STAND. COM. REP. NO.  1322-08

Honolulu, Hawaii

                , 2008

RE:   S.B. No. 2198

      S.D. 2

      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 Committees on Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture, to which was referred S.B. No. 2198, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO LAND CONSERVATION,"

beg leave to report as follows:

     The purpose of this bill is to encourage the protection and preservation of land in the state by establishing a Land Conservation Incentives Tax Credit (Tax Credit).  Specifically, this bill allows taxpayers to deduct:

(1)  50 percent of the value of the interest in lands donated in perpetuity for conservation purposes to the State or a conservation agency; or

(2)  50 percent of the amount invested in the management of lands for conservation purposes under a land protection agreement,

up to $2,500,000, from their net income tax liability.  This bill also authorizes the holder of an interest in agricultural lands that qualifies for the Tax Credit to petition to have the agricultural lands designated as important agricultural lands and qualify for important agricultural lands incentives under Section 205-46, Hawaii Revised Statutes.

The Nature Conservancy of Hawaii, The Trust for Public Land, Maui Land & Pineapple Company, Inc., and a concerned individual testified in support of this bill.  The Office of Planning, Department of Land and Natural Resources, and Hawaii Agriculture Research Center supported the intent of this measure.  Hawaii Building and Construction Trades Council, AFL-CIO, opposed this bill.  The Department of Taxation, Department of Agriculture, and Tax Foundation of Hawaii provided comments.

Upon careful consideration, your Committees have amended this bill by replacing its contents with the language of House Bill No. 2518, H.D. 1.  Specifically, this bill has been amended by:

(1)  Deleting the provision that authorizes the holder of an interest in agricultural lands that qualifies for the Tax Credit to petition to have the agricultural lands designated as important agricultural lands and qualify for important agricultural lands incentives under Section 205-46, Hawaii Revised Statutes;

(2)  Deleting the provision that requires the state agency that certifies that a protected resource is significant or important to work with the taxpayer to identify opportunities for public access, if appropriate and reasonable;

(3)  Deleting the provision that when evaluating the fair market value of eligible donations, the amount be substantiated by a qualified appraisal prepared by a qualified appraiser; and

(4)  Removing the sunset date of December 31, 2012.

Your Committees have further amended this bill by changing the effective date to upon its approval.

     As affirmed by the records of votes of the members of your Committees on Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2198, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2198, 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 Water, Land, Ocean Resources & Hawaiian Affairs and Agriculture,

____________________________ CLIFT TSUJI, Chair

____________________________ KEN ITO, Chair