Report Title:

Tax Credit; Private Development at Ko Olina Resort and Marina

 

Description:

Establishes a tax credit for qualified investment at Ko Olina Resort and Marina. (SB2907 HD1)

THE SENATE

S.B. NO.

2907

TWENTY-FIRST LEGISLATURE, 2002

S.D. 2

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

relating to taxation.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that further development planned by the State and the city and county of Honolulu to enhance the west side of Oahu and develop the second city of Kapolei and Ko Olina Resort and Marina would bring extensive economic benefits and result in the creation of thousands of construction and permanent jobs. The legislature believes that Ko Olina can play a pivotal role in regenerating Oahu's tourism economy. The creation of "must see" attractions and educational facilities at Ko Olina including a world-class ocean front aquarium, marine science and mammal research facilities, an international sports training complex, a travel industry management intern campus, and other facilities developed in cooperation with the University of Hawaii will attract visitors from local, national, and international markets, will reposition Oahu as a multi-resort island, and will compliment Waikiki by creating a broad-based visitor destination.

The purpose of this Act is to establish a tax credit for the private development of attractions and educational facilities at the Ko Olina Resort and Marina.

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

"§235-   Attractions and educational facilities credit; Ko Olina Resort and Marina. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a tax credit for investment in the development of facilities for attractions and educational purposes at Ko Olina Resort and Marina. The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter or at the election of the taxpayer from the tax liability imposed by chapter 237D, 238, 239, 241, or 431.

The director of taxation in administering the tax credit for the taxes imposed by chapter 237D, 238, 239, 241, or 431 in lieu of the tax credit may implement the tax credit by prescribing tax forms and instructions that require tax reporting and payment by deduction, allocation, or any other method to determine the tax credit allowed under this section.

The tax credit shall be twenty per cent of the investment made in a taxable year and twenty per cent of the investment for each of the four consecutive taxable years after the investment is made.

(b) If the tax credit under this section exceeds the taxpayer's income tax liability or the tax liability under chapter 237D, 238, 239, 241, or 431 for any year for which the credit is taken, the excess of the tax credit over liability may be used as a credit against the taxpayer's tax liability for the taxes set forth in this section in subsequent years until exhausted.

Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(c) If at any time during the five-year period in which tax credits are earned under subsection (a), the costs incurred no longer meet the definition of investment under subsection (d), the credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent of the total tax credit claimed under this section in the preceding two taxable years; provided the amount of the credit recaptured shall apply only to those costs that no longer meet the definition of investment, and shall not apply to any portion of a tax credit claimed for a qualified investment that remains a qualified investment. The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

(d) As used in this section:

"Investment" means costs, up to a total of $100,000,000 in the aggregate, incurred after June 30, 2002, at Ko Olina Resort and Marina, being the 642 acres reclassified to urban district by Decision and Order entered on September 12, 1985, in Docket A83-562, by the land use commission, for the development of facilities for attractions and educational purposes, and for infrastructure within the Ko Olina Resort and Marina that is directly related to those facilities, including a world-class aquarium, marine science and mammal research facilities, international sports training complex, a travel industry management intern campus, infrastructure for the transfer of ocean waters to the aquarium or marine mammal facilities, or both, and other educational facilities developed or operated in cooperation with the University of Hawaii or other educational institutions; provided that investment shall not include land acquisition costs.

(e) This section shall apply to investments made after June 30, 2002, and shall not apply to investments made after December 31, 2007; provided that a taxpayer may continue to claim the credits provided in this section if the investment is made before January 1, 2008.

(f) No taxpayer that claims a credit under this section shall claim any other credit for investments under this chapter."

SECTION 3. Section 235-2.45, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Section 704 of the Internal Revenue Code (with respect to a partner's distributive share) shall be operative for purposes of this chapter; except that section 704(b)(2) shall not apply to:

(1) Allocations of the high technology business investment tax credit allowed by section 235-110.9; [or]

(2) Allocations of net operating loss pursuant to section

235-111.5[.]; or

(3) Allocations of the investment tax credit allowed by section 235- ."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2001.