Report Title:

Charter School Facilities Fund; Tax Credit; Appropriation

 

Description:

Establishes the Hawaii charter school facilities fund for funding the repair, maintenance, and other facilities needs of charter schools.  Establishes a tax credit for certain individuals who make contributions to charter school repairs, maintenance, or development.  Appropriates funds for the Hawaii charter school facilities fund.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

2561

TWENTY-FOURTH LEGISLATURE, 2008

 

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to education.

 

 

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

 


     SECTION 1.  The legislature finds that article X, section 1 of the Constitution of the State of Hawaii clearly indicates that the State has a constitutional obligation to support charter school facilities.  In relevant part, it states that "[t]he State shall provide for the establishment, support and control of a statewide system of public schools free from sectarian control, a state university, public libraries and such other educational institutions as may be deemed desirable, including physical facilities therefor." 

     Department of education schools that convert to charter school status have pre-existing facilities and continue to remain on the department's regular repair and maintenance and capital improvement program schedules.  Furthermore, presently, all Hawaii 3R's projects must be selected from the department of accounting and general services repair and maintenance backlog unfunded list, which only includes conversion charter schools.  Start-up charter schools, however, receive no such support and only received legislative appropriations for facilities assistance once, after the 2006 session, in the amount of $660 per pupil.

     Except for that single occasion, all of the twenty-three start-up charter schools have always been forced to pay for occupancy costs out of a per pupil allocation that is already significantly lower than that provided to the department of education-operated schools.

     Although not intended to serve as the exclusive, sole means of meeting the State's constitutional obligation to support charter school facilities, the legislature finds that innovative, cost-effective public-private partnerships are promising means of addressing this issue.  The legislature further finds that this program would provide a mechanism to leverage scarce public resources with private resources and to use state investments to leverage federal funding for charter school facilities, which often is unavailable absent state funding.

     The legislature further finds that:

     (1)  Any charter school in the State may participate in programs of the fund, be they start-up or conversion; and

     (2)  Kanu o ka aina learning ohana may prioritize funding for projects that exhibit best practices in green building or sustainable construction, rehabilitation, repair, and maintenance. 

     Kanu o ka aina learning ohana is in the process of examining the feasibility of establishing a community development financial institution to support charter school facility financing.  The legislature may consider transferring the Hawaii charter school facilities fund and related tax credit reporting responsibilities from Kanu o ka aina learning ohana to such a community development financial institution upon its establishment.

     The legislature further finds that this program aligns well with another measure under consideration this legislative session to authorize the State to issue special purpose revenue bonds, and use the proceeds from those bonds, to assist nonprofit corporations benefiting one or more charter schools, community development financial institutions benefiting one or more charter schools, or charter schools.

     The legislature hopes that as all of these related initiatives mature, they will result in the establishment of an administratively and financially sophisticated new system of charter school facility financing that will effectively leverage public investment for the benefit of all charter schools in Hawaii.

     A provision in this Act, regarding a state income tax credit for environmentally sustainable goods and services, parallels those of section 235-12.5, Hawaii Revised Statutes.  However, it is the intent of the legislature that these state tax credits for environmentally-sustainable goods and services shall not be limited to those defined in this Act, but shall be construed broadly to include a wide variety of good and services consistent with prevailing industry standards in green building or sustainable construction, rehabilitation, repair, and maintenance.

     The purpose of this Act is to support the funding of charter school facilities by creating the Hawaii charter school facilities fund, a program comparable to Hawaii 3R's, except that the fund would only support charter schools and nonprofit organizations that support charter schools.  This program shall also differ from Hawaii 3R's in that:

     (1)  It would be expanded to include acquisition, predevelopment, rehabilitation, construction, and other capital improvement projects, in addition to repair and maintenance; and

     (2)  It would accommodate the greater complexity of capital improvement projects, as opposed to repair and maintenance projects, the state tax credit provision for the contributions of in-kind services by members of certain professions and occupations would be expanded to include:

         (A)  A broader group of professions and occupations (including those regulated under title 25, Hawaii Revised Statutes, including electricians and plumbers, mortgage brokers and solicitors, real estate appraisers, real estate brokers and salespersons, attorneys, employees of financial institutions regulated under title 22, Hawaii Revised Statutes, and those who provide environmentally-sustainable services; and

         (B)  Goods, including but not limited to environmentally friendly ones.

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

     "§235-    Tax Credit for charter school repair, maintenance, acquisition, predevelopment, rehabilitation, construction, and other capital improvements.  (a)  There shall be allowed to each taxpayer who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest and who:

     (1)  Is licensed under chapter 444, 448E, 454, 460J, 464, 466K, or 467;

     (2)  Is a member of Hawaii state bar association;

     (3)  Is an employee of entities regulated under title 22; or

     (4)  Provides environmentally-sustainable goods or services including, but not limited to, the sale, installation, and service of renewable energy technology systems, solar or wind energy systems, and other goods and services consistent with prevailing industry standards in green building or sustainable construction, rehabilitation, repair, and maintenance,

a tax credit for contributions of in-kind services for the repair, maintenance, acquisition, predevelopment, rehabilitation, construction, and other capital improvements of charter schools provided by the licensed taxpayer in Hawaii, or facilities administered, operated, or developed by nonprofit corporations for the benefit of charter schools.  The tax credit 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.

     (b)  There shall be allowed to each taxpayer who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest, a tax credit for contributions of goods for the repair, maintenance, acquisition, predevelopment, rehabilitation, construction, and other capital improvements of charter schools provided by the licensed taxpayer in Hawaii, or facilities administered, operated, or developed by nonprofit corporations for the benefit of charter schools.  The tax credit 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.

     (c)  The amount of the tax credit established under this section shall be equal to ten per cent of the value of contributions of in-kind goods and services to the Hawaii charter school facilities fund for that taxable year; provided that the aggregate value of the contributions of in-kind services claimed by a taxpayer shall not exceed $40,000 in a given taxable year.

     (d)  For purposes of this section:

     "Charter schools" has the same meaning as defined in section 302A-101.

     "Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as wind, heat (solar thermal), or light (photovoltaic) from the sun into:

     (1)  A usable source of thermal or mechanical energy;

     (2)  Electricity; or

     (3)  Fuel.

     "Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts insolation or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.

     "Value of contributions of in-kind goods and services" means the fair market value of uncompensated services or labor as determined and certified by the department of accounting and general services.

     (e)  The tax credit allowed under this section shall be claimed against net income tax liability for the taxable year.  A tax credit under this section that exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

     (f)  All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (g)  Kanu o ka aina learning ohana shall maintain records of the names of taxpayers eligible for the credit and the total value of in-kind goods and services contributed for the repair, maintenance, acquisition, predevelopment, rehabilitation, construction, and other capital improvements of charter schools provided by the licensed taxpayer in Hawaii, or facilities administered, operated, or developed by nonprofit corporations for the benefit of charter schools for the taxable year; provided that the taxpayer has expressed interest to kanu o ka aina learning ohana in receiving the tax credit.  All contributions shall be verified by kanu o ka aina learning ohana.  Kanu o ka aina learning ohana shall keep an accurate total of all contributions that they verify.  Upon each determination, kanu o ka aina learning ohana shall issue a certificate to the taxpayer certifying:

     (1)  The amount of the contribution;

     (2)  That the taxpayer:

         (A)  Is licensed under chapter 444, 448E, 454, 460J, 464, 466K, or 467;

         (B)  Is a member of the Hawaii state bar association;

         (C)  Is an employee of entities regulated under Title 22; or

         (D)  Provides environmentally-sustainable goods or services, including but not limited to the sale, installation, and service of renewable energy technology systems and solar or wind energy systems, and other goods and services consistent with prevailing industry standards in green building or sustainable construction, rehabilitation, repair, and maintenance; and

     (3)  That the taxpayer has obtained a current and valid certificate signed by the director of taxation, showing that the taxpayer does not owe the State any delinquent taxes, penalties, or interest.

     The taxpayer shall file the certificate from kanu o ka aina learning ohana with the taxpayer's tax return with the department of taxation.  When the total amount of certified contributions for each taxable year reaches $2,500,000, kanu o ka aina learning ohana shall immediately discontinue certifying contributions and notify the department of taxation.  In no instance shall the total amount of certified contributions exceed $2,500,000 for each taxable year.

     (h)  The State shall provide not more than $250,000 in tax credits for contributions of in-kind goods and services in Hawaii for the repair and maintenance of charter schools.

     (i)  The director of taxation shall prepare any forms that may be necessary to allow a credit to be claimed under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91."

     SECTION 3.  Chapter 302B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§302B-    Hawaii charter school facilities fund.  (a)  There is established the Hawaii charter school facilities fund as a separate fund of kanu o ka aina learning ohana, a Hawaii nonprofit corporation.  Moneys received from the State, county, or federal government, private contributions of cash or other property, and the income and capital gains earned by the fund shall constitute its assets.

     (b)  Kanu o ka aina learning ohana shall spend moneys from the fund in the form of either grants, loans, or contracts to charter schools, nonprofit corporations that benefit charter schools, or contracts with private vendors for the repair, maintenance, acquisition, predevelopment, rehabilitation, construction, or other capital improvement projects of charter school facilities, or facilities administered, operated, or developed by nonprofit corporations for the support of charter schools in Hawaii in accordance with this section.

     (c)  The fund may receive contributions, grants, endowments, gifts in cash or otherwise, loans, and bond financing from all sources, including corporations or other businesses, foundations, government, individuals, and other interested parties.  The State may appropriate moneys to the fund.

     (d)  There is established the Hawaii charter school facilities fund advisory board, which shall consist of five members who shall be appointed without regard to section 26-34.  Kanu o ka aina learning ohana shall appoint two members, the Hawaii charter school network shall appoint two members, and the office shall appoint one member of the Hawaii charter school facilities fund advisory board.  The Hawaii charter school facilities fund advisory board shall be responsible for:

     (1)  Soliciting and otherwise raising funds for the Hawaii charter school facilities fund;

     (2)  Establishing criteria for the expenditure of funds;

     (3)  Reviewing grant and loan proposals using criteria established by kanu o ka aina learning ohana;

     (4)  Making recommendations for grants, loans, and other specific expenditures; and

     (5)  Engaging in other activities necessary to support the prudent and efficient operation of the Hawaii charter school facilities fund.

     (e)  In managing the Hawaii charter school facilities fund, the kanu o ka aina learning ohana shall exercise ordinary business care and prudence, given the facts and circumstances prevailing at the time of action or decision.  In so doing, kanu o ka aina learning ohana shall consider the fund's long- and short-term needs in carrying out its purposes, its present and anticipated financial requirements, expected total return on its investments, price trends, and general economic conditions.

     (f)  There may be an endowment component of the Hawaii charter school facilities fund, and kanu o ka aina learning ohana may accumulate net income and add the same to the principal.

     (g)  The use of any state moneys may be restricted by the legislature in appropriating moneys to the Hawaii charter school facilities fund.

     (h)  Kanu o ka aina learning ohana may expend principal from the Hawaii charter school facilities fund for the purposes of the fund.

     (i)  Any organization submitting a proposal to kanu o ka aina learning ohana for moneys shall meet the following standards at the time of application and:

     (1)  Be:

         (A)  A for-profit organization duly registered under the laws of the State;

         (B)  A nonprofit organization determined by the Internal Revenue Service to be exempt from the federal income tax; or

         (C)  An agency of the State or a county;

     (2)  Have experience with the project or in the program area for which the proposal is being made; and

     (3)  Be licensed and accredited, as applicable, in accordance with the requirements of federal, state, and county governments.

     (j)  Organizations or agencies to which moneys are awarded shall agree to comply with the following conditions prior to receiving the award:

     (1)  Use persons qualified to engage in the activity to be funded;

     (2)  Comply with the applicable federal, state, and county laws; and

     (3)  Comply with any other requirements prescribed by kanu o ka aina learning ohana to ensure adherence by the recipient of the award with applicable federal, state, and county laws, and with the purposes of this section.

     (k)  Chapter 103D shall not apply to organizations or agencies that apply for grants or contracts under this section; provided that kanu o ka aina learning ohana shall be held accountable for the use of the funds.

     (l)  The Hawaii charter school facilities fund shall be audited annually by an independent auditor.  The results of each annual audit shall be submitted to the department of budget and finance not later than thirty days from the date kanu o ka aina learning ohana receives the audit results.  Kanu o ka aina learning ohana shall retain for a period of three years and permit the department of budget and finance, state legislators, and the auditor, or their duly authorized representatives, to inspect and have access to any documents, papers, books, records, and other evidence that is pertinent to the Hawaii charter school facilities fund.

     (m)  The fund shall not be placed in the state treasury, and the State shall not administer the fund, nor shall the State be liable for the operation or solvency of the fund or kanu o ka aina learning ohana.

     (n)  For every dollar of state moneys granted by the Hawaii charter school facilities fund to the project, there shall be a minimum of $1 in value matched by kanu o ka aina learning ohana from private, federal, or county sources; provided that this matching value may include:

     (1)  The fair market value of contributions of in-kind goods and services;

     (2)  Federal funding intended for charter schools that passes through the department of education as the federally-designated state education agency or local education agency;

     (3)  Federal funding that passes through any agency, board, or panel of the State; and

     (4)  Any funding from the office of Hawaiian affairs, as a quasi-state agency, that did not originate as general revenues appropriated to it by the legislature.

     (o)  Kanu o ka aina learning ohana shall submit an annual report to the legislature on the progress of the fund no later than twenty days prior to the convening of each regular session."

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $2,500,000 or so much thereof as may be necessary for fiscal year 2008-2009 for the Hawaii charter school facilities fund.

     The sum appropriated shall be expended by the department of education for the purposes of this Act.

     SECTION 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2007; provided that section 4 of this Act shall take effect on July 1, 2008.

 

INTRODUCED BY:

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