Bill Text: HI SB2895 | 2012 | Regular Session | Amended
Bill Title: Economic Development; New Markets Tax Credits; Loans; Qualified Community Development Entity [Track Bill]
Status: 2012-03-08 - (H) Referred to ERB, FIN, referral sheet 41 [SB2895 Detail]
STAND. COM. REP. NO. 2745
RE: S.B. No. 2895
Honorable Shan S. Tsutsui
President of the Senate
Twenty-Sixth State Legislature
Regular Session of 2012
State of Hawaii
Your Committee on Ways and Means, to which was referred S.B. No. 2895, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO NEW MARKETS TAX CREDITS,"
begs leave to report as follows:
The purpose and intent of this measure is to facilitate community development by establishing incentives to spur such initiatives.
Specifically, the measure:
(1) Defines "community development entity" to allow financing to be provided by the State through a structure that facilitates the use of federal new markets tax credits;
(2) Expands the methods of delivering funding to a project by providing loans to capitalize a community development entity and to provide guarantees or other credit enhancements that will facilitate private lenders' participation in new markets tax credit financing;
(3) Adjusts loan maximums and establishes guarantees or credit enhancements to reflect current available funding and facilitates monetization of existing project assets for purposes of new markets tax credit financing; and
(4) Establishes a state new markets tax credit.
Written comments on this measure were submitted by the Department of Business, Economic Development, and Tourism and the Tax Foundation of Hawaii.
Your Committee finds that the Hawaii community-based economic development technical and financial assistance program in the Department of Business, Economic Development, and Tourism, was established to provide financial assistance to community-based businesses and enterprises through low-interest loans and grants to qualifying applicants. Your Committee also finds that there are various programs provided by the federal government, nonprofit organizations, and foundations, as well as opportunities provided by public-private partnerships, that could help foster community-based economic development for various products and services that demonstrate and embrace Hawaii's diversified economy. Your Committee believes that this measure would allow project funding provided by the State to become more efficient and effective by providing the funding in the form most compatible with these programs and in the manner most suitable to optimize all sources of funding.
You Committee also finds that the federal new markets tax credit program was created to facilitate projects in low-income communities, and the program has been used successfully in several other states. Your Committee believes that the state new markets tax credit established by this measure would serve to support efforts to revitalize low-income communities throughout the State.
Your Committee has amended this measure by:
(1) Amending all references to "community development entity" to read "qualified community development entity", in accordance with section 45D(c)(1) of the Internal Revenue Code;
(2) Deleting amendments to the State's income tax law to exempt certain entities that provide potable water;
(3) Deleting sections 12 and 13 of the measure, relating to amendments made to the State's general excise tax law to exempt certain entities that provide potable water;
(4) Specifying the taxable years to which part II of the measure would apply;
(5) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and
(6) Making technical nonsubstantive amendments for the purposes of consistency, clarity, and style.
As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2895, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2895, S.D. 2.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
DAVID Y. IGE, Chair