A bill that seeks to promote and preserve industrial uses along the rail transit route by offering tax incentives was deferred Wednesday in the City Council’s Budget Committee after concerns were raised about the potential economic impacts.

Introduced by City Councilwoman Carol Fukunaga, Bill 61 would allow owners to dedicate land within 1 mile of a rail station for industrial uses — such as automotive repair, manufacturing and wholesaling — for 10 years. The property would be assessed at 50 percent of its fair market value.

City Budget Director Nelson Koyanagi estimated that the potential revenue loss would total about $27 million annually. He told Council members Wednesday that his office was opposed to the bill because “it could possibly be a large amount of revenue that would be impacted.” He added that his department identified all of the industrial properties within 1 mile of the rail stations to come up with the estimate.

Koyanagi said that during the process of creating transit-oriented development plans, the Department of Planning and Permitting has been working with businesses to craft zoning policies to meet the community’s needs. TOD plans map out developments around each rail station.

Harrison Rue, the city’s TOD administrator, added that DPP was not taking a position on the bill, but would “yield to the budget department’s opinion.”

“We do share your deep concern about preservation, strengthening our industrial land area,” Rue said. “(But) we’re a little concerned, also, about the 1-mile radius. It draws in industrial land that’s not actually under — I don’t think — any near-term economic threat of development from TODs.”

Fukunaga said the goal of the bill is to help smaller industrial businesses that might face increasing financial pressure as more development occurs. She added that through her outreach efforts, she has found that the focus has mainly been on larger industrial properties, not so much the smaller businesses.

“I think what we were looking for was really to kind of preserve existing uses,” Fukunaga said. “The goal is to not necessarily bring new uses in that may not be compatible with the surrounding neighborhood. It would likely be a relatively small number of smaller parcels in which the surrounding areas’ pressures might cause the whole area to become too expensive to remain in.”

John Whalen, who spoke in favor of the bill, said he believes it would be a viable way to allow industrial businesses to remain in TOD areas. He mentioned that smaller businesses in Kakaako have faced financial problems.

“You can’t really ignore all the high-rise development that is taking place around it, creating economic pressure,” said Whalen, chairman of the Hawaii Community Development Authority. “(But) there might be other solutions. I think maybe narrowing the circumference of the area that would qualify for this kind of property tax reduction might be warranted.”

At Fukunaga’s request the bill was deferred so she can revise the measure to target smaller businesses. She also requested that Koyanagi provide information on agricultural land dedications, which she said her bill was based on.

“In terms of the bill itself, it’s not quite ready for prime time,” Fukunaga told Council members. “I think there is a lot more that needs to be done. And clearly, the reach may be broader than what we were looking to achieve.”