HomeMy WebLinkAboutCOM 0597.001 2006-2008 ~tv w
Harry Kim ` ~y William Takaba
Mayor ~ Director
Nancy E. Crawford
~ oi~wi.~ Deputy Director
County of Hawaii
Finance Department
25 Aupuni Street, Room 118 • Hilo, Hawaii 96720
(808) 961-8234 • Fax (808) 961-8248
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August 1, 2007 _I
i
Pete Hoffmann, Chairperson and
Members of the Hawaii County Council
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Re: Bill Submittal for Amending Chapter 32, Hawaii County Code
The proposed amendments in the referenced bill are intended to improve the
Community Facilities District (CFD) process by changing the timing and focus of
the required appraisal. Also included are changes proposed to clarify the
applicability of special taxes within a district to owners or lessees of record.
Currently, Chapter 32 requires that prior to the establishment of any CFD,
Council must find that the value of the land plus the proposed improvements is at
least two times the cost of the improvements, based on prevailing appraisal
standards. This requirement is unique to County of Hawaii and has not been
found in other CFD enabling legislation. In a case such as Kamakoa at Waikoloa,
the land carries very little value due to the deed restrictions. In any area without
high value land this requirement will be difficult to meet and could prevent some
very worthwhile projects.
The appraisal requirement also comes very early in the process and without
regard to the amount of CFD bonds that a developer may be planning to request
in a bond ordinance at a later time. While there is no requirement in this Chapter
that another appraisal be done at the time of a bond ordinance, such an
appraisal will be required by the financial underwriters. The need for two
appraisals creates a cost that is ultimately born by the residents of the CFD.
For the above reasons, we propose deleting the appraisal requirement in the pre-
formation section of Chapter 32 and adding a section tying appraised value
requirements to the authorization for issuance of bonds. New proposed
language requires that the value of the land plus the proposed improvements is
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Ref. To:
Hawaii County is an equal opportunity provider and employer. Ref. ~@
Hawaii County Council
August 1, 2007
Page 2
at least three times the principal amount of bonds issued for a district. Such a
requirement is common in the special district legislation of many county or
municipal governments. It will satisfy the underwriters of CFD bonds and will
assure the legislators that the debt is reasonable relative to the value of the
improved property.
This proposed section of the Chapter also allows the Council to waive the three
to one ratio requirement in special situations where the bonds are felt to have a
significant public impact. Kamakoa at Waikoloa is an example of a project that
might be exempted from having to meet the three to one ratio because of its
unique land trust requirements, which reduce its value, and acknowledged public
purpose.
This bill also adds language to the section on levy of special taxes. This section
currently provides that, if property owned by a public body is leased to a
nonexempt person or entity, the special tax is levied on the lessee's interest. The
proposed addition clarifies that this applies to direct or indirect leasing
arrangements (including situations where the public body grants a master lease
to another entity which then develops the property and leases individual parcels
to the ultimate occupants). The proposed addition also allows for the special tax
to be levied on the lessee's interest in situations where the owner of the property
is a person or entity other than a public body
Both of these changes are intended to enhance the usefulness of Chapter 32
and formation of Community Facilities Districts when they address a public need.
Should you have additional questions, please don't hesitate to call or email
Nancy Crawford.
Sincerely,
~Zs~
William akaba
Finance Director
cc: Dixie Kaetsu, Managing Director
Craig Masuda, Corporation Counsel