Relativity-Backed Hawaii Tax Credit Bill Stalls in State Legislature

Neil Jacobs/CBS © CBS Broadcasting Inc.
'Hawaii Five-O'

Relativity and the Shangri-La business group promised to spend almost $400 million to build new studio facilities in the state if the bill passed.

A bill that would have boosted the tax credit for film and TV productions shot in Hawaii and was the lynchpin to a plan to build two new movie studios in the state has stalled in a legislative conference committee and is dead for this year’s legislative session.

It was one of a number of bills covering a wide variety of subjects and issues that were caught in a legislative gridlock between Republicans and Democrats and were put off for this session.

Relativity Media and the Shangri-La business group had promised to spend almost $400 million to build new studio facilities with multiple soundstages on the Hawaii islands of Oahu and Maui if the bill had been passed.

It would have raised the tax incentive for productions from the current 15% to as much as a 40% rebate, eliminated the cap on how much the state could spend each year and created a subsidy for the building of the studios. It also included a 5% bonus on visual effects and animation work and a training program that would have had the state paying back half of the salary of new workers for the first 900 hours of employment.

Another provision of the proposed plan would have eliminated the hotel tax for productions that stayed for a long period on the island. That became one of the big bones of contention in the state. There was concern about the loss of revenue from hotel taxes.

The bill had made it through key committees in both the Hawaiian state Senate and House of Representatives, and the Democratic governor had agreed to sign it if passed.

However, according to a spokesperson for Hawaii Sen. J. Kalani English, the bill stalled Friday night in the conference committee of Senators and Representatives who were to merge two versions of the legislation and was "deferred." It can't be revived in the current legislative session but will carry over to the next legislative session, which begins in mid-January 2012.

A spokesman for Relative Media on Tuesday had no comment.

Relativity and Shangri-La, according to a source, have been meeting to discuss other options including going forward with a studio plan with the current tax incentive program.