HB1658.DOC

SECTION 1. The legislature finds that the real property tax exemption offered under state law to properties used for church purposes is not in line with federal law.

The purpose of this Act is to restrict the real property tax exemption currently offered to properties used for church purposes only to places of worship, and not to other properties owned by religious organizations.

SECTION 2. Section 246-32, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (b) to read:

"(b) This subsection applies to property owned in fee simple, leased, or rented for a period of one year or more, by the person using the property for the exempt purposes, hereinafter referred to as the person claiming the exemption. If the property for which exemption is claimed is leased or rented, the lease or rental agreement shall be in force and recorded in the bureau of conveyances.

Exemption is allowed by this subsection to the following property:

(1) Property used for school purposes including:

(A) Kindergartens, grade schools, junior high schools, and high schools[~~, which~~] that carry on a program of instruction meeting the requirements of the compulsory school attendance law, section 302A-1132, or [~~which~~] that are for preschool children who have attained or will attain the age of five years before January 1 of the school year; provided that any claim for exemption based on any of the foregoing uses shall be accompanied by a certificate issued by or under the authority of the department of education stating that the foregoing requirements are met;

(B) Junior colleges or colleges carrying on a general program of instruction of college level. The property exempt from taxation under this paragraph is limited to buildings used for educational purposes (including dormitories), housing owned by the school or college and used as residence for personnel employed at the school or college, campus and athletic grounds, and realty used for vocational purposes incident to the school or college.

(2) Property used for hospital and nursing home purposes, including housing for personnel employed at the hospital. In order to qualify under this paragraph the person claiming the exemption shall present with the claim a certificate issued by or under the authority of the department of health that the property for which the exemption is claimed consists of, or is a part of, hospital or nursing home facilities that are properly constituted under the law and maintained to serve, and that do serve the public.

(3) Property used [for church purposes, including incidental activities, parsonages, and church grounds, the property exempt from taxation being limited to realty exclusive of burying grounds (exemption for which may be claimed under paragraph (4)).] as places of worship.

(4) Property used as cemeteries (excluding property used for cremation purposes) maintained by a religious society, or by a corporation, association, or trust organized for this purpose.

(5) Property dedicated to public use by the owner, which dedication has been accepted by the State or any county, reduced to writing, and recorded in the bureau of conveyances; and property [~~which~~] that has been set aside for public use and actually used therefor for a period not less than five years after enactment of this section.

(6) Property owned by any nonprofit corporation, admission to membership of which is restricted by the corporate charter to members of a labor union; property owned by any government employees' association or organization, one of the primary purposes of which is to improve employment conditions of its members; property owned by any trust, the beneficiaries of which are restricted to members of a labor union; and property owned by any association or league of federal credit unions chartered by the United States, the sole purpose of which is to promote the development of federal credit unions in the State. Notwithstanding any provision in this section to the contrary, the exemption shall apply to property or any portion thereof that is leased, rented, or otherwise let to another, if the leasing, renting, or letting is to a nonprofit association, organization, or corporation."

2. By amending subsection (e) to read:

"(e) [The term "for nonprofit purposes", as used in this section requires that no monetary gain or economic benefit inure to the person claiming the exemption, or any private shareholder, member, or trust beneficiary.

~~"Monetary gain" includes without limitation any gain in the form of money or money's worth.~~] For the purposes of this section:

"Economic benefit" includes without limitation any benefit to a person in the course of the person's business, trade, occupation, or employment.

"For nonprofit purposes" requires that no monetary gain or economic benefit inure to the person claiming the exemption or to any private shareholder, member, or trust beneficiary.

"Monetary gain" includes without limitation any gain in the form of money or money's worth.

"Places of worship" means any church, temple, synagogue, mosque, or other similar place where religious worship is conducted for groups of people or other similar activities, but does not include other real property owned by religious organizations."

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

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2010.

INTRODUCED BY:

_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1658
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII