Report Title:

Renaissance Zones; Tax Exemptions for Developers

Description:

Establishes procedures for the designation of two renaissance zones in the State; exempts from income and general excise tax liability certain amounts of income derived by developers from renaissance zones.

HOUSE OF REPRESENTATIVES

H.B. NO.

819

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to economic Development.

 

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

SECTION 1. The legislature finds that there is a continuing need to encourage economic development in many rural areas in this state that suffer from high unemployment and other social problems related to the lack of economic opportunity. To achieve this purpose, it is necessary to create renaissance zones that provide temporary tax relief for developers of such zones.

The legislature further finds that certain areas of the State warrant particular consideration in being designated as a renaissance zone. The tax incentives derived from doing business in these zones should attract investors and developers, resulting in new opportunities for businesses and job seekers and helping low-income areas overcome their social and economic obstacles.

The legislature further finds that the following tax map key (TMK) parcels are in desperate need of economic stimulation and should be designated renaissance zones:

(1) South Kona-Ka'u area, TMK Nos. 8-9-12-14 (parcel 14) and 8-9-12-9 (parcel 9). (A visitor center and a growers' store are proposed for parcel 14. Proposed for parcel 9 is an activated carbon plant using macadamia nut shells to generate power to pump water for potable and agricultural uses. The carbon by-product could be sold for use in carbon filters.);

(2) Waipahu Sugar Mill area, TMK Nos. 94-161-4 (owned by YMCA), 94-161-2 (land owned by YMCA), 94-161-5 (vacant lot), 94-161-1 (Filipino Community Center), 94-161-3 (commercial property), and 94-166 (Sugar Mill town center in development as a light industrial area);

(3) Kalaeloa, Oahu, TMK No. 91-13 (contains over 60 parcels of land);

(4) Aniani Place in Waipahu, Oahu, TMK Nos. 9-4-025:014-024 and 9-4-025:026-041; and

(5) Pupu Area in Waipahu, Oahu, TMK Nos. 9-4-039:001, 9-4-039:003-019, 9-4-039:021-044, 9-4-039:048, 9-4-039:052-067, 9-4-039:071-072, 9-4-039:074-076, 9-4-039:079-083, 9-4-039:089-091, 9-4-039:093-095, 9-4-039:097-109.

The purpose of this Act is to establish procedures for the designation of renaissance zones in the state and to exempt from income and general excise tax liability certain amounts of income derived by developers from renaissance zones.

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.

"Developer" means any person, corporation, organization, partnership, association, or other legal entity that proposes and executes a development plan in a renaissance zone. "Developer" includes any person, corporation, organization, partnership, association, or other legal entity that makes contributions of money, real property, or personal property to propose and execute a development plan in a renaissance zone.

"Development plan" means a written plan that addresses the criteria provided in section    -5 and that 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.

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

"Review board" means the renaissance zone review board established in section    -3.

§   -2 Renaissance zones. Renaissance zones may be designated in this state, subject to certain criteria set forth in section    -5.

§   -3 Review board. (a) There is established the renaissance zone review board to be placed within the department for administrative purposes. Members of 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 the designation of two renaissance zones that shall be selected on the basis of criteria set forth in section    -5.

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

§   -4 Application; procedure. The application for the designation of a renaissance zone shall include:

(1) A development plan as defined in section    -1; and

(2) The proposed duration of renaissance zone status, not to exceed December 31, 2008.

§   -5 Designation; criteria. The governor shall consider the following criteria in approving or denying any renaissance zone selected by the review board:

(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 Exemption from income and general excise taxes. (a) One hundred per cent of the income derived by a developer from a renaissance zone shall be exempt from the tax liability imposed under chapters 235 and 237; provided that:

(1) For the tax year that is two years before the final year of designation as a renaissance zone, seventy-five per cent of the income derived by a developer from that renaissance zone shall be exempt from the tax liability imposed under chapters 235 and 237;

(2) For the tax year immediately preceding the final year of designation as a renaissance zone, fifty per cent of the income derived by a developer from that renaissance zone shall be exempt from the tax liability imposed under chapters 235 and 237; and

(3) For the final year of designation as a renaissance zone, twenty-five per cent of the income derived by a developer from that renaissance zone shall be exempt from the tax liability imposed under chapters 235 and 237.

§   -7 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.

§   -8 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.

§   -9 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."

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. The developer of a renaissance zone, as designated pursuant to chapter    , who is otherwise subject to the tax imposed by this chapter, shall be exempt from the imposition of taxes as provided for in section    -6."

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. The developer of a renaissance zone, as designated pursuant to chapter    , who is otherwise subject to the tax imposed by this chapter, shall be exempt from the imposition of taxes as provided for in section    -6."

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, 2004; provided that this Act shall be repealed on January 1, 2009.

INTRODUCED BY:

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