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Gathering Place
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Motor sports tax credit
would help community
As the sponsor of the motor sport facility tax-credit legislation, I would like to clarify the status of the project and the content of the current language in House Bill 994 and Senate Bill 1734. The proposed legislation is designed to provide a tax credit to investors for the construction of a portion of a new, site-specific motor sport facility in Kalaeloa at Parcel 9.
Under the Base Realignment and Closure 1993 act, Parcel 9 was approved as a motor sports complex and included in the U.S. Navy's final environmental impact statement and "Record of Decision" regarding the closure of Barbers Point Naval Air Station in 1999. The process included a review of business plans and financing plans by the state of Hawaii Department of Business and Economic Development. This much is historical fact.
Further review of development options and careful consideration with local, mainland and international industry experts prompted introduction of the tax-credit legislation to provide incentives for local business involvement.
Some highlights of the bill are:
» As the money is invested for construction and operation, the tax credits are deemed to be "earned" as the "Qualified Investment" as defined in the bill language and enforced by the Department of of Business, Economic Development and Tourism.
» After five years the facility will be generating income by the production of local, national and international events, which will generate new taxes from the operation as well as travel, media and other activities, similar to the Pro Bowl and Honolulu Marathon.
» At such time as DBEDT and the Department of Taxation compute the positive generation of "new" taxes using their revenue-generating models, then and only then will investors be allowed to use the tax credits.
» Investors can only use tax credits up to the amount of new taxes generated.
» The current attendance figures used during previous testimony of 160,000 spectators and participants have set the benchmark for measurement. The base line will facilitate measurement of new visitors for all to see.
This means that if no new taxes are generated, then no tax credits may be taken. The entire burden is on the facility to demonstrate it has actually created new business.
What a novel idea, accountability. "You can't take it if you don't make it." This concept creates a perfect partnership between the state and the project. Ultimately, the facility is projected to bring in more new visitors to Hawaii annually than the Honolulu Marathon and the Pro Bowl.
During major events the majority of event revenue will accrue to the community, not the facility. Thirty percent of the attendees are expected to be visitors to the state. Air travel, room nights, car rentals, golf courses, restaurants and shopping centers will be the beneficiaries as the visitors stay seven to 10 days in the islands. During that time only three days will be spent at the facility along with the event ticket. For every $1,000 spent during this visit, about $100 will be spent at the facility, thus the community will gain more from the activities than the facility itself.
With as many as five major events, 47 weeks are still available for local residents to play and learn at the complex. Multiple activities going on at the same time will accommodate a much greater variety of activities than we currently support. In a state-of-the-art facility with emergency services, all of the necessary safety equipment and media facilities will be permanently on site. Hawaii will take a cottage activity into the mainstream global industry.
I hope this summary clarifies what we are trying to do for the local racing community, the whole state and us.
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