STAND. COM. REP. NO. 671
RE: S.B. No. 855
Honorable Ronald D. Kouchi
President of the Senate
Thirtieth State Legislature
Regular Session of 2019
State of Hawaii
Your Committee on Ways and Means, to which was referred S.B. No. 855 entitled:
"A BILL FOR AN ACT RELATING TO THE LOW-INCOME HOUSING TAX CREDIT,"
begs leave to report as follows:
The purpose and intent of this measure is to specify that certain provisions of the Internal Revenue Code related to at-risk rules and deductions and to passive activity loss do not apply with respect to claims for the state low-income housing tax credit.
Your Committee received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation, the Oahu County Committee on Legislative Priorities of the Democratic Party of Hawaii, and two individuals. Your Committee received comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.
Your Committee finds that because the low-income housing tax credit law incorporates the Internal Revenue Code provisions that relate to at-risk rules and passive activity loss rules, it attracts only a small pool of investors. By amending the law to specify that the tax credit shall not be subject to those Internal Revenue provisions, the universe of potential investors is expected to increase, thereby creating a positive cycle of reinvestment into the local economy.
Your Committee has amended this measure by:
(1) Adopting specific clarifying language proposed by the Department of Taxation regarding the maximum amount of the state tax credits that may be allocated for a qualified low-income building; and
(2) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.
As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 855, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 855, S.D. 1, and be placed on the calendar for Third Reading.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
DONOVAN M. DELA CRUZ, Chair