Report Title:

Renaissance Zones; Established

Description:

Authorizes the governor to designate up to eight renaissance zones in the State. Establishes the renaissance review board. Exempts persons located and operating within renaissance zones from up to 100 percent of the person's income and general excise taxes. Requires DBEDT to submit annual report on the economic effects. Requires DBEDT to submit a report to the 2004 legislature on providing enterprise zone tax benefits to retail businesses, including its feasibility, probable impact on state revenues, and on the probable social and economic impact on communities. (SD1)

THE SENATE

S.B. NO.

1422

TWENTY-SECOND LEGISLATURE, 2003

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to economic recovery.

 

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

PART I

SECTION 1. The legislature finds that communities such as Waipahu on Oahu and the Hamakua coast on Hawaii have struggled as a result of the closing of several businesses. The legislature further finds that by targeting these areas for strategic support and revitalization, the overall welfare of communities will improve and businesses on the edge of collapse may be saved.

The legislature finds that one such way government can assist with strategic support and revitalization is by creating renaissance zones to provide temporary relief from certain taxes within the renaissance zones. Certain areas of the State, including Waipahu on Oahu and the Hamakua coast on Hawaii, warrant particular consideration for designation as renaissance zones. The tax incentives derived from doing business in these zones will attract investors and thereby collaterally address the attending unemployment and social problems in the vicinity of the zones.

The purpose of this Act is to authorize the governor to designate up to eight renaissance zones in the State based on certain criteria.

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

"CHAPTER

STATE RENAISSANCE ZONES

§   -1 Definitions. As used in this chapter:

"Department" means the department of business, economic development, and tourism.

"Development plan" means a written plan that addresses the criteria as provided in section    -5 and includes all of the following:

(1) A map of the proposed renaissance zone that indicates the geographic boundaries, the total area, and the present use and conditions of the land and structures within those boundaries;

(2) Evidence of community support and commitment from residential and commercial interests;

(3) A description of the methods proposed to increase economic opportunity and expansion, facilitate infrastructure improvement, and provide job training;

(4) Current social, economic, and demographic characteristics of the proposed renaissance zone and anticipated improvements in education, health, human services, public safety, and employment if the renaissance zone is created; and

(5) Any other information required by the department.

"Person" means an individual, partnership, corporation, association, limited liability company, or other legal entity.

"Renaissance zone" means a geographic area designated by the governor under this chapter.

"Review board" means the renaissance zone review board created in section    -2.

§   -2 Review board. (a) There is established the renaissance zone review board to be placed within the department for administrative purposes. Membership in the review board shall consist of:

(1) The director of finance, or the director's designee;

(2) The director of business, economic development, and tourism, or the director's designee; and

(3) The director of taxation, or the director's designee.

(b) The review board shall make recommendations to the governor for selection based on the criteria contained in section    -5.

(c) The designation of a renaissance zone under this chapter shall take effect upon designation by the governor.

§   -3 Application; criteria. A person may apply to the review board for the designation of a distinct geographic area within the State as a renaissance zone, which shall not be greater than ten acres in size.

§   -4 Application; procedure. An application shall include:

(1) A development plan as defined in this chapter; and

(2) The proposed duration of renaissance zone status, not to exceed fifteen years.

§   -5 Designation; criteria. The governor shall consider the following criteria in selecting a renaissance zone:

(1) Evidence of adverse economic and socioeconomic conditions within the proposed renaissance zone;

(2) The viability of the development plan;

(3) Whether the development plan is creative and innovative in comparison to other applications;

(4) Public and private commitment to, and other resources available for, the proposed renaissance zone;

(5) Demonstrated cooperation from surrounding areas; and

(6) Any other information required by the governor.

§   -6 Zones; number. The governor shall not designate more than eight renaissance zones within the State.

§   -7 Exemption from certain taxes. (a) A person who is located and operates within a renaissance zone shall be exempt from up to one hundred per cent of the taxes due under chapters 235 and 237.

(b) During the last three years that the taxpayer is eligible for an exemption described in subsection (a), the exemption shall be reduced by the following percentages:

(1) For the tax year that is two years before the final year of designation as a renaissance zone, the percentage shall be twenty-five per cent;

(2) For the tax year immediately preceding the final year of designation as a renaissance zone, the percentage shall be fifty per cent; and

(3) For the tax year that is the final year of designation as a renaissance zone, the percentage shall be seventy-five per cent.

(c) Except as otherwise provided under subsection (a), the exemption in this section shall take effect for taxable years beginning after December 31, 2003.

§   -8 Form of application. The form of the application for a renaissance zone designation shall be as specified by the department, which may request any information from an applicant, in addition to that contained in an application, as may be needed to permit the department to discharge its responsibilities under this chapter.

§   -9 Public meetings; open records. (a) The department and the review board shall conduct all business at public meetings held in compliance with chapters 91 and 92.

(b) Any record or a portion of a record, material, or other data received, prepared, used, or retained by the department or review board shall be subject to chapter 92F.

§   -10 Liberal interpretation. This chapter shall be construed liberally to effectuate the legislative intent and the purposes of this chapter, and as complete and independent authority for the performance of each and every act and thing authorized by this chapter, and all powers granted by this chapter shall be broadly interpreted to effectuate the intent and purposes of this chapter and not as a limitation of powers.

§   -11 Reports. The department shall annually report to the legislature generally on the economic effects of this chapter in each renaissance zone."

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

"§235-    Renaissance zones; exemption from tax. Any person, as defined in section    -1, who is located and operates within a renaissance zone as designated pursuant to chapter     and who is otherwise subject to the tax imposed by this chapter, shall be exempt from up to one hundred per cent of the tax imposed by this chapter for the duration of the renaissance zone as provided in section    -7."

SECTION 4. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237-    Renaissance zones; exemption from tax. Any person, as defined in section    -1, who is located and operates within a renaissance zone as designated pursuant to chapter     and who is otherwise subject to the tax imposed by this chapter, shall be exempt from up to one hundred per cent of the tax imposed by this chapter for the duration of the renaissance zone as provided in section    -7."

PART II

SECTION 5. The legislature finds that enterprise zones have been successful in attracting businesses to designated areas in the State by offering certain tax benefits. However, under current law, these tax benefits are not available to retail businesses. The legislature believes that retail businesses represent a significant portion of the economy and tend to establish a hub for commerce within a community. There may be concerns as to the impact of allowing enterprise zone tax benefits to retail businesses on the tax revenues of the State as well as other concerns. Therefore, an analysis of the probable impact is necessary.

SECTION 6. The department of business, economic development, and tourism shall submit a report to the legislature not later than twenty days prior to the convening of the 2004 regular session on the prospect of providing enterprise zone tax benefits to retail businesses, including its feasibility, probable impact on state revenues, and on the probable social and economic impact on communities.

PART III

SECTION 7. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval; provided that sections 3 and 4 shall apply to taxable years beginning after December 31, 2003.