Hawaii lawmakers have shelved a bill that if passed would have changed the tax structure for real estate investment trusts, or REITs, in the state. Proponents of the tabled bill claim that it could result in “millions of tax revenues coming to the state from owners of large commercial properties,” but the National Association of Real Estate Investment Trusts Hawaii disagreed about the advantages of the proposed legislation.
“The unprecedented statewide housing shortage means every available housing unit should be used to house local residents. This bill will impose a financial penalty on leaving properties vacant and make vacant properties less attractive for speculation by investors,” state Sen. Stanley Chang (D), who helped introduce the bill, told the local ABC News affiliate.
Forty-nine percent of Hawaii households have investments in REITs as long-term investors, according to Nareit Hawaii.
“Changing the state’s tax structure for REITs would not generate any kind of windfall for Hawaii. In fact, it would have the opposite effect,” Gladys Quinto Marrone, executive director of Nareit Hawaii, told the McKnight’s Business Daily.
She said that REITs in Hawaii pay hundreds of millions of dollars annually in state and county taxes and support tens of thousands of jobs statewide.
“The Hawaii State Department of Taxation has stated that eliminating the deduction paid dividend REITs are allowed by federal law might generate only about $2 million the first year and possibly $10 million each year after that,” Marrone said. “However, this change in tax status would result in a much greater loss in general excise tax revenue for the state of Hawaii. No one wants that to happen.”In addition to adding tax revenue, Nareit Hawaii and the REITs operating in Hawaii also support community programs and initiatives. Among its efforts, Nareit Hawaii provides grants that support affordable housing projects. The Nareit Foundation and Nareit Hawaii have donated $1.74 million to 19 nonprofits statewide in the first three years of their Charitable Giving Initiative. Earlier this month, Nareit Hawaii’s Community Giving Initiative provided $130,000 to the Kaua‘i Housing Development Corp. to help with the building of a house under the affordable housing designation by the county’s housing agency.
