Hawaii Governor David Ige Announces Intention to Veto Anti-REIT Bill
On June 24, 2019, Hawaii Governor David Ige announced the legislative bills he is intending to veto. Included in that list was SB 301, legislation which would disallow the REIT dividends paid deduction for four years for Hawaii income tax purposes.
The vetoes are expected to take place on Tuesday, July 9. Until then, Governor Ige has the option to remove bills from the veto list. The state Senate and state House of Representatives could also convene a special session on or before July 9 and, with a two-thirds majority in both bodies, vote to override any or all of the bills that Governor Ige decides to veto.
The rationale for this decision is posted on Governor Ige’s official website. Nareit believes that Governor Ige’s intention to veto is the right decision for the right reasons. “Overall,” Governor Ige noted, “the unintended consequences of [enactment] are not worth the potential benefits. Hawai‘i needs to be a place that is able to attract investment capital in order to create jobs and a sustainable economy.”
In particular, Governor Ige highlighted the negative message that enactment would send, “potentially stifl[ing] economic development and scar[ing] away investment capital to address [the state’s] aging infrastructure.” Governor Ige also recognized that ”REITs provide stable economic growth and long-term benefits – including job creation – that will extend the supply chain into rental and commercial properties.” Finally, Governor Ige concluded that SB 301’s enactment could result in “negative impacts to the state’s economic health and business climate, such as the reduction of general excise, property and state income taxes.”
Nareit will continue to oppose any anti-REIT legislation at the state level.
For further information, please contact Dara Bernstein, Nareit’s SVP & Tax Counsel, at email@example.com.