THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO CREATIVE DISTRICTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that creative districts are areas designated to encourage economic growth through the development of creative activities within the community. In many states, businesses within designated cultural or creative districts have evolved to improve the quality of life for residents of the area and rejuvenated the community. The legislature further finds that creative districts utilize the cultural and artistic resources within the designated areas to stimulate economic development, revitalize communities, and unleash the artistic and cultural potential of those who live, work, and play within the designated areas.
Accordingly, the purpose of this Act is to:
(1) Create a process for the establishment of a creative district;
(2) Establish a five-year income tax credit for creative districts;
(3) Permit counties to enact incentives for creative districts; and
(4) Require the state foundation on culture and the arts to submit an annual report to the legislature on creative districts.
SECTION 2. Chapter 9, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
"Part . CREATIVE DISTRICTS
§9-A Definitions. As used in this part:
"Advisory committee" means an advisory committee established by the foundation pursuant to section 9-C.
"Creative district" means a designated area that:
(1) Is a single contiguous area of real property not less than acres within an urban or rural district;
(2) Is distinguished by physical, artistic, cultural, or natural resources that are vital to the quality of life of the community;
(A) A concentration of artistic craft enterprises;
(B) A concentration of cultural activities; or
(C) Major artistic or cultural institutions or facilities; and
(4) Is where the development of an artistic or cultural community is proposed.
"Creative enterprise" means:
(1) A business or venture that involves a trade or occupation that integrates the arts into an economic development strategy and contributes to economic development and community revitalization; or
(2) A cultural organization or business that furthers the development and marketing of the community’s cultural assets.
"Lease" means the conveyance of land or an interest in land by the fee owner for a term of twenty years or more.
"Lessee" means any person to whom land is leased.
§9-B Creative districts; establishment; terms. (a) A creative district may be established if more than fifty per cent of the landowners and lessees in a contiguous area submit a petition to the foundation for the designation of the area as a creative district.
(b) The petition shall include:
(1) A plan of the parcel or parcels sought to be designated as a creative district that includes a map and description of the contiguous area;
(2) A description of the artistic or cultural activities, any major artistic or cultural institutions or facilities, and any areas with artistic and cultural activities or production within the proposed district; and
(3) A description of any proposed artistic or cultural activities, or proposed areas of artistic and cultural activities or production, within the proposed district.
(c) Upon approval of the advisory committee established pursuant to section 9-C, a petition shall be submitted to the foundation for review. The foundation shall review the qualifications of the proposed district to determine whether it meets the criteria of a creative district pursuant to this part. The foundation may certify that the proposed district meets the requirements of a creative district and submit a certificate of approval to the county and the petitioners.
(d) A county receiving the certificate of approval of a creative district shall review the existing or proposed artistic or cultural activities, or proposed areas of artistic and cultural activities or production, within the proposed district for conformance to the county's comprehensive general plan and zoning ordinance. The county, after conducting a public hearing, may approve the certificate of approval, deny the certification, or request modifications to the proposed creative district.
(e) The term of a creative district established pursuant to this section shall be years, and may be extended by the foundation upon submittal of a petition pursuant to subsections (a) and (b).
§9-C Creative district advisory committee. (a) Upon receipt of a petition to establish a creative district, the foundation shall convene an advisory committee to review the petition, which shall be comprised of:
(1) A chairperson, who shall be appointed by the chairperson of the commission;
(2) Three members recognized as being professionally qualified in the fields of culture and the arts; provided that two of the members shall be residents of the county in which the proposed district is located; and
(3) The planning director of the county in which the proposed district is located or the planning director's designee.
(b) The advisory committee, within a period of not less than days after holding a public meeting pursuant to chapter 92, shall act to approve the petition, deny the petition, or modify the petition by imposing conditions to conform it to the spirit of a creative district.
§9-D Creative district tax credit. (a) There shall be allowed to each taxpayer that is a creative enterprise within a creative district certified and approved pursuant to section 9‑B, an income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by chapter 235 for the taxable year in which the credit is properly claimed.
(b) The foundation shall certify annually to the department of taxation the applicability of the tax credit provided in this section for a designated creative district.
(c) The tax credit shall be:
(1) per cent of the tax due for the first tax year;
(2) per cent of the tax due for the second tax year;
(3) per cent of the tax due for the third year;
(4) per cent of the tax due for the fourth year; and
(5) per cent of the tax due for the fifth year.
Any tax credit not usable shall be carried forward until exhausted.
(d) The tax credit allowed under this section shall only apply to taxes on the gross proceeds attributable to a designated creative district. Any taxpayer claiming a tax credit under this section shall allocate and apportion the taxpayer's taxable income based on business conducted inside and outside of the creative district.
§9-E County incentives. Each county may enact incentives for creative districts, which may include:
(1) Expedited permit processing;
(2) Real property tax exemptions for creative districts; and
(3) Other incentives."
SECTION 3. Section 23-94, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) This section shall apply to the following:
(1) Section 235-4.5(a)--Exclusion of intangible income earned by a trust sited in this State;
(2) Section 235-4.5(b)--Exclusion of intangible income of a foreign corporation owned by a trust sited in this State;
(3) Section 235-4.5(c)--Credit to a resident beneficiary of a trust for income taxes paid by the trust to another state;
(4) Sections 235-55 and 235-129--Credit for income taxes paid by a resident taxpayer to another jurisdiction;
(5) Section 235-71(c)--Credit for a regulated investment company shareholder for the capital gains tax paid by the company;
(6) Section 235-110.6--Credit for fuel taxes paid by a commercial fisher;
(7) Section 235-110.93--Credit for important agricultural land qualified agricultural cost;
(8) Section 235-110.94--Credit for organically produced agricultural products;
(9) Section 235-129(b)--Credit to a
shareholder of an S corporation for the shareholder's pro rata share of the tax
credit earned by the S corporation in this State; [
(10) Section 209E-10--Credit for a qualified
business in an enterprise zone; provided that the review of this credit
pursuant to this part shall be limited in scope to income tax credits[
(11) Section 9-D-–Credit for businesses within a creative district."
SECTION 4. The state foundation on culture and the arts, in consultation with the counties and the department of taxation, shall submit an annual report on the designation of creative districts to the legislature no later than twenty days prior to the convening of each regular session. The report shall include:
(1) The number of petitions received for the designation of creative districts;
(2) The number of districts designated as creative districts; and
(3) Incentives proposed for the designation of creative districts.
SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take on July 1, 2050.
Creative District; Tax Credit; State Foundation on Culture and the Arts; Counties
Creates a process for the establishment of a creative district. Establishes a 5-year income tax credit for creative districts. Permits counties to enact incentives for creative districts. Requires the State Foundation on Culture and the Arts to submit an annual report to the Legislature on creative districts. Effective 7/1/2050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.