Ko Olina Resort returns tax credit of $75 million

Lingle and Hanabusa have different plans for how to use it

State lawmakers and Gov. Linda Lingle are eyeing a controversial $75 million state tax credit for a world-class aquarium given up by the developer of the Ko Olina Resort & Marina.

Ko Olina developer Jeff Stone said yesterday the resort is now in the midst of $1 billion in development and that he has never used the tax credit since it was approved in 2003. It also does not plan to build a "centerpiece" aquarium.

"We agreed ... to return the tax credit and not use it, the whole $75 million," Stone said yesterday, a day after his discussions on the tax credit with Senate President Colleen Hanabusa (D, Waianae) and the governor. "The purpose of the credit was really to drive attention and economic momentum to the west side. We feel the tax credit's done its job."

But what to do with the tax credit will be debated this coming session.

Hanabusa outlined in her speech during yesterday's opening ceremonies at the state Legislature what she wants to do. She said the tax credit should be used to develop a new industry that would make Hawaii a hub of digital media production to attract film, television and other digital media production projects and be a source of jobs for students graduating from places like Waianae High School's Searider Productions, which is in Hanabusa's district, and the Academy for Creative Media at UH-Manoa.

"I think what the tax credit did was it gave Ko Olina a brand. ... It branded it and said, 'OK, this is where the state of Hawaii feels that they're going to invest in,'" Hanabusa said. "That's why I think the effective use of the tax credit would be to do something very similar, which is to have some industry that we feel we can develop."

The governor, however, has a different idea on what to do with the tax credit.

"We have a specific bill, in fact, that opens up that tax credit to economic development on the Leeward Coast," she said. "Any business that's willing to locate within the region would be able to claim that tax credit, so it's not taking it away from anyone, it's simply opening it up to anybody who wants to go out and create jobs in the region."

Lingle said her bill would continue the intent of the Ko Olina tax credit by spurring job creation.

"So if you're thinking, I could open up somewhere else in the state, or I could go to the Leeward Coast and create these jobs because I would have access to this tax credit -- that might be incentive to go out," Lingle said.

Lingle was scheduled today to unveil her other tax reduction proposals.

House Finance Chairman Marcus Oshiro (D, Wahiawa) said he opposed the Ko Olina tax credit when it first came before the Legislature.

"I've always opposed that particular tax credit of $75 million to one person. I thought it was bad policy," he said. "Tax credits that look to solicit or encourage development of niche industries and benefiting local communities should be considered, and I'm interested in seeing both the governor's and the senator's proposals."

The tax credit approved in 2003 would allow investors to claim a maximum credit of $7.5 million a year for investment costs.

Last year, there was a proposal to repeal the tax credits in part because of the delay in getting the aquarium built. Stone said that bill spawned discussions on whether the resort really needed the tax credits.

"Hawaii's economy is entirely different today than it was when the credit was passed," Stone said. "(The tax credit) was almost a vote of confidence. That is really what it comes down to. Prior to that, I really don't think the state understood what Ko Olina could be for."

One of the requirements to qualify for the tax credits was to complete construction of the aquarium, but Stone said the resort will probably not develop a "centerpiece" aquarium although it plans to continue to feature other ocean attractions like the University of Hawaii Dolphin Institute's research center currently on site.