STAND. COM. REP. NO.  367-08

Honolulu, Hawaii

                , 2008

RE:   H.B. No. 2985

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committee on Tourism & Culture, to which was referred H.B. No. 2985 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this bill is to provide incentives to improve Hawaii's hotel facilities by establishing a temporary income tax credit, available for taxable years beginning after December 31, 2013, and ending before January 1, 2020, equal to fifteen percent of the renovation costs incurred for a hotel facility (Hotel Renovation Tax Credit). 

     The Hawaii Tourism Authority and Outrigger Hotels supported this bill.  The Hawaii Hotel & Lodging Association supported the intent of this measure.  The Department of Business, Economic Development, and Tourism and Department of Taxation (DOTAX) submitted comments.

     Your Committee recognizes the growing concerns regarding the conversion of hotels to time-shares and condominiums.  This issue appears to be of particular concern with respect to non-beachfront properties, which may not command the same room rates as beachfront properties.  Greater revenue for beachfront properties allows such properties to pay for needed renovation costs, whereas non-beachfront properties may not be able to afford to upgrade their facilities.  Your Committee respectfully requests future legislative efforts to consider appropriate ways to address this particular issue.

     Your Committee has amended this measure by, among other things:

     (1)  Changing its effective date to July 1, 2025, to encourage further discussion; and

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

     As affirmed by the record of votes of the members of your Committee on Tourism & Culture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2985, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2985, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Tourism & Culture,

____________________________

RYAN I. YAMANE, Chair