HOUSE OF REPRESENTATIVES

H.C.R. NO.

132

TWENTY-SEVENTH LEGISLATURE, 2014

 

STATE OF HAWAII

 

 

 

 

 

HOUSE CONCURRENT

RESOLUTION

 

 

urging the department of land and natural resources and the department of taxation to DRAFT PROPOSED legislation to establish an income tax credit for the rehabilitation or preservation of archaeological, cultural, or historic structures in the state.

 

 

 


     WHEREAS, the Hawaii State Constitution recognizes the value of historic places and vests the State with the power to conserve and develop objects and places of historic or cultural interest; and

 

     WHEREAS, the Legislature has declared that it is in the public's interest to engage in a comprehensive program of historic preservation at all levels of government to promote the use and conservation of historic properties for the education, inspiration, and enrichment of its citizens; and

 

     WHEREAS, older buildings make ideal locations for small, independent businesses and start-up companies; and

 

     WHEREAS, sixty cents of every dollar spent at independent businesses remain in the local economy, compared to less than ten cents of every dollar spent at national discounters; and

 

     WHEREAS, preserving and appropriately using historic buildings can enhance community character, provide an alternative to urban sprawl, create jobs, provide affordable housing, encourage heritage tourism, and spur economic development in older neighborhoods and commercial districts; and

 

     WHEREAS, Hawaii is the site of many historical structures and landmarks, making it a destination for heritage tourism and the film industry, both of which create additional jobs for Hawaii residents and added revenue for the State; and

 

     WHEREAS, the rehabilitation of existing infrastructure rather than the building of new infrastructure saves money by making use of existing property; and

 

     WHEREAS, the labor intensive work needed for historic rehabilitation projects creates more jobs than new construction projects because more money is spent on labor than materials; and

 

     WHEREAS, according to a study released by the Historic Hawaii Foundation, a state recoups its investment in rehabilitation tax credits through four primary sources: construction period taxes, real property taxes, plus post-construction sales, and income taxes; and

 

     WHEREAS, national studies have found that historic rehabilitation tax credits create a surge in economic development; and 

 

     WHEREAS, thirty-one states have adopted laws creating credits against state taxes to provide incentives for the appropriate rehabilitation of historic buildings; and

 

     WHEREAS, many states that provide a historic rehabilitation tax credit have found that the fiscal return was greater than the state’s foregone tax revenue, often returning three to five times more revenue to the state in new taxes and significant new investment; and

 

     WHEREAS, these states also found that historic rehabilitation tax credits were successful in creating new jobs, increasing loan demand and deposits in local financial institutions, enhancing property values, and generating sales as well as benefiting environmental sustainability, affordable housing, tourism and visitation, and neighborhood revitalization; and

 

     WHEREAS, historic rehabilitation tax credit programs have proved to be successful incentives for rehabilitating older structures and returning them to useful life; and

 

     WHEREAS, tax credit programs for the rehabilitation of historic properties have been used at the federal level and by almost two-thirds of the United States, and although the details of the programs vary by state, preservation tax credits universally have been shown to be effective, especially when coupled with the twenty per cent federal historic tax credit available to income-producing historic properties, such as commercial, office, industrial, and resort properties; and

 

     WHEREAS, most historic rehabilitation tax credit programs include the following basic elements:

 

     (1)  Criteria establishing the buildings or structures that qualify for the tax credit;

 

     (2)  Standards that ensure proper rehabilitation to preserve the historic and architectural character of the building or structure;

 

     (3)  A method for calculating the value of the tax credit awarded, reflected as a percentage of the amount expended on that portion of the rehabilitation work that is approved as a certified rehabilitation;

 

     (4)  A minimum amount required to be invested in the rehabilitation; and

 

     (5)  A mechanism for administering the program through the appropriate state agency; and

 

     WHEREAS, historic rehabilitation tax credits not only provide economic growth, but also facilitate sustainable growth by encouraging the reuse of natural resources and materials found in rehabilitation projects; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-seventh Legislature of the State of Hawaii, Regular Session of 2014, the Senate concurring, that the Department of Land and Natural Resources and the Department of Taxation are requested to draft proposed legislation to establish an income tax credit for the rehabilitation or preservation of archaeological, cultural, or historic structures in the State; and

 

     BE IT FURTHER RESOLVED that the Department of Land and Natural Resources and the Department of Taxation, as part of their proposed legislation to the Legislature, are requested to include a clear and specific definition of the terms "archaeological, cultural, and historic structures" that qualify for the proposed income tax credit; and

 

     BE IT FURTHER RESOLVED that the Department of Land and Natural Resources and the Department of Taxation are requested to submit the proposed legislation to the Legislature no later than twenty days prior to the convening of the Regular Session of 2015; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Chairperson of the Board of Land and Natural Resources and the Director of Taxation.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title: 

Historic Preservation Income Tax Credit; DLNR and Dept. of Taxation