STAND. COM. REP. NO. 1129

Honolulu, Hawaii

RE: S.B. No. 1394

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1394, S.D. 1, 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 facilitate the rehabilitation of historic structures.

More specifically, this measure:

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

(2) Appropriates funds for one temporary position within the State Historic Preservation Division to assist with the establishment and administration of the historic preservation income tax credit program.

Your Committee received written comments in support of this measure from the Department of Land and Natural Resources, Land Use Research Foundation of Hawaii, and Oahu County Committee on Legislative Priorities of the Democratic Party of Hawaii.

Your Committee received written comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that thirty-eight states provide tax credits for the rehabilitation of historic structures. Your Committee also finds that establishing a similar tax credit in Hawaii would promote the comprehensive state historic preservation program established by chapter 6E, Hawaii Revised Statutes.

Your Committee has amended this measure by:

(1) Changing the tax credit from refundable to nonrefundable;

(2) Disallowing the tax credit if a deduction is claimed for the same expenses;

(3) Inserting provisions to reduce the basis of depreciable property by the amount of the tax credit;

(4) Clarifying that recapture of the tax credit shall occur when the Department of Taxation is informed by the Department of Land and Natural Resources that the taxpayer has failed to comply with the requirements of the tax credit;

(5) Requiring the taxpayer to file the certificate issued by the State Historic Preservation Division along with the taxpayer's tax return to the Department of Taxation;

(6) Authorizing in statute, rather than session law, the Department of Land and Natural Resources to collect fees to offset the costs of certifying tax credit claims; and

(7) Making technical nonsubstantive amendments for purposes of consistency, clarity, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1394, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1394, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

DONOVAN M. DELA CRUZ, Chair