Posted on: Friday, February 11, 2005
Sprinkler bill sets tax credit at 5 percent
By Mike Gordon
Advertiser Staff Writer
A tax credit designed to entice owners of older high-rise apartments to install automatic fire-sprinkler systems is moving through the Legislature, but some say the proposed incentive — 5 percent of the cost — may be too low.
The tax credit actually left some dismayed.
"If the whole thing with this is an incentive, then 5 percent isn't going to do it," said Jane Sugimura, president of the Hawai'i Council of Associations of Apartment Owners.
With two recent high-rise fires still fresh on the minds of firefighters — and about 300 older residential buildings without fire sprinklers —Ęstate lawmakers are eager to address the problem. The tax-credit bill breezed through a hearing yesterday before committees on Economic Development & Business Concerns and Public Safety & Military Affairs. The City Council also formed a task force last week to study incentives.
In its present form, the tax credit in House Bill 1448 would not exceed $1,000 a year and be available for up to five years.
That wouldn't add up to very much when applied to estimated costs for several O'ahu condominiums.
A study conducted five years ago for the Honolulu Fire Department by S.S. Dannaway Associates estimated per-unit costs for a sprinkler system in several buildings. They ranged from $2,870 at the Marco Polo to $10,000 at Yacht Harbor Towers.
That would mean a tax credit of $143 a year at the Marco Polo and $500 a year Yacht Harbor Towers.
"Five percent is useless," said Yacht Harbor Tower resident Richard Port, who also is a member of the Hawai'i Independent Condominium & Cooperative Owners. "It's really to protect the Fire Department personnel. That is what this bill is all about. I don't object to that, but I think that owners cannot afford this."
Retrofitting an older building with a sprinkler system would create a heavy expense for seniors on fixed incomes and young couples just starting out, Port said.
Port's organization supports the bill but would like to see a 50 percent tax credit, he said.
The bill had proposed a 35 percent tax credit when it was first written. One of the bill's authors, Rep. Glenn Wakai, D-31st (Salt Lake, Tripler), said the state could not afford to lose that much in taxes, so the credit was reduced.
Wakai is optimistic about the bill's chances. Its next stop is a hearing in the Judiciary Committee.
"Considering there was no testimony in opposition, I think it has a good chance," he said yesterday. "From a public-policy standpoint, it is common-sense legislation. Whether we can afford this is for another committee to decide."
Of the approximately 300 residential high-rise buildings in Honolulu that do not have sprinkler systems, all were built before a 1975 law requiring sprinklers in buildings higher than 75 feet.
Reach Mike Gordon at mgordon@honoluluadvertiser.com or 525-8012.
