Bill attempts to influence development near transit
Tax breaks would be awarded to builders of affordable housing
Developers of affordable housing, elder care and community service centers would get tax breaks if they build along the city's transit lines, according to a bill moving through the state Legislature.
Senate Bill 3165 would exempt developers from the general excise tax. Different versions of it have passed the House and Senate, and the bill moved to a conference committee yesterday.
The bill's sponsor, Sen. Carol Fukunaga (D, Lower Makiki-Punchbowl), represents one of the state's most congested areas.
She says the tax breaks would encourage development of needed facilities in areas that might resist development.
"It is a matter of educating people in areas where you would normally have a lot of community opposition," Fukunaga said. "Also, our goal is to prevent the displacement of large groups of senior citizens and low-income residents if traditional development happens."
The bill is getting support from representatives of the real estate industry but is opposed by the city.
"This bill will encourage development of affordable senior housing, health care medical services with easy access to transportation and shopping," Jane Sugimura, president of the Hawaii Council of Associations of Apartment Owners, said in testimony before the House Finance Committee.
But Henry Eng, city planning director, called the bill "premature and an infringement on home rule."
"It is an attempt to dictate or impose uses in our transit-oriented development," Eng said.
If the state wants to encourage seniors to "age in place," it should do more than just encourage development along the transit line, Eng said in written testimony.
"If the state Legislature believes this is a serious public issue, then it goes far beyond transit-oriented development," Eng said.
The bill also triggered questions from the private Hawaii Tax Foundation.
Lowell Kalapa, foundation executive director, said the bill would levy the 0.5 percent county transit surcharge on all affordable-housing projects -- although the surcharge and the 4 percent general excise tax are already exempted.
"This makes no sense. You are talking about hundreds of projects from construction projects to rents. This will hurt," Kalapa said.
Fukunaga said the bill just keeps the 0.5 percent tax in place because the city asked that it not be scrapped. Kalapa, however, said the Tax Department has said the 0.5 percent tax would not be collected if the 4 percent excise tax is exempted.
"We don't impose the 4 percent tax on affordable housing, so we shouldn't impose the surcharge either," Kalapa said.
Fukunaga argued that her bill is "not intended to tax poor people. It was intended to not affect the city's 0.5 percent tax."