, safe, and sanitary condition that requires more than routine or minor repairs or improvements and may include, but is not limited to, the gutting and extensive reconstruction of a unit or cosmetic improvements coupled with the curing of a substantial accumulation of deferred maintenance. "Substantial rehabilitation" also includes renovation, alteration, or remodeling to convert or adapt structurally sound property to the design and condition required for a specific use (e.g., conversion of a hotel to housing for elders)."

SECTION 2. Section 237-29, Hawaii Revised Statutes, is amended to read as follows:

"§237-29 Exemptions for certified or approved housing projects. (a) All gross income received by any qualified person or firm for the planning, design, financing, construction, sale, or lease in the State of a housing project which has been certified or approved under section 201G-116 or 206E-   shall be exempt from general excise taxes.

(b) All gross income received by a nonprofit or a limited distribution mortgagor for a low and moderate income housing project certified or approved under section 201G-116 or 206E-   shall be exempt from general excise taxes.

(c) The director of taxation [and], the housing and community development corporation of Hawaii, and the Hawaii community development authority shall adopt rules pursuant to chapter 91 for the purpose of this section, including any time limitation for the exemptions."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.