Report Title:

Agricultural development zone program

Description:

Creates an agricultural zone program.

HOUSE OF REPRESENTATIVES

H.B. NO.

283

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to agriculture.

 

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

SECTION 1. The legislature finds that more needs to be done to assist agricultural businesses in Hawaii. To assist agricultural businesses in Hawaii, the legislature believes that tax credits to assist this sector will help stimulate agriculture development in the state.

The purpose of this Act is to establish an agricultural development zone program to help attract, promote, retain, and encourage the expansion of agricultural businesses in Hawaii.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

AGRICULTURAL DEVELOPMENT ZONE

§     -1  Definitions. As used in this chapter:

"Department" means the department of agriculture.

"Rural area" means an area located in a county with a population density of less than      persons per square mile.

§     -2   Agricultural development zone. (a) The department may designate one area in the state as an agricultural development zone. The designated area shall be located in a rural area. Agricultural businesses located in the agricultural development zone are eligible for tax benefits as provided in     -4.

(b) The designation of an area as an agricultural development zone shall be for ten years from the time that the department first designates the area. However, not more than

$ in tax benefits may be claimed in an agricultural development zone. The department may change the boundaries of an agricultural zone during the time that its designation is in effect. A change in the boundaries of an agricultural development zone shall not affect the duration of the designation of the area or the maximum tax benefit amount that may be claimed in the agricultural development zone.

(c) The department may certify for tax benefits in an agricultural development zone, a new or expanding agricultural business that is located in the agricultural development zone. In determining whether to certify a business under this subsection, the department shall consider among other things, the number of jobs that will be created or retained by the business.

(d) When the department certifies an agricultural business under this subsection, the department shall establish a limit on the amount of tax benefits that the business may claim. The department shall enter into an agreement with the business that specifies the limit on the amount of tax benefits that the business may claim and reporting requirements with which the business must comply.

§     -3   Notification. The department shall notify the department of taxation of the following:

(1) An agricultural development zone's designation;

(2) A business's certification and the limit on the amount of tax benefits that the business may claim; and

(3) A revocation of a business's certification;

§     -4   Agricultural development zone tax credits. (a) The department shall certify annually to the department of taxation the applicability of the tax credits provided in this chapter for a certified business against any taxes due the State.

(b) A certified business is entitled to the following tax credits:

(1) A tax credit of per cent for capital investment costs that the certified business incurred;

(2) A job creation and retention tax credit of up to $ per job; and

(3) An environmental remediation tax credit equal to an amount of per cent of the expenses the business incurred in environmental remediation.

(c) If the tax credit under this section exceeds the certified business's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability for fifteen subsequent years until exhausted. All claims, 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.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director of taxation may also require the certified business 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, 2002, and continue for ten years from the date that the area is designated as an agricultural development zone.

(f) To qualify for the income tax credit, the certified business shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(g) As used in this section:

"Capital investment costs" means costs, beyond the research and development phase, associated with capital improvements, including the acquisition and development of land, the design and construction of new facilities, and the making of renovations or additions to existing facilities.

§     -5  Rules. The department shall adopt rules pursuant to chapter 91 to implement this chapter, including rules related to the following:

(1) Criteria for designating an area as an agricultural development zone;

(2) Criteria for certifying a business for tax benefits;

(3) Standards for establishing the limit on the amount of tax benefits that a business may claim;

(4) Reporting requirements for certified businesses;

(5) The exchange of information between the department of agriculture and the department of taxation;

(6) Reasons for revoking a business's certification; and

(7) Standards for changing the boundaries of an agricultural development zone."

SECTION 3. The department of taxation shall submit a yearly report to the legislature no later than twenty days before the beginning of each regular session beginning with the 2004 session and ending with the 2011 regular session. The reports shall contain:

(1) The name and business address of every taxpayer that claimed the agricultural development zone tax credit in the previous year;

(2) The number of tax credits each taxpayer claimed in the previous year;

(3) The cost to the state of these tax credits for the previous year; and

(4) The sum of each of these for all the years since the tax credit became available.

The report shall also include:

(1) An analysis of the economic impact of this tax credit on the State and the businesses that are eligible for the tax credit; and

(2) Recommendations for amending the availability or caps on the credit is warranted.

The department of taxation shall work with the department of agriculture for this analysis.

SECTION 4. This Act shall take effect upon its approval and shall be repealed on           .

INTRODUCED BY:

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