Report Title:

Tax Credit; Private Development at Ko Olina Resort and Marina

 

Description:

Establishes a tax credit for qualified costs at Ko Olina Resort and Marina; maximum tax credit of $7,500,000 in any year; maximum total tax credit of $75,000,000. (CD1)

THE SENATE

S.B. NO.

2907

TWENTY-FIRST LEGISLATURE, 2002

S.D. 2

STATE OF HAWAII

H.D. 2


C.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 complement 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 tax credit; Ko Olina Resort and Marina. (a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter a tax credit for qualified costs 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 and at the election of the taxpayer from the tax liability imposed by chapter 237, 237D, 238, 239, 241, and 431.

(b) The tax credit earned shall be equal to the qualified costs incurred in the previous taxable year for any one or more years in the six consecutive taxable years from January 1, 2003, through December 31, 2008, up to a maximum of $75,000,000 of credits in the aggregate for all qualified taxpayers for all six years; provided that notwithstanding the amount of tax credit earned in any year, a maximum of $7,500,000 of tax credit in the aggregate for all qualified taxpayers may be utilized in any one year. The credits over $7,500,000 shall be used as provided in subsection (d).

(c) To qualify for the tax credit, a taxpayer shall:

(1) Have expended qualified costs on and be developing a world-class aquarium and marine science and mammal research facility at Ko Olina Resort and Marina; and

(2) Dedicate one-half of the taxable income, as defined in chapter 235, of the world-class aquarium to the State, beginning on the seventeenth year following the year in which the attractions and educational facilities credit was first taken.

(d) If the tax credit under this section exceeds $7,500,000 in the aggregate for all qualified taxpayers for any taxable year or exceeds the taxpayer's income tax liability and the tax liability under chapter 237, 237D, 238, 239, 241, and 431 for any year for which the credit is taken, the excess of the tax credit 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.

(e) 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.

(f) If at any time during the six-year period in which tax credits are earned under this section, the costs incurred no longer meet the definition of qualified costs, the credit claimed under this section shall be recaptured. The recapture shall be equal to one hundred per cent of the total tax credit claimed under this section for the preceding taxable year; provided the amount of the credit recaptured shall apply only to those costs that no longer meet the definition of qualified costs. 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.

(g) This section shall apply to qualified costs incurred after December 31, 2002, and shall not apply to qualified costs incurred after December 31, 2008; provided that a taxpayer may continue to claim the credits provided in this section if the qualified cost is incurred before January 1, 2009.

(h) No taxpayer that claims a credit under this section shall claim any other credit for the same qualified costs under any chapter identified in this section.

(i) The director of taxation shall prepare any forms that 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 claims for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

The qualified taxpayer, no later than March 31 of each year in which qualified costs were expended in the previous taxable year, shall submit a written, certified statement to the director of taxation, in the form specified by the director of taxation identifying:

(1) The qualified costs, if any, expended in the previous taxable year;

(2) The amount of tax credit claimed pursuant to this section, if any, in the previous taxable year; and

(3) The tax liability under this chapter and chapter 237, 237D, 238, 239, 241, and 431 against which the tax credit is claimed.

(j) As used in this section:

"Ko Olina Resort and Marina" means the six hundred forty-two acres reclassified to urban district by Decision and Order entered on September 12, 1985, in Docket A83-562, by the land use commission.

"Qualified costs" means any costs for plans, design, and construction, and costs for equipment that is permanently affixed to a building or structure, up to a total of $75,000,000 in the aggregate, incurred after December 31, 2002, at Ko Olina Resort and Marina 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 "qualified costs" shall not include land acquisition costs.

"Qualified taxpayer" means a person who fulfills the requirements of subsection (c)."

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 attractions and educational facilities 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 approval, shall apply to qualified costs, as defined in section 2 of this Act, incurred after December 31, 2002.