STAND. COM. REP. NO.  1923

Honolulu, Hawaii

                , 2007

RE:   S.B. No. 707

      S.D. 2

      H.D. 2

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No. 707, S.D. 2, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO A NEW MARKETS TAX CREDIT,"

begs leave to report as follows:

     The purpose of this bill is to:

     (1)  Encourage investment in business in targeted low-income communities in Hawaii; and

     (2)  Benefit from the infrastructure established by the successful federal new markets tax credit,

by establishing a state credit equal to the federal new market tax credit for investments in Hawaii made through a qualified community development entity located in Hawaii.

     Chun, Kerr, Dodd, Beaman, and Wong, a Limited Liability Law Partnership, Hawaii Science and Technology Council, KUD International LLC, and Phase 3 Properties testified in support of this bill.  The Department of Business, Economic Development, and Tourism, Department of Taxation, and The Chamber of Commerce of Hawaii testified in support of the intent of this measure.  The Tax Foundation of Hawaii submitted comments.

     Your Committee has amended this bill by:

(1)  Changing the credit allowed under this bill to an unspecified percentage of an investment made through a qualified community development entity;

     (2)  Changing the effective date to July 1, 2020, and providing that this credit will sunset on December 31, 2010; and

     (3)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 707, S.D. 2, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 707, S.D. 2, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Finance,

____________________________

MARCUS R. OSHIRO, Chair