Bill Text: HI SB1056 | 2018 | Regular Session | Introduced

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Bill Title: Relating To Income Tax Benefits For Seawater Air Conditioning.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced - Dead) 2017-11-30 - Carried over to 2018 Regular Session. [SB1056 Detail]

Download: Hawaii-2018-SB1056-Introduced.html

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THE SENATE	S.B. NO.	1056
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO INCOME TAx benefits for seawater air conditioning.

 

 

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

 

     SECTION 1.  The legislature finds that seawater air conditioning is a cost-effective way to help reduce the high cost of cooling large commercial buildings.  Seawater air conditioning is a technology that uses cold, deep, seawater that is pumped from deep offshore to a cooling station located near buildings.  The cold seawater at the cooling station chills fresh water which is then pumped to buildings that use the chilled water for cooling.  The slightly warmed seawater is returned to the ocean at a level where it matches the ambient temperature of the surrounding waters.

     The legislature further finds that the ocean coastline provides access to naturally cold water that is as cold as or colder than the water used in conventional air conditioning systems.  If this water can be tapped, then the significant electrical power requirements for operating mechanical chillers can be eliminated.  This process reduces:

     (1)  Electrical usage significantly with a renewable resource;

     (2)  Ozone-depleting chlorofluorocarbon refrigerants; and

     (3)  Reliance on fossil fuels and emission of green house gases.

     The legislature further finds that seawater air conditioning benefits consumers by:

     (1)  Providing price-competitive service with stable energy costs;

     (2)  Keeping fuel dollars in the local economy;

     (3)  Eliminating the need for chillers and cooling towers;

     (4)  Saving space in the mechanical room of buildings;

     (5)  Eliminates the burning of oil to produce energy; and

     (6)  Provides a model of sustainability that is built to operate for seventy-five to one hundred years.

     The legislature additionally finds that traditional air conditioning systems require       barrels of oil and       gallons of potable water per year to chill one large building.  Seawater air conditioning systems would reduce electricity consumption by twenty to thirty per cent and would reduce potable water consumption by       per cent to chill one large building.

     Seawater air conditioning can help cool large commercial buildings, especially in downtown Honolulu, can reduce Hawaii's dependence on fossil fuels, and help the State meet its one hundred per center renewable energy goal by 2045.

     The legislature finds that constructing a seawater air conditioning system is expensive.  A project of this magnitude requires private investment capital.  The legislature further finds that incentives are needed to encourage private businesses to purchase chilled seawater for their air conditioning systems and to incentivize private investors to invest in seawater air conditioning systems.  Special purpose revenue bonds are one means of assisting private enterprise financially.  Another means is to offer tax benefits for users and investors through tax credits.

     The purpose of this Act is to create a tax credit to:

     (1)  Encourage private businesses to purchase chilled seawater for use in seawater air conditioning systems; and

     (2)  Incentivize private investment in seawater air conditioning systems.

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

     "§235-A  Seawater air conditioning system income tax credit; purchase costs.  (a)  For taxable years ending before January 1,     , each taxpayer who files an income tax return for a taxable year, may claim a seawater air conditioning system income tax credit under this section against their net income tax liability.  The tax credit may be claimed for the actual cost of purchasing chilled water that is to be used by an air conditioning system.  The tax credit may be claimed in an amount not to exceed twenty per cent of the actual cost of the purchase of the chilled water for an air conditioning system that utilizes seawater for cooling purposes.  The credit shall be claimed against any net income tax liability for the taxable year in which the chilled water is purchased.

     (b)  Tax credits which exceed the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

     (c)  Tax credits shall apply only to the actual cost of the purchase of chilled water that is to be used in an air conditioning system, and shall not include the cost of consumer incentive premiums unrelated to the operation of the air conditioning system or offered with the sale of electricity produced therefrom.

     (d)  In the case of multiple tenants in a building in which the owner of the building or other entity purchases the chilled water for use in an air conditioning system, the owner of the building may claim a tax credit in an amount not to exceed $           for each taxable year.

     (e)  In the case of multiple tenants in a building in which each tenant purchases chilled water for use in an air conditioning system, each tenant may claim a tax credit in an amount not to exceed $           for each taxable year.

     (f)  The director of taxation shall prepare such forms as may be necessary to claim a credit under this section.  The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

     (g)  For purposes of this section, "air conditioning system" means a technology that uses cold, deep, seawater that is pumped from deep offshore to a cooling station to chill fresh water which is then used for cooling."

     SECTION 3.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-B  Seawater air conditioning system investment tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter a seawater air conditioning system investment 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 and the following four years provided the credit is properly claimed.  The amount of the income tax credit shall be twenty per cent of the investment made by the taxpayer in each seawater air conditioning system business up to a maximum amount of $           per investment.

     (b)  If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of the credit over liability shall be refunded to the taxpayer; provided that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.

     (c) If at the close of any taxable year in the five-year period in subsection (a):

     (1)  The qualified seawater air conditioning system business no longer qualifies as a seawater air conditioning system business; or

     (2)  The qualified seawater air conditioning system business or an interest in the business has been sold or withdrawn by the taxpayer;

the credit claimed under this section shall be recaptured.  The amount of the credit recaptured shall apply only to the investment in the particular qualified seawater air conditioning system business that meets the requirements of paragraphs (1) or (2).  The amount of the recaptured tax credit determined shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection.

     (d)  Every taxpayer claiming a tax credit under this section, shall submit a written, certified statement to the director of taxation specifically identifying the qualified seawater air conditioning system business.

     (e)  The department shall:

     (1)  Maintain records of the names and addresses of the taxpayers claiming the credits under this section and the total amount of the qualified investment costs upon which the tax credit is based;

     (2)  Verify the nature and amount of the qualifying investments; and

     (3)  Total all qualifying and cumulative investments that the department certifies.

     Upon each determination made under this subsection, the department shall issue a certificate to the taxpayer verifying information submitted to the department, including qualifying investment amounts, the credit amount certified for the taxable year, and the cumulative amount of the tax credit during the credit period.  The taxpayer shall file the certificate with the taxpayer's tax return with the department.

     The director of taxation may assess and collect a fee to offset the costs of certifying tax credits claims under this section.  All fees collected under this section shall be deposited into the tax administration special fund established under section 235-20.5.

     (f)  As used in this section:

     "Qualified seawater air conditioning system business" means a business, employing or owning capital or property, or maintaining an office, in this State to produce or provide seawater air conditioning systems; provided that more than seventy-five per cent of its gross income is derived from producing or providing seawater air conditioning system; provided further that this income is received from:

     (1)  Producing or providing seawater air conditioning systems sold from, manufactured in, or produced in this State; or

     (2)  Related services performed in this State.

     "Seawater air conditioning system" has the same meaning as in section 235-A."

     SECTION 4.  Section 235-20.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  There is established a tax administration special fund, into which shall be deposited:

     (1)  Fees collected under sections 235-20, 235-110.9, [and], 235-110.91[;], and 235-B;

     (2)  Revenues collected by the special enforcement section pursuant to section 231-85; provided that in each fiscal year, of the total revenues collected by the special enforcement section, all revenues in excess of $700,000 shall be deposited into the general fund; and

     (3)  Fines assessed pursuant to section 237D-4."

     SECTION 5.  In codifying the new statutory sections in this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in this Act.

     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect upon its approval; provided that section 2 shall apply to taxable years beginning after           ; provided further that section 3 of this Act shall apply to taxable years beginning after           , for investments made on or after the effective date of this Act.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Seawater Air Conditioning; Investment; Tax Credit

 

Description:

Encourages purchase of chilled water for use in an air conditioning system and investment in seawater air conditioning systems by providing tax credits.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.