SB3022.DOC

SECTION 1. The legislature finds that the State of Hawaii is comprised of a chain of islands, six of which have major population centers, limited by air and water transportation options. Unlike the forty-eight contiguous states, Hawaii does not have the benefit of being linked to other states through the federal interstate highway system or a network of intersecting state and local highways and roads.

The legislature also finds that while property is transported between islands via time consuming inter-island shipping and barge operations, the principal means of transporting people between islands is mostly limited to costly air transportation or small ocean charters. There are security concerns associated with residents and visitors being overly reliant on one inter-island carrier and a few smaller commuter operations, as airports face severe operational disruption in the event of a significant natural or man-made disaster.

The legislature further finds that a previous attempt at implementing a statewide inter-island ferry operation, giving effect to chapter 268, Hawaii Revised Statutes, failed due to a lack of mandatory environmental impact statements. However, the limited run of the Hawaii Superferry did prove to be a successful mode of transportation, for both persons and limited property, between the islands of Maui and Oahu. For a period of time, the operation connected family members, provided individuals physically unable to fly with a less burdensome alternative to air travel, and supported inter-island business opportunities.

An inter-island ferry service is the missing link in Hawaii's transportation system, providing critical connections essential for the health, safety, and well-being of the people of Hawaii. For these reasons, the legislature finds that the State should make it a priority to facilitate more efficient and affordable inter-island commuting options.

The purpose of this Act is to:

(1) Provide a non-refundable tax credit and a fifty per cent reduction in harbor fees for the first year of operation for any company operating an inter-island ferry vessel; and

(2) Direct the department of land and natural resources to conduct any necessary environmental impact assessments to enable the department of transportation to fully implement a Hawaii state ferry system.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Ferry vessel tax credit. (a) Each principal operator of an inter-island ferry who files an individual or corporate net income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual or corporate net income tax.

(b) The tax credit shall be an amount equal to five per cent of the principal operator's individual or corporate income tax liability.

(c) The tax credit claimed under this section by the principal operator shall be deductible from the principal operator's individual or corporate income tax liability, if any, for the tax year in which the credit is properly claimed.

(d) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91.

(e) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(f) Claims for the tax credit under this section, including any amended claims thereof, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed. Failure to comply with this subsection shall constitute a waiver of the right to claim the credit.

(g) As used in this section:

"Inter-island ferry" means any inter-island ferry vessel that is designed to transport and transports or is intended to transport per voyage at least four hundred passengers, along with motor vehicles and cargo between the islands of the State.

"Principal operator" means any individual or corporate taxpayer who derives at least fifty-one per cent of the taxpayer's gross annual income from the inter-island ferry vessel operations."

SECTION 3. Section 266-13, Hawaii Revised Statutes, is amended to read as follows:

"§266-13 Dockage. (a) All watercraft:

(1) Lying idle alongside any wharf, pier, bulkhead, quay, or landing belonging to or controlled by the State; or

(2) Discharging or receiving freight or passengers on or from any wharf, pier, bulkhead, quay, or landing belonging to or controlled by the State, while made fast or lying alongside of the wharf, pier, bulkhead, quay, or landing;

shall pay to the department of transportation [~~such~~] rates of dockage as shall be fixed by the department.

(b) All watercraft that receive or discharge freight or passengers:

(1) From or upon any wharf, pier, bulkhead, quay, or landing, by means of boats, lighters, or otherwise, while lying at anchor or under steam in any bay, harbor, or roadstead; or

(2) While lying in any slip or dock belonging to or controlled by the State, but not made fast to or lying alongside any wharf, pier, bulkhead, quay, or landing;

shall pay [~~such~~] rates of dockage as shall be fixed by the department.

(c) Notwithstanding subsections (a) and (b), the department may waive dockage and other charges at any wharf, pier, bulkhead, quay, landing, slip, or dock belonging to or controlled by the State whenever:

(1) The governor declares a state of emergency; and

(2) The department determines that the waiver of dockage fees and other charges is consistent with assisting in the delivery of humanitarian relief to disaster-stricken areas of the State.

(d) Notwithstanding subsections (a) and (b), the department of transportation may waive fifty per cent of dockage and other charges at any wharf, pier, bulkhead, quay, landing, slip, or dock belonging to or controlled by the State whenever the wharf, pier, bulkhead, quay, landing, slip, or dock belonging to or controlled by the State is used by an inter-island ferry; provided that the waiver of dockage and other charges by the department shall only be valid for the first twelve months that the inter-island ferry is in operation.

For the purposes of this subsection, "inter-island ferry" means any inter-island ferry vessel that is designed to transport and transports or is intended to transport per voyage at least four hundred passengers, along with motor vehicles and cargo between the islands of the State.

[~~(d)~~] (e) Any watercraft leaving any wharf, pier, bulkhead, quay, landing, slip, dock, basin, or waters belonging to or controlled by the State without paying dockage and other charges, with intent to evade the payment thereof, shall be liable to pay double rates."

SECTION 4. Chapter 268, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§268- Environmental assessment; environmental impact statement. (a) The department of land and natural resources shall conduct any environmental assessment required pursuant to chapter 343, for an inter-island or intra-island ferry system authorized by this chapter; provided that if the department determines, pursuant to section 343-5, that an environmental impact statement is likely to be required, the department shall prepare an environmental impact statement.

(b) Any private ferry system in operation at the time an environmental assessment is conducted or an environmental impact statement is prepared pursuant to subsection (a), or anytime thereafter, may rely on and utilize the environmental assessment or environmental impact statement for future operations."

SECTION 5. There is appropriated out of the environmental response, energy, and food security tax pursuant to section 243-3.5, Hawaii Revised Statutes, the sum of $ or so much thereof as may be necessary for fiscal year 2016-2017 for the department of land and natural resources to conduct any necessary environmental assessment to enable the department of transportation to fully implement a Hawaii state ferry system.

The sum appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2016.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3022
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII