STAND. COM. REP. NO.878-02
RE: S.B. No. 2383
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-First State Legislature
Regular Session of 2002
State of Hawaii
Your Committee on Economic Development and Business Concerns, to which was referred S.B. No. 2383, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO TAXATION TO STIMULATE THE ECONOMY,"
begs leave to report as follows:
The purpose of this bill is to promote Hawaii's tourism and construction industries by:
(1) Establishing a nonrefundable commercial construction and remodeling tax credit for commercial construction and remodeling costs incurred before July 1, 2005, as follows:
(A) Four percent of the commercial construction and remodeling costs incurred for projects valued at less than $10,000,000; and
(B) Ten percent of the commercial construction and remodeling costs incurred for projects valued at $10,000,000 or more;
(2) Expanding the hotel construction and remodeling tax credit to include construction and renovation costs incurred for:
(A) Any property on which commercial or recreational use is permitted to support or service a hotel/hotel-condo or resort use; and
(B) Offsite improvements necessary to service destination resort areas where a hotel/hotel-condo is situated.
Your Committee notes that this bill applies to taxable years beginning after December 31, 2050, to ensure further discussion.
Testimony in support of this measure was submitted by the Building Industry Association of Hawaii, Wimberly Allison Tong & Goo, Ferraro Choi and Associates, Ltd., Waikiki Improvement Association, Consulting Engineers Council of Hawaii, Honu Group, Inc., Castle & Cooke Properties, Inc., Land Use Research Foundation of Hawaii, Hawaii Island Economic Development Board, Retail Merchants of Hawaii, Hawaii Attractions Association, Hawaii Resort Developers Conference, Paul Louie & Associates, Inc., Associated Builders and Contractors, Hawaii Chapter, Inc., Hawaii Construction Industry Association, The Chamber of Commerce of Hawaii, Hawaii Business Roundtable, General Contractors Association of Hawaii, Hyatt Regency Waikiki Resort & Spa, and Louis Vuitton Fashion Group Hawaii.
The Department of Business, Economic Development, and Tourism and the Hawaii Tourism Authority supported the intent of this bill. The Department of Budget and Finance and Department of Taxation opposed this bill. Paradise Cruise, Ltd., Hawaii Activities and Tours Association, and Tax Foundation of Hawaii offered comments.
Your Committee has amended this measure by:
(1) Deleting the commercial construction and remodeling tax credit and inserting a nonrefundable qualified project construction tax credit for qualified project construction costs incurred after December 31, 2002, and before January 1, 2010. More specifically, this credit:
(A) Amounts to four percent in each taxable year for qualified project construction costs incurred up to $10,000,000 over a consecutive seven-year period;
(B) Amounts to ten percent in each taxable year for qualified project construction costs incurred of more than $10,000,000 over a consecutive seven-year period; provided that the taxpayer shall require that any general contractor performing work for the qualified project pay its employees the prevailing wages;
(C) Defines "qualified project construction costs" to mean any costs incurred after December 31, 2002, and before January 1, 2010, for plans, design, construction, infrastructure, amenities, equipment, alteration, modification, telecommunications, and information technology relating to a qualified project; and
(D) Defines "qualified project" to mean a single or multiple phase development or renovation project situated on one or more parcels of real property which are contiguous, adjoining, or in close proximity to each other;
(2) Making technical, nonsubstantive amendments for purposes of style and clarity.
As affirmed by the record of votes of the members of your Committee on Economic Development and Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2383, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2383, S.D. 2, H.D. 1, and be referred to the Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Economic Development and Business Concerns,
LEI AHU ISA, Chair