Report Title:

Kakaako; Taxation; Industrial Business Tax Credit

 

Description:

Provides an unspecified tax credit for real property in the Kakaako community development district zoned I-1 and I-2 for a portion of the industrial real property tax assessment imposed by the city and county of Honolulu; provided that the property was in use for light industrial, wholesaling, or service and commercial operations in the year in which the tax credit is taken and retains I-1 or I-2 zoning; clarifies that the HCDA may, not shall, affix assessments against real property for district-wide improvements.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

3333

TWENTY-FOURTH LEGISLATURE, 2008

 

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO kakaako.

 

 

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

 


PART I

     SECTION 1.  In 1976, the Hawaii community development authority was established to address long-term planning and redevelopment needs in urban Honolulu, operating with broad powers and state funding alternatives to accomplish what existing planning and zoning laws could not do.  At the same time, the Hawaii community development authority was tasked with addressing unmet community development needs that included, among other things, "...insufficient commercial and industrial facilities for rent...".

     Under section 206E-31, the Kakaako community development district was tasked with facilitating the development of a mixed-use district in which industrial, commercial, residential, and public uses would be able to coexist compatibly within the same area.  The Hawaii community development authority was directed to "...respect and support the present function of Kakaako as a major economic center, providing significant employment in such areas as light industrial, wholesaling, service and commercial activity."

     The legislature finds that within the past decade, a burgeoning number of high-density, high-rise developments have been planned and constructed in accordance with Hawaii community development authority's development plans for the Kakaako mauka portion of the Kakaako community development district.  The growth of a high-density residential-commercial and retail corridor through the Kakaako community development district is beginning to threaten the existence of existing light industrial, wholesaling, or service and commercial operations due to increased property taxes and rents.

     The purpose of this part is to fulfill the purposes of chapter 206E, Hawaii Revised Statutes, that promoted small business and light industrial development, by establishing a state tax credit that offsets a portion of the industrial real property tax assessments imposed by the city and county of Honolulu.

     SECTION 2.  Chapter 206E, part II, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§206E‑    Industrial use; tax credit.  Effective January 1,     , any real property with a total area of less than       square feet located within the Kakaako community development district and designated as I-1, limited industrial district, or I-2, intensive industrial district, by the city and county of Honolulu shall be allowed a tax credit that is equal to       per cent of any industrial real property tax assessment imposed by the city and county of Honolulu in a given tax year, as provided by section 235-  ; provided that the real property is in use for light industrial, wholesaling, or service and commercial operations in the year in which the tax credit is claimed and retains the I-1 or I-2 designation in the year following the year in which the tax credit is claimed."

     SECTION 3.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235‑    Kakaako community development district; industrial use tax credit.  (a)  Any law to the contrary notwithstanding, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income 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)  The amount of the credit shall be equal to       per cent of any industrial real property tax assessment imposed by the city and county of Honolulu in a given tax year on any real property with a total area of less than       square feet located within the Kakaako community development district and designated as I-1, limited industrial district, or I-2, intensive industrial district, by the city and county of Honolulu; provided that the real property is in use for light industrial, wholesaling, or service and commercial operations in the year in which the tax credit is claimed and retains the I-1 or I-2 designation in the year following the year in which the tax credit is claimed.

     (c)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1.  All claims, including any amended claims, for tax credits 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.

     (d)  The director of taxation shall prepare forms as may be necessary to claim a credit under this section.  The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

     (e)  The tax credit allowed under this section shall be available for taxable years beginning after December 31,     , and shall not be available for taxable years beginning after December 31,     .

     (f)  In the case of a partnership, S corporation, estate, trust, or any developer of a commercial building, the tax credit allowable is for a percentage of the industrial real property tax imposed by the city and county of Honolulu for the taxable year.  The cost upon which the tax credit is computed shall be determined at the entity level."

PART II

     SECTION 4.  Section 206E-6, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (b) to read:

     "(b)  Whenever the authority shall determine to undertake, or cause to be undertaken, any public facility as part of the district-wide improvement program, the cost of providing the public facilities [shall] may be assessed against the real property in the community development district specially benefiting from such public facilities.  The authority shall determine the areas of the community development district which will benefit from the public facilities to be undertaken and, if less than the entire community development district benefits, the authority may establish assessment areas within the community development district.  The authority may issue and sell bonds in such amounts as may be authorized by the legislature to provide funds to finance such public facilities.  The authority [shall] may fix the assessments against real property specially benefited.  All assessments made pursuant to this section shall be a statutory lien against each lot or parcel of land assessed from the date of the notice declaring the assessment until paid and such lien shall have priority over all other liens except the lien of property taxes.  As between liens of assessments, the earlier lien shall be superior to the later lien."

     2.  By amending subsection (d) to read:

     "(d)  Any other law to the contrary notwithstanding, in assessing real property for public facilities, the authority [shall] may assess the real property within an assessment area according to the special benefits conferred upon the real property by the public facilities.  These methods may include assessment on a frontage basis or according to the area of real property within an assessment area or any other assessment method which assesses the real property according to the special benefit conferred, or any combination thereof.  No such assessment levied against real property specially benefited as provided by this chapter shall constitute a tax on real property within the meanings of any constitutional or statutory provisions."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2007.

 

INTRODUCED BY:

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