| 47 | | - | SECTION 1. The legislature finds that coronavirus disease 2019 (COVID-19) pandemic and the extraordinary measures instituted to minimize the spread of the SARS-CoV-2 virus have had devastating impacts on the local economy. Businesses in the State have faced mounting losses in revenue while incurring substantial rental expenses during mandated closure periods. These costs represent among the largest expenses for a business operation, particularly for retail and restaurant establishments. Many commercial landlords have suffered financially as they absorb losses due to unpaid rent or business closures, which is displacing jobs and reducing local household income. The legislature further finds that, in an effort to mitigate the effects of the international COVID-19 pandemic, commercial landlords have taken significant efforts to ease the burden placed upon their small business tenants and their employees. These measures have included renegotiating lease terms and providing rent deferrals to tenants. The legislature additionally finds that non-residential landowners who exclusively use their property for commercial purposes or lease their property to commercial tenants deserve financial relief to cover land costs or unpaid rent. This will assist with the circulation of money throughout the economy, including banks, landlords, businesses, and employees, which ultimately leads to higher tax revenue to maintain government fiscal budgets and employ the public workforce. Landowners or landlords are better equipped to participate in the administrative process of applying for government-sponsored programs than small business tenants who are struggling to survive. The legislature also finds that in order to allow small businesses the ability to recover without causing further hardships to the real estate industry, commercial landowners need financial support to continue the mitigation efforts to keep small businesses open and people employed. This can be done by providing grants to landowners to help them continue to pay their area maintenance fees, real property taxes, or other payments in light of reduced rental payments. These grants would, in turn, allow landlords to provide rent relief to their commercial tenants. Accordingly, the purpose of this Act is to establish a commercial rent relief grant program to be funded through federal funds. SECTION 2. Notwithstanding any law to the contrary: (a) An owner of property classified as commercial, hotel and resort, or industrial under county real property tax classifications shall be eligible for a grant not to exceed three per cent of taxable revenue derived from the property in 2019; annualized taxable revenue for commercial tenants established and registered for business with the State before March 20, 2020, and with less than twelve months' operating history; or three months of full rent; whichever is less; provided that: (1) The owner of commercial or industrial classified property shall attest or otherwise prove that the owner exclusively uses the property for the owner's own commercial or industrial purposes or leases the property to a commercial or industrial tenant, if applicable; (2) The owner of hotel and resort classified property shall attest or otherwise prove that a portion of the subject property is dedicated for use by a commercial tenant, including legally non-conforming commercial uses, if applicable; and (3) The property owner provides rent forgiveness to any commercial or industrial tenant who occupies the property at the time of submittal of the grant application in a cumulative amount not less than the value of the grant; provided further that an owner of hotel and resort classified property shall only be eligible for a grant that is proportionate to the portion of the property that is leased to a tenant operating a commercial business on the subject property. (b) Rent relief grants pursuant to this section shall be applicable to rent forgiven on or after April 1, 2020. (c) Within sixty days of receiving a grant, a property owner providing rent forgiveness to an eligible commercial or industrial tenant shall provide to the department of taxation: (1) Attestations or other proof from each eligible tenant that the tenant received rent forgiveness; and (2) The amount of rent forgiveness provided to each eligible tenant. (d) An eligible tenant shall meet the following criteria: (1) Operation in a physical commercial space in the State of Hawaii; (2) Demonstration of financial hardship in excess of a forty per cent decline in taxable revenue between either: (A) 2019 and 2020; or (B) If the business has less than twelve months of operating history, an annualized operating period prior to March 31, 2020, and a comparable annualized operating period after April 1, 2020; (3) Registration with the department of commerce and consumer affairs, unless the tenant is a sole proprietorship; (4) Status as a small business as defined by the United States Small Business Administration's size standards; (5) Occupancy under a lease dated before March 20, 2020; (6) Attestation by the majority owner or owners that: (A) Each majority owner is a resident of the State; (B) The business is located in the State; and (C) The business is not publicly traded and is not a national or international chain, unless it is a locally-owned franchise location; and (7) The business is currently open or unable to open due to government restrictions; provided that if the business is not open, the owner plans to re-open in the same location once government restrictions are lifted. (e) Grant applications shall be submitted to and reviewed by the department of taxation. The counties, in cooperation with the department of taxation, shall be responsible for administering grants issued pursuant to this section. Each grant application is subject to audit or investigation at the discretion of the department of taxation. A fraudulent application and grant award shall be deemed a violation of section 661-21, Hawaii Revised Statutes. (f) Moneys for grants pursuant to this section shall be appropriated out of any and all federal funding suitable for this purpose. Appropriated funds shall be used for the commercial rent relief grant program and shall be replenished as additional federal funds or state funds become available. (g) As additional federal funding becomes available, consideration shall be made to expand the program to properties classified as agricultural to benefit farmers, or transient accommodations to benefit the tourism sector. SECTION 3. As additional sources of federal funding appropriate for the purposes of this Act become available, the grant program established by this Act shall be given priority over all other uses in the distribution of those funds. SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 to be deposited into the emergency and budget reserve fund established pursuant to section 328L-3, Hawaii Revised Statutes; provided that no funds shall be made available under this Act unless the federal government provides the necessary funds through stimulus payments to the State. SECTION 5. There is appropriated out of the emergency and budget reserve fund the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 for grants under the commercial rent relief grant program. The sums appropriated shall be expended by the department of taxation for the purposes of this Act. SECTION 6. This Act shall take effect on July 1, 2050. |
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| 47 | + | SECTION 1. The legislature finds that coronavirus disease 2019 (COVID-19) and the extraordinary measures instituted to minimize the spread of the SARS-CoV-2 virus have had devastating impacts on the local economy. Businesses in the State have faced mounting losses in revenue while incurring substantial rental expenses during mandated closure periods. These costs represent among the largest expenses for a business operation, particularly for retail and restaurant establishments. Many commercial landlords have suffered financially as they absorb losses due to unpaid rent or business closures, which is displacing jobs and reducing local household income. The legislature further finds that, in an effort to mitigate the effects of the international COVID-19 pandemic, commercial landlords have taken significant efforts to ease the burden placed upon their small business tenants and their employees. These measures have included renegotiating lease terms and providing rent deferrals to tenants. The legislature additionally finds that non-residential landowners who exclusively use their property for commercial purposes or lease their property to commercial tenants deserve financial relief to cover land costs or unpaid rent. This will assist with the circulation of money throughout the economy, including banks, landlords, businesses, and employees, which ultimately leads to higher tax revenue to maintain government fiscal budgets and employ the public workforce. Landowners or landlords are better equipped to participate in the administrative process of applying for government-sponsored programs than small business tenants who are struggling to survive. The legislature also finds that in order to allow small businesses the ability to recover without causing further hardships to the real estate industry, commercial landowners need financial support to continue the mitigation efforts to keep small businesses open and people employed. This can be done by providing grants to landowners to help them continue to make their area maintenance fees, real property taxes, or other payments in light of reduced rental payments. These grants would, in turn, allow landlords to provide rent relief to their commercial tenants. Accordingly, the purpose of this Act is to establish a commercial rent relief grant program to be funded through federal funds. SECTION 2. Notwithstanding any law to the contrary: (a) Owners of property classified as commercial, hotel and resort, or industrial under county real property tax classifications shall be eligible for a grant not to exceed three per cent of taxable revenue derived from the property in 2019; annualized taxable revenue for commercial tenants established and registered for business with the State before March 20, 2020, and with less than twelve months' operating history; or three months of full rent; whichever is less; provided that: (1) Owners of commercial or industrial classified property attest or otherwise prove that they exclusively use their property for their own commercial or industrial purposes or lease their property to commercial or industrial tenants, if applicable; (2) Owners of hotel and resort classified property attest or otherwise prove that a portion of the subject property is dedicated to use by commercial tenants including legally non-conforming commercial uses, if applicable; and (3) The property owner provides rent forgiveness to any commercial or industrial tenants who occupy the property at the time of submittal of the grant application in a cumulative amount not less than the value of the grant; provided further that owners of hotel and resort classified property shall only be eligible for a grant proportionate to the portion of the property that is leased to tenants operating a commercial business on the subject property. (b) Rent relief grants pursuant to this section shall be applicable to rent forgiven on or after April 1, 2020. (c) Within sixty days of receiving a grant, a property owner providing rent forgiveness to their eligible commercial or industrial tenants shall provide to the department of taxation: (1) Attestations or other proof from each eligible tenant that the tenant received rent forgiveness; and (2) The amount of rent forgiveness provided to each eligible tenant. (d) Eligible tenants shall meet the following criteria: (1) Operation in a physical commercial space in the State of Hawaii; (2) Demonstration of financial hardship in excess of a forty per cent decline in taxable revenue between either: (A) 2019 and 2020; or (B) If the business has less than twelve months of operating history, an annualized operating period prior to March 31, 2020, and a comparable annualized operating period after April 1, 2020; (3) Registration with the department of commerce and consumer affairs, unless the tenant is a sole proprietorship; (4) Status as a small business as defined by the United States Small Business Administration's size standards; (5) Occupancy under a lease dated prior to March 20, 2020; (6) Attestation by the majority owner or owners that: (A) Each majority owner is a resident of the State; (B) The business is located in the State; and (C) The business is not publicly traded and is not a national or international chain, unless it is a locally-owned franchise location; and (7) The business is currently open or unable to open due to government restrictions; provided that if the business is not open, the owner plans to re-open in the same location once government restrictions are lifted. (e) Grant applications shall be submitted to and reviewed by the department of taxation. The counties, in cooperation with the department of taxation, shall be responsible for administering grants issued pursuant to this section. All grant applications are subject to audit or investigation at the discretion of the department of taxation. A fraudulent application and grant award shall be deemed a violation of section 661-21, Hawaii Revised Statutes. (f) Moneys for grants pursuant to this section shall be appropriated out of any and all federal funding suitable for this purpose. Appropriated funds shall be used for the commercial rent relief grant program and shall be replenished as additional federal funds or state funds become available. (g) As additional federal funding becomes available, consideration shall be made to expand the program to properties classified as agricultural to benefit farmers, or transient accommodations to benefit the tourism sector. SECTION 3. As additional sources of federal funding appropriate for the purposes of this Act become available, the grant program established by this Act shall be given priority in the distribution of those funds. SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 to be deposited into the emergency and budget reserve fund; provided that no funds shall be made available under this Act unless the federal government provides the necessary funds through stimulus payments to the State. SECTION 5. There is appropriated out of the emergency and budget reserve fund the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 for grants under the commercial landlord-tenant grant program. The sums appropriated shall be expended by the department of taxation for the purposes of this Act. SECTION 6. This Act shall take effect on July 1, 2021. |
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