HOUSE OF REPRESENTATIVES

H.B. NO.

1702

TWENTY-SEVENTH LEGISLATURE, 2014

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to the CAPITAL infrastructure tax credit.

 

 

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

 


SECTION 1. The legislature finds that development of a new overseas container terminal and piers at the lower Kapalama military reservation site requires improvements on fast and submerged lands associated with piers twenty-four through twenty-eight to accommodate maritime dependent operators at Kapalama who are to be evicted and displaced. The total cost for the proposed master plan at the Kapalama site is estimated to be $243,000,000, which is being financed entirely by the State through revenue bonds and revenues from harbor tariffs and leases. None of these funds, however, will go toward assisting displaced maritime and waterfront dependent tenants of the Kapalama site. The displaced tenants will be relocated to various piers that have limited infrastructure, facilities, and utilities. These tenants must find ways to finance not only their move, but also significant capital improvements to state-owned land.

The legislature finds that the Kapalama container terminal project is critical to modernizing its commercial harbors and that completion of the project will assure that harbor infrastructure is adequate to support sustained economic growth. The legislature also finds that supporting those maritime and waterfront dependent tenants displaced by the Kapalama container terminal project supports the growth of commerce in the State and supports maritime jobs. In light of state support provided for University of Hawaii-related tenants that have been displaced by the Kapalama container terminal project, the legislature finds it prudent and fair to also support the maritime-dependent operators in Kapalama who are being displaced by the project. The solution proposed in this Act is to provide a capital infrastructure tax credit to help displaced tenants raise private equity capital. This approach is expected to:

(1) Mobilize private equity and near-equity capital for investment in critical waterfront infrastructure in Honolulu harbor;

(2) Retain the private sector culture of focusing on rate of return in the investing process;

(3) Secure and retain the services of high quality trade labor in the maritime industry in Hawaii; and

(4) Accomplish the foregoing in a return-driven manner with the goal of minimizing any adverse impact on state tax revenues.

Accordingly, the purpose of this Act is to establish a capital infrastructure tax credit to help tenants displaced by the Kapalama container terminal project in raising capital to make improvements on state-owned property upon relocation.

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

"235-   Capital infrastructure tax credit. (a) There shall be allowed to each qualified infrastructure tenant subject to the taxes imposed by this chapter a capital infrastructure tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the investment was made; provided that the credit is properly claimed.

(b) For the purpose of this section:

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified infrastructure tenant" means a business that:

(1) Currently owns capital or property or maintains an office, operations, or facilities at the former Kapalama military reservation site;

(2) Whose principal business is ship repair, maritime, and waterfront dependent, and is included under the State's plan to relocate such business to piers twenty-four through twenty-eight within Honolulu harbor; and

(3) Will be displaced and relocated by the State pursuant to the Kapalama container terminal project.

(c) The amount of the tax credit shall be equal to       per cent of the capital infrastructure costs incurred by the taxpayer during the taxable year up to a maximum of $           in capital infrastructure costs in any taxable year.

(d) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted. Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with this subsection shall constitute a waiver of the right to claim the credit.

(e) This section shall not apply to taxable years beginning after December 31, 2019.

(f) Pursuant to chapter 91, the director of taxation may adopt any rules or forms necessary to carry out this section."

SECTION 3. Chapter 241, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"241-   Capital infrastructure tax credit. The capital infrastructure tax credit established by section 235-    shall be operative for this chapter for taxable years beginning after December 31, 2013."

SECTION 4. Section 235-2.45, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Section 704 of the Internal Revenue Code (with respect to a partner's distributive share) shall be operative for purposes of this chapter; except that section 704(b)(2) shall not apply to:

(1) Allocations of the high technology business investment tax credit allowed by section 235-110.9 for investments made before May 1, 2009;

(2) Allocations of net operating loss pursuant to section 235-111.5;

(3) Allocations of the attractions and educational facilities tax credit allowed by section 235-110.46; [or]

(4) Allocations of low-income housing tax credits among partners under section 235-110.8[.]; or

(5) Allocations of the capital infrastructure tax credit allowed by section 235-   ."

SECTION 5. Section 235-110.51, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:

"(h) The tax credit allowed under this section shall not be available for taxable years beginning after December 31, [2010.] 2019."

SECTION 6. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2013.

 

INTRODUCED BY:

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Report Title:

Capital Infrastructure Tax Credit; Kapalama Container Terminal Project; Displaced Tenants

 

Description:

Creates a capital infrastructure tax credit for tenants who are displaced by the Kapalama container terminal project. Allows banks and other financial corporations the ability to claim the capital infrastructure tax credit. Allows allocations of the capital infrastructure tax credit to a partner under a partnership agreement even if the allocation has a substantial economic effect. Renews the technology infrastructure renovation tax credit through 2019.

 

 

 

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