STAND

STAND. COM. REP. NO. 1098

Honolulu, Hawaii

, 2005

RE: S.B. No. 1186

S.D. 2

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Tourism & Culture and Economic Development & Business Concerns, to which was referred S.B. No. 1186, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO HOTEL CONSTRUCTION AND REMODELING TAX CREDIT,"

beg leave to report as follows:

The purpose of this measure is to adjust the four per cent hotel construction and remodeling tax credit to eight per cent on January 1, 2008 and to repeal the tax credit on January 1, 2011.

Your Committee finds that since its inception in 2001, the hotel construction and remodeling tax credit has produced a substantial increase in hotel construction and renovation activity. Waikiki hotels estimate construction and renovation investments have exceeded $400,000,000 over the past five years. The tax credit has resulted in more jobs, higher earnings by hotels, and an increase in tax revenues for the State.

Your Committee, therefore, concurs with the basic intent of this measure, but has amended the bill as follows:

(1) Increasing the tax credit to eight per cent after the effective date of this Act, lowering it back to four per cent on July 1, 2009, and repealing the tax credit on July 1, 2012;

(2) Adding the recapture provision suggested by the Department of Taxation for qualified full service hotel facilities that convert to a time share or condominium project;

(3) Removing references to time share or condominium projects, which were never intended to benefit from the tax credit; and

(4) Changing the effective date of the bill from July 1, 2050 to "upon approval".

As affirmed by the records of votes of the members of your Committees on Tourism & Culture and Economic Development & Business Concerns that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1186, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1186, S.D. 2, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Tourism & Culture and Economic Development & Business Concerns,

____________________________ ROBERT N. HERKES, Chair		____________________________ JERRY L. CHANG, Chair