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The Honolulu Advertiser
Posted on: Friday, April 7, 2006

Racetrack tax credit survives hearing

By Derrick DePledge
Advertiser Government Writer

After a raw and intense hearing that showed the personal rifts among racing fans on O'ahu, the state House Finance Committee decided last night to keep alive a $50 million tax credit to draw investors to a new motorsports complex.

The committee resurrected the tax credit just before today's deadline to position bills for key votes next week, bowing to aggressive pressure from racers and fans who have nowhere else to go on O'ahu after Hawai'i Raceway Park closed last weekend.

The House is likely to approve the bill and send it into conference committee with the state Senate, which passed a version of the tax credit last session.

State Rep. Dwight Takamine, D-1st (N. Hilo, Hamakua, N. Kohala), the chairman of the House Finance Committee, asked the House for a waiver of the 48-hour public notice requirement to rush the tax credit for a hearing yesterday after it had appeared dead. Takamine explained that he wanted to give his colleagues an opportunity to consider the tax credit in conference committee rather than close off debate.

"There are some unanswered questions," he said.

Racing fans have split into camps over the past few months and have grown increasing combative and political as the racetrack closed. Stock car drivers who race on a dirt oval have rebelled against Mike Oakland, president of the Hawai'i Motorsports Complex, because he will not guarantee that a new motorsports complex will have a dirt track.

The dirt-track fans are asking the Legislature not to grant Oakland the tax credit and instead provide money to help the city condemn and purchase the existing racetrack. The Campbell Estate is selling the racetrack land to an unidentified affiliate of Oakland, and it is not publicly known what the buyer plans to do with the land.

Oakland said he needs the tax credit to get investors for the new complex, which he hopes to build at Kalaeloa on land owned by the state Department of Hawaiian Home Lands. Oakland said he had an earlier agreement with the department for a land swap for property in Kunia, but now wants to trade other land, most likely on the Big Island.

The new complex would be designed to attract a handful of national or international events a year while providing larger and more modern courses for local racers. The tax credit would only be given to investors if it is offset by new tax revenue generated by Mainland or international visitors to the complex.

The credit, which the state Department of Taxation opposes because it would be difficult to calculate, would likely be based on visitor surveys similar to what is done to measure the economic impact of the Pro Bowl or the Honolulu Marathon.

Oakland said he was saddened that dirt-track racers feel left out, and said he is still exploring whether a dirt track fits within the new complex. "I designed it with them and me in mind," he said.

Others who want the new complex, including drag, drifting, motorcycle and go-cart racers, are getting resentful that dirt-track fans are willing to risk losing the project to save an aging racetrack many have long outgrown.

Ed Kemper, who is involved in sports-car racing, asked lawmakers to imagine the uproar if the only golf course on O'ahu was closing. "We also have to look at the big picture," Kemper said. "We want to have another facility that is modern and that is safe for the drivers."

But dirt-track fans said they have lost trust in Oakland.

"We don't need a world-class facility here in Hawai'i. We need a track that can support all the local racers," said Ronald Joseph, Jr., a dirt-track racer.

Franklin Souza, a veteran dirt-track racer and fan, said during a break in the hearing that he has no interest in compromising with Oakland. "We not only want the existing racetrack. We want him out," he said.

Some lawmakers were skeptical of Oakland for asking for a tax credit but refusing to publicly share more details of his business plan.

State Rep. Glenn Wakai, D-31st (Salt Lake, Tripler), asked Oakland why he did not just use private financing for the new complex. "Why do the people of Hawai'i have to be on the hook for your project?" he asked.

Oakland said others who have received tax credits, including investors for movies and television shows filmed in Hawai'i, were not required to publicly disclose their finances. He also said he does not want to name his investors because lawmakers might seek them out for political campaign contributions.

Oakland said after the hearing that he does not plan to go ahead with a new complex without the tax credit.

"They can race on the street," he said of his critics. "I'm old enough for Social Security."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.