HB2694 HD1

PART I

SECTION 1. The legislature finds that only twenty-five per cent of water resources in the county of Maui are provided by the county. Seventy-five per cent of water resources are provided by private operators. The legislature believes that it is in the public interest to promote water access equity in the State.

Accordingly, the purpose of this Act is to:

(1) Establish an income tax credit to incentivize the voluntary relinquishment of private water systems;

(2) Direct the attorney general to initiate eminent domain proceedings to acquire privately-owned water systems in certain areas; and

(3) Appropriate moneys to the department of the attorney general to fund eminent domain proceedings to acquire private water systems.

PART II

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

"§235- Voluntary relinquishment of private water systems; income tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed under this chapter, a tax credit that 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) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for the assessed value of a water system relinquished by the entity to the county during the taxable year. The assessed value upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(c) The tax credit shall be equal to the value of a water system, as assessed by county officials, relinquished by the taxpayer to the county within which the water system is located.

(d) The amount of credit allowed for each water system shall not exceed $ .

(e) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules under chapter 91 necessary to implement this section.

(f) 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. All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year during which the water system was relinquished by the taxpayer to the county. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(g) The tax credit may not be claimed by a taxpayer that has received just compensation for the acquirement of privately-owned water systems from the State or county pursuant to eminent domain proceedings.

(h) This section shall not apply to taxable years beginning after December 31, 2028.

(i) As used in this section:

"Water system" means a system that provides water for human consumption through pipes or other constructed conveyances. "Water system" includes:

(1) Any collection, treatment, storage, and distribution facilities controlled by the system and used primarily in connection with the system; and

(2) Any collection or pretreatment storage facilities not under the control of, but which are used primarily in connection with the system."

PART III

SECTION 3. The attorney general shall commence eminent domain proceedings to acquire privately-owned water systems in counties having a population greater than one hundred thousand and less than two hundred thousand.

SECTION 4. In accordance with section 9 of article VII, of the Constitution of the State of Hawaii and sections 37-91 and 37-93, Hawaii Revised Statutes, the legislature has determined that the appropriation contained in this Act will cause the state general fund expenditure ceiling for fiscal year 2024-2025 to be exceeded by $ , or per cent. The reasons for exceeding the general fund expenditure ceiling are that the appropriation made in this Act is necessary to serve the public interest and to meet the needs provided for by this Act.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for eminent domain proceedings to acquire privately-owned water systems in counties having a population greater than one hundred thousand and less than two hundred thousand.

The sum appropriated shall be expended by the department of the attorney general for the purposes of this Act.

PART IV

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 3000; provided that:

(1) Part II shall apply to taxable years beginning after December 31, 2023 and shall not apply to taxable years beginning after December 31, 2028; and

(2) Section 5 shall take effect on July 1, 2024.

HOUSE OF REPRESENTATIVES	H.B. NO.	2694
THIRTY-SECOND LEGISLATURE, 2024		H.D. 1
STATE OF HAWAII