STAND. COM. REP. NO. 430

Honolulu, Hawaii

RE: S.B. No. 822

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Transportation and Culture and the Arts, to which was referred S.B. No. 822 entitled:

"A BILL FOR AN ACT RELATING TO CREATIVE DISTRICTS,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Create a process for the establishment of a creative district;

(2) Establish a five-year tax credit for creative districts, beginning in taxable years after December 31, 2023;

(3) Permit counties to enact incentives for creative districts; and

(4) Require the State Foundation on Culture and the Arts to submit an annual report to the Legislature on creative districts.

Your Committee received testimony in support of this measure from the State Foundation on Culture and the Arts and one individual. Your Committee received comments on this measure from the Creative Industries Division of the Department of Business, Economic Development, and Tourism; Department of Taxation; Office of Information Practices; and Tax Foundation of Hawaii.

Your Committee finds that creative districts are areas designated to encourage economic growth through the development of creative activities within the community. In other states, businesses within designated cultural or creative districts have evolved to improve the quality of life for residents of the area and rejuvenated the community. To stimulate economic development, revitalize communities, and support the artistic and cultural potential of those who live, work, and play within the designated areas, this measure establishes a process to create creative districts and a creative district tax credit.

Your Committee has amended this measure by:

(1) Deleting language that would have required the advisory committee to give notice pursuant to chapter 91, Hawaii Revised Statutes, and conduct its meetings under chapter 92, Hawaii Revised Statutes;

(2) Clarifying that taxpayers shall allocate and apportion their taxable income to designate business conducted inside and outside of the creative district; and

(3) Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Transportation and Culture and the Arts that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 822, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 822, S.D. 1, and be referred to your Committee on Ways and Means.

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

________________________________

CHRIS LEE, Chair