STAND. COM. REP. NO. 645

Honolulu, Hawaii

RE: S.B. No. 1394

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Labor, Culture and the Arts, to which was referred S.B. No. 1394 entitled:

"A BILL FOR AN ACT RELATING TO HISTORIC PRESERVATION,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Establish a historic preservation income tax credit; and

(2) Appropriate funds for one temporary position to assist with the establishment and administration of the Hawaii historic preservation income tax credit program.

Your Committee received testimony in support of this measure from the Department of Land and Natural Resources, Historic Hawai‘i Foundation, Minatoishi Architects, O‘ahu County Committee on Legislative Priorities of the Democratic Party of Hawai‘i, and one individual. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that tax incentives for rehabilitation of historic structures have been proven to be enormously effective in preserving important buildings; ensuring their continued economic viability; revitalizing communities, especially historic downtowns; preserving community character; and promoting heritage tourism. Tax credits for rehabilitation of historic structures also provides an incentive to promote rehabilitation of income producing historic properties and provide affordable housing. Many states already provide tax credits for the rehabilitation of historic structures. National studies have found that historic rehabilitation tax credits spurred economic development and increased direct revenues that offset the tax credit expense. This measure will establish a historic rehabilitation tax credit, which will benefit affordable housing, tourism, neighborhood revitalization, and the economy as a whole.

Your Committee notes that due to the complexity of the proposed historic preservation income tax credit and the amendments proposed by several testifiers at the hearing, your Committee will continue to work with the interested parties and your Committee on Ways and Means in order to craft substantive amendments to better effectuate the intent of this measure.

Your Committee has amended this measure by inserting an effective date of July 1, 2050, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Labor, Culture and the Arts that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1394, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1394, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor, Culture and the Arts,

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BRIAN T. TANIGUCHI, Chair