HomeMy WebLinkAboutRES 613 Draft 01 2024-2026 •
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COUNTY OF HAWAI I ':= 4'.11'M STATE OF HAWAIGI
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RESOLUTION NO. GI3 26
A RESOLUTION DECLARING THE INTENTION OF THE COUNTY OF HAWAII TO
ESTABLISH A COMMUNITY FACILITIES DISTRICT,DESIGNATED AS HAWAII
COUNTY COMMUNITY FACILITIES DISTRICT NO. 1-2026(WAIKOLOA HEIGHTS
PROJECT),INCLUDING THREE IMPROVEMENT AREAS THEREIN,TO
AUTHORIZE FUNDING FOR PRESCRIBED SPECIAL IMPROVEMENTS,TO
AUTHORIZE LEVY OF A SPECIAL TAX,AND TO AUTHORIZE ISSUANCE OF
BONDS SECURED BY PROCEEDS OF THE SPECIAL TAX.
WHEREAS, Section 32-20 of the Hawaii County Code 1983 (2016 Edition, as amended)
(the"Code")provides that proceedings for the establishment of a Community Facilities District,
pursuant to Chapter 32, shall be instituted by the adoption of a resolution of intention containing
the matters set forth in said Section, as provided hereafter in this resolution; and
WHEREAS,Nana Kai Development Corp., a Hawai`i corporation, and Waikoloa
Heights Land Investors, L.P., a Delaware limited partnership (individually and collectively,the
"Petitioner") are developing a master-planned community consisting of single- and multi-family
residences, community service and recreational facilities, and potential commercial locations,
known as"Nana Kai," located in Waikoloa, South Kohala,Hawai`i(the"Development"); and
WHEREAS, in connection with the Development,the Petitioner proposes to construct
certain special improvements, as defined in Chapter 32 of the Code ("Chapter 32,"with all
references herein to articles or sections,unless otherwise defined being intended to mean and
refer to the appropriate articles or sections within Chapter 32) and as more specifically described
herein(the"Special Improvements"); and
WHEREAS, by petition dated July 3, 2026 (the"Petition"),the Petitioner, as owner in
fee simple of 100%of the land by area within the proposed Community Facilities District,
requested that the County Council institute the procedure for the establishment of a proposed
Community Facilities District encompassing the Development(the "Proposed District"),
including three improvement areas therein (each an"Improvement Area" and referred to as
"Improvement Area No. 1,""Improvement Area No. 2,"and"Improvement Area No. 3,"
respectively), for the purpose of financing the costs of the Special Improvements, as provided in
Chapter 32 and as further described herein; and
WHEREAS, in response to the Petition;the Council proposes to institute proceedings in
accordance with Chapter 32 to establish the Proposed District and to provide for the issuance of
one or more series of bonds (the"Special Tax Bonds")to finance all or a portion of: (1)the
actual costs of constructing the Special Improvements (the"Actual Costs") and(2)certain
"incidental expenses," as defined in Section 32-16 and more specifically identified herein(the
"Incidental Expenses"); and
•
• WHEREAS,the Council further intends, except where funds are otherwise available,to
provide for the annual levy of a special tax upon the taxable parcels within Improvement Area
No. 1, Improvement Area No. 2,and/or Improvement Area No. 3,respectively(the"Special
Taxes"), in amounts sufficient to pay for the Actual Costs of the Special Improvements and
Incidental Expenses, including the debt•service on Special Tax Bonds, allocated to Improvement
Area No. 1, Improvement Area No. 2, and/or Improvement Area No. 3,respectively; and
WHEREAS, Special Taxes will be calculated in accordance with the applicable rate and
method of apportionment("RMA") established separately for Improvement Area No. 1,
Improvement Area No. 2, and Improvement Area No. 3 (each an"Improvement Area RMA"and
referred to as"Improvement Area No. 1 RMA,"the"Improvement Area No. 2 RMA," and the
"Improvement Area No. 3 RMA,"respectively); and
WHEREAS,the Council intends to establish the Proposed District, including
Improvement Area No. 1,Improvement Area No. 2, and Improvement Area No. 3,for a term of
50 years,commencing with the fiscal year ending June 30,2027 (the"Initial Fiscal Year"),
subject to further provisions hereof regarding such term; and
WHEREAS, in connection with the proceedings for the establishment of the Proposed
District,the County and the Petitioner entered into a Deposit and Reimbursement Agreement
dated December 26,2024 (the"Deposit and Reimbursement Agreement"),pursuant to which the
Petitioner: (1) initially deposited the sum of$75,000 with the County for the purpose of paying
costs incurred by the County in connection with the establishment of the Proposed District and
the issuance of Special Tax Bonds, and (2) agreed to replenish such deposit upon request of the
County; now,therefore,
BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF HAWAII that, in
accordance with Chapter 32:
1. The Council hereby finds and determines that instituting proceedings for the
establishment of the Proposed District, including Improvement Area No. 1,
Improvement Area No. 2, and Improvement Area No. 3, is in the public interest.
2. The Proposed District, including Improvement Area No. 1, Improvement Area No.
2, and Improvement Area No. 3 therein, is to be established under the terms of
Chapter 32. The Proposed District shall be named"Hawai`i County Community
Facilities District No. 1-2026 (Waikoloa Heights Project)," and the Improvement •
Areas within the Proposed District shall be named"Hawai`i County Community
Facilities District No. 1-2026 (Waikoloa Heights Project) -Improvement Area No.
1,""Hawai`i County Community Facilities District No. 1-2026 (Waikoloa Heights
Project) -Improvement Area No. 2,"and"Hawai`i County Community Facilities
District No. 1-2026 (Waikoloa Heights Project) -Improvement Area No. 3,"
respectively.
3. The Council hereby establishes the initial boundaries of the Proposed District,
including the initial boundaries of Improvement Area No. 1, Improvement Area No.2,
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•
and Improvement Area No. 3, as described in the Petition and as shown on the
boundary map on file with the Director of Finance.
4. The County intends to issue Special Tax Bonds to finance all or a portion of the
Actual Costs of the Special Improvements and Incidental Expenses which may be
allocated to Improvement Area No. 1, Improvement Area No. 2, and/or
Improvement Area No. 3. The aggregate principal amount of Special Tax Bonds
shall not exceed a maximum of$60,000,000, exclusive of refunding bonds, if any,
which amount shall be allocated to Improvement Area No. 1, Improvement Area NO.
2, and/or Improvement Area No. 3 as determined by the Director of Finance in
consultation with the Petitioner.
5. Set forth in Exhibit A, attached hereto and incorporated herein by reference, is a
description of the Special Improvements proposed to be funded, in whole or in part,
by proceeds of the Special Tax Bonds and/or the Special Taxes which Special
Improvements shall be allocated to Improvement Area No. 1, Improvement Area No.
2, and/or Improvement Area No. 3 as determined by the Director of Finance in
consultation with the Petitioner. The construction and funding of such Special
Improvements shall be subject to the terms of an acquisition and funding agreement
• to be entered into between the County and the Petitioner(the"Acquisition and
Funding Agreement"). Subject to compliance with the provisions or the Acquisition
and Funding Agreement and all applicable State and County laws and rules, and to
oversight and supervision by the appropriate County department,the Petitioner or its
authorized representative shall be permitted to let and administer the contracts for
the construction Of the Special Improvements (unless the County undertakes the
letting and administration of such contracts under the Acquisition and Funding
Agreement)and,where applicable, such Special Improvements shall be conveyed to
the County upon completion.
6. It is currently expected that all of the Special Improvements to be funded will be
owned by the County, except for the following:
(a) The recreational trail park identified in Exhibit A will not be owned by the
County,but will be subject to a perpetual easement, license, or other appropriate
property interest in favor of the County,which provides for the park to be
maintained and operated as a recreational trail park open to the general public;
and
(b) The emergency ingress/egress road identified in Exhibit A will not be owned
by the County,but will be subject to a perpetual easement, license, or other
appropriate property interest in favor of the County,which provides for the road
to be maintained and operated for ingress and egress by the general public in the
event of emergencies.Based on the foregoing,the recreational trail park and the
emergency ingress/egress road are hereby determined to serve a public purpose
as provided in Section 32-7.
In the event that any other Special Improvements are not owned by the County,the
funding of such Special Improvements shall be subject to a further determination by
the Council that they serve a public purpose under Section 32-7.
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7. The Incidental Expenses proposed to be incurred and authorized to be paid, in whole
or in part, from the proceeds of the Special Tax Bonds and/or the Special Taxes are
set forth in Exhibit B, attached hereto and incorporated herein by reference. Such
Incidental Expenses shall be allocated to Improvement Area No. 1, Improvement
Area No. 2, and/or Improvement Area No. 3 as determined by the Director of
Finance in consultation with the Petitioner.
8. Improvement Area RMAs.
(a) Following the establishment of the Proposed District, and except where funds
are otherwise available, Special Taxes sufficient to pay for the Actual Costs of
the Special Improvements and Incidental Expenses or the debt service on
Special Tax Bonds issued to pay such Actual Costs and Incidental Expenses, as
allocated to each Improvement Area, shall be annually levied on taxable
properties within such Improvement Area pursuant to the provisions of Chapter
32 and the applicable Improvement Area RMA. The Improvement Area No. 1
RMA,the Improvement Area No. 2 RMA, and the Improvement Area No. 3
RMA are hereby approved in the forms set forth in Exhibit C, attached hereto
and incorporated herein by reference, subject to modification in accordance with
the applicable provisions thereof and of Chapter 32.
(b) The foregoing approval of the Improvement Area RMAs includes the provisions
of Section J of each Improvement Area RMA, as shown in Exhibit C,which
provides that the"Majority Owner"of property within any Improvement Area
may,prior to the issuance of any Special Tax Bonds secured by Special Taxes
levied on properties within such Improvement Area, request in writing a reduction
in the"Maximum Special Tax"on properties within the Improvement Area,
which reduction shall reflect an equal percentage reduction in the Maximum
Special Tax across all"Land Use Classes" of properties within the Improvement
Area;provided that the requested reduction complies with the requirements of
such Section of the applicable Improvement Area RMA, as determined by the
Director of Finance, such reduction shall be deemed authorized hereby and shall
be permitted without further authorization or approval by the Council.
9. Any provision hereof to the contrary notwithstanding,the Special Taxes on
properties within each Improvement Area shall be levied and administered
separately and independently from the Special Taxes on properties within any other
Improvement Area,to wit:
(a) Properties within each Improvement Area shall be subject only to the levy of
Special Taxes pursuant to the Improvement Area RMA applicable thereto;
(b) Special Tax Bonds issued with respect to each Improvement Area shall be
secured solely by Special Taxes levied*on properties within such Improvement
Area and shall not be cross-defaulted with Special Tax Bonds secured by
Special Taxes levied on properties in any other Improvement Area; and
(c) In the event of any modifications with respect to any Improvement Area
pursuant to Article 3, including modifications of the applicable term,authorized
Special Improvements, or Special Taxes, shall be determined independently of
any modifications to any other Improvement Area and shall be subject only to
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the rights afforded by said Article to the owners of taxable properties within the
affected Improvement Area.
10. The term of the Proposed District, including Improvement Area No. 1,Improvement
Area No. 2, and Improvement Area No. 3, shall be 50 years commencing with the
Initial Fiscal Year;provided that the term of the Proposed District shall expire at
such time,but in no event until such time,whether before or after the end of such
term, as all bonds and other debt incurred pursuant to Chapter 32 and all Incidental
Expenses related thereto that are payable from the Special Taxes have been fully
paid or payment duly provided for.
11. Appropriate provisions have been made under the Deposit and Reimbursement
Agreement to ensure that sufficient funds have been and will be provided to pay the
costs to be incurred by the County in connection with the formation of the Proposed
District and issuance of the Special Tax Bonds.The Deposit and Reimbursement
Agreement attached as Exhibit D hereto is hereby approved, and the execution and
delivery thereof by the appropriate County officials is hereby approved,ratified, and
confirmed.
12. Advances of funds or contributions of work in kind from any lawful source,
specifically including but not limited to the County or the Petitioner,may be
reimbursed from Special Tax Bond proceeds or from Special Tax revenues, or both,
to the extent of the lesser of the value or cost of the contribution. This resolution is
adopted in part for the purpose of establishing compliance with the requirements of
Section 1.150-2 of the United States Treasury Regulations.
13. The Petition satisfies the applicable requirements of Chapter 32 and has been signed
and filed by the Petitioner,the owner in fee simple of all of the land in the Proposed
District. There are no lessees of such land who,by the express terms of any existing
leases, are obligated to pay the Special Taxes. The Petitioner has waived the public
hearing and notice requirements under Section 32-24.Accordingly,the Council
determines that.it is unnecessary to conduct a public hearing or give notice of public
hearing prior to the adoption of an ordinance of formation for the Proposed District.
14. The Council hereby directs the Director of Public Works, and/or such other
appropriate department or departments to be responsible for operating and
maintaining the Special Improvements,to study the Proposed District,to prepare the
report required by Section 32-21 (the"Report"), and to file the Report with the
County Clerk not later than 60 days after the adoption of this resolution. Such
Director may consult with and rely upon other officials and departments of the
County or the State in connection with such study and the Report. If deemed
necessary or desirable by such Director,the study may be conducted and the Report
may be prepared, in whole or in part,by an independent consultant(including a
consultant retained by the Petitioner)under the supervision of such Director.The
Report shall include, but not be limited to, an estimate of the fair and reasonable cost
of the Special Improvements and Incidental Expenses.
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•
BE IT FINALLY RESOLVED that the County Clerk shall transmit a copy of this
resolution to the Honorable C. Kimo Alameda,Mayor of the County of Hawai`i;Diane
Nakagawa,Director of Finance;Renee N. C. Schoen, Corporation Counsel; Wesley Segawa,
Director of Public Works;Nana Kai Development Corp.; and Waikoloa Heights Land Investors,
L.P.
Dated at ,Hawai`i,this day of ,20
INTRODUCED BY:
MATTHEW AL `I-KLEINFELDER
Council Member
BY REQUEST OF THE:
• Director of Finance
•
COUNTY COUNCIL ROLL CALL VOTE
County of Hawai`i AYES NOES ABS EX
Hilo,Hawaii• GALIMBA
HUSTACE
I hereby certify that the foregoing RESOLUTION was by INABA
the vote indicated to the right hereof adopted by the COUNCIL of the KAGIWADA
County of Hawaii on KANEALI`I-KLEINFELDER
KIERKIEWICZ
ATTEST: KIMBALL
ONISHI
•
VILLEGAS
Reference: C-976/PC
COUNTY CLERK CHAIRPERSON&PRESIDING OFFICER RESOLUTION NO. '..3 26.
I H huE HUll H
6 LRB 26-006 FIN
PETITION TO INSTITUTE PROCEDURE FOR ESTABLISHMENT OFA
COMMUNITY FACILITIES DISTRICT(WAIKOLOA HEIGHTS PROJECT),
WAIKOLOA,SOUTH KOHALA, HAWAII
COUNTY COUNCIL OF THE COUNTY OF HAWAII
25 AUPUNI STREET .
HILO, HAWAII 96720
WHEREAS, Nana Kai Development Corp., a Hawaii corporation, and Waikoloa Heights
Land Investors, L.P., a Delaware limited partnership (individually and collectively, the
"Petitioner"), are developing a master-planned community consisting of single- and multi-family
residences, community service and recreational facilities and potential commercial locations,
known as"Nana Kai,"in Waikoloa, South Kohala, Hawaii(the"Development");and
WHEREAS, in connection with the Development, the Petitioner proposes to construct
certain "special improvements,"as defined in Chapter 32 of the Hawaii County Code 1983 (2016
Edition, as amended) (the "County Code") and more particularly described herein (the "Special
Improvements"); and
WHEREAS,the Petitioner is requesting that the County establish a Community Facilities
District encompassing the Development (the "Proposed District"), including three improvement
areas therein("Improvement Area No. 1,""Improvement Area No.2"and"Improvement Area No.
3," respectively), for the purpose of financing the costs of the Special Improvements, as provided
in Chapter 32 of the County Code and as further described herein;
BY THIS PETITION,the Petitioner respectfully requests that the County Council institute
the procedure for the establishment of the Proposed District pursuant to Chapter 32 of the Hawaii
County Code, by adoption of a Resolution of Intention pursuant to Section 32-20 of the Hawaii
County Code (the "Resolution of Intention"). In support of this request, the Petitioner hereby
represents and affirms as follows:
1. The Petitioner is the owner in fee simple of 100%of the land by area within
the Proposed District. There are no lessees of the land to be included within the Proposed
District who, by the express terms of any existing leases, are obligated to pay the Special
Taxes under Chapter 32 of the County Code. Accordingly, this Petition is signed and
submitted by the requisite number of landowners under Section 32-19(d) of the County
Code.
2. The boundaries of the Proposed District and the properties within the
Proposed District(by TMK Number)are described and shown in Exhibit A attached hereto
and made a part hereof. As authorized by Sections 32-45 and 32-59 of the County Code,
the Proposed District will consist of Improvement Area No. 1, Improvement Area No. 2
and Improvement Area No. 3, the boundaries of which are included in Exhibit A.
1
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3. The types of Special Improvements to be financed by the Proposed District,
as may be allocable to Improvement Area No. I, Improvement Area No. 2 and/or
Improvement Area No.3,are described in Exhibit B attached hereto and made a part-hereof.
4. The Petitioner has entered into a Deposit and Reimbursement Agreement
with the County (the "Deposit and Reimbursement Agreement"), a copy of which is
attached as Exhibit C hereto, pursuant to which the Petitioner has agreed to provide the
funds needed to defray the County's costs in undertaking to establish the Proposed District
and issuing community facilities district bonds pursuant to Chapter 32 of the County Code.
Pursuant to the Deposit and Reimbursement Agreement, the Petitioner has made an initial
deposit of seventy five thousand dollars($75,000)with the County to cover such costs and
has agreed to replenish the deposit as needed upon request of the County. The Petitioner
respectfully submits that the Deposit and Reimbursement Agreement and the deposits
thereunder satisfy the- provisions of Section 32-18 of the County Code regarding the
payment of the County's costs.
5. As owner in fee of one hundred percent (100%) of the land within the
Proposed District, with no lessees of such land who, by the express terms of any existing
leases,are obligated to pay the Special Taxes under the County Code,the Petitioner hereby
waives the public notice and hearing requirements with respect to the Proposed District as
provided in Section 32-24 of the County Code. However, the Petitioner hereby discloses
that it has entered into an agreement of sale for the parcel of land referred to as "Lot 3"
(and identified as TMK No, (3)6-8-044-0033), the closing for which is expected to occur
prior to consideration by the County Council of the Resolution of Intention instituting the
procedure for the establishment of the Proposed District. The purchaser of Lot 3 has agreed
that, if the closing occurs prior to consideration of the Resolution of Intention as expected,
such purchaser, as the new owner of Lot 3, will execute and deliver a Joinder Petition in
substantially the form attached as Exhibit D hereto, pursuant to which such purchaser will
(i)join in the Petitioner's request that the County Council institute the procedure for the
establishment of the Proposed District,(ii)represent that there are no lessees of Lot 3 who,
by the express terms of any existing leases, are obligated to pay the Special Taxes under
Chapter 32 the County Code, and (iii) waive the public notice and hearing requirements
with respect to the Proposed District as provided in Section 32-24 of the County Code.
2
IN WITNESS WHEREOF, the Petitioner has executed this Petition as of this 3rd day of
July,2026.
NANA KAI DEVELOPMENT CORP., a Hawaii
corporation
' By: e ,.4 .c
Name: Charles Somers
Title: President
WAIKOLOA HEIGHTS LAND INVESTORS,
L.P., a Delaware limited partnership
By: CONWY/B&Z HOLDINGS, LLC, a Delaware
Limited Liability Company, its general partner
By: Conwy, LLC, a California limited liability
company, its manager
By: e - , •&
Name: Charles Somers
Title: Member
•
EXHIBIT A
BOUNDARIES OF PROPOSED DISTRICT/
PROPERTIES WITHIN PROPOSED DISTRICT
Map of Proposed District (Including Improvement Areas)
[See Attached Map]
Improvement Area No. 1 Properties
Hawai`i TMK Acres Status
6-8-044: 01 to 078 24.38 Assessed single family lots
6-8-044: 079 4.37 Exempt, roadway
6-8-044: 080 5.97 Exempt, landscaping
6-8-044: 081 3.84 Exempt, Nana Kai Park
Improvement Area No. 2 Properties
Hawai'i TMK Acres Status
6-8-02:47 30.24 To be determined
Improvement Area No. 3 Properties
Hawaii i TMK Acres Status
6-8-44:82 52.9 . To be determined
A-I
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A-2
EXHIBIT B
SPECIAL IMPROVEMENTS
• Sanitary Sewer and Water Systems
• Paniolo Avenue Extension Improvements(including but not limited to swales, sidewalks,
paths, landscaping,grading, paving,traffic signage or otherwise improving or related to
" the foregoing)
• County Right of Way Landscape Improvements
• Recreational Trail Park Improvements'
• Nana Kai Park Land Improvements
• Regional Traffic Mitigation and Flood Control Measures (including but not limited to
transportation and traffic-related improvement, pedestrian and bicycle facilities, roadway
safety enhancements, signalization, flood and drainage control, stabilization, intersection
improvements and transit-related infrastructure)
• Emergency ingress/egress Road(engineering costs only)2
• Additional special improvements reasonably related to the Development,as determined
by mutual agreement between the County and the Petitioner, including but not limited to
streets, roads, trails(hiking and biking)medians, landscaping, parks, signals,traffic sign-
age, flood control, and other utilities and transit improvements
•
The recreational trail park will not be owned by the County, but will be subject to a perpetual easement,
license or other appropriate property interest in favor of the County which provides for the park to be main-
tained and operated as a recreational trail park open to the general public.
2 The emergency ingress/egress road will not be owned by the County, but will be subject to a perpetual
easement, license or other appropriate property interest in favor of the County which provides for the road
to be maintained and operated for ingress and egress by the general public in the event of emergencies.
B-1
EXHIBIT C
DEPOSIT AND REIMBURSEMENT AGREEMENT
L
[See Attached]
•
COUNTY OF HAWAI'l
PROPOSED COMMUNITY FACILITIES DISTRICT
DEPOSIT AND REIMBURSEMENT AGREEMENT
THIS AGREEMENT is made and entered into thist-6 day of eeet4119e —
2024,by and between the County of Hawaii(the"County"),and Waikoloa Heights Land
Investors, L.P., a Delaware Limited Partnership (the "Proponent"), which owns the
property within the boundaries of a proposed community facilities district.
RECITALS
A. The Proponent owns the real property that is included within the proposed
boundaries of a proposed community facilities district(the"Proposed District")for
the development known as Nana Kai(the"Development Project"). The Proposed
District is proposed to be established pursuant to the provisions of Chapter 32 of
the Hawaii County Code,as amended("Chapter 32")for financing the acquisition,
construction and installation of'special improvements'(as defined in Chapter 32)
(the "Special Improvements") which the Proponent is required to provide in
connection with the Development Project.
B. The Proponent has agreed to advance funds to allow the County to pay all costs
and expenses of the County related to proceedings heretofore and hereafter
conducted for the establishment of the Proposed District and the issuance of
special lax bonds for the Proposed District pursuant to Chapter 32(the"Proposed
Bonds").
C. The parties hereto wish to enter into an agreement to define the terms and
conditions under which the funds will be advanced and subsequently reimbursed.
AGREEMENT
in consideration of the mutual promises herein contained, the parties hereto do
hereby agree as follows:
Section 1. Proponent's Deposit:Use of Deposited Funds.
(a) The Proponent agrees to deposit initially the sum of$75,000(together with
additional deposits hereunder,the"Deposit")with the County to pay one hundred percent
(100%) of the costs and qxpenses of the County relating to the proceedings for the
formation of the Proposed District and the issuance of the Proposed Bonds(collectively,
the"County Costs''),including without limitation:(i)the fees and expenses of the County's
special tax consultant,financial advisor, appraiser, absorption consultant, legal counsel
(including bond counsel and special tax counsel), consulting engineers and other
professional consultants and advisors (individually a "Consultant" and collectively the
"Consultants");(ii)publication costs and other out-of-packet expenses;(iii)a reasonable
stmnivs
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charge(if applicable)for County staff time;and(iv)other County staff and administrative
costs.
(b) The County may draw upon the Deposit to pay the County Costs from time
to time. The County shall not be obligated to advance any of its funds for purposes of
forming the Proposed District or the issuance and sale of the Proposed Bonds.
(c) In the event that the balance of the Deposit falls below $20,000, or is
otherwise insufficient to pay any County Costs due or corning due,the Proponent shall
deposit additional monies with the County in the amount necessary to restore the balance
of the Deposit to $75,000 and/or pay the County Costs due or coming due. The
Proponent shall deposit such additional monies within ten (10) calendar days of the
receipt of written notification from the County of the need for such additional funds.
Without limiting any other right of the County to discontinue proceedings relating to the
Proposed District or the Proposed Bonds,it is expressly understood and agreed that the
County shall have the right to suspend or terminate all proceedings for the establishment
of the Proposed District and/or the issuance of the Proposed Bonds in the event that the
Proponent fails to deposit such additional monies with the County within said ten (10)
calendar days.
(d) The County shall provide monthly statements to the Proponent showing the
amount disbursed from the Deposit and the remaining balance thereof. The County
agrees to keep such records as are reasonably necessary to show the amount of monies
disbursed for payment of County Costs.The County shall make such records available to
the Proponent upon request.
Section 2. Consultants. Compensation, and Method of Payment, The
County shall retain the Consultants upon such terms as it deems appropriate in its sole
discretion. The County shall have the sole discretion to select the persons or firms to be
retained as Consultants, and to evaluate their performance and the reasonableness of
their compensation.Compensation shall be paid to each Consultant for work performed
as specified in their respective contracts with the County.Upon request,the County shall
provide the Proponent with a summary of fees paid to the Consultants on a bi-monthly
basis.
Section 3. Reimbursement to Proponent, If the Proposed District is
established and the Proposed Bonds are issued,the Proponent shall be entitled to be
reimbursed for Deposit,without interest,from the proceeds of the Proposed Bonds In the
event that the net proceeds of the Proposed Bonds,after deducting the costs of issuance
from the proceeds received by the County, are insufficient to fully fund both (i)
reimbursement of the Deposit anti (ii) financing of the Special Improvements, the I
Proponent shall advise the County in writing whether it wishes to receive reimbursement
of the Deposit or to waive its entitlement to such reimbursement. In the event that the
Proposed Bonds are issued in multiple series,waiver of reimbursement with respect to a
given series shall not constitute a waiver of reimbursement from the proceeds of any
subsequent series. If the proceedings are abandoned for any reason prior to the sale
and issuance of the Proposed Bonds, the obligation of the County to reimburse the
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Proponent for the Deposit or any portion thereof shall be strictly limited to that portion of
the Deposit not yet expended,and the provisions of subsection (c)of Section 5 hereof
shall govern the application of such unexpended portion of the Deposit.
Section 4. Ownership of Documents. All plans, specifications, reports,
appraisals and other documentation prepared as part of the proceedings to establish the
Proposed District and to sell and issue the Proposed Bonds shall become the property of
the County,regardless of whether the Proposed District is formed and/or the Proposed .
Bonds are sold and issued;provided,however,that the Proponent shall be entitled to use
the information contained in such documents.
Section 5. No Obligation to form a Community Facilitieg_ Distrjct;
Abandonment of Proceedings.
(a) The County expressly reserves the right to abandon the proceedings for the
establishment of the Proposed District and/or issuance of the Proposed Bonds for any
reason at any time prior to the completion thereof. Without limiting the generality of the
foregoing,the Proponent expressly acknowledges that the decision of the County to form
a community facilities district and/or to issue special tax bonds under Chapter 32 is an
exercise of the legislative authority of the Council of the County,and that the County may
not enter Into a contract or obligate the Council to exercise its legislative discretion in a
particular manner. This Agreement does not,therefore, in any way create a contractual,
legal or equitable obligation of or commitment by the County to approve the formation of
the Proposed District or to sell the Proposed Bonds to finance the Project.
(b) Should the Proponent elect to abandon the proceedings, the Proponent
shall provide written notification of such election to the County and request the County to
terminate all consulting agreements and use reasonable efforts to minimize any and all
additional County Costs.
(c) If proceedings to form the Proposed District and/or issue the Proposed
Bonds are not completed and are abandoned for any reason at any time,there will be no
obligation on the part of the County to reimburse the Proponent for any monies previously •
advanced pursuant to this Agreement. In such event,the County, however, agrees to
return to the Proponent such portion of the remaining balance of the Deposit, without
interest, as the County determines to be in excess of the amount necessary to pay any
outstanding County Costs which the County is obligated to pay,which determination shalt
be made as soon as reasonably practicable. If,for any reason,the remaining balance of
the Deposit is not sufficient to pay all outstanding County Costs, the Proponent shall
deposit such additional amounts as are required to pay all such County Costs.
(d) It is hereby expressly acknowledged and agreed that this Agreement is not
a debt or liability of the County,and that the County shall not be obligated to advance any
of its funds for purposes of forming the Proposed District or issuing the Proposed Bonds.
Section 6. Authority to Execute Agreement. The County and the Proponent
each represents that it has the authority to execute,deliver and perform its obligations
#?l9951v1 Page 3 of 6
C-3
under the terms of this Agreement and that the individual(s)signing this Agreement on its
behalf have full right and authority to bind said party to this Agreement.
Section 7. Designated Representatives; Notices. The following individuals
are hereby designated as representatives for the County and the Proponent,respectively,
to act as liaison between the parties:
County:
Director of Finance(or his/her designee)
County of Hawaii
25 Aupuni Street,Rm.118
Hilo,Hawaii 96720
•
Proponent:
Mr.Bruce Bell,CEO
WaikoIca Heights Land Investors,L.P.
5241 Arnold Avenue
McClellan,CA 95652
Any written notice, statement, demand, consent, approval, authorization, offer,
designation,request or other communication to be given hereunder shall be given to the
party entitled thereto at its address set forth above,or at such other address as such party
may provide to the other party in writing from time to time. Each such notice,statement.
demand, consent, approval, authorization, offer, designation, request or other
communication hereunder shall be delivered to the party to whom it is addressed (a)if
personally served or delivered, upon delivery, (b)if given by electronic communication,
whether telex, telegram, electronic mail or telecopy upon sender's receipt of an
appropriate answerback or other written acknowledgment, (c) if given by registered or
certified mail, return receipt requested, deposited with the United States mail postage
prepaid,72 hours after such notice is deposited with the United States Mail,(d) if given
by overnight courier, with courier charges prepaid, 24 hours after delivery to said
overnight courier, or (e) if given by any other means, upon delivery at the address
specified in this Section.
" Section 8. Jurisdiction and Venue. Each of the County and the Proponent(a)
agrees that any suit action or other legal proceeding arising out of or relating to this
Agreement shall be brought in state court in the County of Hawaii, (b) consents to the
Jurisdiction of each such court in any suit, action 9r proceeding, and (c) waives any
bjection that it may have to the laying of venue or dny suit action or proceeding in any
of such courts and any claim that any such suit,action or proceeding has been brought
in an inconvenient forum.
Section 9. Amendments. This Agreement may be amended by an instrument
in writing executed and delivered by the parties hereto.
•779861v1 Page 4 of 8
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Section 10. Waivers. No waiver of,or consent with respect to,any provision of
this Agreement by a party hereto shall in any event be effective unless the same shalt be
in writing and signed by such party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was given.
Section 11. indemnification. The Proponent hereby indemnifies, and agrees
that it shall defend and hold harmless,the County and its officials,employees,contractors
and agents,from and against any and all actions,claims,damages,losses or expenses
of any kind whatsoever arising out of or relating to any acts or omissions on the part of
the Proponent or any of ils officers,employees,contractors or agents with respect to the
Proposed District or the Proposed Bonds.
Section 12. Governing Law. This Agreement has been executed in and shall be
governed by the laws of the State of Hawaii.
Section 13. Construction. The parties to this Agreement and their counsel have
reviewed and revised this Agreement, and the normal rule of construction to the effect
that any ambiguities in an agreement are to be resolved against the drafting party shall
•
not be employed in the interpretation of this Agreement.
Section 14. Severability. If a provision of this Agreement is found to be void,
illegal or unenforceable, then any such provision shall be deemed stricken and the
remaining provisions hereof shall,nevertheless,remain in full force and effect.
Section 15. Entire Agreement. This Agreement shall constitute the entire
Agreement between the parties. Any amounts to or clarification necessary to this
Agreement shall be in writing and acknowledged by all parties to the Agreement.
Section 16, Counterparts. This Agreement may be executed in one or more
counterparts,each of which shall constitute an original,and all of which together shall be
considered one and the same instrument.
• I I
107799510 Page 5 of 6
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date and year first above written.
•
COUNTY OF HAWAI'I
By: •
Name:Willja 11- $vikart4e 7v PEE 161D24
Title: ManagtnR lirmct:r
WAIKOLOA HEIGHTS LAND INVESTORS,L.P.
By:
Name: I
Title: etp
RECOMMEND APPROVAL:
Ul/L
Diane Naka a
Director of Finance
APPROVED AS TO FORM AND e.prra.oa OS to Asodo:sillty of Fundy
LEGALITY: m the movers and for the purpoen
eel forth herein.
otxoe Or t:tku+cs a)
DEC 2 2024
EIi a e A.Stra ce
Corporation Counsel
•
077E41A Page 6 of 8
C-6
EXHIBIT D
FORM OF JOINDER PETITION
JOINDER PETITION
COUNTY COUNCIL OF THE COUNTY OF HAWAII
25 AUPUNI STREET
HILO, HAWAII 96720
•
Reference is made to that certain Petition dated , 2026 (the "Developer Petition")
submitted by Nana Kai Development Corp., a Hawaii corporation, and Waikoloa Heights Land
Investors, L.P., a Delaware limited partnership (individually and collectively, the "Developer
Petitioner")requesting that the County Council of the County of Hawaii institute the procedure for
the establishment of a community facilities district (the "Proposed District) pursuant to Chapter
32 of the Hawaii County Code 1983 (2016 Edition, as amended) (the "County Code"). As
described in the Developer Petition, the Proposed District encompasses the land within the master
planned community, known as "Nana Kai," which the Developer Petitioner is developing in
Waikoloa, South Kohala, Hawaii.
By this Joinder Petition, the undersigned petitioner hereby joins in the Developer
Petitioner's request, as set forth in the Developer Petition, that the County Council institute the
procedure for the establishment of the Proposed District. In support of this request, the
undersigned hereby represents and affirms as follows:
1. The undersigned is the owner in fee simple of a parcel of land within the Proposed
District identified as TMK No.
2. There are no lessees of the parcel who, by the express terms of any existing leases,are
obligated to pay the special taxes levied on the parcel pursuant to Chapter 32 of the
County Code.
3. The undersigned hereby waives the public notice and hearing requirements with respect
to the Proposed District as provided in Section 32-24 of the County Code.
IN WITNESS WHEREOF,the undersigned petitioner,as owner in fee of the above lot,has
executed this Joinder Petition as of this day of 2026.
Name:
TMK No.:
D-I
EXHIBIT A
Description of Authorized Special Improvements
• Sanitary Sewer and Water Systems
• Paniolo Avenue Extension Improvements (including but not limited to swales, sidewalks,
paths,landscaping, grading, paving, traffic signage or otherwise improving or related to
the foregoing)
• County Right of Way Landscape Improvements
• Recreational Trail Park Improvements)
• Nana Kai Park Land Improvements
• • Regional Traffic Mitigation and Flood Control Measures (including but not limited to
transportation and traffic-related improvement,pedestrian and bicycle facilities,roadway
safety enhancements, signalization, flood and drainage control, stabilization,intersection
improvements and transit-related infrastructure)
• Emergency ingress/egress road(engineering costs only)2
• Additional special improvements reasonably related to the Development, as determined
by mutual agreement between the County and the Petitioner, including but not limited to
streets,roads, trails (hiking and biking) medians; landscaping,parks, signals, traffic
signage, flood control, and other utilities and transit improvements
1 The recreational trail park will not be owned by the County,but will be subject to a perpetual easement,
license or other appropriate property interest in favor of the County which provides for the park to be
maintained and operated as a recreational trail park open to the general public.
2 The emergency ingress/egress road will not be owned by the County, but will be subject to a perpetual
easement,license or other appropriate property interest in favor of the County which provides for the road
to be maintained and operated for ingress and egress by the general public in the event of emergencies.
A-1
EXHIBIT B
DESCRIPTION OF AUTHORIZED INCIDENTAL EXPENSES
A. Initial Incidental Expenses. It is anticipated that the following incidental
expenses may be incurred by the County and/or the Petitioner in the proceedings for formation of
the Proposed District, implementation of the authorized Special Improvements and related bond
financing and will be payable or reimbursable from proceeds of the Special Tax Bonds or
directly from the proceeds of the Special Taxes:
• Engineering, Architectural (Building and Landscape), Geotechnical and
Environmental and Related,Miscellaneous Consulting services
• Survey, Staking and Contract Administration services
• Archeological and Cultural Monitoring services
• Permits, Plan Check Fees,Entitlement Processing Fees and Expenses
• Special tax consultant services
• County staff review, oversight and administrative services
• Legal services,including services of Bond Counsel, Special Tax Counsel,Disclosure
Counsel, Developer's Counsel and Underwriter's Counsel
• Financial advisor services
• Special tax administrator services
• Appraiser/Market absorption consultant services
• Initial bond transfer agent, fiscal agent,registrar and paying agent services,
and rebate calculation service set up charge
• Escrow services
• 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
B. Recurring Incidental Expenses. The expenses of certain recurring services
pertaining to the Proposed District may be included in each annual special tax levy. These may
include:
• Trustee,bond transfer agent,registrar and paying agent services
• Rebate calculation services and periodic arbitrage rebate payments
B-1
• Special tax administrator services
• Appraisal services
• Other necessary consultant services incidental to the administration of the Proposed
District
• 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
• Continuing disclosure services
The enumeration of initial and recurring Incidental Expenses under A and B
above is supplemented in its entirety by the items listed in the definition of "Administrative
Expenses," set forth in the applicable Improvement Area RMA, and shall not be regarded as
exclusive but rather shall be deemed to include any other incidental expenses within the meaning
of Chapter 32 which may be incurred from time to time with respect to the Proposed District.
Without limiting the generality of the foregoing, all expenditures made from the funds deposited
by the Petitioner with the County to defray the County's expenses of the proceedings for the
Proposed District, implementation of authorized Special Improvements and related bond
financings, and all amounts paid by the Petitioner to third parties providing services in
connection therewith, shall constitute authorized Incidental Expenses reimbursable to the
Petitioner from either proceeds of the Special Taxes or proceeds of sale of the Bonds for the
Proposed District.
•
B-2
EXHIBIT C
RATE AND METHOD OF APPORTIONMENT
[See Attached]
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA NO. 1 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
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. 1-2026 of the County of Hawaii
(Waikoloa Heights Project) ("CFD No. 1-2026") and collected each Fiscal Year commencing in
Fiscal Year 2027-2028, in an amount determined by the County Council of the County Hawai'i
(as defined below) through the application of the procedures described below. All of the real
property in IA No. 1, 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 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 Parcel
shall be calculated by the CFD Administrator.
"Acquisition Agreement" means the Acquisition and Funding Agreement by and
between the County relating to CFD No. 1-2026 and Nana Kai Development Corp. and
Waikoloa Heights Land Investors, L.P., as modified, amended and/or supplemented
from time to time in accordance with its terms, or any applicable successor to or
restatement of such agreement.
•
"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
discharge 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. 1
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. 1 or any designee thereof related to an appeal of the
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 1
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. 1
for any other administrative purposes of IA No. 1, including attorney's fees and other
costs related to commencing and pursuing to completion any foreclosure of delinquent
Special Taxes.
"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 Parcel of Developed
Property, as determined in accordance with Section C.1.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. 1-2026" means the County of Hawaii Community Facilities District No. 1-2026
(Waikoloa Heights Project).
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 1-2026.
"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, 2022 and prior to
August 1 of the prior Fiscal Year; provided, however, that Developed Property shall not
include Taxable Property Owner Association Property and Taxable Public Property.
"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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 2
"IA No. 1" means Improvement Area No. 1 of CFD No. 1-2026 as identified on the
boundary map for CFD No. 1-2026.
"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.
"Initial Fiscal Year" means Fiscal Year 2027-2028.
"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 a non-residential use.
"Ordinance of Formation" means the ordinance of formation for CFD No. 1-2026
adopted by the Council.
"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
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
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.
"Public Property" means, for each Fiscal Year, all Taxable 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.
County of Hawaii July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 3
"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, Undeveloped Property, Taxable Property Owner Association
Property, and Taxable Public 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 or Bonds expected to be issued in such
Fiscal Year by IA No. 1; (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 or Bonds expected to be issued in such Fiscal
Year by IA No. 1; (v) pay directly for acquisition or construction of facilities eligible to be
financed by IA No. 1 to the extent permitted by the Ordinance of Formation and the
Acquisition Agreement, such 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 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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 4
"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, Taxable Property Owner Association Property, or Taxable Public
Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 1 shall be classified as Developed
Property,Taxable Public Property, Taxable Property Owner Association 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 Initial Fiscal Year Assigned Special Tax for each Land Use Class is
shown below in Table 1. The amounts shown in Table 1 shall increase
thereafter, commencing on July 1, 2028 and on July 1 of each Fiscal Year
thereafter, by an amount equal to two percent (2%) of the amount in
effect for the previous Fiscal Year.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 5
TABLE 1
Assigned Special Tax for Developed Property
Land Use Initial Fiscal Year
Description Residential Floor Area
Class Assigned Special Tax
1 Residential Property > 2,800 sq. ft. $8,364 per unit
2 Residential Property 2,400—2,799 sq. ft. $7,834 per unit
3 Residential Property 2,065—2,399 sq. ft. $7,303 per unit
4 Residential Property < 2,065 sq. ft. $6,763 per unit
5 Non-Residential Property Not Applicable $27,120 per Acre
c. Backup Special Tax
The Initial Fiscal Year Backup Special Tax shall equal $27,120 per Acre,
and shall increase thereafter, commencing on July 1, 2028 and on July 1
of each Fiscal Year thereafter, by an amount equal to two percent (2%) of
the amount in effect for the previous Fiscal Year.
2. Undeveloped Property, Taxable Property Owner Association Property, and
Taxable Public Property
The Initial Fiscal Year Maximum Special Tax for Undeveloped Property, Taxable
• Property Owner Association Property, and Taxable Public Property shall be
$27,120 per Acre, and shall increase thereafter, commencing on July 1, 2028 and
on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%)
of the amount in effect for the previous Fiscal Year.
3. 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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 6
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Initial Fiscal Year and for each following Fiscal Year, the
Council shall levy the Special Tax until the amount of Special Taxes levied equals
the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as
follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to one-hundred percent (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 Undeveloped Property at up to one-
hundred percent (100%) of the Maximum Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement
after the first two 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;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement
after the first three 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.
E. EXEMPTIONS
No Special Taxes shall be levied on Property Owner Association Property and Public
Property, so long as the Acreage of Taxable Property is at least 23.1 Acres. Tax-exempt
status will be assigned by the CFD Administrator in the chronological order in which
property becomes Property Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, or Public Property would reduce the Acreage of Taxable Property below 23.1
Acres, such Assessor's Parcel shall be classified as Taxable Property Owner Association
Property, or Taxable Public 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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 7
Should a TMK Parcel no longer be classified as 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$9.2 million in 2027 dollars, which shall increase by
the Construction Inflation Index on July 1, 2028, 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. 1 under the 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.
"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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 8
"Outstanding Bonds" means, for purposes of this 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 Undeveloped Property for
which a building permit has been issued, may be prepaid. The Special Tax
obligation applicable to such TMK Parcel in IA No. 1 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:
Paragraph 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 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,
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 9
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 Year on all expected
development through buildout of IA No. 1, 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. 1.
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.
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.
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 10
11. Add the amounts computed pursuant to paragraphs 8 and
9 and subtract the amount computed pursuant to paragraph 10
(the "Defeasance Amount").
12. 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 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. 1.
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
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 11
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
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:
PP = (PE—A) x F+A.
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
County of Hawai'i July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 12
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.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. 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 estimated Administrative
Expenses.
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty (50) years commencing
with the Initial Fiscal Year.
J. SPECIAL TAX REDUCTION
The following additional definition applies to this Section J:
"Majority Owner" means the owner of record of the majority of property within IA No. 1 and a
party to the Acquisition Agreement.
Pursuant to the Ordinance of Formation, and prior to the issuance of the first series of Bonds,
the Majority Owner may request a reduction in the Maximum Special Tax. Such request shall be
submitted in writing to the CFD Administrator and shall reflect an equal percentage reduction in
the Maximum Special Tax across all Land Use Classes. Provided that the Special Tax and the
County facilities to be funded by IA No. 1 following the reduction remain consistent with County
policies, the CFD Administrator shall prepare and execute a Certificate of Reduction in Special
Taxes in the form attached as Exhibit A hereto.
County of Hawaii July 5,2026
Improvement Area No.1 of CFD No.1-2026(Waikoloa Heights Project) Page 13
APPENDIX A
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 1 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAII
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 1 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAI'I
1. Pursuant to Section J of the Rate and Method of Apportionment, the Assigned Special Tax for
Developed Property for all Land Use Classes within IA No. 1 of CFD No. 1-2026 and the Backup
Special Tax has been reduced.
2. The calculations made pursuant to Section J were based upon a uniform percentage reduction of
_% applied to all Land Use Classes and the Backup Special Tax that was received by the CFD
Administrator on
3. Table 1 below shows the Assigned Special Tax for each Land Use Class after such reduction.
Table 1:Assigned Special Tax Rates for Improvement Area No.1
Land Use Class Description Residential ASSIGNED
Floor Area Special Tax*
1 Residential Property >2,800 sq.ft. $
2 Residential Property 2,400—2,799 sq.ft. $ _
3 Residential Property 2,065—2,399 sq.ft. $
4 Residential Property <2,065 sq.ft. $
* Per residential dwelling unit for Residential Property.
4. The Backup Special Tax after such reduction shall be equal to$ per Acre.
5. The CFD Public Facilities amount in Section H shall be equal to$ .
6. Upon execution of this certificate by CFD No. 1-2026,CFD No. 1-2026 shall cause an amended notice
of Special Tax lien for IA No. 1 of CFD No. 1-2026 to be recorded reflecting the Assigned Special Tax,
Backup Special Tax,and CFD Public Facilities amount set forth herein.
Submitted
CFD ADMINISTRATOR
By: Date:
By execution hereof, the undersigned acknowledges, on behalf of CFD No. 1-2026, receipt of this
certificate and modification of the Rate and Method of Apportionment as set forth in this certificate.
Community Facilities District No. 1-2026 (Waikoloa Heights Project)of the County of Hawai'i
By: Date as of: [closing date of Bonds]
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA NO. 2 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
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. 1-2026 of the County of Hawaii
(Waikoloa Heights Project) ("CFD No. 1-2026") and collected each Fiscal Year commencing in
Fiscal Year 2027-2028, in an amount determined by the County Council of the County Hawaii
(as defined below) through the application of the 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 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 Parcel
shall be calculated by the CFD Administrator.
"Acquisition Agreement" means the Acquisition and Funding Agreement by and
between the County relating to CFD No. 1-2026 and Nana Kai Development Corp. and
Waikoloa Heights Land Investors, L.P., as modified, amended and/or supplemented
from time to time in accordance with its terms, or any applicable successor to or
restatement of such agreement.
"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
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 1
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.
•
"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 Parcel of Developed
Property, as determined in accordance with Section C.1.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. 1-2026" means the County of Hawaii Community Facilities District No. 1-2026
(Waikoloa Heights Project).
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 1-2026.
"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, 2022 and prior to
August 1 of the prior Fiscal Year; provided, however, that Developed Property shall not
include Taxable Property Owner Association Property and Taxable Public Property.
"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.
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No. 1-2026(Waikoloa Heights Project) Page 2
"IA No. 2" means Improvement Area No. 2 of CFD No. 1-2026 as identified on the
boundary map for CFD No. 1-2026.
"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.
"Initial Fiscal Year" means Fiscal Year 2027-2028.
"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 a non-residential use.
"Ordinance of Formation" means the ordinance of formation for CFD No. 1-2026
adopted by the Council.
"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
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
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.
"Public Property" means, for each Fiscal Year, all Taxable 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.
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 3
"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, Undeveloped Property, Taxable Property Owner Association
Property, and Taxable Public 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 or Bonds expected to be issued in such
Fiscal Year by IA No. 2; (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 or Bonds expected to be issued in such Fiscal
Year by IA No. 2; (v) pay directly for acquisition or construction of facilities eligible to be
financed by IA No. 2 to the extent permitted by the Ordinance of Formation and the
Acquisition Agreement, such 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 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.
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 4
"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, Taxable Property Owner Association Property, or Taxable Public
Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 2 shall be classified as Developed
Property, Taxable Public Property,Taxable Property Owner Association 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 Initial Fiscal Year Assigned Special Tax for each Land Use Class is
shown below in Table 1. The amounts shown in Table 1 shall increase
thereafter, commencing on July 1, 2028 and on July 1 of each Fiscal Year
thereafter, by an amount equal to two percent (2%) of the amount in
effect for the previous Fiscal Year.
•
•
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 5
TABLE 1
Assigned Special Tax for Developed Property
Land Use Initial Fiscal Year
Description Residential Floor Area
Class Assigned Special Tax
1 Residential Property > 2,800 sq. ft. $8,690 per unit
2 Residential Property 2,400—2,799 sq. ft. $8,337 per unit
3 Residential Property 2,065—2,399 sq.ft. $7,985 per unit
4 Residential Property < 2,065 sq. ft. $7,438 per unit
5 Non-Residential Property Not Applicable $31,929 per Acre
c. Backup Special Tax
The Initial Fiscal Year Backup Special Tax shall equal $31,929 per Acre,
and shall increase thereafter, commencing on July 1, 2028 and on July 1
of each Fiscal Year thereafter, by an amount equal to two percent (2%) of
the amount in effect for the previous Fiscal Year.
2. Undeveloped Property, Taxable Property Owner Association Property, and
Taxable Public Property
The Initial Fiscal Year Maximum Special Tax for Undeveloped Property, Taxable
Property Owner Association Property, and Taxable Public Property shall be
$31,929 per Acre, and shall increase thereafter, commencing on July 1, 2028 and
on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%)
of the amount in effect for the previous Fiscal Year.
3. 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.
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 6
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Initial Fiscal Year and for each following Fiscal Year, the
Council shall levy the Special Tax until the amount of Special Taxes levied equals
the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as
follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to one-hundred percent (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 Undeveloped Property at up to one-
hundred percent (100%) of the Maximum Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement
after the first two 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;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement
after the first three 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.
E. EXEMPTIONS
No Special Taxes shall be levied on Property Owner Association Property and Public
Property, so long as the Acreage of Taxable Property is at least 19.8 Acres. Tax-exempt
status will be assigned by the CFD Administrator in the chronological order in which
property becomes Property Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, or Public Property would reduce the Acreage of Taxable Property below 19.8
Acres, such Assessor's Parcel shall be classified as Taxable Property Owner Association
Property, or Taxable Public 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.
•
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 7
Should a TMK Parcel no longer be classified as 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 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 $10.0 million in 2027 dollars, which shall increase
by the Construction Inflation Index on July 1, 2028, 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 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.
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 8
"Outstanding Bonds" means, for purposes of this 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 Undeveloped Property for
which a building permit has been issued, may be prepaid. The Special Tax
obligation applicable to such TMK Parcel in IA 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:
Paragraph 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 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,
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 9
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. 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 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.
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.
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 10
•
11. Add the amounts computed pursuant to paragraphs 8 and
9 and subtract the amount computed pursuant to paragraph 10
(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").
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 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
County of Hawai'i July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 11
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. 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
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:
PP = (PE—A) x F+A.
•
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
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 12
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.1., 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 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. 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.
I. TERM OF SPECIAL TAX
The Special Tax shall be levied for a period not to exceed fifty (50) years commencing
with the Initial Fiscal Year.
J. SPECIAL TAX REDUCTION
The following additional definition applies to this Section J:
"Majority Owner" means the owner of record of the majority of property within IA No. 2 and a
party to the Acquisition Agreement.
Pursuant to the Ordinance of Formation, and prior to the issuance of the first series of Bonds,
the Majority Owner may request a reduction in the Maximum Special Tax. Such request shall be
submitted in writing to the CFD Administrator and shall reflect an equal percentage reduction in
the Maximum Special Tax across all Land Use Classes. Provided that the Special Tax and the
County facilities to be funded by IA No. 2 following the reduction remain consistent with County
policies, the CFD Administrator shall prepare and execute a Certificate of Reduction in Special
Taxes in the form attached as Exhibit A hereto.
County of Hawaii July 5,2026
Improvement Area No.2 of CFD No.1-2026(Waikoloa Heights Project) Page 13
APPENDIX A
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 2 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAII
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 2 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAII
1. Pursuant to Section J of the Rate and Method of Apportionment, the Assigned Special Tax for
Developed Property for all Land Use Classes within IA No. 2 of CFD No. 1-2026 and the Backup
Special Tax has been reduced.
2. The calculations made pursuant to Section J were based upon a uniform percentage reduction of
_% applied to all Land Use Classes and the Backup Special Tax that was received by the CFD
Administrator on
3. Table 1 below shows the Assigned Special Tax for each Land Use Class after such reduction.
Table 1:Assigned Special Tax Rates for Improvement Area No.2
Land Use Class Description Residential ASSIGNED
Floor Area
Special Tax*
1 Residential Property >2,800 sq.ft. $
2 Residential Property 2,400—2,799 sq.ft. $
3 Residential Property 2,065—2,399 sq.ft. $
4 Residential Property <2,065 sq.ft. $
* Per residential dwelling unit for Residential Property.
4. The Backup Special Tax after such reduction shall be equal to$ per Acre.
5. The CFD Public Facilities amount in Section H shall be equal to$ .
6. Upon execution of this certificate by CFD No. 1-2026,CFD No. 1-2026 shall cause an amended notice
of Special Tax lien for IA No. 2 of CFD No. 1-2026 to be recorded reflecting the Assigned Special Tax,
Backup Special Tax, and CFD Public Facilities amount set forth herein.
Submitted
CFD ADMINISTRATOR
By: Date:
By execution hereof, the undersigned acknowledges, on behalf of CFD No. 1-2026, receipt of this
certificate and modification of the Rate and Method of Apportionment as set forth in this certificate.
Community Facilities District No. 1-2026 (Waikoloa Heights Project)of the County of Hawaii
By: Date as of: [closing date of Bonds]
RATE AND METHOD OF APPORTIONMENT FOR
COUNTY OF HAWAII
IMPROVEMENT AREA NO. 3 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
A Special Tax as hereinafter defined shall be levied on all Tax Map Key parcels in Improvement
Area No. 3 ("IA No. 3") of Community Facilities District No. 1-2026 of the County of Hawaii
(Waikoloa Heights Project) ("CFD No. 1-2026") and collected each Fiscal Year commencing in
Fiscal Year 2027-2028, in an amount determined by the County Council of the County Hawai'i
(as defined below) through the application of the 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 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 Parcel
shall be calculated by the CFD Administrator.
"Acquisition Agreement" means the Acquisition and Funding Agreement by and
between the County relating to CFD No. 1-2026 and Nana Kai Development Corp. and
Waikoloa Heights Land Investors, L.P., as modified, amended and/or supplemented
from time to time in accordance with its terms, or any applicable successor to or
restatement of such agreement.
•
"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 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. 3 or any designee thereof related to an appeal of the
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 1
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. 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.
"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 Parcel of Developed
Property, as determined in accordance with Section C.1.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. 1-2026" means the County of Hawaii Community Facilities District No. 1-2026
(Waikoloa Heights Project).
"Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3),
being Chapter 32 of the Hawaii County Code.
"Council" means the Council of the County of Hawaii, acting as the legislative body of
CFD No. 1-2026.
"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, 2022 and prior to
August 1 of the prior Fiscal Year; provided, however, that Developed Property shall not
include Taxable Property Owner Association Property and Taxable Public Property.
"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.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 2
"IA No. 3" means Improvement Area No. 3 of CFD No. 1-2026 as identified on the
boundary map for CFD No. 1-2026.
"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.
"Initial Fiscal Year" means Fiscal Year 2027-2028.
"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 a non-residential use.
"Ordinance of Formation" means the ordinance of formation for CFD No. 1-2026
adopted by the Council.
"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
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
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.
"Public Property" means, for each Fiscal Year, all Taxable 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.
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 3
"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 permits) 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, Undeveloped Property, Taxable Property Owner Association
Property, and Taxable Public 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 or Bonds expected to be issued in such
Fiscal Year by IA No. 3; (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 or Bonds expected to be issued in such Fiscal
Year by IA No. 3; (v) pay directly for acquisition or construction of facilities eligible to be
financed by IA No. 3 to the extent permitted by the Ordinance of Formation and the
Acquisition Agreement, such 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 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.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 4
"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, Taxable Property Owner Association Property, or Taxable Public
Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Taxable Property within IA No. 3 shall be classified as Developed
Property,Taxable Public Property,Taxable Property Owner Association 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 Initial Fiscal Year Assigned Special Tax for each Land Use Class is
shown below in Table 1. The amounts shown in Table 1 shall increase
thereafter, commencing on July 1, 2028 and on July 1 of each Fiscal Year
thereafter, by an amount equal to two percent (2%) of the amount in
effect for the previous Fiscal Year.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 5
TABLE 1
Assigned Special Tax for Developed Property
Land Use Initial Fiscal Year
Class Description Residential Floor Area Assigned Special Tax
1 Residential Property I > 2,800 sq. ft. $9,157 per unit
2 Residential Property 2,400—2,799 sq.ft. $8,758 per unit
3 Residential Property 2,065—2,399 sq.ft. $8,359 per unit
4 Residential Property < 2,065 sq. ft. $8,117 per unit
5 Non-Residential Property Not Applicable $30,382 per Acre
c. Backup Special Tax
The Initial Fiscal Year Backup Special Tax shall equal $30,382 per Acre,
and shall increase thereafter, commencing on July 1, 2028 and on July 1
of each Fiscal Year thereafter, by an amount equal to two percent (2%) of
the amount in effect for the previous Fiscal Year.
2. Undeveloped Property, Taxable Property Owner Association Property, and
Taxable Public Property
The Initial Fiscal Year Maximum Special Tax for Undeveloped Property, Taxable
Property Owner Association Property, and Taxable Public Property shall be
$30,382 per Acre, and shall increase thereafter, commencing on July 1, 2028 and
on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%)
of the amount in effect for the previous Fiscal Year.
•
3. 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.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 6
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
1. Special Tax
Commencing with Initial Fiscal Year and for each following Fiscal Year, the
Council shall levy the Special Tax until the amount of Special Taxes levied equals
the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as
follows:
First: The Special Tax shall be levied Proportionately on each TMK Parcel of
Developed Property at up to one-hundred percent (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 Undeveloped Property at up to one-
hundred percent (100%) of the Maximum Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement
after the first two 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;
Fourth: If additional monies are needed to satisfy the Special Tax Requirement
after the first three 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.
E. EXEMPTIONS
No Special Taxes shall be levied on Property Owner Association Property and Public
Property, so long as the Acreage of Taxable Property is at least 33.8 Acres. Tax-exempt
status will be assigned by the CFD Administrator in the chronological order in which
property becomes Property Owner Association Property or Public Property.
To the extent that the exemption of an Assessor's Parcel of Property Owner Association
Property, or Public Property would reduce the Acreage of Taxable Property below 33.8
Acres, such Assessor's Parcel shall be classified as Taxable Property Owner Association
Property, or Taxable Public 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.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 7
Should a TMK Parcel no longer be classified as 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 $16.4 million in 2027 dollars, which shall increase
by the Construction Inflation Index on July 1, 2028, 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.
"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.
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 8
"Outstanding Bonds" means, for purposes of this 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 Undeveloped Property for
which a building permit has been issued, may be 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
As of the proposed date of prepayment, the Prepayment Amount
(defined below) shall be calculated as follows:
Paragraph 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 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,
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 9
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.
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.
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 10
11. Add the amounts computed pursuant to paragraphs 8 and
9 and subtract the amount computed pursuant to paragraph 10
(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 las 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 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.
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.
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 11
•
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.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
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:
PP = (PE—A) x F+A.
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.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.
County of Hawai'i July 5,2026
Improvement Area No.3 of CFD No. 1-2026(Waikoloa Heights Project) Page 12
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 (50) years commencing
with the Initial Fiscal Year.
J. SPECIAL TAX REDUCTION
The following additional definition applies to this Section J:
"Majority Owner" means the owner of record of the majority of property within IA No. 3 and a
party to the Acquisition Agreement.
Pursuant to the Ordinance of Formation, and prior to the issuance of the first series of Bonds,
the Majority Owner may request a reduction in the Maximum Special Tax. Such request shall be
submitted in writing to the CFD Administrator and shall reflect an equal percentage reduction in
the Maximum Special Tax across all Land Use Classes. Provided that the Special Tax and the
County facilities to be funded by IA No. 3 following the reduction remain consistent with County
policies, the CFD Administrator shall prepare and execute a Certificate of Reduction in Special
Taxes in the form attached as Exhibit A hereto.
County of Hawaii July 5,2026
Improvement Area No.3 of CFD No.1-2026(Waikoloa Heights Project) Page 13
APPENDIX A
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 3 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAII
CERTIFICATE OF REDUCTION IN SPECIAL TAXES FOR
IMPROVEMENT AREA NO. 3 OF
COMMUNITY FACILITIES DISTRICT NO. 1-2026
(WAIKOLOA HEIGHTS PROJECT)
OF THE COUNTY OF HAWAII
1. Pursuant to Section J of the Rate and Method of Apportionment, the Assigned Special Tax for
Developed Property for all Land Use Classes within IA No. 3 of CFD No. 1-2026 and the Backup
Special Tax has been reduced.
2. The calculations made pursuant to Section J were based upon a uniform percentage reduction of
_% applied to all Land Use Classes and the Backup Special Tax that was received by the CFD
Administrator on
3. Table 1 below shows the Assigned Special Tax for each Land Use Class after such reduction.
Table 1:Assigned Special Tax Rates for Improvement Area No.3
Land Use Class Description Residential ASSIGNED
Floor Area
Special Tax*
1 Residential Property >2,800 sq.ft. $
2 Residential Property 2,400—2,799 sq.ft. $
3 Residential Property 2,065—2,399 sq.ft. $
4 Residential Property <2,065 sq.ft. $
* Per residential dwelling unit for Residential Property.
4. The Backup Special Tax after such reduction shall be equal to$ per Acre.
5. The CFD Public Facilities amount in Section H shall be equal to$
6. Upon execution of this certificate by CFD No. 1-2026,CFD No. 1-2026 shall cause an amended notice
of Special Tax lien for IA No. 3 of CFD No. 1-2026 to be recorded reflecting the Assigned Special Tax,
Backup Special Tax,and CFD Public Facilities amount set forth herein.
Submitted
CFD ADMINISTRATOR
By: Date:
By execution hereof, the undersigned acknowledges, on behalf of CFD No. 1-2026, receipt of this
certificate and modification of the Rate and Method of Apportionment as set forth in this certificate.
Community Facilities District No. 1-2026 (Waikoloa Heights Project) of the County of Hawai'i
By: Date as of: [closing date of Bonds]
EXHIBIT D
DEPOSIT AND REIMBURSEMENT AGREEMENT
[See Attached]
COUNTY OF HAWAI'1
PROPOSED COMMUNITY FACILITIES DISTRICT
DEPOSIT AND REIMBURSEMENT AGREEMENT 1
THIS AGREEMENT is made and entered into thine-6 day of .2Ce14.117�Y
2024, by and between the County of Hawai'i(the"County"),and Waikoloa Heights Land
Investors, L.P., a Delaware Limited Partnership (the "Proponent"), which owns the
property within the boundaries of a proposed community facilities district.
RECITALS
A. The Proponent owns the real property that is included within the proposed
boundaries of a proposed community facilities district(the"Proposed District")for
the development known as Nana Kai(the"Development Project"). The Proposed
District is proposed to be established pursuant to the provisions of Chapter 32 of
the Hawai'i County Code,as amended("Chapter 32")for financing the acquisition,
construction and installation of"special improvements"(as defined in Chapter 32)
(the "Special Improvements") which the Proponent is required to provide in
connection with the Development Project.
B. The Proponent has agreed to advance funds to allow the County to pay all costs
and expenses of the County related to proceedings heretofore and hereafter
conducted for the establishment of the Proposed District and the issuance of
special tax bonds for the Proposed District pursuant to Chapter 32(the"Proposed
Bonds").
C. The parties hereto wish to enter into an agreement to define the terms and
conditions under which the funds will be advanced and subsequently reimbursed.
AGREEMENT
In consideration of the mutual promises herein contained, the parties hereto do
hereby agree as follows:
Section 1. Proponent's Deposit;Use of Deposited Funds.
(a) The Proponent agrees to deposit initially the sum of$75,000(together with
additional deposits hereunder,the"Deposit")with the County to pay one hundred percent
(100%) of the costs and qxpenses of the County relating to the proceedings for the
formation of the Proposed istrict and the issuance of the Proposed Bonds(collectively,
the"County Costs"),including without limitation:(i)the fees and expenses of the County's
special tax consultant,financial advisor, appraiser, absorption consultant, legal counsel
(including bond counsel and special tax counsel), consulting engineers and other
professional consultants and advisors (individually a "Consultant" and collectively the
"Consultants"); (ii) publication costs and other out-of-pocket expenses;(iii)a reasonable
#779951v1
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charge(if applicable)for County staff time;and(iv)other County staff and administrative
costs.
(b) The County may draw upon the Deposit to pay the County Costs from time
to time. The County shall not be obligated to advance any of its funds for purposes of
forming the Proposed District or the issuance and sale of the Proposed Bonds.
(c) In the event that the balance of the Deposit falls below $20,000, or is
otherwise insufficient to pay any County Costs due or coming due, the Proponent shall
deposit additional monies with the County in the amount necessary to restore the balance
of the Deposit to $75,000 and/or pay the County Costs due or corning due. The
Proponent shall deposit such additional monies within ten (10) calendar days of the
receipt of written notification from the County of the need for such additional funds.
Without limiting any other right of the County to discontinue proceedings relating to the
Proposed District or the Proposed Bonds,it is expressly understood and agreed that the
County shall have the right to suspend or terminate all proceedings for the establishment
of the Proposed District and/or the issuance of the Proposed Bonds in the event that the
Proponent fails to deposit such additional monies with the County within said ten (10)
calendar days.
(d) The County shall provide monthly statements to the Proponent showing the
amount disbursed from the Deposit and the remaining balance thereof. The County
agrees to keep such records as are reasonably necessary to show the amount of monies
disbursed for payment of County Costs.The County shall make such records available to
the Proponent upon request.
Section 2. Consultants, Compensation, and Method of Payment. The
County shall retain the Consultants upon such terms as it deems appropriate in its sole
discretion. The County shall have the sole discretion to select the persons or firms to be
retained as Consultants, and to evaluate their performance and the reasonableness of
their compensation. Compensation shall be paid to each Consultant for work performed
as specified in their respective contracts with the County.Upon request,the County shall
provide the Proponent with a summary of fees paid to the Consultants on a bi-monthly
basis.
Section 3. Reimbursement to Proponent. If the Proposed District is
established and the Proposed Bonds are issued, the Proponent shall be entitled to be
reimbursed for Deposit,without interest,from the proceeds of the Proposed Bonds.In the
event that the net proceeds of the Proposed Bonds,after deducting the costs of issuance
from the proceeds received by the County, are insufficient to fully fund both (i)
reimbursement of the Deposit anti (ii) financing of the Special Improvements, the
Proponent shall advise the County in writing whether it wishes to receive reimbursement
of the Deposit or to waive its entitlement to such reimbursement. In the event that the
Proposed Bonds are issued in multiple series,waiver of reimbursement with respect to a
given series shall not constitute a waiver of reimbursement from the proceeds of any
subsequent series. If the proceedings are abandoned for any reason prior to the sale
and issuance of the Proposed Bonds, the obligation of the County to reimburse the •
#779951v1 Page 2 of 6
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Proponent for the Deposit or any portion thereof shall be strictly limited to that portion of
the Deposit not yet expended, and the provisions of subsection (c)of Section 5 hereof
shall govern the application of such unexpended portion of the Deposit.
Section 4. Ownership of Documents. All plans, specifications, reports,
appraisals and other documentation prepared as part of the proceedings to establish the
Proposed District and to sell and issue the Proposed Bonds shall become the property of
the County, regardless of whether the Proposed District is formed and/or the Proposed
Bonds are sold and issued;provided,however,that the Proponent shall be entitled to use
the information contained in such documents.
Section 5. No Obligation to form a Community Facilities District;
Abandonment of Proceedings.
(a) The County expressly reserves the right to abandon the proceedings for the
establishment of the Proposed District and/or issuance of the Proposed Bonds for any
reason at any time prior to the completion thereof. Without limiting the generality,of the
foregoing,the Proponent expressly acknowledges that the decision of the County to form
a community facilities district and/or to issue special tax bonds under Chapter 32 is an
exercise of the legislative authority of the Council of the County,and that the County may
not enter into a contract or obligate the Council to exercise its legislative discretion in a
particular manner. This Agreement does not,therefore, in any way create a contractual,
legal or equitable obligation of or commitment by the County to approve the formation of
the Proposed District or to sell the Proposed Bonds to finance the Project.
(b) Should the Proponent elect to abandon the proceedings, the Proponent
shall provide written notification of such election to the County and request the County to
terminate all consulting agreements and use reasonable efforts to minimize any and all
additional County Costs.
(c) If proceedings to form the Proposed District and/or issue the Proposed
Bonds are not completed and are abandoned for any reason at any time,there will be no
obligation on the part of the County to reimburse the Proponent for any monies previously
advanced pursuant to this Agreement. In such event, the County, however, agrees to
return to the Proponent such portion of the remaining balance of the Deposit, without
interest, as the County determines to be in excess of the amount necessary to pay any
outstanding County Costs which the County is obligated to pay,which determination shall
be made as soon as reasonably practicable. If, for any reason,the remaining balance of
the Deposit is not sufficient to pay all outstanding County Costs, the Proponent shall
deposit such additional amounts as are required to pay all such County Costs.
(d) It is hereby expressly acknowledged and agreed that this Agreement is not
a debt or liability of the County,and that the County shall not be obligated to advance any
of its funds for purposes of forming the Proposed District or issuing the Proposed Bonds.
Section 6. Authority to Execute Agreement. The County and the Proponent
each represents that it has the authority to execute, deliver and perform its obligations
W779951v1 Page 3 of 6
D-3
under the terms of this Agreement and that the individual(s)signing this Agreement on its
behalf have full right and authority to bind said party to this Agreement.
Section 7. Designated Representatives; Notices. The following individuals
are hereby designated as representatives for the County and the Proponent,respectively,
to act as liaison between the parties:
County:
Director of Finance(or his/her designee)
County of Hawaii
25 Aupu ni Street, Rm.118
Hilo,Hawaii 96720
Proponent:
Mr. Bruce Bell,CEO
Waikoloa Heights Land Investors, L.P.
5241 Arnold Avenue
McClellan,CA 95652
Any written notice, statement, demand, consent, approval, authorization, offer,
designation,request or other communication to be given hereunder shall be given to the
party entitled thereto at its address set forth above,or at such other address as such party
may provide to the other party in writing from time to time. Each such notice,statement,
demand, consent, approval, authorization, offer, designation, request or other
communication hereunder shall be delivered to the party to whom it is addressed (a) if
personally served or delivered, upon delivery, (b) if given by electronic communication,
whether telex, telegram, electronic mail or telecopy upon sender's receipt of an
appropriate answerback or other written acknowledgment, (c) if given by registered or
certified mail, return receipt requested, deposited with the United States mail postage
prepaid, 72 hours after such notice is deposited with the United States Mail, (d) if given
by overnight courier, with courier charges prepaid, 24 hours after delivery to said
overnight courier, or (e) if given by any other means, upon delivery at the address
specified in this Section.
Section 8. Jurisdiction and Venue. Each of the County and the Proponent(a)
agrees that any suit action or other legal proceeding arising out of or relating to this
Agreement shall be brought in state court in the County of Hawaii, (b) consents to the
jurisdiction of each such court in any suit, action r proceeding, and (c) waives any
objection that it may have to the laying of venue or 4ny suit action or proceeding in any
of such courts and any claim that any such suit, action or proceeding has been brought
in an inconvenient forum.
Section 9. Amendments. This Agreement may be amended by an instrument
in writing executed and delivered by the parties hereto.
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Section 10. Waivers. No waiver of, or consent with respect to,any provision of
this Agreement by a party hereto shall in any event be effective unless the same shall be
in writing and signed by such party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was given.
Section 11. Indemnification. The Proponent hereby indemnifies, and agrees
that it shall defend and hold harmless,the County and its officials,employees,contractors
and agents,from and against any and all actions,claims,damages,losses or expenses
of any kind whatsoever arising out of or relating to any acts or omissions on the part of
the Proponent or any of its officers,employees,contractors or agents with respect to the
Proposed District or the Proposed Bonds.
Section 12. Governing Law, This Agreement has been executed in and shall be
governed by the laws of the State of Hawaii.
Section 13. Construction. The parties to this Agreement and their counsel have
reviewed and revised this Agreement, and the normal rule of construction to the effect
that any ambiguities in an agreement are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
Section 14. Severability. If a provision of this Agreement is found to be void,
illegal or unenforceable, then any such provision shall be deemed stricken and the
remaining provisions hereof shall, nevertheless, remain in full force and effect.
Section 15. Entire Agreement. This Agreement shall constitute the entire
Agreement between the parties. Any amounts to or clarification necessary to this
Agreement shall be in writing and acknowledged by all parties to the Agreement.
Section 16. Counterparts. This Agreement may be executed in one or more
counterparts,each of which shall constitute an original,and all of which together shall be
considered one and the same instrument.
I I
*779951v1 Page 5 of 6
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date and year first above written.
COUNTY OF HAWAII
By:
Name:Will(Omn U. $V•%triawEe 7v
Title: Managing Director BEE 26 2024
WAIKOLOA HEIGHTS LAND INVESTORS,L.P.
By: Glad(
Name: j e...GS4
Title: ep
RECOMMEND APPROVAL:
Diane Naka a
Director of Finance
•
APPROVED AS TO FORM AND ..tpp,of.]O as to Ava;iaoiiity of Funds
LEGALITY: in the amounts and for the purposes
set forth herein.DIRECTOR 4 FINANGf
�...� �Fc 2 Zoza
EI' a e h A.Stra ce
Corporation Counsel
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