HomeMy WebLinkAboutCOM 0061.000 2006-2008 JNSY OF ~•W
~o.~
y,~a;,
Harry Kim Bruce C. McClure
Mayor Director
~rF Q'i `NAY`
Jiro A. Sumada
Deputy Director
(~aixrlf~r ~~furzi't
DEPARTMENT OF PUBLIC WORKS
Aupuni Center
101 Pauahi Street, Suite 7 • Hilo, Hawaii 96720-4224
(808) 961-8321 • Fax (808) 961-8630
c+
cra
4~
December 28, 2006 C~ °rn ~ .
N ~
CD
_
- r.
HONORABLE PETE HOFFMANN, COUNCIL CHAIR ~ ' -
AND MEMBERS OF THE HAWAII COUNTY COUNCIL ~
HAWAII COUNTY COUNCIL _ F-'
333 KILAUEA AVENUE
BEN FRANKLIN BUILDING, 2ND FLOOR
HILO, HI 96720
SUBJECT: COUNTY OF HAWAII COMMUNITY FACILITIES DISTRICT NO. I
(THE VILLAGES OF AINA LEA)
Pursuant to Resolution 486-06 of the Hawaii County Council, I have directed David Taussig &
Associates, Inc., consultants to the County, to conduct a study of the proposed Community
Facilities District No. 1 (The Villages of Aina Lea) and to prepare a report with respect to the
proposed District in accordance with Section 32-21 of the Hawaii County Code. I am submitting
herewith the report prepared by such consultants under my direction.
If you have any questions, please contact me at 961-8324.
RUCE C. McCLURE, P.E.
Director
cc: Mayor
Comm. No.
Ref. 70: L
Ref. Date
County of Hawai `i is an Equal Opportunity Provider and Employer
Dt~iVID'
Associates, Inc.
COMMUNITY FACILITIES DISTRICT REPORT
COUNTY OF HAWAH
COMMUNITY FACILITIES DISTRICT N0.2006-1
(THE VILLAGES OF AINA LEA
DECEMBER 28, 2006
Public Finance
Facilixies Planning
Urban Flconomics
Newport Beach
Riverside
San Raman
COMMUNITY FACILITIES DISTRICT REPORT
COUNTY OF HAWAII
COMMUNITY FACILITIES DISTRICT NO.2006-1
(THE VILLAGES OF AINA LEA)
Preuared for Preaared by
HAWAII COUNTY COUNCIL DAVID TAUSSIG & ASSOCIATES, INC.
333 Kilauea Avenue ]30] Dove Street, Suite 600
Hilo, HI 96720 Newport Beach, CA 92660
TABLE OF CONTENTS
Section Doge
I. INTRODUCTION ....................................................................................................................1
II. PROJECT DESCRIPTION .......................................................................................................2
A. Improvement Area No. 1 .........................................................................................2
B. Improvement Area No. 2 .........................................................................................2
C. Improvement Area No. 3 .........................................................................................2
D. Improvement Area No. 4 .........................................................................................2
III. DESCRIPTION AND ESTIMATED COST OF PROPOSED FACILITIES ......................................3
A. Description of Proposed Public Improvements .......................................................3
B. Estimated Cost of Proposed Bond Financed Public Improvements ........................3
IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES .......................................................6
A. Projected Bond Sales ...............................................................................................6
B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded
Indebtedness .............................................................................................................6
C. Incidental Expenses to be Included in the Annual Levy of Special Taxes ..............6
V. APPRAISED VALUE ..............................................................................................................8
VI. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX ......................................9
A. Explanation for Special Tax Apportionment ...........................................................9
B. Assigned, Expected and Maximum Special Tax Rates .........................................10
C. Backup Special Tax ...............................................................................................10
D. Accuracy of Information ........................................................................................1 l
VII. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT ......................................................12
VIII. GENERAL TERMS AND CONDITIONS .................................................................................13
A. Substitution Facilities .............................................................................................13
B. Prepayment of Special Tax ....................................................................................13
EXHIBITS
Exhibit A-1 Ra[e and Method of Apportionment for Improvement Area No. 1
Exhibit A-2 Rate and Method of Apportionment for Improvement Area No. 2
Exhibit A-3 Rate and Method of Apportionment for Improvement Area No. 3
Exhibit A-4 Rate and Method of Apportionment for Improvement Area No. 4
Exhibit B-1 Assigned Special Taxes for Developed Property in Improvement Area No. 1
Exhibit B-2 Assigned Special Taxes for Developed Property in Improvement Area No. 2
Exhibit B-3 Assigned Special Taxes for Developed Property in Improvement Area No. 3
Exhibit B-4 Assigned Special Taxes for Developed Property in Improvement Area No. 4
Exhibit C-1 Expected Special Taxes for Approved Property and Undeveloped Property within each
Improvement Area
Exhibit C-2 Maximum Special Taxes for Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone Property within
each Improvement Area
Exhibit D Appraisal Letter
Exhibit E Boundary Map
I. INTRODUCTION
WHEREAS, the Council of the County of Hawaii (hereinafter referred to as the "Council") did,
pursuant to the provisions of the "Community Facilities Districts Code," being Chapter 32 of the
Hawaii County Code (hereinafter referred to as the "Code"), and specifically Section 32-21
thereof, expressly order the filing of a written "Report" with the legislative body of the proposed
community facilities district. This community facilities district being County of Hawaii
Community Facilities District No. 2006-1 (The Villages of Aina Lea) shall bereinafter be
referred to as:
"CFD No. 2006-1' ;and
WHEREAS, a resolution Declaring the Intention of the County of Hawaii to Establish a
Community Facilities District, Designated as Hawaii County Community Facilities District No.
2006-1 (The Villages of Aina Lea), To Authorize Financing for Prescribed Special
Improvements, To Authorize Levy of a Special Tax, and To Authorize Issuance of Bonds
Secured by Proceeds of the Special Tax ("hereinafter referred to as "Resolution of Intention")
did direct that said Report generally contain the following:
1. A brief description of the proposed facilities by type which will be required to adequately
meet the needs of CFD No. 2006-1; and
2. An estimate of the cost of providing those facilities; and
3. An estimate of the fair and reasonable cost of those facilities proposed to be purchased as
completed public facilities; and
4. An estimate of the incidental expenses proposed to be paid; and
5. The appraised value of the land in CFD No. 2006-1 determined in accordance with
prevailing standards of appraisal used by financial institutions for loans.
NOW, THEREFORE, David Taussig & Associates, Inc., under the direction of the Director of
Public Works, does hereby submit this Report.
County of Hawaii December 18,1006
CFD No. 20064 (The Villages ojAina Lea) P°ge l
II. PROJECT DESCRIPTION
CFD No. 2006-1 is comprised of fow improvement areas: Improvement Area No. 1 ("IA No.
1 Improvement Area No. 2 ("IA No. 2"), Improvement Area No. 3 ("IA No. 3"), and
Improvement Area No. 4 ("IA No. 4"). All descriptions and explanations contained in this
Report refer to the entire CFD No. 2006-1 unless otherwise indicated. A brief description of
each improvement area is included below.
A. Improvement Area No. 1
IA No. 1 encompasses approximately 307.09 gross acres of land in the County of Hawaii.
Of this acreage, approximately 86,77 acres are expected to be developed into uses subject
to a special tax levy. At buildout, it is anticipated that the property within IA No. 1 will
consist of approximately 252 single-family residential units and 26.54 acres of non-
residential property.
B. Improvement Area No. 2
IA No. 2 encompasses approximately 257.59 gross acres of land in the County of Hawaii.
Of this acreage, approximately 49.30 acres are expected to be developed into uses subject
to a special tax levy. At buildout, it is anticipated that the property within IA No. 2 will
consist of approximately 414 single-family residential units. In addition, IA No. 2 will
include 385 affordable units that will not be subject to the special tax.
C. Improvement Area No. 3
IA No. 3 encompasses approximately 345.67 gross acres of land in the County of Hawaii.
Of this acreage, approximately 113.11 acres are expected to be developed into uses subject
to a special tax levy. At buildout, it is anticipated that the property within IA No. 3 will
consist of approximately 490 single-family residential units.
D. Improvement Area No. 4
IA No. 4 encompasses approximately 182.48 gross acres of land in the County of Hawaii.
Of this acreage, approximately 58.41 acres are expected to be developed into uses subject
to a special tax levy. At buildout, it is anticipated that the property within IA No. 4 will
consist of approximately 511 single-family residential units and 1.59 acres of non-
residential property.
County ojHawaii December 18, 2006
CFD No. 1006-7 (The Villages ofAina Lea) Page 2
III, DESCRIPTION AND ESTIMATED COST OF PROPOSED FACILITIES
A. Description of Proposed Public Improvements
A community facilities district may provide for the purchase, construction, installation,
expansion, improvement, or rehabilitation of any real or tangible property with a useful life
estimated by the Council to be five (5) years or longer. In addition, a community facilities
district may pay in full all amounts necessary to eliminate or reduce any fixed assessment
liens or to repay or defease, in whole or in part, any indebtedness secured by any tax, fee,
charge, or assessment levied within the area of the community facilities district or may pay
debt service on that indebtedness.
The facilities described in this Report are all facilities which the legislative body creating
CFD No. 2006-1 is authorized to own, construct, or finance, and which are required, in
part, to adequately meet the needs of CFD No. 2006-1. The actual facilities described
herein are those currently expected to be required to adequately meet, in part, the needs of
CFD No. 2006-1. Because the actual needs of CFD No. 2006-1 arising as development
progresses therein may differ from those currently anticipated, CFD No. 2006-1 reserves
the right to modify the actual facilities proposed herein to the extent CFD No. 2006-1
deems necessary, in its sole discretion to meet those needs. The Special Taxest required
from each improvement area to pay for the construction or financing of said facilities will
be apportioned as described in the Rate and Method of Apportionment of the Special Tax
for each improvement azea within CFD No. 2006-1.
B. Estimated Cost of Proposed Bond Financed Public Improvements
The types of facilities proposed to be financed by CFD No. 2006-1 are described below:
• Roadway and roadway improvements, including utilities, curb and gutter, lighting,
sidewalks, irrigation, landscaping, traffic control and signalization, design,
engineering, permitting, grading, and demolition, and any and a]] appurtenant
facilities relating to the foregoing. These roadway and roadway improvements will
include a mauka-makai road which will connect to, among other things, the
affordable housing, recreational and commercial portions of the project which will
benefit the region and which will also serve as emergency egress for Waikoloa
Village to the Queen Kaahumanu Highway. Street improvements, including traffic
mitigation measures required as a consequence of the development of the ]and in
CFD No. 2006-1, including, but not limited to, two intersections at the Queen
Ka'ahumanu Highway.
• Wastewater improvements including survey, design, engineering, all costs of site
acquisition, planning, engineering legal services, materials testing, coordination,
~ All capitalized terms used herein, unless otherwise indicated, shall have the meanings defined in the applicable
Rate and Method of Apportionment.
County of Hawaii Decemher 18, 2006
CFD No. 2006-1 (The Villages ofAina Lea) P°ge 3
construction, staking, construction inspection and any and all appurtenant facilities
relating to the foregoing.
• Water System improvements, including, but not limited to, wells, tanks, piping,
mains, valves, meters, fire hydrants, air & vac assembly, blow off assembly and
paving. The Water System improvements will also serve as a backup water system
for the region. It is our understanding that the County Water Department's share of
water produced by this system will be greater than that which has been previously
required for similar water development agreements.
• Storm drain improvements, including intermittent stream crossings, junction
structures, slope protection, drain pipes, catch basins, dry wells, riser inlet, low flow
pipe system and interceptor drain.
• Electrical system improvements including, but not limited to, poles, transformers,
cable, wire, switching stations, meters, conduit, engineering, survey, design,
inspection, and other appurtenant facilities for electricity distribution and use.
• Cable system, including but not limited to, cable, cooling systems, power supplies,
connector interface panels, switch interface boards, routing engines, control boazds,
and other facilities necessary for the distribution and use of a cable system.
• Phone system, including but not limited to, wire, switches, generators, towers,
poles, and other facilities to make a phone system viable.
• Hiking and biking trail system, including but not limited to, planning, engineering,
design, base, asphalt, concrete, curbing, landscaping, irrigation and other facilities
to make a trail system usable. The hiking and biking trail system will be available
for use by members of the public and will not be restricted to residents of the
district.
• Approximately 16 acres of passive parks and ] 0 acres of active parks, including but
not limited to, grass, landscaping, parking lots, trails, restrooms, buildings, fencing,
planning, design, engineering, surveying, playground equipment, signs, and other
facilities to make a park usable for the public. The park facilities will be available
for use by the public and not restricted to residents of the district.
• Infrastructure to aid in police and fire protection, including but not limited to,
equipment, buildings, training facilities, and other facilities to assist the police and
fire departments.
The estimated costs of the facilities aze shown in Table 1 below.
Coanry of Hawaii December 28, 2006
CFD No. 2006-1(The Villages ofAina Lea) pa8e 4
Table 1
Facilities Amount
Roadway and Roadway Improvements $30,000,000
Wastewater Improvements $11,500,000
Water System Improvements $15,000,000
Storm Drain Improvements $1,500,000
Electrical System Improvements $3,000,000
Cable Systems $2,000,000
Phone Systems $2,500,000
Hiking and Biking Trail Systems $2,000,000
Passive and Active Park Facilities $4,000,000
Police and Fire Protection Facilities $1,000,000
Total $72,500,000
The facilities and improvements described above will provide the necessary infrastructure
for the property within CFD No. 2006-1 which will include commercial pazcels, one or two
18-hole golf courses, a community park, 1,667 single family units, and up to 385 affordable
housing units. The commercial parcels, the golf courses, and the community park site will
provide benefit to the surrounding region as well as the residential property within CFD
No. 2006-1.
The facilities and the estimated costs herein are subject to review and confirmation. The
costs listed in Table 1 above aze estimates only, based upon current construction estimates
and actual costs may differ from those estimates herein. Please note that some of the
facilities described herein may be funded from other sources and not through CFD No.
2006-1.
County of Hawaii December 18, 2006
CFD No. 1006-] (The Vil/ages ofAina Lea) F°ge S
IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES
A. Proiected Bond Sales
The maximum authorized bonded indebtedness for CFD No. 2006-1 shall not exceed
$100,000,000 in aggregate for all improvement areas. It is anticipated that bonds will be
issued separately for each Improvement Area as development commences in such
improvement area.
B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded
Indebtedness
Pursuant to Section 32-58 of the Code, bonded indebtedness may include all costs and
estimated costs incidental to, or connected with, the accomplishment of the purpose for
which the proposed debt is to be incurred, including, but not limited to, the costs of
engineering, azchitectura] (building and landscape), geotechnical and environmental and
related, miscellaneous consulting services, survey, staking and contract administration
services, permits, plan check fees, entitlement processing fees and expenses, special tax
consultant services, county staff review, oversight and administrative services, bond
counsel, special tax counsel and disclosure counsel services, financial advisor services,
special tax administrator services, appraiser/market absorption consultant services, initial
bond transfer agent, fiscal agent, registraz and paying agent services,
and rebate calculation service set up charge, bond printing, official statement printing and
mailing, publishing, mailing and posting of notices, recording fees, underwriter's discount,
fees and expenses, bond reserve fund, capitalized interest, governmental notification and
filing fees, credit enhancement costs, real estate acquisition costs, rating agency fees, other
costs of bond issuance or special tax/district administration. For purposes of determining
the special tax rates for CFD No. 2006-1, bond issue estimates included capitalized interest
at approximately 15.07 percent, a reserve fund equal to 9.05 percent, and other incidental
bond issuance expenses equal to 5.00 percent of the principal amount of the bonds. Actual
bond issue characteristics will vary from the above estimates based on market conditions
and other factors.
C. Incidental Expenses to be Included in the Annual Levv of Special Taxes
Pursuant to Section 32-53 of the Code, the proceeds of any special tax may only be used to
pay, in whole or part, the cost of providing public facilities, services and incidental
expenses. The expenses of certain recurring services pertaining to the CFD No. 2006-1
may be included in each annual special tax levy. These include trustee, bond transfer
agent, registrar and paying agent services, rebate calculation services and periodic arbitrage
rebate payments, special tax administrator services, other necessary consultant services
incidental to the administration of CFD No. 2006-I, rating agency fees, posting, collecting
and enforcing payment of the special taxes, including but not limited to foreclosure
attorneys' services, personnel and administrative services provided by County personnel,
and continuing disclosure services. While the actual cost of administering CFD No. 2006-1
may vary, it is anticipated that the amount of special taxes which can be collected will be
County of Hawaii December 28, 2006
CFD No. 1006-] (The Villages ofAina Lea) Page 6
sufficient to fund at least $30,000 in annual administrative expenses for each improvement
area.
County of Hawaii December 18,1006
CFD No. 1006-1(The Villages ofAina Lea) page ~
V. APPRAISED VALUE
The appraised value of the land in CFD No. 2006-1 is not less than $105,000,000. Such
value was determined in accordance with prevailing standards of appraisal currently used
by financial institutions for loans. See Exhibit D for the Appraisal Letter of John Child &
Company Appraisers and Consultants.
County of Hawaii December 18,1006
CFD No. 1006-1 (The Villages ofAina Lea) Page 8
VI. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX
All of the property located within CFD No. 2006-1, unless exempted by law or by the Rate and
Method of Apportionment for each improvement area, shall be taxed for the purpose of
providing necessary facilities to serve CFD No. 2006-1. Pursuant to Section 32-30 of the Code,
"there is no requirement that the special tax imposed pursuant to this chapter be fixed in amount
or apportioned on the basis of special benefit to any property. It shall be sufficient that the
Council determines that the property subject to the special tax is improved or benefited in a
general manner or in any other manner."
As shown in Exhibit A, the adopted Rate and Method of Apportionment for each improvement
area provides information sufficient to allow each property owner within CFD No. 2006-1 to
estimate the maximum annual Special Tax he or she will be required to pay. Sections A through
D, below, provide additional information on the Rate and Method of Apportionment of the
Special Tax for each improvement area.
A. Explanation for Special Tax Apportionment
When a community facilities district is formed, a Special Tax may be levied on each parcel
of taxable property within the CFD to pay for the purchase, construction, installation,
expansion, improvement, or rehabilitation of any real or tangible property or to repay
bonded indebtedness or other related expenses incurred by CFD No. 2006-1. This Special
Tax must be apportioned in a reasonable manner.
When more than one type of land use is present within a community facilities district,
several criteria may be considered when apportioning the Special Tax. Generally, criteria
based on building square footage, acreage, and land use are selected, and categories based
on such criteria are established to differentiate between parcels of property. These
categories are a direct result of the projected product mix, and are reflective of the
proposed land use types within that community facilities district. Specific Special Tax
levels are assigned to each land use class, with all parcels within a land use class assigned
the same Special Tax rate.
The Code does not require that Special Taxes be apportioned to individual parcels based on
benefit received. However, in order to insure fairness and equity, benefit principles have
been incorporated in establishing the Special Tax rates for CFD No. 2006-1.
The major assumption inherent in the Special Tax rates set forth in the Rate and Method of
Apportionment is that the level of benefit received from the proposed public improvements
is a function of land use and building square footage. This assumption is borne out through
an examination of commonly accepted statistical measures for public facility usage.
In measuring average weekday vehicle trip-ends, the Institute of Transportation Engineer's
Trin Generation manual identifies land use as the primary determinant of trip-end
magnitude. Larger single family dwellings typically generate a greater number of trip-ends
Count' of Hawaii December 28,1006
CFD No. 2006-I (The Villages ofAina Lea) page 9
than do smaller single family homes, and therefore, will tend to receive more benefit from
road facilities.
Another example is sewer treatment costs, which are based on plant capacity to treat
biochemical oxygen demand (BOD), suspended solids (SS), and the flow rate. Other
variables for water and sewer requirements include storage and fire flow requirements, as
well as the number of bathrooms and fixture units, which tends to vary with the size of the
dwelling unit.
In addition, larger buildings typically generate a greater number of "Person Hours," or the
number of hours per week that residents associated with a specific type of land use could
potentially use park facilities.
Land Use Classes for Residential Property and Non-Residential Property have been
established for IA Nos. 1, 2, 3, and 4. Residential Property will be assigned to a particular
Land Use Class based on the size of the home. Non-Residential Property will be taxed
based on lot size. In addition, in order to insure fairness, the Special Tax rates are
uniformly applied to all Developed Property within CFD No. 2006-1.
Therefore, based on the types of public facilities that are proposed for the improvement
areas within CFD No. 2006-1, the property subject to the Special Taxes is benefited by
such improvements.
B. Assigned Expected and Maximum Special Tax Rates
Exhibits B-1 through B-4 list the Assigned Special Tax rates that may be levied against
Developed Property within each improvement area of CFD No. 2006-1. Exhibit C-I lists
the Expected Special Tax rates that may be levied against Approved Property and
Undeveloped Property within each Improvement Area of CFD No. 2006-1. Exhibit C-2
lists the Maximum Special Tax rates that may be levied against Approved Property,
Undeveloped Property, Taxable Property Owner Association Property, Taxable Public
Property, and Taxable Non-Taxable Zone Property within each Improvement Area of CFD
No. 2006-1.
The Council will annually determine the actual amount of the Special Tax levy in each
improvement area based on the method and subject to the maximum Special Tax rates
described in Exhibit A. The Council will levy a Special Tax to the extent necessary to
meet the Special Tax Requirement.
C. Backus Snecial Tax
Pursuant to the Rate and Method of Apportionment, the Maximum Special Tax for each
Assessor's Parcel classified as Developed Property is the greater of (i) the Assigned Special
Tax or (ii) the amount derived by application of the Backup Special Tax.
County oJHawair December 28, 2006
CFD No. 1006-1 (The Vi/[ages ojArna Lea) Page ]0
Pwsuant to the Rate and Method of Apportionment for each improvement area, the Backup
Special Tax attributable to property within a Final Map is equal to (i) $20,056 per Acre
within IA No. 1, (ii} $38,504 per Acre within IA No. 2, (iii) $26,716 per Acre within IA
No. 3, and (iv) $38,815 per Acre within IA No. 4. The Backup Special Tax for each
Assessor's Parcel of Developed Property in a Final Map within IA No. 2, IA No. 3, and IA
No.4 shall be computed by dividing the aggregate Backup Special Tax attributable to such
Final Map within each improvement area by the number of residential lots within such
Final Map, as determined in Section C.l.c of each Rate and Method of Apportionment for
IA No. 2, IA No. 3, and IA No. 4, respectively.
If use of the Backup Special Tax should become necessary, the Maximum Special Tax
rates for some parcels classified as Developed Property will be increased above the
Assigned Special Tax rates shown in Exhibit B until the Special Tax Requirement is met.
However, under no circumstances will the Special Tax on an Assessor's Parcel of
Developed Property in CFD No. 2006-1 be increased to a level that exceeds the greater of
the applicable Backup Special Tax or the applicable Assigned Special Tax.
D. Accuracy of Information
In order to establish the Special Taxes for CFD No. 2006-1 as set forth in the Rate and
Method of Apportionment, David Taussig and Associates, Inc. has relied on information
including, but not limited to absorption, land-use types, building square footage, and net
taxable acreage which were provided to David Taussig and Associates, Inc. by others.
David Taussig and Associates, Inc. has not independently verified such data and disclaims
responsibility for the impact of inaccurate data provided by others, if any, on the Rate and
Method of Apportionment for CFD No. 2006-1, including the inability to meet the financial
obligations of CFD No. 2006-1.
County of Hawaii December 18,1006
CFD No. 1006-I (The Villages ofAina Lea) Page Il
VII. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT
The boundaries of CFD No. 2006-1 include all land on which the Special Taxes may be levied.
A map of the area included within CFD No. 2006-1 is provided as Exhibit E.
County of Hawaii December 18,1006
CFD No. 1006-1 (The Villages ofAina Lea) P°ge 11
VIII. GENERAL TERMS AND CONDITIONS
A. Substitution Facilities
The descriptions of the public facilities, as set forth herein, aze general in their nature. The
final nature, location, and costs of improvements and facilities will be determined upon the
preparation of final plans and specifications. The final plans may show substitutes, in lieu
or modifications to the proposed work in order to accomplish the work of improvement,
and any such substitution shall not be a change or modification in the proceedings as long
as the facilities provide a service substantially similar to that as set forth in this Report.
B. Prepavment of Special Tax
The Special Tax applicable to an Assessor's Parcel of Developed Property, or Approved
Property or Undeveloped Property for which a building permit has been issued may be
prepaid in whole or in part according to the prepayment provisions in the Rate and Method
of Apportionment for each improvement area.
K:\CLIENTS2\Hawaii.Counry\mello\CFD 20064 (Aina Lea)\CFD Report\CFD_RPT_03.doc
County of Hawaii December 28, 2006
CFD No. 1006-1 (The Villages ofAina Lea) Page 13
EXHIBIT A-1
COUNTY OF HAWAII
COMMUNITY FACILITIES DISTRICT N0.2006-1
RATE AND METHOD OF APPORTIONMENT FOR
IMPROVEMENT AREA NO.1
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA NO. 1 OF
COMMUNITY FACILITIES DISTRICT N0.2006-1
(THE VILLAGES OF AINA LEA)
A Special Tax as hereinafter defined shall be levied on all Tax Map Key parcels in Improvement
Area No. 1 ("IA No. 1") of Community Facilities District No.2006-1 ofthe County of Hawaii (The
Villages ofAina Lea) ("CFD No. 2006-1") and collected each Fiscal Yeaz commencing in Fiscal
Year 2007-08, in an amount determined by the CFD Administrator (as defined below) through the
application ofthe procedures described below. All ofthe real property in IA No. 1, unless exempted
bylaw or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner
herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the number of acres of land area of a TMK Parcel as shown on
the applicable Tax Map, or if the land area is not shown on such Tax Map, the land area
shown on the applicable Final Map, parcel map, condominium plan, or other recorded parcel
map. If such maps are not available, the land area of the TMK Pazcel shall be calculated by
the CFD Administrator.
"Administrative Expenses" means the following actual or reasonably estimated costs
related to the administration of IA No. 1: the costs of computing the Special Taxes and
preparing the annual Special Tax collection schedules (whether by the County or designee
thereof or both); the costs of collecting the Special Taxes (whether by the County, through
foreclosure proceedings, or otherwise); the costs of remitting the Special Taxes to the
Trustee; the costs of the Trustee (including its legal counsel) in the dischazge of the duties
required of it under the Indenture; the costs to the County, IA No. 1 or any designee thereof
of complying with arbitrage rebate requirements; the costs to the County, IA No. 1 or any
designee thereof of complying with County, IA No. I or obligated persons disclosure
requirements associated with applicable federal and state securities laws and ofthe Code; the
costs associated with preparing Special Tax disclosure statements and responding to public
inquiries regarding the Special Taxes; the costs of the County, IA No. 1 or any designee
thereof related to an appeal of the Special Tax; the costs associated with the release of funds
from an escrow account; and the County's annual administration fees and third party
expenses. Administrative Expenses shall also include amounts estimated or advanced by the
County or IA No. ]for any other administrative purposes of ]A No. 1, including attorney's
fees and other costs related to commencing and pursuing to completion any foreclosure of
delinquent Special Taxes.
Caunry of Hawaii
)A No. I ojCFD No. 2006-1 (The Villages ofAina Lea) Page I
"Approved Property" means, for each Fiscal Year, all Taxable Property which is located
within a Final Map that was recorded prior to January 1 of the prior Fiscal Year; provided,
however, that Approved Property shall not include Developed Property, Taxable Property
Owner Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property.
"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed
Property, as determined in accordance with Section C.l.b below.
"Backup Special Tax" means the Special Tax applicable to each TMK Pazcel of Developed
Property, as determined in accordance with Section C.l.c below.
"Bonds" means any bonds or other debt (as defined in Section 32-16 of the Code), whether
in one or more series, issued under the Code.
"CFD Administrator" means an official of the County, or designee thereof, who is
responsible for determining the Special Tax Requirement and providing for the levy and
collection of the Special Taxes.
"CFD No.2006-1"means the County of Hawaii Community Facilities District No. 2006-1
(The Villages of Aina Lea).
"Clubhouse Property" means all TMK Parcels ofNon-Residential Property for which a
building permit was issued for golf course clubhouse purposes.
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Commercial Village Center Property" means a]] TMK Parcels of Non-Residential
Property which is zoned CV (Village Commercial Districts) according to the Hawaii County
Code Chapter 25, Article 5 and for which the building permit was issued for golf clubhouse,
retail, or commercial purposes.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 2006-I.
"County" means the County of Hawaii.
"Developed Property" means, for each Fiscal Year, all Taxable Property for which a
building permit for new construction was issued after January 1, 2006 and prior to March 1
of the prior Fiscal Year; provided, however, that Developed Property shall not include
Taxable Property Owner Association Property, Taxable Public Property, and Taxable Non-
Taxable Zone Property.
"Expected Special Tax" means the Special Tax for each Acre of Approved Property and
Undeveloped Property, as determined in accordance with Section C.2 below.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
County of
Hawaii
lA No. 7 ofCFD No. 1006-7 (The Villages of
Aina Lea) Page Z
"Final Map" means a final map approved by the County pursuant to the Subdivision
Control Code (Hawaii County Code Chapter 23) that creates individual lots for which
building permits may be issued or, in the case of a condominium project, the condominium
property regime map recorded with the declaration of condominium property regime that
creates the individual condominium units for which building permits maybe issued.
"IA No. 1" means Improvement Area No. 1 of CFD No. 2006-1 as identified on the
boundary map for CFD No. 2006-1.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time.
"Land Use Class" means any of the classes listed in Table I.
"Maximum Special Tax" means the Maximum Special Tax, determined in accordance with
Section C.1.a below, that can be levied in any Fiscal Year on any TMK Parcel.
"Non-Residential Property" means all TMK Parcels of Developed Property for which a
building permit(s) was issued for anon-residential use, including Clubhouse Property and
Commercial Village Center Property.
"Non-Taxable Zone Property" means all TMK Parcels within the boundaries of IA No. 1,
which are not considered Taxable Zone Property.
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the
Indenture.
"Property Owner Association Property" means, for each Fiscal Year, all Taxable Zone
Property, other than Clubhouse Property or Commercial Village Center Property, that is
owned by or irrevocably dedicated to a property owner association, including any master or
sub-association.
"Proportionately" means for Developed Property that the ratio of the actual Special Tax
levy to the Assigned Special Tax is equal for all TMK Parcels of Developed Property. For
Approved Property, "Proportionately" means that the ratio of the actual Special Tax levy to
the Maximum Special Tax, is equal for all TMK Parcels of Approved Property. For
Undeveloped Property, "Proportionately" means that the ratio ofthe actual Special Tax levy
to the Maximum Special Tax, is equal for all TMK Parcels of Undeveloped Property. For
Taxable Public Property and Taxable Property Owner Association Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax is equal for all TMK Parcels of Taxable Public Property and Taxable Property
Owner Association Property, as applicable. For Taxable Non-Taxable Zone Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax, is equal for all TMK Parcels of Taxable Non-Taxable Zone Property,
County ojHawaii
lA No. I ojCFD Na.1006-] (The Villages ojAina Lea) ~'aBe 3
"Public Property" means, for each Fiscal Year, all Taxable Zone Property that (i) is owned
by or irrevocably offered for dedication to the federal government, the State, the County, or
any other public agency, provided however that any property leased by a public agency to a
private entity and subject to taxation under Section 32-54 of the Code shall be taxed and
classified in accordance with its use; or (ii) is encumbered by a road, access, public utility
easement or other easement or recorded restriction for community or public use making
impractical its use for any purpose other than that set forth in the easement or recorded
restriction.
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure, not including any carport, walkway, garage, overhang,
patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be
made by reference to the building permit(s) issued for such TMK Parcel.
"Residential Property" means all TMK Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more residential
dwelling units.
"Special Tax" means the special tax to be levied in each Fiscal Year on each TMK Parcel of
Developed Property, Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone Property to
fund the Special Tax Requirement.
"Special Tax Requirement" means that amount required in any Fiscal Year for IA No. 1 to:
(i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding
Bonds, including but not limited to, credit enhancement and rebate payments on the
Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to
establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for
acquisition or construction of facilities eligible to be financed by IA No. 1 to the extent that
the inclusion of such amount does not increase the Special Tax levy on Undeveloped
Property; (vi) pay for reasonably anticipated delinquent Special Taxes based on the
delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for
funds available to reduce the annual Special Tax levy, as determined by the CFD
Administrator pursuant to the Indenture.
"State" means the State of Hawaii.
"Tax Map" means an official map of the County designating parcels by Tax Map Key
number.
"Tax Map Key Parcel" or "TMK Parcel" means a lot or parcel shown on a Tax Map with
an assigned tax map key number. A TMK Parcel may include a portion of a lot or two or
more lots.
"Taxable Non-Taxable Zone Property" means all TMK Parcels of Non-Taxable Zone
Property that are not exempt pursuant to Section E below.
County of Hawaii
lA No. I of CFD No. 1006-1 (The Villages of Aina Lea) Page Q
"Taxable Property" means, for each Fiscal Year, all property which is not exempt from the
Special Tax pursuant to law or Section E below.
"Taxable Property Owner Association Property" means all TMK Parcels of Property
Owner Association Property that are not exempt pursuant to Section E below.
"Taxable Public Property" means all TMK Parcels of Public Property that aze not exempt
pursuant to Section E below.
"Taxable Zone Property" means (i) all TMK Parcels within the boundaries ofIA No. 1 for
which the zoning according to the Hawaii County Code Chapter 25, Article 5 is RS (Single-
Family Residential Districts), RD (Double-Family Residential Districts), RM (Multiple-
Family Residential Districts), RCX (Residential-Commercial Mixed Use Districts), RA
(Residential and Agricultural Districts), V (Resort-Hotel Districts), CN (Neighborhood
Commercial Districts), CG (General Commercial Districts), CV (Village Commercial
Districts), MCX (Industrial-Commercial Mixed Districts), ML (Limited Industrial Districts),
or MG (Genera] Industrial Districts); or (ii) any other TMK Parcel within the boundazies of
IA No. 1 on which one or more residential dwelling units is or are constructed.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Properly not classified
as Developed Property, Approved Property, Taxable Property Owner Association Property,
Taxable Public Property, or Taxable Non-Taxable Zone Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 1 shall be classified as Developed
Property, Approved Property, Taxable Public Property, Taxable Property Owner Association
Property, Taxable Non-Taxable Zone Property, or Undeveloped Property, and shall be
subject to Special Taxes in accordance with the rate and method of apportionment
determined pursuant to Sections C and D below.
C. MAXIMUM SPECIAL TAX RATE
I. Developed Property
a. Maximum Special Tax
The Maximum Special Tax for each TMK Parcel classified as Developed
Property shall be the greater of (i) the Assigned Special Tax or (ii) the
Backup Special Tax.
b. Assi ng ed Special Tax
The Assigned Special Tax for Residential Property shall be based on the
Residential Floor Area of each dwelling unit located on the TMK Parcel.
County of Hawaii
lA No. 1 of CFD No. 200b1 (The Villages ofAina Lea) Page 5
The Assigned Special Tax for Non-Residential Property shall be based on the
Acreage of the TMK Parcel.
The Assigned Special Tax for each Land Use Class is shown below in Table
1.
TABLE 1
Assi ned S ecial Tax for Develo ed Pro e
9 a J~ ~ ~ ~ ~ ~ ~
~ a a ~~3 ~ fig' m~~~r~ .!ts `-~a~~~~tRi~c 3~y 1~~~~~~ r,~~
1 Residential Property > 2,050 sq. ft. $5,658 per unit
2 Residential Property 1,850 - 2,049 sq. ft. $5,063 per unit
3 Residential Property 1,650 - 1,849 sq. ft. $4,169 per unit
4 Residential Property < 1,650 sq. ft. $3,454 per unit
5 Non-Residential Property Not Applicable $7,000 per Acre
c. Backup Snecial Tax
(i) Residential Property
The Backup Special Tax attributable to Residential Property within a
Final Map will equal $20,056 multiplied by the Acreage of all
Taxable Property located within such Final Map, excluding current or
expected Non-Residential Property, Taxable Public Property, Taxable
Property Owner Association Property, and Taxable Non-Taxable
Zone Property.
The Backup Special Tax for each TMK Parcel of Residential
Property in a Final Map shall be computed by dividing the aggregate
Backup Special Tax attributable to such Final Map by the aggregate
number of units for which building permits for residential
constructior! have or may be issued within the Fina] Map and
multiplying;the resulting quotient by the number of units within each
TMK Parcel for which building permits for residential construction
have been or may be issued.
Notwithstanding the foregoing, if all or any portion of a Final Map is
subsequently changed or modified, then the Backup Special Tax for
each TMK Parce] of Residential Property in such Final Map that is
changed or modified shall be a rate per Acre calculated as follows:
1. Det~imine the total Backup Special Taxes anticipated to
apply to the changed or modified portion of the Final Map
prior to the change or modification.
County of Hawaii
IA No. 1 of CFD No. 2006-1 (The Vi/[ages of Aiha Lea) Page 6
lr ..r..irr w...rrwrrrr.ir.r
2. The result of paragraph 1 above shall be divided by the total
Acreage of Taxable Property excluding Non-Residential
Property, Taxable Public Property, Taxable Property Owner
Association Property, and Taxable Non-Taxable Zone
Property which is ultimately expected to exist in such
changed or modified Final Map area, as reasonably
determined by the CFD Administrator.
3. The result is the Backup Special Tax per Acre which shall be
applicable to all TMK Parcels of Residential Property in such
changed or modified Final Map.
(ii) Non-Residential Property
The Backup Special Tax for Non-Residential Property shall be
$20,056 per Acre.
d. Multiple Land Use Classes
In some instances a TMK Parcel of Developed Property may contain more
than one Land Use Class. The Assigned Special Tax levied on a TMK Parcel
shall be the sum of the Assigned Special Tax for all Land Use Classes
located on that TMK Parcel. The Maximum Special Tax that can be levied
on a TMK Parcel shall be the sum of the Maximum Special Tax that can be
levied for all Land Use Classes located on that TMK Parcel. For a TMK
Parcel that contains both Residential Property and Non-Residential Property,
the Acreage of such TMK Parcel shall be allocated to each type of property
based on the amount of Acreage designated for each land use as determined
by reference to the site plan approved for such TMK Parcel. The CFD
Administrator's allocation to each type of property shall be final.
2. Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property
a. Expected Special Tax
The Expected Special Tax for Approved Property and Undeveloped Property
shall be 5,000 per Acre.
b. Maximum Special Tax
The Maximum Special Tax for Approved Property, Undeveloped Property,
Taxable Property Owner Association Property, Taxable Public Property, and
Taxable Non-Taxable Zone Property shall be $20,056 per Acre.
County of Hawaii
/A No. 7 ojCFD No. 1006-7 (The Vi//ages afAina Lea) Page ~
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Fiscal Year 2007-08 and for each following Fiscal Yeaz, the CFD
Administrator shall determine the Special Tax Requirement and the Council shall
levy the Special Tax as follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax as needed
to satisfy the Special Tax Requirement;
Second: If additional monies are needed to satisfy the Special Tax Requirement after
the first step has been completed, the Special Tax shall be levied Proportionately on
each TMK Parcel of Approved Property at up to 100% of the Expected Special Tax
for Approved Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement afrer
the first two steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Properly at up to 100% of the
Expected Special Tax for Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after
the first three steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Approved Property at up to ] 00% of the
Maximum Special Tax for Approved Property;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after
the first four steps have been completed, then the levy of the Special Tax on each
TMK Pazcel of Developed Property whose Maximum Special Tax is determined
through the application of the Backup Special Tax shall be increased in equal
percentages from the Assigned Special Tax up to the Maximum Special Tax for each
such TMK Parcel;
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after
the first five steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax for Undeveloped Property;
Seventh: If additional monies are needed to satisfy the Special Tax Requirement
afrer the first six steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Parcel of Taxable Property Owner Association
Property and Taxable Public Property at up to the Maximum Special Tax for Taxable
Property Owner Association Property or Taxable Public Property.
Eighth: If additional monies are needed to satisfy the Special Tax Requirement after
the first seven steps have been completed, then the Special Tax shall be levied
County of Hawaii
lA No. 1 of CFD No. 1006-1 (The Villages of Aina Lea) Page 8
Proportionately on each TMK Parcel of Taxable Non-Taxable Zone Property at up to
the Maximum Special Tax for Taxable Non-Taxable Zone Property.
E. EXEMPTIONS
No Special Taxes shall be levied on Non-Taxable Zone Property, Property Owner
Association Property and Public Property, so long as the Acreage of Taxable Property is at
least 78.09 Acres. Tax-exempt status will be assigned by the CFD Administrator in the
chronological order in which property becomes Non-Taxable Zone Property, Property
Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, Public Property, or Non-Taxable Zone Property would reduce the Acreage of
Taxable Property below 78.09 Acres, such Assessor's Parcel shall be classified as Taxable
Property Owner Association Property, Taxable Public Property, or Taxable Non-Taxable
Zone Property, as applicable, and shall be subject to the levy of the Special Tax and shall be
taxed as part of the appropriate step in Section D above.
Should a TMK Parcel no longer be classified as Non-Taxable Zone Property, Property
Owner Association Property, or Public Property, its tax-exempt status will, without the
necessity of any action by the Council, terminate.
F. INTERPRETATIONS
Interpretations may be made by the Council by ordinance or resolution for purposes of
clarifying any vagueness or ambiguity in this Rate and Method of Apportionment.
G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes; provided, however, that IA No. 1 may directly bill the Special Tax,
may collect Special Taxes at a different time or in a different manner if necessary to meet its
financial obligations, and may covenant to foreclose and may actually foreclose on
delinquent TMK Parcels as permitted by the Code.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
"CFD Public Facilities" means either $9.7 million in 2006 dollars, which shall increase by
the Construction Inflation Index on July 1, 2007, and on each July 1 thereafrer, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to provide the
public facilities to be provided by IA No. 1 underthe authorized bonding program for IA No.
1, or (ii) shall be determined by the Council concurrently with a covenant that it will not
issue any more Bonds to be supported by Special Taxes levied under this Rate and Method
of Apportionment as described in Section D.
Caunry nfHawaii
]A No. I ojCFD No. 2006-I (The Villages ofAina Lea) Page 9
"Construction Fund" means an account specifically identified in the Indenture to hold
funds which are currently available for expenditure to acquire or construct public facilities
eligible under the Code.
"Construction Inflation Index" means the annual percentage change in the Honolulu
Construction Cost Index• Single Family Residence, measured as of the calendar year which
ends in the previous Fiscal Year. In the event this index ceases to be published, the
Construction Inflation Index shall be another index as determined by the CFD Administrator
that is reasonably comparable to the Honolulu Construction Cost Index: Single Family
Residence.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs
previously paid from the Construction Fund, (ii) moneys currently on deposit in the
Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected
to be available to finance public Facilities costs.
"Outstanding Bonds" means, for purposes ofthis section H, all Bonds which are deemed to
be outstanding under the Indenture after the first interest and/or principal payment date
following the current Fiscal Year.
1. Prepayment in Full
Any TMK Parcel of Developed Property, or Approved Property or
Undeveloped Property for which a building permit has been issued, maybe
prepaid. The Special Tax obligation applicable to such TMK Parcel in IA
No. 1 may be fully prepaid and the obligation oFthe TMK Parcel to pay the
Special Tax permanently satisfied as described herein; provided that a
prepayment maybe made only if there are no delinquent Special Taxes with
respect to such TMK Parcel at the time of prepayment. An owner of a TMK
Parcel intending to prepay the Special Tax obligation shall provide the CFD
Administrator with written notice of intent to prepay. Within 30 days of
receipt of such written notice, the CFD Administrator shall notify such owner
of the prepayment amount of such TMK Parcel. The CFD Administrator
may charge a reasonable fee for providing this amount.
The Prepayment Amount (defined below) shall be calculated as summarized
below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
County of Hawaii
IA No. ] of CFD No. 1006-1 (The Villages ofAina Lea) Page 70
As of the proposed date of prepayment, the Prepayment Amount (defined
below) shall be calculated as follows:
Parasraph No.•
1. Confirm that no Special Tax delinquencies apply to such TMK Parcel.
2. For TMK Parcels of Developed Property, compute the Assigned
Special Tax and Backup Special Tax applicable for the TMK Parcel
to be prepaid. For TMK Parcels of Approved Property or
Undeveloped Property for which a building permit has been issued,
compute the Assigned Special Tax and Backup Special Tax for that
TMK Parcel as though it was already designated as Developed
Property, based upon the building permit which has already been
issued for that TMK Parcel.
3. (a) Divide the Assigned Special Tax computed pursuant to paragraph
2 by the total estimated Assigned Special Tax for the entire IA No. 1
based on the Developed Property Special Tax which could be
charged in the current Fiscal Yeaz on all expected development
through buildout of IA No. 1, and
(b) Divide the Backup Special Tax computed pursuant to pazagraph 2
by the total estimated Backup Special Tax at buildout for the entire
IA No. 1.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the Outstanding Bonds to compute the amount ofOutstanding
Bonds to be retired and prepaid (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursuant to
paragraph 4 by the applicable redemption premium, if any, on the
Outstanding Bonds to be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the amount determined pursuant to paragraph 6 to compute
the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
8. Compute the amount needed to pay interest on the Bond Redemption
Amount from the first bond interest and/or principal payment date
following the current Fiscal Year until the earliest redemption date
for the Outstanding Bonds.
9. Determine the Special Tax levied on the TMK Parcel in the current
Fiscal Year which have not yet been paid.
County of Hawaii
IA No. I of CFD No. 1006-] (The Vil/ages of Aina Lea) Page ]1
10. Compute the minimum amount the CFD Administrator reasonably
expects to derive from the reinvestment of the Prepayment Amount
less the Future Facilities Amount and the Administrative Fees and
Expenses from the date of prepayment until the redemption date for
the Outstanding Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and
subtract the amount computed pursuant to paragraph 10 (the
"Defeasance Amount").
]2. Verify the administrative fees and expenses of IA No. 1, including
the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs of redeeming Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption
(the "Administrative Fees and Expenses").
13. The reserve fund credit ("Reserve Fund Credit") shall equal the lesser
of: (a) the expected reduction in the reserve requirement (as defined
in the Indenture), if any, associated with the redemption of
Outstanding Bonds as a result of the prepayment, or (b) the amount
derived by subtracting the new reserve requirement (as defined in the
Indenture) in effect after the redemption of Outstanding Bonds as a
result of the prepayment from the balance in the reserve fund on the
prepayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have
been expended at the time of the first interest and/or principal
payment following the current Fiscal Year, a capitalized interest
credit shall be calculated by multiplying the larger quotient computed
pursuant to paragraph 3(a) or 3(b) by the expected balance in the
capitalized interest fund after such first interest and/or principal
payment (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts
computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts
computed pursuant to paragraphs 13 and 14 (the "Prepayment
Amount").
16. From the Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and ] 4 shall be deposited into the appropriate
fund as established under the Indenture and be used to retire
Outstanding Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the
Construction Fund. The amount computed pursuant to paragraph 12
shall be retained by IA No. 1.
County of Hawaii
lA No. 1 of CFD No. 1006-I (The Vi!/ages ofAina Lea) Page 12
The Prepayment Amount may be sufficient to redeem other than a $5,000
increment of Bonds. In such cases, the increment above $5,000 or integral
multiple thereofwill be retained in the appropriate fund established under the
Indenture to be used with the next prepayment of bonds or to make debt
service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as
determined under paragraph 9 (above), the CFD Administrator shall remove
the current Fiscal Year's Special Tax levy for such TMK Parcel from the
County tax rolls. With respect to any TMK Parcel that is prepaid, the
Council shall cause a suitable notice to be recorded and filed with the bureau
of conveyances or land court in compliance with the Code, to indicate the
prepayment of Special Taxes and the release of the Special Tax lien on such
TMK Parcel, and the obligation of such TMK Parcel to pay the Special Tax
shall cease. The CFD Administrator shall mail a copy of the notice to the
owner and any known lessee of the property.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 1 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus the estimated Administrative Expenses.
2. Prepayment in Part
The Maximum Special Tax on a TMK Parcel of Developed Property, or
Approved Property or Undeveloped Property for which a building permit has
been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section H.1; except that a partial prepayment shall be
calculated according to the following formula:
These terms have the following meaning:
PP =the partial prepayment
PE = the Prepayment Amount calculated according to Section H. ]
F = the percent by which the owner of the TMK Parcel(s) is
partially prepaying the Maximum Annual Special Tax.
A = the Administrative Fees and Expenses according to Section
H.1
The owner of any TMK Parcel who desires such prepayment shall notify the
CFD Administrator of such owner's intent to partially prepay the Special Tax
and the percentage by which the Special Tax shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount
required for the partial prepayment of the Special Tax for a TMK Parcel
County of Hawaii
lA No. 1 of CFD No. 1006-I (The Villages ojAina Leal Page 73
within thirty (30) days of the request and may charge a reasonable fee for
providing this service.
With respect to any TMK Parcel that is partially prepaid, the County shall
(i) distribute the funds remitted to it according to Section H.1., and (ii)
indicate in the records of IA No. 1 that there has been a partial prepayment of
the Special Tax and that a portion of the Special Tax equal to the outstanding
percentage (1.00 - F) of the remaining Maximum Special Tax shall continue
to be levied on such TMK Parcel pursuant to Section D.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. I both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus estimated Administrative Expenses.
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty years commencing with
Fiscal Year 2007-08.
K:\CLIENTS2\Hawaii.Counry\mello\CFD 20064 (Aina Lea)\IA 1\RMAULMA IAI 03.doc
County ofHawarr
/A No. I of CFD No. 200&l (The Vil/ages ofArna lea) Page ]4
EXHIBIT A-2
COUNTY OF HAWAII
COMMUNITY FACILITIES DISTRICT N0.2006-1
RATE AND METHOD OF APPORTIONMENT FOR
IMPROVEMENT AREA N0.2
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA N0.2 OF
COMMUNITY FACILITIES DISTRICT N0.2006-1
(THE VILLAGES OF AINA LEA)
A Special Tax as hereinafter defined shall be levied on all Tax Map Key parcels in Improvement
Area No. 2 ("IA No. 2") of Community Facilities District No.2006-1 ofthe County of Hawaii (The
Villages of Aina Lea) ("CFD No. 2006-1 and collected each Fiscal Year commencing in Fiscal
Year 2007-08, in an amount determined by the CFD Administrator (as defined below) through the
application ofthe procedures described below. All of the real property in IA No. 2, unless exempted
by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner
herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the number of acres of land azea of a TMK Parcel as shown on
the applicable Tax Map, or if the land area is not shown on such Tax Map, the land area
shown on the applicable Final Map, parcel map, condominium plan, or other recorded parcel
map. If such maps are not available, the land area of the TMK Parcel shall be calculated by
the CFD Administrator.
"Administrative Expenses" means the following actual or reasonably estimated costs
related to the administration of IA No. 2: the costs of computing the Special Taxes and
preparing the annual Special Tax collection schedules (whether by the County or designee
thereof or both); the costs of collecting the Special Taxes (whether by the County, through
foreclosure proceedings, or otherwise); the costs of remitting the Special Taxes to the
Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties
required of it under the Indenture; the costs to the County, IA No. 2 or any designee thereof
of complying with arbitrage rebate requirements; the costs to the County, IA No. 2 or any
designee thereof of complying with County, IA No. 2 or obligated persons disclosure
requirements associated with applicable federal and state securities laws and of the Code; the
costs associated with preparing Special Tax disclosure statements and responding to public
inquiries regarding the Special Taxes; the costs of the County, IA No. 2 or any designee
thereof related to an appeal of the Special Tax; the costs associated with the release of funds
from an escrow account; and the County's annual administration fees and third party
expenses. Administrative Expenses shall also include amounts estimated or advanced by the
County or IA No. 2 for any other administrative purposes of IA No. 2, including attorney's
fees and other costs related to commencing and pursuing to completion any foreclosure of
delinquent Special Taxes.
County of Hawaii
IA No. 1 of CFD No.100b1 (The Villages of Aina Lea) Page 1
"Affordable Property" means, for each Fiscal Year, any TMK Parcel for which a building
permit was issued for one or more Affordable Units prior to January 1 of the prior Fiscal
Year.
"Affordable Unit(s)" means up to 385 dwelling units that are subject to deed restrictions,
resale restrictions, and/or regulatory agreements recorded in favor of the County providing
for affordable housing. Dwelling units shall be classified as Affordable Units by the CFD
Administrator in the chronological order in which the deed restrictions, resale restrictions,
and/or regulatory agreements for such property are recorded. If the total number of
Affordable Units exceeds the amount stated above, then the units exceeding such total shall
not be considered Affordable Units and shall be assigned to Land Use Classes 1 through 5
based on the Residential Floor Area for such units. In order to ensure that a dwelling unit is
correctly classified as an Affordable Unit, the owner of such property shall provide the CFD
Administrator with a copy of any applicable deed restrictions, resale restrictions, and/or
regulatory agreements. When the deed restrictions, resale restrictions, and/or regulatory
agreements terminate, the affected units shall no longer be classified as Affordable Unit(s),
and shall be assigned to Land Use Classes 1 through 5, as appropriate. Notwithstandingthe
above, the number of Affordable Units may exceed 385 dwelling units if the total number of
dwelling units in IA No. 2 exceed 799, In such cases, the number of Affordable Units
exceeding 385 shall not be greater than the total number of units in lA No. 2 which exceed
799.
"Approved Property" means, for each Fiscal Year, all Taxable Property which is located
within a Final Map that was recorded prior to January 1 of the prior Fiscal Year; provided,
however, that Approved Property shall not include Developed Property, Taxable Property
Owner Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property.
"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed
Property, as determined in accordance with Section C.l.b below.
"Backup Special Tax" means the Special Tax applicable to each TMK Parcel ofDeveloped
Property, as determined in accordance with Section C.l.c below.
"Bonds" means any bonds or other debt (as defined in Section 32-] 6 of the Code), whether
in one or more series, issued under the Code.
"CFD Administrator" means an official of the County, or designee thereof, who is
responsible for determining the Special Tax Requirement and providing for the levy and
collection of the Special Taxes.
"CFD No.2006-1"means the County ofHawaii Community Facilities District No. 2006-1
(The Villages of Aina Lea).
"Clubhouse Property" means all TMK Parcels ofNon-Residential Property for which a
building permit was issued for golf course clubhouse purposes.
County of Hawaii
)A Na. 1 of CFD No. 2006-I (The Villages ojAina Lea) Page 1
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Commercial Village Center Property" means all TMK Parcels of Non-Residential
Property which is zoned CV (Village Commercial Districts) according to the Hawaii County
Code Chapter 25, Article 5 and for which the building permit was issued for golf clubhouse,
retail, or commercial purposes.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 2006-1.
"County" means the County of Hawaii.
"Developed Property" means, for each Fiscal Year, all Taxable Property for which a
building permit for new construction was issued afrer January 1, 2006 and prior to March 1
of the prior Fiscal Year; provided, however, that Developed Property shall not include
Affordable Property, Taxable Property Owner Association Property, Taxable Public
Property, and Taxable Non-Taxable Zone Property.
"Expected Special Tax" means the Special Tax for each Acre of Approved Property and
Undeveloped Property, as determined in accordance with Section C.2 below.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
"Final Map" means a final map approved by the County pursuant to the Subdivision
Control Code (Hawaii County Code Chapter 23) that creates individual lots for which
building permits may be issued or, in the case of a condominium project, the condominium
property regime map recorded with the declaration of condominium property regime that
creates the individual condominium units for which building permits may be issued.
"IA No. 2" means Improvement Area No. 2 of CFD No. 2006-1 as identified on the
boundary map for CFD No. 2006-1.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time.
"Land Use Class" means any of the classes listed in Table 1.
"Maximum Special Tax" means the Maximum Special Tax, determined in accordance with
Section C.l.a below, that can be levied in any Fiscal Year on any TMK Parcel.
"Non-Residential Property" means all TMK Parcels of Developed Property for which a
building permit(s) was issued for anon-residential use, including Clubhouse Property and
Commercial Village Center Property.
"Non-Taxable Zone Property" means al] TMK Parcels within the boundaries of IA No. 2,
which are not considered Taxable Zone Property.
County ojHawaii
]A No.1 ojCFD No. 1006-1 (The Vil/ages ofAina Lea) Page 3
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the
Indenture.
"Property Owner Association Property" means, for each Fiscal Year, al] Taxable Zone
Property, other than Clubhouse Property or Commercial Village Center Property, that is
owned by or irrevocably dedicated to a property owner association, including any master or
sub-association.
"Proportionately" means for Developed Property that the ratio of the actual Special Tax
levy to the Assigned Special Tax is equal for all TMK Parcels of Developed Property. For
Approved Property, "Proportionately" means that the ratio of the actual Special Tax levy to
the Maximum Special Tax, is equal for all TMK Parcels of Approved Property. For
Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy
to the Maximum Special Tax, is equal for all TMK Parcels of Undeveloped Property. For
Taxable Public Property and Taxable Property Owner Association Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax is equal for all TMK Parcels of Taxable Public Property and Taxable Property
Owner Association Property, as applicable. For Taxable Non-Taxable Zone Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax, is equal for all TMK Parcels of Taxable Non-Taxable Zone Property.
"Public Property" means, for each Fiscal Year, all Taxable Zone Property that (i) is owned
by or irrevocably offered for dedication to the federal government, the State, the County, or
any other public agency, provided however that any property leased by a public agency to a
private entity and subject to taxation under Section 32-54 of the Code shall be taxed and
classified in accordance with its use; or (ii) is encumbered by a road, access, public utility
easement or other easement or recorded restriction for community or public use making
impractical its use for any purpose other than that set forth in the easement or recorded
restriction.
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure, not including any carport, walkway, garage, overhang,
patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be
made by reference to the building permit(s) issued for such TMK Parcel.
"Residential Property" means all TMK Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more residential
dwelling units.
"Special Tax" means the special tax to be levied in each Fiscal Year on each TMK Parcel of
Developed Property, Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone Property to
fund the Special Tax Requirement.
"Special Tax Requirement" means that amount required in any Fiscal Year for IA No. 2 to:
(i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding
Bonds, including but not limited to, credit enhancement and rebate payments on the
County of Hawaii
7A No. 2 of CFD No. 20067 (The Villages ofAina Lea) Page 4
Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to
establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for
acquisition or construction of facilities eligible to be financed by IA No. 2 to the extent that
the inclusion of such amount does not increase the Special Tax levy on Undeveloped
Property; (vi) pay for reasonably anticipated delinquent Special Taxes based on the
delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for
funds available to reduce the annual Special Tax levy, as determined by the CFD
Administrator pwsuant to the Indenture.
"State" means the State of Hawaii.
"Tax Map" means an official map of the County designating pazcels by Tax Map Key
number.
"Tax Map Key Parcel" or "TMK Parcel" means a lot or pazcel shown on a Tax Map with
an assigned tax map key number. A TMK Parcel may include a portion of a lot or two or
more lots.
"Taxable Non-Taxable Zone Property" means all TMK Parcels of Non-Taxable Zone
Property that are not exempt pwsuant to Section E below.
"Taxable Property" means, for each Fiscal Year, all property which is not exempt from the
Special Tax pursuant to law or Section E below.
"Taxable Property Owner Association Property" means all TMK Parcels of Property
Owner Association Property that are not exempt pursuant to Section E below.
"Taxable Public Property" means all TMK Parcels of Public Property that are not exempt
pursuant to Section E below.
"Taxable Zone Property" means (i) all TMK Parcels within the boundaries of IA No. 2 for
which the zoning according to the Hawaii County Code Chapter 25, Article 5 is RS (Single-
Family Residential Districts), RD (Double-Family Residential Districts), RM (Multiple-
Family Residential Districts), RCX (Residential-Commercial Mixed Use Districts), RA
(Residential and Agricultural Districts), V (Resort-Hotel Districts), CN (Neighborhood
Commercial Districts), CG (General Commercial Districts), CV (Village Commercial
Districts), MCX (Industrial-Commercial Mixed Districts), ML (Limited Industrial Districts),
or MG (General Industrial Districts); or (ii) any other TMK Parcel within the boundaries of
IA No. 2 on which one or more residential dwelling units is or are constructed.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified
as Developed Property, Approved Property, Taxable Property Owner Association Property,
Taxable Public Property, or Taxable Non-Taxable Zone Property.
County of Hawaii
IA No. 2 of CFD No. 1006-1 (The Villages of Aina Lep) Page 5
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 2 shall be classified as Developed
Property, Approved Property, Taxable Public Property, Taxable Property Owner Association
Property, Taxable Non-Taxable Zone Property, or Undeveloped Property, and shall be
subject to Special Taxes in accordance with the rate and method of apportionment
determined pursuant to Sections C and D below.
C. MAXIMUM SPECIAL TAX RATE
1. Developed Property
a. Maximum Special Tax
The Maximum Special Tax for each TMK Parcel classified as Developed
Property shall be the greater of (i) the Assigned Special Tax or (ii) the
Backup Special Tax.
b. Assigned Special Tax
The Assigned Special Tax for Residential Property shall be based on the
Residential Floor Area of each dwelling unit located on the TMK Parcel.
The Assigned Special Tax for Non-Residential Property shall be based on the
Acreage of the TMK Parcel.
The Assigned Special Tax for each Land Use Class is shown below in Table
1.
TABLE 1
Assi ned S ecial Tax for Develo ed Pro er
"
a
Land-Use ~ - 3teaidentislFloor ,~ssl' 'i''~'aa
Class pescrlption Area 'Per~hil~r~ere'
1 Residential Property > 2,050 sq. fr. $5,846 per unit
2 Residential Property 1,850 - 2,049 sq. ft. $5,231 per unit
3 Residential Property 1,650 - 1,849 sq. ft. $4,308 per unit
4 Residential Property 1,300 - 1,649 sq. ft. $3,569 per unit
5 Residential Property < 1,300 sq. fr. $2,769 per unit
6 Non-Residential Property Not Applicable $7,000 per Acre
County ofNawaii
IA No.1 of CFD No. 2006-1 (The Villages of Aina Lea) Page 6
c. Backu S ecial Tax
(i) Residential Property
The Backup Special Tax attributable to Residential Property within a
Final Map will equal $38,504 multiplied by the Acreage of all
Taxable Property located within such Final Map, excluding current or
expected Non-Residential Property, Taxable Public Properly, Taxable
Property Owner Association Property, and Taxable Non-Taxable
Zone Property.
The Backup Special Tax for each TMK Parcel of Residential
Property in a Final Map shall be computed by dividing the aggregate
Backup Special Tax amibutable to such Final Map by the aggregate
number of units for which building permits for residential
construction have or may be issued within the Final Map and
multiplying the resulting quotient by the number ofunits within each
TMK Parcel for which building permits for residential construction
have been or may be issued.
Notwithstanding the foregoing, if al] or any portion of a Final Map is
subsequently changed or modified, then the Backup Special Tax for
each TMK Parcel of Residential Property in such Final Map that is
changed or modified shall be a rate per Acre calculated as follows:
1. Determine the total Backup Special Taxes anticipated to
apply to the changed or modified portion of the Final Map
prior to the change or modification.
2. The result of paragraph 1 above shall be divided by the total
Acreage of Taxable Property excluding Non-Residential
Property, Taxable Public Property, Taxable Property Owner
Association Property, and Taxable Non-Taxable Zone
Property which is ultimately expected to exist in such
changed or modified Final Map area, as reasonably
determined by the CFD Administrator.
3. The result is the Backup Special Tax per Acre which shall be
applicable to all TMK Parcels of Residential Property in such
changed or modified Final Map.
(ii) Non-Residential Property
The Backup Special Tax for Non-Residential Property shall be
$38,504 per Acre.
County of Hawaii
IA No. 2 of CFD No. 2006-] (The Villages of Aina Lea) Page ~
d. Multiple Land Use Classes
In some instances a TMK Parcel of Developed Property may contain more
than one Land Use Class. The Assigned Special Tax levied on a TMK Parcel
shall be the sum of the Assigned Special Tax for all Land Use Classes
located on that TMK Parcel. The Maximum Special Tax that can be levied
on a TMK Parcel shall be the sum of the Maximum Special Tax that can be
levied for all Land Use Classes located on that TMK Parcel. For a TMK
Parcel that contains both Residential Property and Non-Residential Property,
the Acreage of such TMK Parcel shall be allocated to each type of property
based on the amount of Acreage designated for each land use as determined
by reference to the site plan approved for such TMK Parcel. The CFD
Administrator's allocation to each type of property shall be final.
2. Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property
a. Expected Special Tax
The Expected Special Tax for Approved Property and Undeveloped Property
shall be $28,000 per Acre.
b. Maximum Snecial Tax
The Maximum Special Tax for Approved Property, Undeveloped Property,
Taxable Property Owner Association Property, Taxable Public Property, and
Taxable Non-Taxable Zone Property shall be $38,504 per Acre.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Fiscal Year 2007-08 and for each following Fiscal Year, the CFD
Administrator shall determine the Special Tax Requirement and the Council shall
levy the Special Tax as follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax as needed
to satisfy the Special Tax Requirement;
Second: ]f additional monies are needed to satisfy the Special Tax Requirement after
the first step has been completed, the Special Tax shall be levied Proportionately on
each TMK Parcel of Approved Property at up to 100% of the Expected Special Tax
for Approved Property;
Third: ]f additional monies are needed to satisfy the Special Tax Requirement after
the first two steps have been completed, the Special Tax shall be levied
County of Hawaii
]A No. 2 of CFD Na. 2006-I (The Villages ofAina Lea) Page 8
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Expected Special Tax for Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after
the first three steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Approved Property at up to 100% of the
Maximum Special Tax for Approved Property;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after
the first four steps have been completed, then the levy of the Special Tax on each
TMK Parcel of Developed Property whose Maximum Special Tax is determined
through the application of the Backup Special Tax shall be increased in equal
percentages from the Assigned Special Tax up to the Maximum Special Tax for each
such TMK Parcel;
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after
the first five steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax for Undeveloped Property;
Seventh: If additional monies are needed to satisfy the Special Tax Requirement
after the first six steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Parcel of Taxable Property Owner Association
Property and Taxable Public Property at up to the Maximum Special Tax for Taxable
Property Owner Association Property or Taxable Public Property.
Eiehth: If additional monies are needed to satisfy the Special Tax Requirement after
the first seven steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Parcel of Taxable Non-Taxable Zone Property at up to
the Maximum Special Tax for Taxable Non-Taxable Zone Property.
E. EXEMPTIONS
No Special Taxes shall be levied on Affordable Property, Non-Taxable Zone Property,
Property Owner Association Property and Public Property, so long as the Acreage of
Taxable Property is at least 44.37 Acres. Tax-exempt status will be assigned by the CFD
Administrator in the chronological order in which property becomes Affordable Property,
Non-Taxable Zone Property, Property Owner Association Property or Public Property.
Notwithstandingthe foregoing, the first 40.82 Acres with tax-exempt status shall be reserved
for current or expected Affordable Property. However, the number of Acres of Affordable
Property may exceed 40.82 Acres to the extent that the total number of Acres of Taxable
Property does not go below 44.37 Acres.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, Public Property, Non-Taxable Zone Property, or Affordable Property would reduce
the Acreage of Taxable Property below 44.37 Acres, such Assessor's Parcel shall be
classified as Taxable Property Owner Association Property, Taxable Public Property,
Taxable Non-Taxable Zone Property, as applicable, or assigned to Land Use Class 1 through
County of Hawaii
IA No.1 of CFD Na. 1006-1(The Villages of Aina Lea) Page 9
5, as appropriate, for property no longer considered Affordable Property, and shall be subject
to the levy of the Special Tax and shall be taxed as part of the appropriate step in Section D
above.
Should a TMK Parcel no longer be classified as Affordable Property, Non-Taxable Zone
Property, Property Owner Association Property, or Public Property, its tax-exempt status
will, without the necessity of any action by the Council, terminate.
F. INTERPRETATIONS
Interpretations may be made by the Council by ordinance or resolution for purposes of
clarifying any vagueness or ambiguity in this Rate and Method of Apportionment.
G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes; provided, however, that IA No. 2 may directly bill the Special Tax,
may collect Special Taxes at a different time or in a different manner ifnecessary to meet its
financial obligations, and may covenant to foreclose and may actually foreclose on
delinquent TMK Parcels as permitted by the Code.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
"CFD Public Facilities" means either $10.6 million in 2006 dollars, which shall increase by
the Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to provide the
public facilities to be provided by IA No. 2 under the authorized bonding program for IA No.
2, or (ii) shall be determined by the Council concurrently with a covenant that it will not
issue any more Bonds to be supported by Special Taxes levied under this Rate and Method
of Apportionment as described in Section D.
"Construction Fund" means an account specifically identified in the Indenture to hold
funds which are currently available for expenditure to acquire or construct public facilities
eligible under the Code.
"Construction Inflation Index" means the annual percentage change in the Honolulu
Construction Cost Index Single Family Residence, measured as ofthe calendaryearwhich
ends in the previous Fiscal Year. In the event this index ceases to be published, the
Construction Inflation Index shall be another index as determined by the CFD Administrator
that is reasonably comparable to the Honolulu Construction Cost Index: Single Family
Residence.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs
previously paid from the Construction Fund, (ii) moneys currently on deposit in the
Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected
to be available to finance public facilities costs.
County of Hawaii
)A No. Z ojCFD No. 20061(The Villages ofAina Lea) Page 10
"Outstanding Bonds" means, for purposes ofthis section H, all Bonds which are deemed to
be outstanding under the Indenture after the first interest and/or principal payment date
following the current Fiscal Year.
1. Prepayment in Full
Any TMK Pazcel of Developed Property, or Approved Property or
Undeveloped Property for which a building permit has been issued, maybe
prepaid. The Special Tax obligation applicable to such TMK Parcel in lA
No. 2 may be fully prepaid and the obligation of the TMK Parcel to pay the
Special Tax permanently satisfied as described herein; provided that a
prepayment may be made only if there are no delinquent Special Taxes with
respect to such TMK Parcel at the time of prepayment. An owner of a TMK
Parcel intending to prepay the Special Tax obligation shall provide the CFD
Administrator with written notice of intent to prepay. Within 30 days of
receipt of such written notice, the CFD Administrator shall notify such owner
of the prepayment amount of such TMK Parcel. The CFD Administrator
may charge a reasonable fee for providing this amount.
The Prepayment Amount (defined below) shall be calculated as summarized
below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined
below) shall be calculated as follows:
Paraeraph No.'
1. Confirm that no Special Tax delinquencies apply to such TMK Parcel.
2. For TMK Parcels of Developed Property, compute the Assigned
Special Tax and Backup Special Tax applicable for the TMK Parcel
to be prepaid. For TMK Parcels of Approved Property or
Undeveloped Property for which a building permit has been issued,
compute the Assigned Special Tax and Backup Special Tax for that
TMK Parcel as though it was already designated as Developed
Property, based upon the building permit which has already been
issued for that TMK Parcel.
Caunty of Hawaii
lA No. 1 of CFD No. 2006-1 (The Viflages ofAina Lea) Page 11
3. (a) Divide the Assigned Special Tax computed pursuant to pazagraph
2 by the total estimated Assigned Special Tax for the entire IA No. 2
based on the Developed Property Special Tax which could be
charged in the current Fiscal Year on all expected development
through buildout of IA No. 2, and
(b) Divide the Backup Special Tax computed pursuant to paragraph 2
by the total estimated Backup Special Tax at buildout for the entire
IA No. 2.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the Outstanding Bonds to compute the amount ofOutstanding
Bonds to be retired and prepaid (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursuant to
paragraph 4 by the applicable redemption premium, if any, on the
Outstanding Bonds to be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the amount determined pwsuant to pazagraph 6 to compute
the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
8. Compute the amount needed to pay interest on the Bond Redemption
Amount from the first bond interest and/or principal payment date
following the current Fiscal Year until the eazliest redemption date
for the Outstanding Bonds.
9. Determine the Special Tax levied on the TMK Pazcel in the current
Fiscal Year which have not yet been paid.
]0. Compute the minimum amount the CFD Administrator reasonably
expects to derive from the reinvestment of the Prepayment Amount
less the Futwe Facilities Amount and the Administrative Fees and
Expenses from the date of prepayment until the redemption date for
the Outstanding Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and
subtract the amount computed pursuant to paragraph ] 0 (the
"Defeasance Amount").
12. Verify the administrative fees and expenses of IA No. 2, including
the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs of redeeming Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption
(the "Administrative Fees and Expenses").
County of Hawaii
]A No. 2 of CFD No. 200G1(The Vi[tages ofAina Lea) Page I2
13. The reserve fund credit ("Reserve Fund Credit") shall equal the lesser
of: (a) the expected reduction in the reserve requirement (as defined
in the Indenture), if any, associated with the redemption of
Outstanding Bonds as a result of the prepayment, or (b) the amount
derived by subtracting the new reserve requirement (as defined in the
Indentwe) in effect after the redemption of Outstanding Bonds as a
result of the prepayment from the balance in the reserve fund on the
prepayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have
been expended at the time of the first interest and/or principal
payment following the current Fiscal Year, a capitalized interest
credit shall be calculated by multiplying the larger quotient computed
pursuant to paragraph 3(a) or 3(b) by the expected balance in the
capitalized interest fund after such first interest and/or principal
payment (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts
computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts
computed pursuant to paragraphs 13 and 14 (the "Prepayment
Amount").
16. From the Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 1 ] , 13 and 14 shall be deposited into the appropriate
fund as established under the Indenture and be used to retire
Outstanding Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the
Construction Fund. The amount computed pursuant to paragraph 12
shall be retained by IA No. 2.
The Prepayment Amount may be sufficient to redeem other than a $5,000
increment of Bonds. In such cases, the increment above $5,000 or integral
multiple thereof will be retained in the appropriate fund established under the
Indenture to be used with the next prepayment of bonds or to make debt
service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as
determined under paragraph 9 (above), the CFD Administrator shall remove
the current Fiscal Year's Special Tax levy for such TMK Parcel from the
County tax rolls. With respect to any TMK Parcel that is prepaid, the
Council shall cause a suitable notice to be recorded and filed with the bureau
of conveyances or land court in compliance with the Code, to indicate the
prepayment of Special Taxes and the release of the Special Tax lien on such
TMK Parcel, and the obligation of such TMK Parcel to pay the Special Tax
shall cease. The CFD Administrator shall mail a copy of the notice to the
owner and any known lessee of the property.
County of Hawaii
lA No.1 of CFD No. 2006-1(The Vi//ages of Aina Lea) Page ]3
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 2 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus the estimated Administrative Expenses.
2. Prepayment in Part
The Maximum Special Tax on a TMK Parcel of Developed Property, or
Approved Property or Undeveloped Property for which a building permit has
been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section H.1; except that a partial prepayment shall be
calculated according to the following formula:
These terms have the following meaning:
PP =the partial prepayment
PE =the Prepayment Amount calculated according to Section H.1
F = the percent by which the owner of the TMK Parcel(s) is
partially prepaying the Maximum Annual Special Tax.
A = the Administrative Fees and Expenses according to Section
H.1
The owner of any TMK Parcel who desires such prepayment shall notify the
CFD Administrator of such owner's intent to partially prepay the Special Tax
and the percentage by which the Special Tax shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount
required for the partial prepayment of the Special Tax for a TMK Parcel
within thirty (30) days of the request and may charge a reasonable fee for
providing this service.
With respect to any TMK Parcel that is partially prepaid, the County shall
(i) distribute the funds remitted to it according to Section H.l., and (ii)
indicate in the records of IA No. 2 that there has been a partial prepayment of
the Special Tax and that a portion ofthe Special Tax equal to the outstanding
percentage (1.00 - F) of the remaining Maximum Special Tax shall continue
to be levied on such TMK Parcel pursuant to Section D.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 2 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus estimated Administrative Expenses.
Count~~ ofBawaii
)A No. 2 of CFD No. 1006-1 (The Villages of Aina Lea) Page 14
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty years commencing with
Fiscal Year 2007-08.
K:\CLIENTS2U3awaii.County\mello\CFD 2006-] (Aina Lea)VA 2U2MAU2MA IA2 09.doc
County ojHawaii
IA Na. 2 ojCFD No. 20067 (The Villages ojAina Lea) Page IS
EXHIBIT A-3
COUNTY OF HAWAII
COMMUNITY FACILITIES DISTRICT N0.2006-1
RATE AND METHOD OF APPORTIONMENT FOR
IMPROVEMENT AREA N0.3
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA N0.3 OF
COMMUNITY FACILITIES DISTRICT N0.2006-I
(THE VILLAGES OF AINA LEA)
A Special Tax as hereinafter defined shall be levied on all Tax Map Key pazcels in Improvement
Area No. 3 ("IA No. 3") of Community Facilities District No.2006-1 of the County of Hawaii (The
Villages of Aina Lea) ("CFD No. 2006-I and collected each Fiscal Year commencing in Fiscal
Yeaz 2007-08, in an amount determined by the CFD Administrator (as defined below) through the
application ofthe procedures described below. All of the real property in IA No. 3, unless exempted
by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner
herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the number of acres of land azea of a TMK Pazcel as shown on
the applicable Tax Map, or if the land area is not shown on such Tax Map, the land azea
shown on the applicable Final Map, parcel map, condominium plan, or other recorded parcel
map. If such maps are not available, the land area of the TMK Parcel shall be calculated by
the CFD Administrator.
"Administrative Expenses" means the following actual or reasonably estimated costs
related to the administration of IA No. 3: the costs of computing the Special Taxes and
preparing the annual Special Tax collection schedules (whether by the County or designee
thereof or both); the costs of collecting the Special Taxes (whether by the County, through
foreclosure proceedings, or otherwise); the costs of remitting the Special Taxes to the
Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties
required of it under the Indenture; the costs to the County, IA No. 3 or any designee thereof
of complying with arbitrage rebate requirements; the costs to the County, IA No. 3 or any
designee thereof of complying with County, IA No. 3 or obligated persons disclosure
requirements associated with applicable federal and state securities laws and ofthe Code; the
costs associated with preparing Special Tax disclosure statements and responding to public
inquiries regarding the Special Taxes; the costs of the County, IA No. 3 or any designee
thereof related to an appeal of the Special Tax; the costs associated with the release of funds
from an escrow account; and the County's annual administration fees and third party
expenses. Administrative Expenses shall also include amounts estimated or advanced by the
County or lA No. 3 for any other administrative purposes of IA No. 3, including attorney's
fees and other costs related to commencing and pursuing to completion any foreclosure of
delinquent Special Taxes.
Cou»ty of Hawaii
lA No. 3 of CFD No. 1008-1 (The Villages afAina Lea) Page l
"Approved Property" means, for each Fiscal Year, all Taxable Property which is located
within a Final Map that was recorded prior to January 1 of the prior Fiscal Year; provided,
however, that Approved Property shall not include Developed Property, Taxable Property
Owner Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property.
"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed
Property, as determined in accordance with Section C.l.b below.
"Backup Special Tax" means the Special Tax applicable to each TMK Parcel of Developed
Property, as determined in accordance with Section C.l.c below.
"Bonds" means any bonds or other debt (as defined in Section 32-16 of the Code), whether
in one or more series, issued under the Code.
"CFD Administrator" means an official of the County, or designee thereof, who is
responsible for determining the Special Tax Requirement and providing for the levy and
collection of the Special Taxes.
"CFD No.2006-1" means the County of Hawaii Community Facilities District No. 2006-1
(The Villages of Aina Lea).
"Clubhouse Property" means all TMK Parcels ofNon-Residential Property for which a
building permit was issued for golf course clubhouse purposes.
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Commercial Village Center Property" means al] TMK Parcels of Non-Residential
Property which is zoned CV (Village Commercial Districts) according to the Hawaii County
Code Chapter 25, Article 5 and for which the building permit was issued for golf clubhouse,
retail, or commercial purposes.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No.2006-1.
"County" means the County of Hawaii.
"Developed Property" means, for each Fiscal Year, all Taxable Property for which a
building permit for new construction was issued after January 1, 2006 and prior to March 1
of the prior Fiscal Year; provided, however, that Developed Property shall not include
Taxable Property Owner Association Property, Taxable Public Property, and Taxable Non-
Taxable Zone Property.
"Expected Special Tax" means the Special Tax for each Acre of Approved Property and
Undeveloped Property, as determined in accordance with Section C.2 below.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
County of Hawaii
]A No. 3 of CFD No. 1006-] (The Vi((ages of Aina lea) Page 1
"Final Map" means a final map approved by the County pursuant to the Subdivision
Control Code (Hawaii County Code Chapter 23) that creates individual lots for which
building permits may be issued or, in the case of a condominium project, the condominium
property regime map recorded with the declaration of condominium property regime that
creates the individual condominium units for which building permits may be issued.
"IA No. 3" means Improvement Area No. 3 of CFD No. 2006-1 as identified on the
boundary map for CFD No. 2006-1.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time.
"Land Use Class" means any of the classes listed in Table 1.
"Maximum Special Tax" means the Maximum Special Tax, determined in accordance with
Section C.1.a below, that can be levied in any Fiscal Year on any TMK Parcel.
"Non-Residential Property" means all TMK Parcels of Developed Property for which a
building permit(s) was issued for anon-residential use, including Clubhouse Property and
Commercial Village Center Property.
"Non-Taxable Zone Property" means all TMK Parcels within the boundaries of IA No. 3,
which are not considered Taxable Zone Property.
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the
Indenture.
"Property Owner Association Property" means, for each Fiscal Year, all Taxable Zone
Property, other than Clubhouse Property or Commercial Village Center Property, that is
owned by or irrevocably dedicated to a property owner association, including any master or
sub-association.
"Proportionately" means for Developed Property that the ratio of the actual Special Tax
levy to the Assigned Special Tax is equal for all TMK Parcels of Developed Property. For
Approved Property, "Proportionately" means that the ratio of the actual Special Tax levy to
the Maximum Special Tax, is equal for all TMK Parcels of Approved Property. For
Undeveloped Property, "Proportionately" means that the ratio ofthe actual Special Tax levy
to the Maximum Special Tax, is equal for all TMK Parcels of Undeveloped Property. For
Taxable Public Property and Taxable Property Owner Association Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax is equal for all TMK Parcels of Taxable Public Property and Taxable Property
Owner Association Property, as applicable. For Taxable Non-Taxable Zone Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax, is equal for all TMK Parcels of Taxable Non-Taxable Zone Property.
County of Hawaii
IA No. 3 of CFD No.1006d (The Villages of Aina Lea) Page 3
"Public Property" means, for each Fiscal Year, all Taxable Zone Property that (i) is owned
by or irrevocably offered for dedication to the federal government, the State, the County, or
any other public agency, provided however that any property leased by a public agency to a
private entity and subject to taxation under Section 32-54 of the Code shall be taxed and
classified in accordance with its use; or (ii) is encumbered by a road, access, public utility
easement or other easement or recorded restriction for community or public use making
impractical its use for any purpose other than that set forth in the easement or recorded
restriction.
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure, not including any carport, walkway, garage, overhang,
patio, enclosed patio, or similaz area. The determination of Residential Floor Area shall be
made by reference to the building permit(s) issued for such TMK Parcel.
"Residential Property" means all TMK Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more residential
dwelling units.
"Special Tax" means the special tax to be levied in each Fiscal Yeaz on each TMK Parcel of
Developed Property, Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone Property to
fund the Special Tax Requirement.
"Special Tax Requirement" means that amount required in any Fiscal Year for IA No. 3 to:
(i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding
Bonds, including but not limited to, credit enhancement and rebate payments on the
Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to
establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for
acquisition or construction of facilities eligible to be financed by IA No. 3 to the extent that
the inclusion of such amount does not increase the Special Tax levy on Undeveloped
Property; (vi) pay for reasonably anticipated delinquent Special Taxes based on the
delinquency rate for Special Taxes levied in the previous Fiscal Yeaz; less (vii) a credit for
funds available to reduce the annual Special Tax levy, as determined by the CFD
Administrator pursuant to the Indenture.
"State" means the State of Hawaii.
"Tax Map" means an official map of the County designating parcels by Tax Map Key
number.
"Tax Map Key Parcel" or "TMK Parcel" means a lot or parcel shown on a Tax Map with
an assigned tax map key number. A TMK Parcel may include a portion of a lot or two or
more lots.
"Taxable Non-Taxable Zone Property" means all TMK Parcels of Non-Taxable Zone
Property that are not exempt pursuant to Section E below.
County ofHawaii
]A No. 3 of CFD No. 1006-I (The Villages of Aina Lea) Page 4
"Taxable Property" means, for each Fiscal Year, all property which is not exempt from the
Special Tax pursuant to law or Section E below.
"Taxable Property Owner Association Property" means all TMK Parcels of Property
Owner Association Property that are not exempt pursuant to Section E below.
"Taxable Public Property" means all TMK Parcels of Public Property that are not exempt
pursuant to Section E below.
"Taxable Zone Property" means (i) all TMK Parcels within the boundaries of IA No. 3 for
which the zoning according to the Hawaii County Code Chapter 25, Article 5 is RS (Single-
Family Residential Districts), RD (Double-Family Residential Districts), RM (Multiple-
Family Residential Districts), RCX (Residential-Commercial Mixed Use Districts), RA
(Residential and Agricultural Districts), V (Resort-Hotel Districts), CN (Neighborhood
Commercial Districts), CG (General Commercial Districts), CV (Village Commercial
Districts), MCX (Industrial-Commercial Mixed Districts), ML (Limited Industrial Districts),
or MG (General Industrial Districts); or (ii) any other TMK Parcel within the boundaries of
IA No. 3 on which one or more residential dwelling units is or are constructed.
"Trustee" means the trustee or fiscal agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified
as Developed Property, Approved Property, Taxable Property Owner Association Property,
Taxable Public Property, or Taxable Non-Taxable Zone Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 3 shall be classified as Developed
Property, Approved Property, Taxable Public Property, Taxable Property Owner Association
Property, Taxable Non-Taxable Zone Property, or Undeveloped Property, and shall be
subject to Special Taxes in accordance with the rate and method of apportionment
determined pursuant to Sections C and D below.
C. MAXIMUM SPECIAL TAX RATE
1. Developed Property
a. Maximum Special Tax
The Maximum Special Tax for each TMK Parcel classified as Developed
Property shall be the greater of (i) the Assigned Special Tax or (ii) the
Backup Special Tax.
b. Assigned Snecial Tax
The Assigned Special Tax for Residential Property shall be based on the
Residential Floor Area of each dwelling unit located on the TMK Parcel.
County of Hawaii
lA No. 3 ojCFD No. 2006-7 (The Vi//ages ofAina Lea) Page 5
The Assigned Special Tax for Non-Residential Property shall be based on the
Acreage of the TMK Pazcel.
The Assigned Special Tax for each Land Use Class is shown below in Table
1.
TABLE 1
Ay srs_i ned S ecial Tax for Develo ed Pro er
.:e x~ ~,~~a~~4u~ 3 ~ ;A~ I~ t ~d kI 3v'RC~~¢'ifl. 4
~ 1ttt~ yda a~9S~ $~yai~iV. ~~j~Ay~ 3y t5 ~+4A~1«r#F~~ 5t { ~ H~'"~~
,~~s~~l~ ~It~FA dI~.~iI,~YYV~t U' 9 ~~i~ i ~~SI~~®~ `u
1 Residential Property > 2,050 sq. ft. $5,878 per unit
2 Residential Property 1,850 - 2,049 sq. ft. $5,259 per unit
3 Residential Property 1,650 - 1,849 sq. ft. $4,331 per unit
4 Residential Property < 1,650 sq. fr. $3,588 per unit
5 Non-Residential Property Not Applicable $7,000 per Acre
c. Backup Special Tax
(i) Residential Property
The Backup Special Tax attributable to Residential Property within a
Final Map will equal $26,716 multiplied by the Acreage of all
Taxable Property located within such Final Map, excluding current or
expected Non-Residential Property, Taxable Public Property, Taxable
Property Owner Association Property, and Taxable Non-Taxable
Zone Property.
The Backup Special Tax for each TMK Parcel of Residential
Property in a Final Map shall be computed by dividing the aggregate
Backup Special Tax attributable to such Final Map by the aggregate
number of units for which building permits for residential
construction have or may be issued within the Final Map and
multiplying the resulting quotient by the number ofunits within each
TMK Parcel for which building permits for residential construction
have been or may be issued.
Notwithstanding the foregoing, if all or any portion of a Final Map is
subsequently changed or modified, then the Backup Special Tax for
each TMK Parcel of Residential Property in such Final Map that is
changed or modified shall be a rate per Acre calculated as follows:
1. Determine the total Backup Special Taxes anticipated to
apply to the changed or modified portion of the Final Map
prior to the change or modification.
County of Hawaii
IA No. 3 of CFD No. 200&) (The Villages of Aina Lea) Page 6
2. The result of paragraph 1 above shall be divided by the total
Acreage of Taxable Property excluding Non-Residential
Property, Taxable Public Property, Taxable Property Owner
Association Property, and Taxable Non-Taxable Zone
Property which is ultimately expected to exist in such
changed or modified Final Map area, as reasonably
determined by the CFD Administrator.
3. The result is the Backup Special Tax per Acre which shall be
applicable to all TMK Pazcels of Residential Property in such
changed or modified Final Map.
(ii) Non-Residential Property
The Backup Special Tax for Non-Residential Property shall be
$26,716 per Acre.
d. Multiple Land Use Classes
In some instances a TMK Parcel of Developed Property may contain more
than one Land Use Class. The Assigned Special Tax levied on a TMK Parcel
shall be the sum of the Assigned Special Tax for all Land Use Classes
located on that TMK Parcel. The Maximum Special Tax that can be levied
on a TMK Parcel shall be the sum of the Maximum Special Tax that can be
levied for all Land Use Classes located on that TMK Pazcel. For a TMK
Parcel that contains both Residential Property and Non-Residential Property,
the Acreage of such TMK Parcel shall be allocated to each type ofproperty
based on the amount of Acreage designated for each land use as determined
by reference to the site plan approved for such TMK Pazcel. The CFD
Administrator's allocation to each type of property shall be final.
2. Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property
a. Expected Special Tax
The Expected Special Tax for Approved Property and Undeveloped Property
shall be $19,000 per Acre.
b. Maximum Special Tax
The Maximum Special Tax for Approved Property, Undeveloped Property,
Taxable Property Owner Association Property, Taxable Public Property, and
Taxable Non-Taxable Zone Property shall be $26,716 per Acre.
County of
Hawaii
lA No. 3 of CFD No. 1006-1 (The Villages of Aina Lea) Page 7
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Fiscal Year 2007-08 and for each following Fiscal Year, the CFD
Administrator shall determine the Special Tax Requirement and the Council shall
levy the Special Tax as follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax as needed
to satisfy the Special Tax Requirement;
Second: If additional monies are needed to satisfy the Special Tax Requirement after
the first step has been completed, the Special Tax shall be levied Proportionately on
each TMK Parcel of Approved Property at up to 100% of the Expected Special Tax
for Approved Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement after
the first two steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Expected Special Tax for Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after
the first three steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Approved Property at up to 100% of the
Maximum Special Tax for Approved Property;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after
the first four steps have been completed, then the levy of the Special Tax on each
TMK Parcel of Developed Property whose Maximum Special Tax is determined
through the application of the Backup Special Tax shall be increased in equal
percentages from the Assigned Special Tax up to the Maximum Special Tax for each
such TMK Parcel;
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after
the first five steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to ] 00% of the
Maximum Special Tax for Undeveloped Property;
Seventh: If additional monies are needed to satisfy the Special Tax Requirement
after the first six steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Parcel of Taxable Property Owner Association
Property and Taxable Public Property at up to the Maximum Special Tax for Taxable
Property Owner Association Property or Taxable Public Property.
Eiehth: ]f additional monies are needed to satisfy the Special Tax Requirement after
the first seven steps have been completed, then the Special Tax shall be levied
County ojHawaii
IA No. 3 ojCFD No. 2006] (The Villages ojAina Lea) Page 8
Proportionately on each TMK Parcel of Taxable Non-Taxable Zone Property at up to
the Maximum Special Tax for Taxable Non-Taxable Zone Property.
E. EXEMPTIONS
No Special Taxes shall be levied on Non-Taxable Zone Property, Property Owner
Association Property and Public Property, so long as the Acreage of Taxable Property is at
least 101.79 Acres. Tax-exempt status will be assigned by the CFD Administrator in the
chronological order in which property becomes Non-Taxable Zone Property, Property
Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, Public Property, or Non-Taxable Zone Property would reduce the Acreage of
Taxable Property below 101.79 Acres, such Assessor's Parcel shall be classified as Taxable
Property Owner Association Property, Taxable Public Property, or Taxable Non-Taxable
Zone Property, as applicable, and shall be subject to the levy ofthe Special Tax and shall be
taxed as part of the appropriate step in Section D above.
Should a TMK Parcel no longer be classified as Non-Taxable Zone Property, Property
Owner Association Property, or Public Property, its tax-exempt status will, without the
necessity of any action by the Council, terminate.
F. INTERPRETATIONS
Interpretations may be made by the Council by ordinance or resolution for purposes of
clarifying any vagueness or ambiguity in this Rate and Method of Apportionment.
G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes; provided, however, that IA No. 3 may directly bill the Special Tax,
may collect Special Taxes at a different time or in a different manner if necessary to meet its
financial obligations, and may covenant to foreclose and may actually foreclose on
delinquent TMK Parcels as permitted by the Code.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
"CFD Public Facilities" means either $17.0 million in 2006 dollars, which shall increase by
the Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to provide the
public facilities to be provided by IA No. 3 under the authorized bonding program for IA No.
3, or (ii) shall be determined by the Council concurrently with a covenant that it will not
issue any more Bonds to be supported by Special Taxes levied under this Rate and Method
of Apportionment as described in Section D.
County of
Hawaii
lA No. 3 of CFD No. 2006-7 (The Villages of Aina Lea) Page 9
"Construction Fund" means an account specifically identified in the Indenture to hold
funds which are currently available for expenditure to acquire or construct public facilities
eligible under the Code.
"Construction Inflation Index" means the annual percentage change in the Honolulu
Construction Cost Index: Single Family Residence, measured as of the calendar year which
ends in the previous Fiscal Year. In the event this index ceases to be published, the
Construction Inflation Index shall be another index as determined by the CFD Administrator
that is reasonably comparable to the Honolulu Construction Cost Index: Single Family
Residence.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs
previously paid from the Construction Fund, (ii) moneys currently on deposit in the
Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected
to be available to finance public facilities costs.
"Outstanding Bonds" means, for purposes of this section H, all Bonds which aze deemed to
be outstanding under the Indenture afrer the first interest and/or principal payment date
following the current Fiscal Year.
1. Prepayment in Full
Any TMK Parcel of Developed Property, or Approved Property or
Undeveloped Property for which a building permit has been issued, maybe
prepaid. The Special Tax obligation applicable to such TMK Parcel in IA
No. 3 may be fully prepaid and the obligation of the TMK Parcel to pay the
Special Tax permanently satisfied as described herein; provided that a
prepayment may be made only if there are no delinquent Special Taxes with
respect to such TMK Parcel at the time of prepayment. An owner of a TMK
Parcel intending to prepay the Special Tax obligation shall provide the CFD
Administrator with written notice of intent to prepay. Within 30 days of
receipt of such written notice, the CFD Administrator shall notify such owner
of the prepayment amount of such TMK Parcel. The CFD Administrator
may charge a reasonable fee for providing this amount.
The Prepayment Amount (defined below) shall be calculated as summarized
below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Prepayment Amount
County of Hawaii
IA No. 3 of CFD No. 1006-] (The Villages ofAina Lea) Page 1 D
As of the proposed date of prepayment, the Prepayment Amount (defined
below) shall be calculated as follows:
Para¢rauh No.:
1. Confirm that no Special Tax delinquencies apply to such TMK Parcel.
2. For TMK Parcels of Developed Property, compute the Assigned
Special Tax and Backup Special Tax applicable for the TMK Parcel
to be prepaid. For TMK Parcels of Approved Property or
Undeveloped Property for which a building permit has been issued,
compute the Assigned Special Tax and Backup Special Tax for that
TMK Parcel as though it was already designated as Developed
Property, based upon the building permit which has already been
issued for that TMK Parcel.
3. (a) Divide the Assigned Special Tax computed pursuant to paragraph
2 by the total estimated Assigned Special Tax for the entire IA No. 3
based on the Developed Property Special Tax which could be
charged in the current Fiscal Year on all expected development
through buildout of IA No. 3, and
(b) Divide the Backup Special Tax computed pursuant to paragraph 2
by the total estimated Backup Special Tax at buildout for the entire
IA No. 3.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the Outstanding Bonds to compute the amount of Outstanding
Bonds to be retired and prepaid (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursuant to
paragraph 4 by the applicable redemption premium, if any, on the
Outstanding Bonds to be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the amount determined pursuant to paragraph 6 to compute
the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
8. Compute the amount needed to pay interest on the Bond Redemption
Amount from the first bond interest and/or principal payment date
following the current Fiscal Year until the earliest redemption date
for the Outstanding Bonds.
9. Determine the Special Tax levied on the TMK Parcel in the current
Fiscal Year which have not yet been paid.
County ojHawaii
IA No. 3 of CFD No. 2006] (The Vi/loges ofAina Lea) page Il
10. Compute the minimum amount the CFD Administrator reasonably
expects to derive from the reinvestment of the Prepayment Amount
less the Future Facilities Amount and the Administrative Fees and
Expenses from the date of prepayment until the redemption date for
the Outstanding Bonds to be redeemed with the prepayment.
11. Add the amounts computed pursuant to paragraphs 8 and 9 and
subtract the amount computed pursuant to paragraph ] 0 (the
"Defeasance Amount").
12. Verify the administrative fees and expenses of IA No. 3, including
the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs of redeeming Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption
(the "Administrative Fees and Expenses").
13. The reserve fund credit ("Reserve Fund Credit") shall equal the lesser
of: (a) the expected reduction in the reserve requirement (as defined
in the Indenture), if any, associated with the redemption of
Outstanding Bonds as a result of the prepayment, or (b) the amount
derived by subtracting the new reserve requirement (as defined in the
Indenture) in effect afrer the redemption of Outstanding Bonds as a
result of the prepayment from the balance in the reserve fund on the
prepayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have
been expended at the time of the first interest and/or principal
payment following the current Fiscal Year, a capitalized interest
credit shall be calculated by multiplying the larger quotient computed
pursuant to paragraph 3(a) or 3(b) by the expected balance in the
capitalized interest fund afrer such first interest and/or principal
payment (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts
computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts
computed pursuant to paragraphs 13 and 14 (the "Prepayment
Amount").
16. From the Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate
fund as established under the Indenture and be used to retire
Outstanding Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the
Construction Fund. The amount computed pursuant to paragraph 12
shall be retained by IA No. 3.
County of Hawaii
)A No. 3 of CFD No. 2006-I (The Villages ofAina Lea) Page I2
The Prepayment Amount may be sufficient to redeem other than a $5,000
increment of Bonds. In such cases, the increment above $5,000 or integral
multiple thereof will be retained in the appropriate fund established under the
Indenture to be used with the next prepayment of bonds or to make debt
service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as
determined under paragraph 9 (above), the CFD Administrator shall remove
the cun•ent Fiscal Year's Special Tax levy for such TMK Parcel from the
County tax rolls. With respect to any TMK Parcel that is prepaid, the
Council shall cause a suitable notice to be recorded and filed with the bureau
of conveyances or land court in compliance with the Code, to indicate the
prepayment of Special Taxes and the release ofthe Special Tax lien on such
TMK Parcel, and the obligation of such TMK Parcel to pay the Special Tax
shall cease. The CFD Administrator shall mail a copy of the notice to the
owner and any known lessee of the property.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 3 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus the estimated Administrative Expenses.
2. Prepayment in Part
The Maximum Special Tax on a TMK Parcel of Developed Property, or
Approved Property or Undeveloped Property for which a building permit has
been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section H.1; except that a partial prepayment shall be
calculated according to the following formula:
These terms have the following meaning:
PP =the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1
F = the percent by which the owner of the TMK Parcel(s) is
partially prepaying the Maximum Annual Special Tax.
A = the Administrative Fees and Expenses according to Section
H.1
The owner of any TMK Parcel who desires such prepayment shall notify the
CFD Administrator of such owner's intent to partially prepay the Special Tax
and the percentage by which the Special Tax shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount
required for the partial prepayment of the Special Tax for a TMK Parcel
County of Hawaii
IA No. 3 of CFD Na. 2006-] (The Vi/!ages ofAina Lea) Page ]3
within thirty (30) days of the request and may charge a reasonable fee for
providing this service.
With respect to any TMK Parcel that is partially prepaid, the County shall
(i) distribute the funds remitted to it according to Section H.1., and (ii)
indicate in the records of IA No. 3 that there has been a partial prepayment of
the Special Tax and that a portion of the Special Tax equal to the outstanding
percentage (1.00 - F) of the remaining Maximum Special Tax shall continue
to be levied on such TMK Parcel pursuant to Section D.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 3 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus estimated Administrative Expenses.
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty years commencing with
Fiscal Year 2007-08.
K:\CLIEN7S2Viawaii.County\mello\CFD 2006-1 (Aina Lea)\IA 3U2MAU2MA IA3 02.doc
County of Hawaii
/A No. 3 of CFD No. 1006-/ (The Villages of
Aina Lea) Page /4
EXHIBIT A-4
COUNTY OF HAWAII
COMMUNITY FACILITIES DISTRICT N0.2006-1
RATE AND METHOD OF APPORTIONMENT FOR
IMPROVEMENT AREA N0.4
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA N0.4 OF
COMMUNITY FACILITIES DISTRICT N0.2006-1
(THE VILLAGES OF AINA LEA)
A Special Tax as hereinafter defined shall be levied on all Tax Map Key parcels in Improvement
Area No. 4 ("IA No. 4") of Community Facilities District No.2006-1 ofthe County of Hawaii (The
Villages of Aina Lea) ("CFD No. 2006-1 and collected each Fiscal Year commencing in Fiscal
Year 2007-08, in an amount determined by the CFD Administrator (as defined below) through the
application of the procedures described below. All of the real property in IA No. 4, unless exempted
bylaw or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner
herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the number of acres of Land area of a TMK Parcel as shown on
the applicable Tax Map, or if the ]and area is not shown on such Tax Map, the land area
shown on the applicable Final Map, parcel map, condominium plan, or other recorded parcel
map. If such maps are not available, the land area of the TMK Parcel shall be calculated by
the CFD Administrator.
"Administrative Expenses" means the following actual or reasonably estimated costs
related to the administration of IA No. 4: the costs of computing the Special Taxes and
preparing the annual Special Tax collection schedules (whether by the County or designee
thereof or both); the costs of collecting the Special Taxes (whether by the County, through
foreclosure proceedings, or otherwise); the costs of remitting the Special Taxes to the
Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties
required of it under the Indenture; the costs to the County, IA No. 4 or any designee thereof
of complying with arbitrage rebate requirements; the costs to the County, IA No. 4 or any
designee thereof of complying with County, IA No. 4 or obligated persons disclosure
requirements associated with applicable federal and state securities laws and ofthe Code; the
costs associated with preparing Special Tax disclosure statements and responding to public
inquiries regarding the Special Taxes; the costs of the County, IA No. 4 or any designee
thereof related to an appeal of the Special Tax; the costs associated with the release of funds
from an escrow account; and the County's annual administration fees and third party
expenses. Administrative Expenses shall also include amounts estimated or advanced by the
County or IA No. 4 for any other administrative purposes of IA No. 4, including attorney's
fees and other costs related to commencing and pursuing to completion any foreclosure of
delinquent Special Taxes.
County of Hawaii
IA No. 4 of CFD No. 200b1(The Villages afAina Leal Page ~
"Approved Property" means, for each Fiscal Yeaz, all Taxable Property which is located
within a Final Map that was recorded prior to January 1 of the prior Fiscal Year; provided,
however, that Approved Property shall not include Developed Properly, Taxable Property
Owner Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property.
"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed
Property, as determined in accordance with Section C.1.b below.
"Backup Special Tax" means the Special Tax applicable to each TMK Pazcel of Developed
Property, as determined in accordance with Section C.l.c below.
"Bonds" means any bonds or other debt (as defined in Section 32-16 ofthe Code), whether
in one or more series, issued under the Code.
"CFD Administrator" means an official of the County, or designee thereof, who is
responsible for determining the Special Tax Requirement and providing for the levy and
collection of the Special Taxes.
"CFD No.2006-1"means the County of Hawaii Community Facilities District No. 2006-1
(The Villages of Aina Lea).
"Clubhouse Property" means all TMK Parcels ofNon-Residential Property for which a
building permit was issued for golf course clubhouse purposes.
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec, 3),
being Chapter 32 of the Hawaii County Code.
"Commercial Village Center Property" means all TMK Parcels of Non-Residential
Property which is zoned CV (Village Commercial Districts) according to the Hawaii County
Code Chapter 25, Article 5 and for which the building permit was issued for golf clubhouse,
retail, or commercial purposes.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 2006-1.
"County" means the County of Hawaii.
"Developed Property" means, for each Fiscal Year, all Taxable Property for which a
building permit for new construction was issued after January 1, 2006 and prior to March l
of the prior Fiscal Year; provided, however, that Developed Property shall not include
Taxable Property Owner Association Property, Taxable Public Property, and Taxable Non-
Taxable Zone Property.
"Expected Special Tax" means the Special Tax for each Acre of Approved Property and
Undeveloped Property, as determined in accordance with Section C.2 below.
"Fiscal Year" means the period starting July ]and ending on the following June 30.
County of Hawaii
IA No. 4 ojCFD Na.1006-I (The Villages of
Aina Lea) Page 2
"Final Map" means a final map approved by the County pursuant to the Subdivision
Control Code (Hawaii County Code Chapter 23) that creates individual lots for which
building permits may be issued or, in the case of a condominium project, the condominium
property regime map recorded with the declaration of condominium property regime that
creates the individual condominium units for which building permits may be issued.
"IA No. 4" means Improvement Area No. 4 of CFD No. 2006-1 as identified on the
boundary map for CFD No. 2006-1.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time.
"Land Use Class" means any of the classes listed in Table 1.
"Maximum Special Tax" means the Maximum Special Tax, determined in accordance with
Section C.l.a below, that can be levied in any Fiscal Year on any TMK Parcel.
"Non-Residential Property" means all TMK Parcels of Developed Property For which a
building permit(s) was issued for anon-residential use, including Clubhouse Property and
Commercial Village Center Property.
"Non-Taxable Zone Property" means all TMK Parcels within the boundaries ofIA No. 4,
which are not considered Taxable Zone Property.
"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the
Indenture.
"Property Owner Association Property" means, for each Fiscal Year, all Taxable Zone
Property, other than Clubhouse Property or Commercial Village Center Property, that is
owned by or irrevocably dedicated to a property owner association, including any master or
sub-association.
"Proportionately" means for Developed Property that the ratio of the actual Special Tax
levy to the Assigned Special Tax is equal for all TMK Parcels of Developed Property. For
Approved Property, "Proportionately" means that the ratio of the actual Special Tax levy to
the Maximum Special Tax, is equal for all TMK Parcels of Approved Property. For
Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy
to the Maximum Special Tax, is equal for all TMK Parcels of Undeveloped Property. For
Taxable Public Property and Taxable Property Owner Association Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax is equal for all TMK Parcels of Taxable Public Property and Taxable Property
Owner Association Property, as applicable. For Taxable Non-Taxable Zone Property,
"Proportionately" means that the ratio of the actual Special Tax levy to the Maximum
Special Tax, is equal for all TMK Parcels of Taxable Non-Taxable Zone Property.
County of Hawaii
IA No. 4 of CFD No. 1006-I (The Villages of Aina lea) Page 3
"Public Property" means, for each Fiscal Year, all Taxable Zone Property that (i) is owned
by or irrevocably offered for dedication to the federal government, the State, the County, or
any other public agency, provided however that any property ]eased by a public agency to a
private entity and subject to taxation under Section 32-54 of the Code shall be taxed and
classified in accordance with its use; or (ii) is encumbered by a road, access, public utility
easement or other easement or recorded restriction for community or public use making
impractical its use for any purpose other than that set forth in the easement or recorded
restriction.
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure, not including any carport, walkway, garage, overhang,
patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be
made by reference to the building permit(s) issued for such TMK Parcel.
"Residential Property" means all TMK Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more residential
dwelling units.
"Special Tax" means the special tax to be levied in each Fiscal Yeaz on each TMK Parcel of
Developed Property, Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone Property to
fund the Special Tax Requirement.
"Special Tax Requirement" means that amount required in any Fiscal Year for IA No. 4 to:
(i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding
Bonds, including but not limited to, credit enhancement and rebate payments on the
Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to
establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for
acquisition or construction of facilities eligible to be financed by IA No. 4 to the extent that
the inclusion of such amount does not increase the Special Tax levy on Undeveloped
Property; (vi) pay for reasonably anticipated delinquent Special Taxes based on the
delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for
funds available to reduce the annual Special Tax levy, as determined by the CFD
Administrator pursuant to the Indenture.
"State" means the State of Hawaii.
"Tax Map" means an official map of the County designating parcels by Tax Map Key
number.
"Tax Map Key Parcel" or "TMK Parcel" means a lot or parcel shown on a Tax Map with
an assigned tax map key number. A TMK Parcel may include a portion of a lot or two or
more lots.
"Taxable Non-Taxable Zone Property" means all TMK Parcels of Non-Taxable Zone
Property that are not exempt pursuant to Section E below.
County of
Hawaii
/A No. 4 of CFD No. 1006-1(The Villages ofAina Lea) Page 4
"Taxable Property" means, for each Fiscal Year, all property which is not exempt From the
Special Tax pursuant to law or Section E below.
"Taxable Property Owner Association Property" means all TMK Parcels of Property
Owner Association Property that are not exempt pwsuant to Section E below.
"Taxable Public Property" means all TMK Parcels of Public Property that aze not exempt
pwsuant to Section E below.
"Taxable Zone Property" means (i) all TMK Parcels within the boundazies of IA No. 4 for
which the zoning according to the Hawaii County Code Chapter 25, Article 5 is RS (Single-
Family Residential Districts), RD (Double-Family Residential Districts), RM (Multiple-
Family Residential Districts), RCX (Residential-Commercial Mixed Use Districts), RA
(Residential and Agricultural Districts), V (Resort-Hotel Districts), CN (Neighborhood
Commercial Districts), CG (General Commercial Districts), CV (Village Commercial
Districts), MCX (Industrial-Commercial Mixed Districts), ML (Limited Industrial Districts),
or MG (General Industrial Districts); or (ii) any other TMK Pazcel within the boundaries of
IA No. 4 on which one or more residential dwelling units is or are constructed.
"Trustee" means the trustee or fiscal agent under the Indentwe.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified
as Developed Property, Approved Property, Taxable Property Owner Association Property,
Taxable Public Property, or Taxable Non-Taxable Zone Property.
ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, a]] Taxable Property within IA No. 4 shall be classified as Developed
Property, Approved Property, Taxable Public Property, Taxable Property Owner Association
Property, Taxable Non-Taxable Zone Property, or Undeveloped Property, and shall be
subject to Special Taxes in accordance with the rate and method of apportionment
determined pursuant to Sections C and D below.
C. MAXIMUM SPECIAL TAX RATE
1. Developed Property
a. Maximum Special Tax
The Maximum Special Tax for each TMK Parcel classified as Developed
Property shall be the greater of (i) the Assigned Special Tax or (ii) the
Backup Special Tax.
b. Assigned~ecial Tax
The Assigned Special Tax for Residential Property shall be based on the
Residential Floor Area of each dwelling unit located on the TMK Parcel.
Counry ojHawari
IA No. 4 of CFD No. 1006-7 (The Villages ofAina Lea) Page 5
The Assigned Special Tax for Non-Residential Property shall be based on the
Acreage of the TMK Parcel.
The Assigned Special Tax for each Land Use Class is shown below in Table
1.
TABLE 1
Assi ned S ecial Tax for Develo ed Pro e
r rl aai~ ; ~ ~~9I~ . yl 'e_ _
~Ca ~ ~ ~ ~ ~~i t~ia~klfli ~ ~ y ~ ~ ~r i ~ 6~€~e ~ ~ ~
: n~
a
_ ,
1 Residential Property ? 2,150 sq. fr. $5,864 per unit
2 Residential Property 1,850 - 2,149 sq. ft. $5,247 per unit
3 Residential Property 1,550 - 1,849 sq. ft. $4,414 per unit
4 Residential Property 1,250 - 1,549 sq. ft. $3,580 per unit
5 Residential Property < 1,250 sq. ft. $2,778 per unit
6 Non-Residential Property Not Applicable $7,000 per Acre
c. Backup Special Tax
(i) Residential Property
The Backup Special Tax attributable to Residential Property within a
Final Map will equal $38,815 multiplied by the Acreage of all
Taxable Property located within such Final Map, excluding current or
expected Non-Residential Property, Taxable Public Property, Taxable
Property Owner Association Property, and Taxable Non-Taxable
Zone Property.
The Backup Special Tax for each TMK Parcel of Residential
Property in a Final Map shall be computed by dividing the aggregate
Backup Special Tax attributable to such Final Map by the aggregate
number of units for which building permits for residential
construction have or may be issued within the Final Map and
multiplying the resulting quotient by the number ofunits within each
TMK Parcel for which building permits for residential construction
have been or may be issued.
Notwithstanding the foregoing, if all or any portion of a Final Map is
subsequently changed or modified, then the Backup Special Tax for
each TMK Parcel of Residential Property in such Final Map that is
changed or modified shall be a rate per Acre calculated as follows:
County of
Hawaii
IA No. 4 ojCFD No. 2006-1 (The Villages ofAina Lea) Page 6
1. Determine the total Backup Special Taxes anticipated to
apply to the changed or modified portion of the Final Map
prior to the change or modification.
2. The result of paragraph 1 above shall be divided by the total
Acreage of Taxable Property excluding Non-Residential
Property, Taxable Public Property, Taxable Property Owner
Association Property, and Taxable Non-Taxable Zone
Property which is ultimately expected to exist in such
changed or modified Final Map area, as reasonably
determined by the CFD Administrator.
3. The result is the Backup Special Tax per Acre which shall be
applicable to all TMK Parcels of Residential Property in such
changed or modified Final Map.
(ii) Non-Residential Property
The Backup Special Tax for Non-Residential Property shall be
$38,815 per Acre.
d. Multiple Land Use Classes
In some instances a TMK Parcel of Developed Property may contain more
than one Land Use Class. The Assigned Special Tax levied on a TMK Parcel
shall be the sum of the Assigned Special Tax for all Land Use Classes
located on that TMK Parcel. The Maximum Special Tax that can be levied
on a TMK Parcel shall be the sum of the Maximum Special Tax that can be
levied for all Land Use Classes located on that TMK Parcel. For a TMK
Parcel that contains both Residential Property and Non-Residential Property,
the Acreage of such TMK Parcel shall be allocated to each type of property
based on the amount of Acreage designated for each land use as determined
by reference to the site plan approved for such TMK Parcel. The CFD
Administrator's allocation to each type of property shall be final.
Z. Approved Property, Undeveloped Property, Taxable Property Owner
Association Property, Taxable Public Property, and Taxable Non-Taxable Zone
Property
a. Expected Sgecia] Tax
The Expected Special Tax for Approved Property and Undeveloped Property
shall be $28,000 per Acre.
County of Hawaii
/A No. 4 of CFD No. 1006-1 (The Villages of Aina Lea) Page ~
b. Maximum Special Tax
The Maximum Special Tax for Approved Property, Undeveloped Property,
Taxable Property Owner Association Property, Taxable Public Property, and
Taxable Non-Taxable Zone Property shall be $38,815 per Acre.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Fiscal Year 2007-08 and for each following Fiscal Yeaz, the CFD
Administrator shall determine the Special Tax Requirement and the Council shall
levy the Special Tax as follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax as needed
to satisfy the Special Tax Requirement;
Second: If additional monies aze needed to satisfy the Special Tax Requirement after
the first step has been completed, the Special Tax shall be levied Proportionately on
each TMK Parcel of Approved Property at up to 100% of the Expected Special Tax
for Approved Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement after
the first two steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Expected Special Tax for Undeveloped Property;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after
the first three steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Pazcel of Approved Property at up to 100% of the
Maximum Special Tax for Approved Property;
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after
the first four steps have been completed, then the levy of the Special Tax on each
TMK Parcel of Developed Property whose Maximum Special Tax is determined
through the application of the Backup Special Tax shall be increased in equal
percentages from the Assigned Special Tax up to the Maximum Special Tax for each
such TMK Parcel;
Sixth: If additional monies are needed to satisfy the Special Tax Requirement after
the first five steps have been completed, the Special Tax shall be levied
Proportionately on each TMK Parcel of Undeveloped Property at up to 100% of the
Maximum Special Tax for Undeveloped Property;
Seventh: If additional monies are needed to satisfy the Special Tax Requirement
after the first six steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Parcel of Taxable Property Owner Association
County of Hawaii
IA No. 4 of CFD No. 200&I (The Villages ofAina Lea) Page 8
Property and Taxable Public Property at up to the Maximum Special Tax for Taxable
Property Owner Association Property or Taxable Public Property.
Eiehth: If additional monies are needed to satisfy the Special Tax Requirement after
the first seven steps have been completed, then the Special Tax shall be levied
Proportionately on each TMK Pazce] of Taxable Non-Taxable Zone Property at up to
the Maximum Special Tax for Taxable Non-Taxable Zone Property.
E. EXEMPTIONS
No Special Taxes shall be levied on Non-Taxable Zone Property, Property Owner
Association Property and Public Property, so long as the Acreage of Taxable Property is at
least 52.57 Acres. Tax-exempt status will be assigned by the CFD Administrator in the
chronological order in which property becomes Non-Taxable Zone Property, Property
Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, Public Property, or Non-Taxable Zone Property would reduce the Acreage of
Taxable Property below 52.57 Acres, such Assessor's Parcel shall be classified as Taxable
Property Owner Association Property, Taxable Public Property, or Taxable Non-Taxable
Zone Property, as applicable, and shall be subject to the levy of the Special Tax and shall be
taxed as part of the appropriate step in Section D above.
Should a TMK Parcel no longer be classified as Non-Taxable Zone Property, Property
Owner Association Property, or Public Property, its tax-exempt status will, without the
necessity of any action by the Council, terminate.
F. INTERPRETATIONS
Interpretations may be made by the Council by ordinance or resolution for purposes of
clarifying any vagueness or ambiguity in this Rate and Method of Apportionment.
G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes; provided, however, that IA No. 4 may directly bill the Special Tax,
may collect Special Taxes at a different time or in a different manner if necessary to meet its
financial obligations, and may covenant to foreclose and may actually foreclose on
delinquent TMK Parcels as permitted by the Code.
H. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section H:
"CFD Public Facilities" means either $12.7 million in 2006 dollars, which shall increase by
the Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to provide the
public facilities to be provided by IA No. 4 under the authorized bonding program for IA No.
County ofHawuii
]A No. 4 of CFD No. 2006-] (The Villages ofAina Lea) PoBe 0
4, or (ii) shall be determined by the Council concurrently with a covenant that it will not
issue any more Bonds to be supported by Special Taxes levied under this Rate and Method
of Apportionment as described in Section D.
"Construction Fund" means an account specifically identified in the Indenture to hold
funds which aze currently available for expenditure to acquire or construct public facilities
eligible under the Code.
"Construction Inflation Index" means the annual percentage change in the Honolulu
Construction Cost Index: Sinele Family Residence, measured as of the calendar yeaz which
ends in the previous Fiscal Year. In the event this index ceases to be published, the
Construction Inflation Index shall be another index as determined by the CFD Administrator
that is reasonably comparable to the Honolulu Construction Cost Index: Sinele Family
Residence.
"Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs
previously paid from the Construction Fund, (ii) moneys currently on deposit in the
Construction Fund, and (iii) moneys currently on deposit in an escrow fund that are expected
to be available to finance public facilities costs.
"Outstanding Bonds" means, for purposes of this section H, all Bonds which are deemed to
be outstanding under the Indenture afrer the first interest and/or principal payment date
following the current Fiscal Year.
1. Prepayment in Full
Any TMK Parcel of Developed Property, or Approved Property or
Undeveloped Property for which a building permit has been issued, maybe
prepaid. The Special Tax obligation applicable to such TMK Parcel in IA
No. 4 may be fully prepaid and the obligation of the TMK Parcel to pay the
Special Tax permanently satisfied as described herein; provided that a
prepayment may be made only ifthere are no delinquent Special Taxes with
respect to such TMK Parcel at the time of prepayment. An owner of a TMK
Parcel intending to prepay the Special Tax obligation shall provide the CFD
Administrator with written notice of intent to prepay. Within 30 days of
receipt of such written notice, the CFD Administrator shall notify such owner
of the prepayment amount of such TMK Parcel. The CFD Administrator
may charge a reasonable fee for providing this amount.
The Prepayment Amount (defined below) shall be calculated as summarized
below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
County ojHawaii
lA No. 4 ojCFANo. 2006-] (The Vi[/ages ojAina Lea) Page 10
less Capitalized Interest Credit
Total: equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined
below) shall be calculated as follows:
Paraeraph No.:
1. Confirm that no Special Tax delinquencies apply to such TMK Parcel.
2. For TMK Parcels of Developed Property, compute the Assigned
Special Tax and Backup Special Tax applicable for the TMK Parcel
to be prepaid. For TMK Parcels of Approved Property or
Undeveloped Property for which a building permit has been issued,
compute the Assigned Special Tax and Backup Special Tax for that
TMK Parcel as though it was already designated as Developed
Property, based upon the building permit which has already been
issued for that TMK Parcel.
3. (a) Divide the Assigned Special Tax computed pwsuant to paragraph
2 by the total estimated Assigned Special Tax for the entire IA No. 4
based on the Developed Property Specia! Tax which could be
charged in the current Fiscal Year on all expected development
through buildout of IA No. 4, and
(b) Divide the Backup Special Tax computed pursuant to pazagraph 2
by the total estimated Backup Special Tax at buildout for the entire
IA No. 4.
4. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the Outstanding Bonds to compute the amount of Outstanding
Bonds to be retired and prepaid (the "Bond Redemption Amount").
5. Multiply the Bond Redemption Amount computed pursuant to
paragraph 4 by the applicable redemption premium, if any, on the
Outstanding Bonds to be redeemed (the "Redemption Premium").
6. Compute the current Future Facilities Costs.
7. Multiply the larger quotient computed pursuant to paragraph 3(a) or
3(b) by the amount determined pursuant to paragraph 6 to compute
the amount of Future Facilities Costs to be prepaid (the "Future
Facilities Amount").
8. Compute the amount needed to pay interest on the Bond Redemption
Amount From the first bond interest and/or principal payment date
following the current Fiscal Year until the earliest redemption date
for the Outstanding Bonds.
County of Hawaii
lA No. 4 of CFD No. 2006-1 (The Vi/loges ofAina Lea) Page ~l
9. Determine the Special Tax levied on the TMK Pazcel in the current
Fiscal Year which have not yet been paid.
10. Compute the minimum amount the CFD Administrator reasonably
expects to derive from the reinvestment of the Prepayment Amount
less the Future Facilities Amount and the Administrative Fees and
Expenses from the date of prepayment until the redemption date for
the Outstanding Bonds to be redeemed with the prepayment.
I1. Add the amounts computed pursuant to paragraphs 8 and 9 and
subtract the amount computed pursuant to pazagraph 10 (the
"Defeasance Amount").
12. Verify the administrative fees and expenses of IA No. 4, including
the costs of computation of the prepayment, the costs to invest the
prepayment proceeds, the costs ofredeeming Bonds, and the costs of
recording any notices to evidence the prepayment and the redemption
(the "Administrative Fees and Expenses").
13. The reserve fund credit ("Reserve Fund Credit")shall equal the lesser
of: (a) the expected reduction in the reserve requirement (as defined
in the Indenture), if any, associated with the redemption of
Outstanding Bonds as a result of the prepayment, or (b) the amount
derived by subtracting the new reserve requirement (as defined in the
Indenture) in effect after the redemption of Outstanding Bonds as a
result of the prepayment from the balance in the reserve fund on the
prepayment date, but in no event shall such amount be less than zero.
14. If any capitalized interest for the Outstanding Bonds will not have
been expended at the time of the first interest and/or principal
payment following the current Fiscal Year, a capitalized interest
credit shall be calculated by multiplying the larger quotient computed
pursuant to paragraph 3(a) or 3(b) by the expected balance in the
capitalized interest fund after such first interest and/or principal
payment (the "Capitalized Interest Credit").
15. The Special Tax prepayment is equal to the sum of the amounts
computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts
computed pursuant to paragraphs 13 and 14 (the "Prepayment
Amount").
16. From the Prepayment Amount, the amounts computed pursuant to
paragraphs 4, 5, 11, 13 and ]4 shall be deposited into the appropriate
fund as established under the Indenture and be used to retire
Outstanding Bonds or make debt service payments. The amount
computed pursuant to paragraph 7 shall be deposited into the
County ofHnwaii
/A No. 4 of CFD No.100b1(The Villages of Aina Lea) Foge 11
Construction Fund. The amount computed pursuant to paragraph 12
shall be retained by IA No. 4.
The Prepayment Amount may be sufficient to redeem other than a $5,000
increment of Bonds. In such cases, the increment above $5,000 or integral
multiple thereof will be retained in the appropriate fund established under the
Indenture to be used with the next prepayment of bonds or to make debt
service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as
determined under paragraph 9 (above), the CFD Administrator shall remove
the current Fiscal Year's Special Tax levy for such TMK Parcel from the
County tax rolls. With respect to any TMK Parcel that is prepaid, the
Council shall cause a suitable notice to be recorded and filed with the bureau
of conveyances or land court in compliance with the Code, to indicate the
prepayment of Special Taxes and the release of the Special Tax lien on such
TMK Parcel, and the obligation of such TMK Parcel to pay the Special Tax
shall cease. The CFD Administrator shall mail a copy of the notice to the
owner and any known lessee of the property.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 4 both prior to and after the proposed
prepayment is at least 1.1 times the maximum annual debt service on all
Outstanding Bonds plus the estimated Administrative Expenses.
2. Prepayment in Part
The Maximum Special Tax on a TMK Parcel of Developed Property, or
Approved Property or Undeveloped Property for which a building permit has
been issued may be partially prepaid. The amount of the prepayment shall be
calculated as in Section H.1; except that a partial prepayment shall be
calculated according to the following formula:
These terms have the following meaning:
PP =the partial prepayment
PE =the Prepayment Amount calculated according to Section H.1
F = the percent by which the owner of the TMK Parcel(s) is
partially prepaying the Maximum Annual Special Tax.
A = the Administrative Fees and Expenses according to Section
H.1
The owner of any TMK Parcel who desires such prepayment shall notify the
CFD Administrator of such owner's intent to partially prepay the Special Tax
Caunry of Hawaii
]A No. 4 of CFD No. 2006-7 (The Yi//ages ofAina Lea) Page 13
and the percentage by which the Special Tax shall be prepaid. The CFD
Administrator shall provide the owner with a statement of the amount
required for the partial prepayment of the Special Tax for a TMK Pazcel
within thirty (30) days of the request and may charge a reasonable fee for
providing this service.
With respect to any TMK Parcel that is paztially prepaid, the County shall
(i) distribute the funds remitted to it according to Section H.1, and (ii)
indicate in the records of IA No. 4 that there has been a partial prepayment of
the Special Tax and that a portion of the Special Tax equal to the outstanding
percentage (1.00 - F) of the remaining Maximum Special Tax shall continue
to be levied on such TMK Parcel pursuant to Section D.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed
unless the amount of Assigned Special Tax that may be levied on Taxable
Property (excluding Taxable Property Owner Association Property and
Taxable Public Property) within IA No. 4 both prior to and after the proposed
prepayment is at ]east 1.1 times the maximum annual debt service on all
Outstanding Bonds plus estimated Administrative Expenses.
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty years commencing with
Fiscal Yeaz 2007-08.
K:\CLIENrS2\Hawaii.Counry\mello\CFD 20064 (Aina Lea)\IA 4UtMAU2MA IA4 02.doc
County of Hawaii
)A No. 4 of CFD No. 2006-1 (The Vil/ages of
Aina Lea) Poge 14
EXHIBIT B-1
ASSIGNED SPECIAL TAXES FOR DEVELOPED PROPERTY
IMPROVEMENT AREA NO.1
0
1 Residential Property > 2,050 s.f. $5,658 per unit
2 Residential Property 1,850 - 2,049 s.f. $5,063 per unit
3 Residential Property 1,650 -1,849 s.f. $4,169 per unit
4 Residential Property < 1,650 s.f. $3,454 per unit
5 Non-Residential Property Not Applicable $7,000 per Acre
EXHIBIT B-2
ASSIGNED SPECIAL TAXES FOR DEVELOPED PROPERTY
IMPROVEMENT AREA N0.2
1 Residential Property ? 2,050 s.f. $5,846 per unit
2 Residential Property 1,850 - 2,049 s.f. $5,231 per unit
3 Residential Property 1,650 -1,849 s.f. $4,308 per unit
4 Residential Property 1,300 -1,649 s.f. $3,569 per unit
5 Residential Property < 1,300 s.f. $2,769 per unit
6 Non-Residential Property Not Applicable $7,000 per Acre
EXHIBIT B-3
ASSIGNED SPECIAL TAXES FOR DEVELOPED PROPERTY
IMPROVEMENT AREA N0.3
_a .
1 Residential Property > 2,050 s.f. $5,878 per unit
2 Residential Property 1,850 - 2,049 s.f. $5,259 per unit
3 Residential Property 1,650 -1,849 s.f. $4,331 per unit
4 Residential Property < 1,650 s.f $3,588 per unit
5 Non-Residential Property Not Applicable $7,000 per Acre
EXHIBIT B-4
ASSIGNED SPECIAL TAXES FOR DEVELOPED PROPERTY
IMPROVEMENT AREA N0.4
,r .
1 Residential Property > 2,150 s.f. $5,864 per unit
2 Residential Property 1,850 - 2,149 s.f $5,247 per unit
3 Residential Property 1,550 -1,849 s.f. $4,414 per unit
4 Residential Property 1,250 - 1,549 s.£ $3,580 per unit
5 Residential Property < 1,250 s.f. $2,778 per unit
6 Non-Residential Property Not Applicable $7,000 per Acre
EXHIBIT C-I
EXPECTED SPECIAL TAXES FOR
APPROVED PROPERTY AND UNDEVELOPED PROPERTY
WITHIN EACH IMPROVEMENT AREA
_
w!Pq
v
IA No. 1 Approved Property and Undeveloped Property $15,000 per Acre
IA No. 2 Approved Property and Undeveloped Property $28,000 per Acre
IA No. 3 Approved Property and Undeveloped Property $19,000 per Acre
IA No. 4 Approved Property and Undeveloped Properly $28,000 per Acre
EXHIBIT C-2
MAXIMUM SPECIAL TAXES FOR
APPROVED PROPERTY, UNDEVELOPED PROPERTY, TAXABLE PROPERTY OWNER
ASSOCIATION PROPERTY, TAXABLE PUBLIC PROPERTY, AND
TAXABLE NON-TAXABLE ZONE PROPERTY
WITHIN EACH IMPROVEMENT AREA
Approved Property, Undeveloped Property,
IA No. 1 Taxable Property Owner Association Property, $20,056 per Acre
Taxable Public Property, and Taxable Non-Taxable
Zone Property
Approved Property, Undeveloped Property,
IA No. 2 Taxable Property Owner Association Property, $38,504 per Acre
Taxable Public Property, and Taxable Non-Taxable
Zone Property
Approved Property, Undeveloped Property,
IA No. 3 Taxable Property Owner Association Property, $26,716 per Acre
Taxable Public Property, and Taxable Non-Taxable
Zone Property
Approved Property, Undeveloped Property,
IA No. 4 Taxable Property Owner Association Property, $38,815 per Acre
Taxable Public Property, and Taxable Non-Taxable
Zone Property
EXHIBIT D
APPRAISAL LETTER
Letter Report to
Bridge Aina Le'a, LLC
Covering the
APPRAISED VALUE OF PROPOSED
IMPROVEMENT AREA IA NO. 1, IA N0.2,
IA N0.3, AND IA NO.4 IN THE
PROPOSED VILLAGES OF AINA I.E'A
Waikoloa, South Kohala,
Island and State of Hawau
December 2006
joxrr Cxnv & COMPANY
APPRA18RR5 & CONSULTANTS
JoxN Cif & COMPnNY
APPAAIS 6R5 & CONSULTANTS
December 28, 2006 14"°i°"`~''~o~
ShellyTa~ul;a
Tammy Walther
Email
Mr. Jim Baldwin
Bridge Aina Le'a LLC
2500 Kalakaua Avenue #2404
Honolulu, Hawaii 96815
Deaz Mr. Baldwin:
Re: Appraised Value of Proposed ]mprovement Area IA No. 1, lA No. 2, IA No. 3, and
lA No. 4 in the Proposed Villages of Aina Le'a
At your request, John Child & Company has estimated the appraised value of the land in the district
for the Petition requesting institution of procedure for establishment of a Community Facilities
District (CFD) for the Aina Le'a master planned project in Waikoloa, Hawaii. This letter stmtmarizes
the study background, objective and study conditions, and the estimated appraised value. The full
appraisal report including the supporting documentation and detailed analysis will be available for
inspection.
STUDY BACKGROUND
Bridge Aina Le'a LLC owns the fee simple interest in the proposed Aina Le'a project site in
Waikoloa, Hawaii. The site includes about 3,000 acres with appropriate entitlements for commercial,
residential, recreational, and agricultural uses.
The property has been master planned by Architects Hawaii Ltd. to include the phased development
of "an integrated golf residential community focused around two, 18-hole golf courses with a village
center at the `heart' of the development." The Villages of Aina Le'a community includes commercial
uses, time share, residential, and recreational uses in the State Land Use "Urban" District. The
surrounding lands are in the State Land Use "Agriculture" District and would be developed with
"family agricultural uses" and four golf courses. [ 1 ]
The conceptual ]and use plan for The Villages of Aina Le'a is shown in Exhibit A.
The State of Hawaii has granted its counties the authority to establish community facilities special tax
districts to fund public infrastructwe and amenities using tax-exempt bonds (CFD bond financing).
[1] Architects Hawaii Ltd., Aina Le'a Master Plan, Waikoloa, Hawaii, prepared for Bridge Aina
Le'a LLC, as of December 17, 2003.
841 Bishop Street, Penthouse • Honolulu, Hawau 9G813
T 608.533.2951 • F 808.523]672 • emaihinfo@johnchdd.com
Mr. Jim Baldwin
December 28, 2006
Page 2
The Villages of Aina Le'a includes four improvement areas proposed for development of 1,667
dwelling units. Bridge Aina Le'a LLC is submitting a Petition requesting institution of procedwe for
establishment of a Community Facilities District (CFD) for Improvement Area IA No.l, IA No. 2, IA
No. 3, and IA No. 4. The development sites and unit count are shown by improvement area in
Exhibit B.
The individual CFD parcels are listed by improvement areas and described in Exhibit C.
The individual parcels are shown in the map in Exhibit D.
To establish a CFD, Chapter 32 of the Hawaii County Code requires a finding by the County
Council that "the appraised value of the land in the district (in accordance with prevailing standards of
appraisal then used by financial institutions for loans thereon) is at least two times the estimated cost
of the proposed improvement and that such approval is in the public interest."
In this regazd you have asked us to assist you by estimating the appraised value of the land in the
petition and submitting a letter report to accompany the Petition.
STUDY OBJECTIVE
The objective of ow assistance is to estimate "the appraised value of the land in the district",
identified as Improvement Area IA No.l, IA No. 2, IA No. 3, and IA No. 4, "(in accordance with
prevailing standazds of appraisal then used by financial institutions for loans thereon)" for the Aina
Le'a masterplanned project in Waikoloa, Hawaii.
INTENDED USE AND USER(S)
The intended use of our assistance is to provide an appraised value that can be used by the Hawaii
County Council to evaluate the Petition to establish a community facilities district (CFD) for the Aina
Le'a project.
As a result, ow assistance is intended For the sole and exclusive use of the Hawaii County Council. In
accepting this letter report, the Client specifically agrees that our assistance is not intended for any
other purpose or users and is not to be relied upon by any third parties for any purpose, whatsoever.
ASSUMPTION OF HYPOTHETICAL COND1T1ONS
The Aina Le'a project is planned for mixed use development; however, the property is currently
vacant and unimproved. The site does not have infrastructure (including roadways, utilities, and fire
and safety services) or community amenities.
Mr. Jim Baldwin
December 28, 2006
Page 3
As a result, this assigtunent is based on the following hypothetical conditions:
• The infrastructure is completed and roadways and utilities aze available to the individual
development sites.
• Community services are available to the residents.
• The golf cotuses are landscaped and provide "golf course views" to adjoining properties.
EFFECTIVE DATE OF APPRAISAL
The effective date of appraisal is October 3, 2006.
DEFINITION OF TERMS
The terms that aze used in this letter report aze defined as follows:
Appraised Value
"Appraised value" means "assignment results." "Assigrtment results" means an appraiser's opinions
and conclusions developed specific to an assignment. [1]
For this assignment, to comply with Chapter 32 of the Code, the appraisal means the market value "as
if complete" of the fee simple interest in the proposed Aina Le'a community facilities district
identified as Improvement Area ]A No.l, IA No. 2, IA No. 3, and lA No. 4.
Market Value
Market value means the most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is
the consurnmation of a sale as of a specified date and [he passing of title from seller to buyer under
conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and acting in what they consider their best
interests;
Appraisal Institute, The Dictionary of Real Estate Appraisal, Fourth Edition
Mr. Jim Baldwin
December 28, 2006
Page 4
c. a reasonable time is allowed for exposure in the open mazket;
d. payment is made in terms of cash in United States dollars or in terms of financial
arrangements comparable thereto; and
e. the price represents the normal consideration for the property sold unaffected by special or
creative financing or sales concessions granted by anyone associated with the sale. [1 ]
Market Value "As if Complete"
Market value "as if complete" on appraisal date means the mazket value of a property with all
proposed construction, conversion, or rehabilitation hypothetically completed, or under other
specified hypothetical conditions as of the date of the appraisal.
COMPLIANCE WITH HAWAII COUNTY CODE
Chapter 32 of the Hawaii County Code requires a finding by the County Council that "the appraised
value of the land in the district (in accordance with prevailing standards of appraisal then used by
financial institutions for loans thereon)...."
This appraisal complies with [he Hawaii County Code as follows:
• The "appraised value of the land in the district" is estimated as the market value "as if
complete" of the fee simple interest in the CFD development sites with all proposed
construction of infrastructure completed and services available, and the individual salable
sites are available for development in four phases as proposed by the master plan.
• "In accordance with prevailing standards of appraisal then used by financial institutions for
loans thereon" means that the report complies with the Federal Institutions Reform, Recovery
and Enforcement Act of 1989 (FIRREA) as follows:
1. The report complies with the Uniform Standards of Professional Appraisal Practice
2. The FIRREA definition of market value is used.
STUDY CONDITIONS
The study conditions are attached in Addendum 1.
[1] 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal
Register ]2202, Apri19, 1992; 59 Federal Register 29499, June 7, 1994.
Mr. Jim Baldwin
December 28, 2006
Page 5
APPRAISED VALUE
Based on the study assumptions and valuation analysis of this assignment, the appraised value of the
land in the district, identified as Improvement Area IA No.l, IA No. 2, lA No. 3, and IA No. 4 in the
proposed Aina Le'a master planned project in Waikoloa, Hawaii is estimated to be not less than:
$105,000,000.
k # # # #
We appreciate having the opportunity to continue to assist you on this interesting assignment. Please
call us if you have any questions.
Sincerely,
JOHN CHILD & COMPANY, INC.
Karen Chaz, MAl, CRE
President
Shelly H. Tanaka
Appraiser
Tammy M. Walther
Analyst
Bridge Aina Le'a, LLC Exhibit A
CONCEPTUAL LAND USE PLAN FOR THE VILLAGES OF AINA LE'A
^a I
w `C -
Li
L. ~
J
G
S
J
d'
1 '
u f~i;
r•.
~II F d
. .
t
} }
~ y t x
4{ ;
~t
4 . f,
t' ;Ef
~3 ` N ~ ~~~~p~a
,~;d~'
dt„ ~~~s!
w, d
, { i1~ i ~
r ,~;p~~ ;
®`a:
lih i ,
/ II
t~
Source: Architects Hawaii, Ltd., December 17, 2003.
Bridge Aina Le'a, LLC Exhibit B
CFD DEVELOPMENT SITES BY INCREMENT
Improvement Improvement Improvement Improvement
Area ] Area 2 Area 3 Area 4 Total
Development sites (acres) 91.34 92.7] [1] 119.06 61.49 364.59
Units 291 66] 512 465 1,929
Units with bonus 319 723 56] 511 2,1 ]4
[ 1 ] 31.82 acres are designated for affordable housing purposes.
Source: Bridge Aina Le a LLC.
Bridge Aina Le'a, LLC Exhibit C
INDIVIDUAL CFD PARCELS BY IMPROVEMENT AREA
Improvement Land area Units with
area Parcel [1] acres [2] Units (3] bonus [3] Zoning [4]
1 E 21.408 CV-]0
1 E-1 3.086 CV-10
1 J 33.623 ]O] 111 RM-14.5
1 K 5.086 55 60 RM~
1 M 16.875 50 55 RM-14.5
1 N 7.823 85 93 RM~
1 Y-2 3.437 CV-]0
2 F 4.466 27 29 RM-7
2 G-1 [5] 30.187 187 205 RM-7
2 H 23.134 69 75 RM-14.5
2 L 10.08 109 119 RM-4
2 O 7.132 77 84 RM~I
2 T 3.919 42 46 RM-4
2 W 13.792 150 765 RM~1
3 BB 14.506 90 99 RM-7
3 FF 10.133 110 121 RM-4
3 MM 25.294 75 82 RM-14.5
3 X 65.349 196 214 RM-14.5
3 Y-1 3.774 41 45 RM-4
4 Y-5 [6] 1.678 CV-]0
4 CC 17.009 185 203 RM-4
4 DD 19.335 210 231 RM-4
4 EE 23.464 70 77 RM-14.5
[1] As identified on the map of Exhibit Improvement Areas 1 to 4 at Waikoloa, South Kohala,
Island of Hawaii, Hawaii.
[2] As identified on document CFDUnitAnal7-6-06.x1s, "CFD-IA."
[3] As identified on document CFDUnitAnal7-6-06.x1s, "Units."
[4] As identified in the Aina Le'a Master Plan prepared by Architects Hawaii Ltd., December 16,
2003, Table 2 -Phasing Plan, p. B-19.
[5] Parcel G-1 is assumed to be parcels G-1 and F-5 as shown on map Exhibit of lmprovement
Areas 1 to 4 at Waikoloa, South Kohala, Island of Hawaii.
[6] Includes Parcel Y-4 from the map Exhibit of lmprovement Areas 1 to 4 at Waikoloa, South
Kohala, Island of Hawaii.
Note: Y-3 will be a parking lot.
The following parcels shown on the map are presumed not to be development sites: P, Z, AA,
5-A, 5-B, 5-C, 5-D, 5-E, 5-F, 5-G, G-2 and Y-3.
Source: Bridge Aina Le'a LLC.
Bridge Aina Le'a, LLC Exhibit D
INDIVIDUAL PARCELS IN IMPROVEMENT AREAS 1 TO 4
s
1`
z ~
.
J f ~ q+ ~ i~
i
~ ``r ; J ~t3 -
$
~ -
e
4 ' 1 f
r i 1.. . ~ .
+ r } ~ r 1
r -j)~
! r I ;
rl ~ i ~ F~r~ t
~ ~
x
i S '
t 1 l € r `t. ~ !sr -
. ~ i i , 1"' ' ~
i t ~ ~ ; y~~ 1 1 q
~ y .r b' t - !
i % /
r ~ ~
~ 1-~ ~
~ ~C , -J ~.i~~ ~
t fi
I ~ l\,. j ~ ~ ~ ~
i
{ ~ 1. ~ f. ~ ~ ~ ~ ~
Z ~ - i _
~t~ t G~ i t ~
~ r~~-'' M%' ~ ~ ~ t 1
'
- ~ jF 1 - ~4 x
~Nh I +
v .-'1 1 1 l ..,V ) R
a ~y. (t ~ ~ 7 t ~ ~ z, _
'
i ~
I ~ r
..1 ~~t,~ ~ ~ ~ y
V ~ ~t" ~ ti ~ o
a
' i
Source: Bridge Aina Le'a LLC.
STUDY CONDITIONS Addendum 1
Page 1
The study conditions that are the basis of the analyses, opinions, and conclusions of this report are
as follows:
Assumption of Hypothetical Conditions
The Aina Le'a project is planned for mixed use development; however, the property is currently
vacant and unimproved. The site does not have infrastructure (including roadways, utilities, and fire
and safety services) or community amenities.
As a result, this assignment is based on the following hypothetical conditions:
• The infrastructure and community services are completed and roadways and utilities aze
available to the individual development sites.
• The golf courses are landscaped and provide "golf course views" to adjoining properties.
Property Description
A complete legal description was not available and not reviewed.
The property description is based on Aina Le'a Master Plan, Waikoloa, Hawaii prepared by
Architects Hawaii, Ltd as of December 17, 2003 and information provided by Bridge Aina Le'a
LLC.
Basis of Analyses,
Opinions, and Conclusions
The analyses, opinions, and conclusions of this report rely on data and information provided by
others. The information is believed to be reliable; however, no responsibility is assumed for the
accuracy of infomtation provided by others.
The analyses, opinions, and conclusions assume:
1. No hidden or unapparent surface or subsurface conditions of the property, structures,
soils, subsoils, geological formations, ground water, or drainage conditions exist that
would render the property more or less valuable.
2. Existing improvements comply with all applicable public and private zoning codes,
regulations and covenants, unless stated otherwise.
3. The client has provided us with all signiScant, relevant information covering the subject
of this report.
STUDY CONDITIONS Addendum 1
Page 2
No responsibility is assumed for matters legal in nature affecting the property or its title, which is
assumed to be good and merchantable.
Properties in Hawaii typically include a reservation in favor of the State of Hawaii of all mineral
and metallic mines. Our analyses, opinions, and conclusions assume these reservations do not have
an impact on the value or use of the property.
Any drawings, maps, photographs, and similar exhibits accompanying this report are included to
assist the reader in visualizing the property. No responsibility is assumed for the accuracy of these
exhibits.
Hazardous Substances
The existence of hazardous substances (actual, alleged or threatened discharge, disposal, seepage,
migration, release, growth, infestation, spread or escape of mold(s), mildew(s), fitngi and/or spores
or any materials, goods of products containing, harboring or nurturing these substances) that could
be present on the property, or other environmental conditions that could impact the property, were
not brought to the attention of the appraisers nor observed during the site visit.
The appraisers are not trained or qualified to detect hazardous substances or conditions even if
these hazards, or evidence of potential presence of these hazards, are visible on the property.
This report assumes no hazardous substance or condition exists that would impact the analyses,
opinions or conclusions. If a hazardous substance or condition exists, it could have a negative
effect on the value of the property.
Archaeological or Historically Significant Conditions
The existence of archaeological or historically significant conditions that could be present on the
property were not identified nor observed during the site visit. The appraisers are not trained or
qualified to recognize archaeological or historically significant conditions, even if these conditions
are visible on the property.
This report assumes no archaeological or historically significant condition exists that would impact
the analyses, opinions or conclusions. ]f an archeological or historically significant condition
exists, it could impact the valae of the property.
Endangered Species
The presence of flora and/or fauna on the property qualified for protection under the Endangered
Species Act of 1973 was not identified. The appraisers are not trained or qualified to recognize
endangered flora or fauna, even if visible on the property.
STUDY CONDITIONS Addendum 1
Page 3
This report assumes no endangered species are present on the property. The presence of
endangered species could impact the value of the property.
Americans With Disabilities Act (ADA)
The Americans with Disabilities Act (ADA) became effective January 26, 1992. This report was
not based on any specific compliance survey and analysis of this property to determine whether or
not it is in conformity with the various detailed requirements of the ADA. A survey of the property
together with a detailed analysis of the requirements of the ADA could reveal that the property is
not in compliance with one or more of the requirements of the ADA. If so, it could have a negative
effect on the value of the property.
Terms of Assignment
We have no obligation to update our report because of events and transactions occurring
subsequent to the effective date of the report.
Neither our fees nor payment were contingent upon the results of the report.
Use of Report
This report is valid only if presented in whole, with original photographs and exhibits, if any, and
the official seal of John Child & Company embossed on the letter of transmittal and certification.
This report or any portion of this report may not be reproduced or published without the prior
written consent of John Child & Company, and then only with proper qualification.
The contents of this report or portions of this report, the identity of the appraisers or any reference
to John Child & Company, the Appraisal Institute, the Counselors of Real Estate, or the American
Society of Appraisers, or to their respective designations may not be disseminated to the public
through advertising media, public relations media, news media, sales media, or any other public
means of communication.
Limitation on Liability
John Child & Company shall not be liable to Client or to any third party (including without
limitation lenders and other persons to whom Client may show this report for the purposes of
obtaining credit, insurance or any other benefit or promise) in the event that the use or value of the
subject property is or becomes different from the use or value estimates, analyses, opinions or
conclusions in this report unless it is established by clear and convincing evidence that John Child
& Company acted in bad faith or willfully and recklessly failed to exercise an appropriate standard
STUDY CONDITIONS Addendum 1
Page 4
of care in the community while performing this assignment. In any event, John Child & Company's
liability to Client or to any third party shall be limited to the amount of the fees to complete this
assignment.
This report may not be shown to any third party without our consent and without receiving a
written acknowledgement from any person to whom it is shown that such person has read,
understands and agrees to be bound by the limitation of liability in this paragraph.
CERTIFICATION
We certify, to the best of our knowledge and belief:
• Reported statements of fact are true and correct.
• Reported analyses, opinions, and conclusions are limited only by the reported assumptions and
limiting conditions and are our unbiased professional analyses, opinions, and conclusions.
• We have no present or prospective interest in the property that is the subject of this report, and we
have no personal interest or bias with respect [o the parties involved.
• Our engagement was not contingent upon developing or reporting predetermined results.
• Our compensation is not contingent on the reporting of a predetermined value or direction in value
that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated
result, or the occurrence of a subsequent event and is not contingent on an action or event resulting
from the analyses, opinions or conclusions in, or use of, this report.
• The reported analyses, opinions, and conclusions were developed, and [his report has been prepared,
in conformity with the requirements of the Code of Professional Ethics and Standards of
Professional Appraisal Practice of the Appraisal ]nstimte, which include the Uniform Standards of
Professional Appraisal Practice.
• The use of this report is subject [o the requirements of the Appraisal Institute relating [o review by
its duly authorized representatives. It is also subject to the same review by [he Counselors of Real
Estate and the American Society of Appraisers.
• The State of Hawaii has a Real Estate Appraiser Certification program. As of the date of this report,
Karen Char, MAI, CRE (CGA-]84) and Shelly H. Tanaka (CGA-648) aze certified general
appraisers by the State of Hawaii. Tammy M. Walther (CRA-739) is a certified residential appraiser
by the State of Hawaii.
• As of the date of this report, Karen Chaz, MAI has completed the requirements of [he continuing
education program of the Appraisal Institute. ASA has a mandatory recertification program.
Karen Char, ASA is currently certified under this program.
• The undersigned made a personal visit to the real estate that is the subject of this report.
• No one other than the undersigned prepared the analysis, opinions, and conclusions in this report.
JOHN CHILD & COMPANY, INC. _
j ~V J`J'~~-'
Karen Char, MAI, CRE (/Shelly H. Tanaka
President Appraiser
Tammy M. Walther
Analyst
QUALIFICATIONS OF JOHN CHILD & COMPANY
SCOPE OF PROFESSIONAL SERVICES
Background
John Child & Company is a professional corporation that specializes in real estate consulting,
appraisal, and business valuation. Since 1937, it has continued to revolutionize the field with
innovative ways of ensuring and expanding the growth of its clients.
The Company provides a critical knowledge of local market conditions and trends, gained from
analysis and interpretation of the community and economy of Hawaii. As a result, clients receive
sound alternatives and progressive solutions backed by experience and insight.
Its professional team members have held local, regional and national leadership positions in their
professional organizations, helping to establish and promote the highest standazds of professional
practice and ethics for the industry.
The strength of the Company is based on its commitment to quality and timeliness, expressed in the
accountability through which it has achieved its growth and earned the trust and confidence of its
clients for neazly 70 years.
Real Estate Consulting and Appraisal
The Company's real estate consulting and appraisal practice includes a range of specialized services
covering real estate in Hawaii and the Pacific area. Professional services include:
• Valuation of real estate
• Litigation support
• Market and financial feasibility analyses
• Highest and best use studies
• Economic and fiscal impact assessments
• Valuation of fractional interests in real estate
• Arbitration.
Prior assignments involve a variety of real estate interests including fee simple, leasehold, leased
fee and other partial rights and fractional interests. These assignments cover a variety of land uses
and property types such as:
• Agricultural, conservation and vacant land
• Golf courses
• Healthcare facilities
• Hotels and reson properties
• Industrial properly
• Master planned and mixed-use projects
• Office buildings and commercial property
• Residential developments (single-family, multi-family and condominium)
Qualifications or John Child & Company 1
QUALIFICATIONS OF JOHN CHILD & COMPANY
• Redevelopment projects
• Shopping centers and retail facilities
• Special-purpose properly
• Timeshaze intervals.
Business Valuation
The Company's business valuation practice includes the valuation of closely-held businesses,
including controlling and minority interests in corporations, partnerships, limited liability companies
(EEGs) and limited liability partnerships (LLPs). Its business valuation practice provides assistance
in:
• Analysis of minority interest and marketability discounts
• ESOP valuation
• Estate planning, estate and gift tax reporting
• Litigation support
• Lost earnings
• Marital dissolution
• Mergers and acquisitions
• Stock transfers and redemptions.
REPRESENTATIVE ASSIGNMENTS
The Company has prepazed real estate consulting and appraisal assignments and business valuations
for nearly 70 yeats. Recent assignments that are representative of its cturent real estate consulting and
business valuation practices are briefly described.
Real Estate Consulting and Appraisal
The Company's real estate appraisal and consulting practice covers a variety of properties and property
interests. Real estate interests include fee simple, leasehold, leased fee and other partial rights and
fractional interests. Representative projects are listed by development type as follows:
Redevelopment
Aloha Tower Kakaako Redevelopment Plan Pawaa Redevelopment Masterplan
Honolulu Waterfront Master Kakaako Waterfront Park Kapalama Development Complex
Development Plan
Resorts
Hualalai Mauna Kea Hawaiian Rivera (proposed)
Kaanapali North Beach Princeville Kaupulehu (proposed)
Kauai Lagoons Waikoloa Beach Resort Manini owali (proposed)
Ko Olina Wailea Resort Regents International (proposed)
Kuilima
Qualifications of John Child & Company 2
QUALIFICATIONS OF JOHN CHILD & COMPANY
Hotels
Ala Moana Hotel Kea Lani Hotel Pacific Beach Hotel
Coco Palms Keauhou Beach Hotel Princeville Hotel
Embassy Suites Kaanapali King Kamehameha Kona Sheraton Poipu Beach
Hilton Hawaiian Village Beach Hotel Wailea Beach Resort
Hotel Hana Maui Kona Village Waikiki Circle Hotel
Hyatt Regency Waikiki Maui Marriott Waikiki Beachcomber
Hyari Regency Maui Maui Wailea Inter-Continental Waikiki Resort Hotel
Kahala Hilton Hotel
Shopping Centers
Ala Moana Keauhou Shopping Center Prince Kuhio Mall
Coconut Grove Koko Marina Princeville
Enchanted Lakes Koolau Center Royal Hawaiian
Ewa Pointe Marketplace Lanihau Cen[er Wailea Shopping Village
Hawaii Kai Mililani Windward City
Hawaii Kai Towne Center Pearl Ciry Windward Mall
Golf Courses
Asahi Kanko Olomana Course Ko Olina Waikapu Country Club
Dunes at Maui Lani (proposed) Mid-Pac Country Club Waikele
Hawaii Country Club Pearl Country Club Waikoloa (Kings)
Hawaii Kai Princeville (Makai and Prince) Waikoloa Village (two proposed)
Kaanapali Sandalwood Golf Course Wailea (Blue, Emerald, Gold)
Kauai Lagoons Silversword Golf Course
(Kiele and Lagoons)
Office Buildings
1 ] 64 Bishop Davies Pacific Center HMSA Building
Ala Moana Building Financial Plaza of the Pacific Pan Am Building
Ala Moana Pacific Center Grosvenor Center Waialae Building
Amfac Towers Harbor Couri Waikiki Bank of Hawaii Building
ANA Kalakaua Center Hawaiian Life Building Waikiki Trade Cen[er
Commerce Tower Hawaii National Bank
Industrial Properties
Airport Trade Center Halawa Center Panasonic/fechnics Center
Bougainville Commercial Hawaii Business Center Robinson Industrial Tract
Center Lihue ]ndustrial Park
Residential
Ewa by Gentry Kamehame Ridge One Archer Lane
Harbor Couri Ko Olina Fairways Royal Capitol Plaza
Honolulu Park Place Makakilo Uplands at Maunakea
]mperial Plaza Mawaena Kai Victoria Tower
Kalele Kai Mililani Wailea Golf Vistas
Kamaole Heights Nauru Tower Wailea Pualani Estate
Qualifications of John Child & Company 3
QUALIF1CATlONS OF JOHN CHILD & COMPANY
Healthcare
Arcadia Retirement Residence Regency at Hualalai Straub Hospital & Clinic
Kauai Care Center (assisted living)
(skilled nursing facility)
Special Purpose
Cemeteries/Memorial Parks Kanepuu Conservation Easement Residential Lease to Fee
Chinese Cultural Plaza Kapaa Land Fill Convervation
Condominium Lease to Fee Kaumalapau Harbor State of Hawaii Airports
Conversion Kealia Pond Telecommunications Sites
Hawaii Newspaper Agency NAS Barbers Point Electrical Visitor Attractions
Building Distribution System
Hawaiian Home Land Claims Palmyra Atoll
Business Valuation
The Company's business valuation practice focuses on closely-held businesses in Hawaii. Business
valuation assignments typically estimate the mazket value of a closely-held corporation or partnership
and the value of minority interests in the business.
These assignments are prepared to assist in estate planning and estate and gift tax reporting to the
Internal Revenue Service. Business valuations are also used to assist in litigation, mergers and
acquisitions covering controlling and minority interests in the closely-held businesses.
Recent valuations of closely-held businesses include:
Corporations
Aala Produce, Inc. -supplier of provisions to vessels
Finance Investment, Ltd. -real estate developer, investor and provider of diversified
financial services
Gay & Robinson, Inc. -sugar grower
Industrial Investors, Inc. -real estate investor and manager
Jas W. Glover Holding Company, Ltd. - constmction contractor
K. Inouye Properties, Inc. -real estate investor and manager
Loyalty Development Company, Inc. -real estate developer, investor and manager
Loyalty Enterprises, Ltd. -property management and insurance agency
Palani Ranch Company, Inc. -cattle rancher
Sen Plex Corporation -plumbing and air conditioning contractor, real estate manager
SSFM Engineers -professional engineering services
Limited Partnerships and Limited Liability Companies
Aaron Properties Partners of Hilo -Hilo Burger King
Caroline J. Robinson LLC -real estate investor
CGB Partners -real estate investor
J.L.P. Robinson LLC -real estate investor
K.J.L. Associates -real estate investor and manager
KVH Partners -real estate investor
Lanihau Partners -real estate developer and manager
Qualifications of John Child & Company 4
QUALIFICATIONS OF JOHN CHILD & COMPANY
Leong Brothers -real estate investor and manager
Loyalty Investments -real estate investor
Taihook Associates -real estate investor and manager
Taira Family Limited Partnership -real estate investor
CLIENTS
The Company provides professional services to a range of clients representing private, non-profit and
public interests. Selected clients in private industry, non-profit organizations and public agencies are
listed.
PRIVATE INDUSTRY
Attorneys/Accountants
Alston Hunt F]oyd &Ing KPMG Peat Marwick
Ashford & Wriston McComston Miller Mukai McKinnon
Cades Schutte Milberg Weiss Bershad Hynes & Lench
Carlsmith Ball Oshima Chun Fong & Chung
Case & Lynch Paul Johnson Park & Niles
Chun Kerr Dodd Beaman & Wong Price Okamoto Himrno & Lum
Goodsill, Anderson, Quinn & Stifel Rush Moore Craven Sutton Morry & Beh
Hong Iwai & Hulbert Tom & Petms
Imanaka Kudo & Fujimoto Torkildson Katz Jossem Fonseca Jaffe Moore &
Ing Horikawa Jorgensen & Endo Hetherington
Kobayashi, Sugi[a & Goda White & Tom
Architects/Planners
AM Partners, Inc. Leo H. Daley/Alfred A. Yee Division
Belt Collins & Associates Parsons Brinckerhoff Quade & Douglas, Inc.
C.H. Guernsey & Company PBR Hawaii
Helber, Hastert & Fee Planners RM Towill Corp.
Kober/Hanssen/Mitchell Architects Townscape, Inc.
Banks/Lenders
American Savings Bank GE Capital Real Estate
Bank of America GMAC Commercial Mortgage
Bank of Hawaii Hawaii National Bank
Central Pacific Bank Key Commercial Mortgage
Chemical Bank Liberty Bank, Connecticut
Citibank, N.A. Nippon Credit Bank
City Bank Orix Corporation
Continental Bank, Chicago Sanwa Bank, Ltd.
First Federal Savings and Loan Association The Bank ofTokyo-Mitsubishi, Ltd.
First Hawaiian Bank The Chuo Mitsui Trust & Banking Co, L[d.
Fukuoka City Bank The Daiwa Bank, Ltd.
GE Capital Hawaii, Inc. The Industrial Bank of Japan, Ltd.
Qualifications of John Child & Company 5
QUALIFICATIONS OF JOHN CHILD & COMPANY
The Kyowa-Saitama Bank Wells Fazgo Bank
The Long-Term Credit Bank of Japan, Ltd.
Builders
Armstrong Builders, L[d. Pacific Construction Co., L[d.
Charles Pankow Builders Tokyu Construction Co., Ltd.
Closely Held Corporations/Limited Partnerships/Family Trusts
Akala PaMers (Twigg-Smith family) Lanihau Partners, LP
Gay & Robinson (Selwyn Robinson family) Leong Brothers
Jas. W. Glover Holding Company, Ltd. Loyalty Development, Loyalty Investments
(Van Orden family) (Ching family)
J.L.P. Robinson LLC (James L.P. Robinson family) MAR Trusts (Mark A. Robinson, Sr. Family)
KJL Associates (Luke family) Palani Tms[ (Greenwell family)
KVH Partners and CGB Partners Sen Plex Corp. (See family)
(Knudsen Trust beneficiaries) Taihook Associates
Developers/Landowners
A&B Properties, Inc. Kaneohe Ranch
Aloha Towers Associates McCormack Properties
Bedford Properties, Inc. Nansay Hawaii
(fka Kaiser National Housing Corporation Niu Pia Fares
Development Company) O. G. Hawaii Corporation
Bradley Holdings Pahio Development
Central Pacific Realty Pauahi Management Corp.
Chiyoda Hawaii Corporation Stone Companies
Dowling Company, Inc. Tesoro Hawaii Corporation
Finance Realty The Estate of James Campbell
Gentry Companies The Myers Corporation
Hana Ranch Partners The Queen Emma Foundation
Hanalei Land Company Toyo Real Estate Co., Ltd.
Haseko (Hawaii), Inc. Violet Hee Lum Properties, Inc.
Hemmeter/Tokyu Waterfront Joint Venture
Diversified Corporafions
Amfac/JMB Hawaii, Inc. Oceanic Properties, Inc.
- Amfac Property Development Co. Kitano Indo Gaisa Co., L[d.
Azabu USA Corporation Kokusai-Motorcars Co., Ltd.
Dole Foods (fka Castle & Cooke, ]ncJ Nissho ]wai Corporation
- Castle & Cooke Retail Shimizu Corpom[ion
- Mililani Town, Inc. Shinwa Golf Kabushiki Kaisha
Investors/Investment Bankers/lnsurance Companies
IDG Realty, Ltd. Meridian Pacific
ITOCHU Corpomtion (C. ]toh & Co., Ltd.) The Equitable Life Assurance Society of the
MassMutual United States of American
Qualifications of John Child & Company 6
QUALIFICATIONS OF JOHN CHILD & COMPANY
Resort Operators/Owners
Alpha U.S.A., Inc. Wailea Resort Company, Inc.
Kapalua Land Company, Ltd. Shinwa Intemational
Princeville Development Company
Retailers
City Mill Co., Ltd. Louis Vuitton Hawaii, Inc.
J.C. Penney Company, Inc. McDonald's Res[awants of Hawaii
Kyotam Intemational
Trust Companies and Trusts
First Hawaiian Tms[ Knudsen Tmsts
Hawaiian Tmst Co., Ltd. Queen Liliuokalani Tmst
NON-PROFIT ORGANIZATIONS
Chaminade College Punahou School
Hawaii Pacific Health St. Francis Healthcaze Systems of Hawaii
Kamehameha Schools Young Women's Christian Association (YWCA)
KCAA Pre-Schools of Hawaii Trust for Public Land
Nature Conservancy
PUBLIC AGENCIES
Bank Regulatory Agencies
Federal Depository Insurance Corporation (FDIC) Federal Home Loan Bank Board (FHLBB)
City & County of Honolulu
Honolulu Public Transit Authority Departmrnt of Public Works
Dept. of Housing and Community Development Department of the Corporation Counsel
County of Hawaii
DepartrnentofFinance
County of Kauai
Department of Water
Federal Agencies
Internal Revenue Service U.S. Department of the Navy
U.S. Attorney General U.S. Dept. of Interior, Fish & Wildlife Service
U.S. Department of the Army
Public Utilities
Citizens Utilities Company -Kauai Electric Hawaiian Electric Industries (HEI, ]nc.)
GTE Hawaiian Telephone Co. Pacific Resources, ]nc.
Qualifications of John Child & Company 7
QUALIFICATIONS OF JOHN CHILD & COMPANY
State of Hawaii
Attorney General Hawaii Community Development Authority
Department of Hawaiian Home Lands Housing and Community Development
Department of Land & Natural Resowces Corporation of Hawaii
Department of Transportation
PROFESSIONAL TEAM QUALIFICATIONS
The Company's professional team has a wide range of real estate experience gained through a range of
field experience, professional accomplishments, training and education. Team members have earned
their reputation for quality work and professional service.
Professional Designations
Team members hold designations earned from the major professional organizations. Team members
have earned the MAI (Members Appraisal Institute) designation from the Appraisal Institute, the CRE
(Counselor of Real Estate) from The Counselors of Real Estate (formerly the American Society of
Real Estate Counselors) and ASA (Senior Member) from [he American Society of Appraisers.
State Certication
Members of the professional team are Certified General Appraisers under the State of Hawaii license
and certification program and are qualified to prepare appraisal reports for mortgage financing
purposes for federally insured lending institutions.
Other QualiTications and Training
Professional team members are qualified as expert witnesses in the courts of Hawaii; actively
participate in various business and professional organizations; serve as review appraisers and
arbitrators; and continue to attend courses, seminars, and workshops to strengthen their own
specialized appraisal skills and education.
Professional Team Members
Professional team members include:
• Karen Char, MAI, CRE, ASA, President Paul D. Cool, MAI, CRE, Vice President
• Shelly H. Tanaka, Appraiser Tammy M. Walther, Analyst
The education and professional experiences of team members are outlined in their accompanying
resumes.
Qualifications of John Child & Company 8
QUALIFICATIONS OF JOHN CHILD & COMPANY
KAREN CHAR, MAI, CRE, ASA
President
As President of John Child & Company, Karen is responsible for developing and managing the
Company's professional practice that includes real estate consulting, appraisal, and business valuation.
She specializes in complex real estate and business valuation assignments.
Karen originally joined the Company in 1973 and has over 30 years of professional experience. She has
served in elected and appointed national and international leadership positions in the Counselors of Real
Estate and the Appraisal Institute.
Education
• Master of Business Administration, University of Hawaii, 1972
• Bachelor of Business Administration, University of Hawaii, 1970
• Punahou Schoo1,1967
• Successfully completed various courses, workshops, and seminars sponsored by the Appraisal
Institute
Professional Associations
• Member, The Counselors of Real Estate (formerly the American Society of Real Estate
Counselors, CRE designation).
- Chief Delegate to the Pan Pacific Congress of Real Estate Appraisers, Valuers and
Counselors: New Zealand, 2000; Singapore, 1998; Sydney, ]996; Yokohama, 1994;
Speaker: New Zealand, 1988 and Korea, 1990
- Member, National Board of Governors, 1995 - 2000
- National Vice President, 1997
- Vice Chair, National Ethics & Professional Practice Committee, 1995; Member, 1993 -
1998 and 2000 - 2002
- Member, National Finance Committee, 1995 - 1997
- Member, International Task Force (fka National International Activities Committee),
1992 - 1999
- Member, National Communications Committee, ]993 - 1995, 2001; National Public
Relations, 1998 - 2001, Technology Committee, 2001
- Chair, Honolulu Convention Committee, 1992
• Member, Appraisal Institute (MAI designation)
- Member (representing Region VII, Arizona, Hawaii, Southern California sad Southern
Nevada), National Appellate Division (serves as National Ethics Appeal Board), 1997 -
1999
- Member, Regional Ethics Panel
- Vice Chair, National Admissions Committee of the General Appraisal Board, 1991
- Governing Councilor, ] 986 - 1988
- Vice Chair, Nations] Bylaws Committee, 7 986 - ] 989
- Vice Chair, Organizing Committee, Pan Pacific Congress of Real Estate Appraisers,
Valuers and Counselors, Honolulu, 1986
- Member, National Bylaws Committee, 1985
- Member, National Admissions Committee, 1982 - ] 990
QUALIFICATIONS OF JOHN CHILD & COMPANY
I{AREN CHAR, MAI, CRE, ASA Page 2
President
• Member, Appraisal Institute, (continued)
- Chairman, National Evaluation Report Subcommittee, 1982
- President, 1986; Vice President, 1985; Secretary, 1984; Honolulu Chapter No. 15
- Grader, National Board of Examiners, 1982 - 1983
- Admissions Chairman, Southwest Region, 1983
• Senior Member, American Society of Appraisers, (ASA designation, specializing in business
valuation).
• Member, Aloha Chapter of Lambda Alpha International, an Honorary Land Economics Society
Other Real Estate and Charitable Associations
• Arbitrator, NASD Dispute Resolution, Inc.
• President, Hawaii Chapter of the National Association of Office and Industrial Properties
(NAIOP Hawaii), 1998
- Member, Boazd of Directors, 1996 - 1998
- Chair, Leasehold Issues Committee, 1996 - 1997
- Responsible for writing NAIOP's reports as follows:
- Ground Lease Reneeotiation Issues and Practical Alternatives, September 1996
- Lease Rent Arbitration and USPAP, January, 1997
• Director, Board of Directors, Hawaii Women's Legal Foundation, 2002 to present.
• Vice President and Director, Board of Directors, Hawaii Opera Theatre, 2004 to present.
Professional Experience
• President and Chief Executive Officer, John Child & Company, Inc., 1984 to present.
• Senior Manager, Peat, Marwick, Mitchell & Co. (now known as KPMG Peat Marwick),
1979 - 1984.
• Appraiser, John Child & Company, Inc., 1973 - 1978.
Professional Certification
• The Appraisal Institute conducts a voluntary program of continuing education for its designated
members. Members who meet the minimum standards of this program are awarded periodic
educational certification. Karen Char, MAI is certified under this program.
• The American Society of Appraisers conducts a mandatory program of recerti£cation through
continuing education and/or participation in professional activities each five years. Karen
Char, ASA, is certified under this program.
State Certification
• Certified General Appraiser, State of Hawaii, License Number CGA-]84, expiring
December 31, 2007.
Court Testimony
• Qualified as an expert witness in the valuation of real property and closely-held businesses in
the Courts of the State of Hawaii.
QUALIFICATIONS OF JOHN CHILD & COMPANY
SHELLY H. TANAKA
Appraiser
Shelly estimates the value of closely held businesses and real estate in Hawaii. Her business valuations
include limited partnerships, corporations, and limited liability companies (EEGs) and limited liability
partnerships (LLPs). Because of her familiarity with both real property and business valuation, she is
able to effectively assist clients in their acquisitions and mergers, stock transfers and redemptions, estate
planning and gifting decisions, internal accounting, ESOP reporting, and divorce settlement.
Shelly's real estate valuations include resort, commercial, industrial, residential, and agricultural
properties on Oahu, Maui, Kauai, and Hawaii. Shelly appraises leasehold, leased fee, and fee simple
interests, undivided fractional interests, and timeshare intervals for attorneys, landowners and
developers, banks, trusts, estates and corporations. Shelly has completed health care market
assessments and real estate appraisals and business valuations for a skilled nursing home, assisted living
projects and other health care facilities on Oahu, Kauai, and the island of Hawaii.
In addition Shelly is proficient in research and analysis for litigation. She has worked on two class
action lawsuits providing complex and timely analysis to assist in settlement negotiations.
Shelly joined the Company in August 1998 while pursuing a Master in Business Administration degree
at the University of Hawaii at Manoa. During her study, she was admitted to the Beta Gamma Sigma
honor society and graduated from the MBA program With Distinction in December 1998. Shelly
obtained her undergraduate degree in psychology at the University of Califomia at Los Angeles where
she graduated Cum Laude in ]994.
Education
• Master of Business Administration, With Distinction, University of Hawaii at Manoa, 1998
- Beta Gamma Sigma Honor Society, 1997
• Bachelor of Arts, Psychology, Cum Laude, University of Califomia at Los Angeles, ] 994
- Golden Key Honor Society, 1994
- Phi Eta Sigma Honor Society, 1990
- Alpha Lambda Delta Honor Society, 1990
• ]olani School, Magna Cum Laude, 1990
• Courses, workshops and seminars including:
- Appraisal Institute, Case Studies in Limited Parnerships and
Common Tenancy Valuation, 2005
- Appraisal Institute, Real Estate Finance, Value and Investment Performance, 2005
- Appraisal Institute, Standards of Professional Practice, 2005
- Appraisal Institute, Advanced Income Capitalization, 2004
- Appraisal Institute, Appraisal Principles, 2001
- Appraisal lnstitute, Appraisal Procedures, 2001
- Appraisal Institute, Industrial Valuation, 1998
- Appraisal Institute, Advanced Sales Comparison, 2000.
QUALIFICAT1ON5 OF JOHN CHILD & COMPANY
SHELLY H. TANAI{A Page 2
Appraiser
Professional Association
• Associate, Appraisal Institute (candidate for MAI designation)
Professional Experience
• Appraiser, John Child & Company, Inc. (1998 to present)
• Corporate Loan Representative, Central Pacific Bank (1997 - 1998)
State Certification
• Certified General Appraiser, State of Hawaii, License Number CGA-648, expiring
December 31, 2007.
QUALIFICATIONS OF JOHN CHILD & COMPANY
TAMMY M. WALTHER Page 1
Analyst
Tammy is the newest professional team member of John Child & Company. She brings to the
Company a unique background in residential real estate appraising and journalism. She is a
Certified Residential Appraiser. As a real estate appraiser assistant from 2003 to 2005, she
estimated the market value of condominium units and single family residential properties on Oahu.
She utilized the sales comparison and cost approaches to value, assisted the appraiser on
inspections, and analyzed market trends.
Prior to her appraisal experience, Tammy honed her research, writing and interviewing skills as a
reporter in residency with the Medill News Service on Capitol Hill. She reported on important
national and international topics for WCAX-TV in Burlington, Vermont. All of her segments were
broadcast on the 6 p.m. news.
Recently Tammy spent 200+ hours in the classroom to build on her appraisal knowledge.
Tammy graduated with honors from Punahou School and received her bachelor and master's
degrees from Northwestern University.
Education
• Master of Science in Broadcast Journalism, Northwestern University, 2002
• Bachelor of Science in Speech, cum laude, Northwestern University, 2001
- Golden Key National Honor Society
- National Society of Collegiate Scholars
- Departmental Honors in Studies for Radio/Television/Film
- Gamma Sigma Alpha National Greek Academic Honor Society
- Alpha Lambda Delta National Academic Honor Society for freshmen
• Punahou School, with honors, 1997
• Successfully completed the following courses and seminars:
- Appraisal Institute, National USPAP Update Course, 2006
- Appraisal Institute, Mini-Series on USPAP Issues, 2006
- Appraisal Institute, General Applications, 2006
- Appraisal Institute, Basic Income Capitalization, 2005
- Appraisal Institute, Case Studies in Commercial Highest and Best Use, 2005
- Appraisal Institute, Rates and Ratios: Making Sense of G1Ms, OARS, and DCF, 2005
- Appraisal ]nstitute, Real Estate Finance, Value, and Investment Performance, 2005
- Appraisal Institute, Business Practices and Ethics, 2005
- Appraisal Institute, Evaluating Residential Construction, 2005
- Appraisal Institute, Single Family Fraud, 2005
- Appraisal Institute, Residential Case Study, 2004
- Lincoln Graduate Center, Uniform Standards of Professional Appraisal Practice, 2004
- Appraisal ]nstitute, Residential Report Writing 1L-VI, 2004
QUALIFICATIONS OF JOHN CHILD & COMPANY
TAMMY M. WALTHER Page 2
Analyst
- Appraisal Institute, Conditions of the Chicago Rea] Estate Market, 2004
- Appraisal Institute, Appraisal Procedures, 2003
- Appraisal Institute, Appraisal Principles, 2003
Professional Association
• General Associate Member, Appraisal Institute
Professional Experience
• Analyst, John Child & Company, lnc., 2005
• Real Estate Appraiser Assistant, Uyetake, Uyetake & Associates, lnc., 2003-2005
State Certification
• Certified Residential Appraiser, State of Hawaii, License Number CRA-739, expiring
December 31, 2007.
Other
• Member, Northwestern University Alumni Admission Council
EXHIBIT E
BOUNDARY MAP
i ~R
i
a
- -
~ ~
-
a
4, ~ F
- _ 3~ i/~~_ _ o e
~ i =
. ~
'l
~ i' ~ ~
5
6 ,"a
~ r 1.
A E ~ ,S
~ yg5¢ @
n .
.H
~ '~I
s t
~~~I ~ a B s((~~
? 1: a E f
+I ~i ,SY F...
f n~A_ €sg5
wa J~ ~ 6e~ .
q:g~y
i, ,e ~ 1df 38
1!-`IJ ~ ~I i
~ ~
~ c.
~ ..fir '"c / / £F.
_ _
w
- u
i~
~ tic - ICI
9 11 e
i 3
~ m
n
a 3 v`
O x M
4
^ Q ~
2 vi
Q ~ h
F r_ W h _
?~FY m ~ O
Q ¢ I
J( ~ R wj
W ~ o
~
Q O Y
~ ~
O ~
O k
Y ~
3
¢ 1
i
i