HOUSE OF REPRESENTATIVES	H.B. NO.	554
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

A BILL FOR AN ACT

relating to economic development.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Location efficiency tax credit. (a)  There shall be allowed to each qualified taxpayer subject to the tax imposed by this chapter a location efficiency tax credit which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b)  To be considered for a tax credit under this section the taxpayer shall submit a location efficiency report to the corporation.  The corporation may grant a tax credit to the taxpayer if in the corporation's discretion the taxpayer's location efficiency report demonstrates that the taxpayer seeks a tax credit for a project to be located in an area that satisfies this section's standards for affordable workforce housing or accessible and affordable mass transit.

(c)  Taxpayers who employ new employees for a project during the taxable year may receive a tax credit equal to ten per cent of the new employee's withheld taxes pursuant to section 235-61; provided that the tax credit may not exceed the taxpayer's annual state income tax liability for any taxable year and the tax credit shall be non-refundable.

(d)  A taxpayer claiming a tax credit under this section shall annually report to the corporation the number of new employees employed by the taxpayer for the project and the amount of taxes withheld by the applicant in connection with the new employees pursuant to section 235-61.

(e)  The corporation shall submit to the legislature no later than twenty days prior to the convening of each regular session a report on the tax credits allowed under this section and the corporation's activities, findings, and recommendations with respect to this section and its extension, amendment, or repeal.

(f)  The corporation may adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

(g)  As used in this section:

"Accessible and affordable mass transit" means access to transit stops with regular and frequent service within one mile from the project site and pedestrian access to transit stops.

"Affordable workforce housing" means owner-occupied or rental housing that costs, based on current census data for the municipality where the project is located, no more than thirty-five per cent of the median salary of employees at the project site, exclusive of the highest ten per cent of the site's salaries.

"Corporation" means the Hawaii housing finance and development corporation.

"Location efficiency" means a project that maximizes the use of existing investments in infrastructure, avoids or minimizes additional government expenditures for new infrastructure, and has nearby affordable workforce housing or accessible and affordable mass transit, or some combination of both.

"New employee" means:

(A) A full-time employee first employed by a taxpayer in a location efficient project.

(B) The term "new employee" does not include an employee of the taxpayer who performs a job that was previously performed by another employee, if that job existed for at least six months before hiring the employee, or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from any person who has a direct or an indirect ownership interest of at least five per cent in the profits, capital, or value of the taxpayer."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2012; provided that this Act shall be repealed on January 1, 2017.

INTRODUCED BY:

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Report Title:

Economic Development; Hawaii Housing Finance and Development Corporation; Location Efficiency Tax Credits

Description:

Creates tax credits for proposed projects to be located in areas that are location efficient.  Establishes procedures for the Hawaii housing finance and development corporation to determine whether proposed projects meet certain requirements necessary to qualify for the tax credit.  Requires the Hawaii housing finance and development corporation to report annually to the legislature.  Applies to tax years beginning after December 31, 2012.  Repeals on January 1, 2017.

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