Report Title:

Tax Credit; UH Dorms.

Description:

Creates a three-year tax credit for the development of dormitories at the University of Hawaii.

HOUSE OF REPRESENTATIVES

H.B. NO.

825

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

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 as the national and local economies struggle to achieve stable growth, it is necessary to find ways to stimulate financial improvement throughout the State. While many "quick-fix" ideas exist for improving the State's fiscal standing, longer-term strategies that focus on creating an improved local workforce are the only way to truly effect lasting growth.

The University of Hawaii, besides being the primary institution of higher learning in the State, is also one of the most important entities in bringing about greater prosperity in Hawaii. Not only can the university help to provide a better-trained pool of workers, but it can also help establish many enterprises that generate significant revenues for the State, while creating a environment that attracts and sustains many other businesses.

Currently, the University of Hawaii system requires more and improved dormitories to house its increasing diverse and dynamic student population. The development of dormitories is a complicated, demanding job that requires a significant amount of capital. Furthermore, the state economy is currently not conducive to generating the amount of funding that is required for this project.

However, if the resources of the private sector could be brought to bear on this project, it could be completed in a timely manner. A project such as this would also help to invigorate the construction industry and provide jobs for many individuals in the State. It would be difficult, however, for private entities to take on a project such as this one without receiving assistance in mitigating the high capital costs and risks associated with this project. One way to encourage the private sector to become involved in this project would be to provide tax incentives.

Accordingly, the purpose of this Act is to establish a three-year income tax credit for the development and construction of dormitories that are to be leased to the University of Hawaii.

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

"§235- University of Hawaii dormitory development and construction tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a University of Hawaii dormitory development and construction 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. The amount of the tax credit claimed under this section by the taxpayer in all years for which the credit is available shall be equal to one hundred percent of the costs incurred for the planning, development, and construction of dormitories at the University of Hawaii; provided that costs for the planning, development, and construction of dormitories shall be incurred after December 31, 2002, and before January 1, 2006; provided further that no tax credit may be claimed under this section unless the taxpayer secures an agreement to lease the dormitories, once constructed, to the University of Hawaii for the university's use.

(b) The tax credit allowed under this section shall be claimed against the net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.

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

(d) 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.

(e) 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 claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(f) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2002, and shall not be available for taxable years beginning after December 31, 2005.

(g) To qualify for the income tax credit under this section, a taxpayer shall be in compliance with all applicable federal, state, and county statutes, ordinances, rules, and regulations.

(h) As used in this section:

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2003, and shall be repealed on July 1, 2006.

INTRODUCED BY:

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