Relating To A State Historic Preservation Income Tax Credit.
SB1462 creates a state historic preservation income tax credit for taxpayers who substantially rehabilitate a certified historic structure in Hawaii. The credit equals 30% of qualified rehabilitation expenditures and is generally claimed in the year the rehabilitated property is placed into service. The bill allows the credit to be used by individuals and by pass-through entities such as partnerships, S corporations, estates, trusts, and developers, and it permits unused credits to be carried forward for up to 10 years.
The measure sets out a detailed administrative framework for approval, certification, and reporting. The Department of Land and Natural Resources, through the State Historic Preservation Division, must adopt rules, review completed projects, verify compliance with approved rehabilitation plans, and issue certificates that taxpayers must file with their returns. The bill also requires annual reporting to the Legislature on the credit’s effectiveness and defines key terms such as “certified historic structure,” “qualified rehabilitation expenditures,” and “substantial rehabilitation.”
SB1462 would amend chapter 235, Hawaii Revised Statutes, by adding a new historic preservation income tax credit and related compliance provisions. It would affect taxpayers undertaking rehabilitation of historic properties, the Department of Land and Natural Resources, the State Historic Preservation Division, and the Department of Taxation. The bill also establishes a $1,000,000 annual statewide cap for taxable years 2025 through 2030, requires recapture if projects do not proceed as planned or if filing requirements are missed, and sunsets the credit on December 31, 2030.
The bill appears to have broad support in committee, passing the Senate Water and Land Committee 5-0 and the Senate Ways and Means Committee 13-0, with the latter passing it with amendments. The voting record suggests a generally favorable view of the proposal as a preservation and economic development tool. No committee transcript was provided, so there is no recorded floor or hearing debate to indicate broader public opposition or support beyond the unanimous committee votes.
The main policy issues embedded in the bill are fiscal control, administrative oversight, and eligibility. The annual $1,000,000 cap and the sunset date reflect concern about limiting state revenue exposure and evaluating the credit’s effectiveness over time. The bill also imposes strict documentation, certification, and recapture requirements, which may be intended to prevent abuse but could be burdensome for taxpayers and developers. Potential points of contention include the breadth of eligible entities, the 30% credit rate, whether the credit should be refundable or transferable, and the extent of discretion given to the historic preservation division in approving projects and determining compliance.