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HomeMy WebLinkAboutRES 629 Draft 01 2006-2008COUNTY OF HAWAII RESOLUTION NO. STATE OF HAWAII 629 08 DECLARING THE INTENTION OF THE COUNTY OF HAWAII TO ESTABLISH A COMMUNITY FACILITIES DISTRICT, DESIGNATED AS HAWAII COUNTY COMMUNITY FACILITIES DISTRICT NO. 2-2008 (KAMANU STREET EXTENSION), 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, in response to a petition (the "Petition") submitted to the Council of the County of Hawaii (the "Council"), West Hawaii Business Park LLC (together with its successors and assigns, the "Petitioner"), as owner of the land shown on a map (the "Boundary Map") attached to the Petition, the Council proposes to establish a community facilities district (the "Proposed District") within the County of Hawaii (the "County") under the teens of Chapter 32 of the Hawaii County Code ("Chapter 32"), with the boundaries of the Proposed District to be as shown on the Boundary Map, which is on file with the Director of Finance of the County; and WHEREAS, the County has appropriated and allotted the sum of $300,000 for the purpose of paying the costs expected to be incurred by the County in connection with the formation of the Proposed District and issuance of the Special Tax Bonds (as hereinafter defined) for the Proposed District and, accordingly, the Council has determined that sufficient funds are available to provide for such purposes and that no deposit of funds by the Petitioner will be required for such purpose; and WHEREAS, in response to the Petition, the Council intends to provide for the issuance of one or more series of bonds (the "Special Tax Bonds") pursuant to Article 6 of Chapter 32 (all references hereafter in this resolution to Articles and Sections shall be deemed to be references to the corresponding Article or Section as set forth in Chapter 32 unless indicated otherwise) in an aggregate principal amount not to exceed $13,500,000 to finance (i) all or a portion of the costs of the special improvements (the "Improvements") described in Exhibit A attached hereto, and (ii) all or a portion of certain incidental expenses (the "Incidental Expenses"), as identified in Exhibit B attached hereto, which Exhibits are, by this reference, incorporated herein and made a part hereof; and WHEREAS, the Special Tax Bonds shall be secured by the special taxes to be levied upon taxable property in the Proposed District, as herein provided; and WHEREAS, the Council further intends, except where firnds aze otherwise available, to provide for the annual levy of a special tax upon the taxable parcels within the Proposed District (the "Special Taxes") sufficient in amount to pay for the costs of the Improvements and Incidental Expenses, including the debt service on any Special Tax Bonds issued to finance or refinance any Improvements and Incidental Expenses, said Special Taxes to be calculated in accordance with the rate and method of apportionment thereof (the "Rate and Method of Apportionment") set forth in Exhibit C, attached hereto and by this reference incorporated herein and made a part hereof; and WHEREAS, the Council intends to establish the Proposed District for a term of forty (40) years, commencing with the Fiscal Yeaz ending June 30, 2009, subject to the further provisions hereof regarding such term; and WHEREAS, Section 32-20 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 32-20, as provided hereafter in this resolution; NOW, THEREFORE, BE IT RESOLVED by the Council of the County of Hawaii as follows: 1. The Council hereby finds and determines that: (a) the Petition satisfies the requirements of Chapter 32 pertaining thereto; (b) the Petition is signed by authorized representatives of the owner of all of the land to be included within the Proposed District; (c) there are no lessees of the land to be included within the Proposed District who, by the express terms of any existing leases, aze obligated to pay the Special Taxes; and (d) sufficient funds have been appropriated and allotted for the estimated costs to be incurred by the County in connection with the formation of the Proposed District and issuance of the Special Tax Bonds and, accordingly, no additional deposit of funds by the Petitioner will be required for such purposes. 2. The Proposed District is proposed to be established under the terms of Chapter 32. The Proposed District shall be named the Hawaii County Community Facilities District No. 2- 2008 (Kamanu Street Extension). 3. The Council hereby establishes the initial boundary of the Proposed District as shown on the Boundary Map on file with the Director of Finance of the County. 4. The County intends to issue the Special Tax Bonds, in an aggregate principal amount not to exceed a maximum of $13,500,000, exclusive of refunding bonds (if any), to finance all or a portion of the authorized Improvements and Incidental Expenses. 5. The Improvements proposed to be funded, in whole or in part, by proceeds of the Special Tax Bonds and/or the Special Taxes aze set forth in Exhibit A. As set forth in Exhibit A, all of the Improvements to be fended will be owned by the County, except for certain non- governmental utility lines, consisting of overhead electrical, telephone and CATV lines. The Council hereby finds and determines that such private utility lines will serve a public purpose and aze therefore eligible for funding. 6. 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. 7. Following establishment of the Proposed District, and except where funds are otherwise available, Special Taxes sufficient to pay for the costs of the Improvements and Incidental Expenses shall be annually levied within the Proposed District in accordance with the provisions of Article 5. The Rate and Method of Apportionment for the Special Taxes shall be as set forth in Exhibit C unless modified in accordance with Chapter 32 prior to establishment of the Proposed District. 8. 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 bond proceeds or from special tax revenue 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. 9. The Petition has been filed by the sole owner of all of the land in the Proposed District and there aze no lessees of such land who, by the express terms of any existing leases, aze obligated to pay the Special Taxes. Accordingly, pursuant to Section 32-24, 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. 10. The term of the Proposed District shall be forty (40) years commencing with the fiscal year ending June 30, 2009; provided that the teen of the Proposed District shall expire at such time, but in no event until such time, whether before or after the end of such 40-year period, 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. The Council hereby directs the Director of Public Works of the County to study the Proposed District, to prepaze the report required by Section 32-21 (the "Report") and to file the Report with the County Clerk not later than sixty (60) days after the adoption of this Resolution; provided that the Director of Public Works may consult with and rely upon other officials and departments of the County or the State in connection with such study and the Report; and provided further that, if deemed necessary or desirable by the Director of Public Works, the study may be conducted and the Report may be prepazed by an independent consultant under the direction of the Director of Public Works. The Report shall include, but not be limited to, an estimate of the cost of providing the Improvements and Incidental Expenses. 12. This Resolution shall take effect immediately upon its adoption. Dated at Hilo , Hawaii, this 3rd day of June , 2008. INTRODUCED BY: COUNCIL COUNTY COUNCIL County of Hawaii Hilo, Hawaii I hereby certify that the foregoing RESOLUTION was by the vote indicated to [he right hereof adopted by the COiJNCIL of the County of Hawaii on June 3 2008 ATTEST: COUNTY CLF OF HAWAII ROLL CALL VOTE AYES NOES ABS EX FORD HIGA X HOFFMANN X IKEDA JACOBSON X NAEOLE X PILAGO g YAGONG g YOSHIMOTO J{ 8 0 1 0 Reference: RESOLUTION C-1193/F+C-289 629 OS EXHIBIT A Description of Authorized Improvements The Improvements to be funded for the Proposed District shall include: (a) a 60-foot Roadway, with curbs, gutters and sidewalks; and (b) related facilities and improvements, including grade adjustment (retaining) walls, a "ground bridge" over the fmger of the burial cave extending through the Kamanu Street Right-of--Way, sewer lines, water mains, drainage facilities, street lights and overhead electrical, telephone and CATV lines. All of the Improvements to be funded will be owned by the County, except for certain non-governmental utility lines, consisting of overhead electrical, telephone and CATV lines. A-1 EXHIBIT B DESCRIPTION OF AUTHORIZED INCIDENTAL EXPENSES It is anticipated that the following incidental expenses may be incurred in the proceedings for formation of the Proposed District, implementation of the authorized Improvements project and related bond financing and will be payable 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 Bond Counsel, Special Tax Counsel and Disclosure Counsel services Financial advisor services Special tax administrator services Appraiser/Market absorption consultant services Initial bond transfer agent, fiscal agent, registraz and paying agent services, and rebate calculation service set up charge 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 casts Real estate acquisition costs Rating agency fees Other costs of bond issuance or special tax/district administration The expenses of certain recurring services pertaining to the Proposed District may be included in each annual special tax levy. These include: Trustee, bond transfer agent, registrar and paying agent services Rebate calculation services and periodic azbitrage rebate payments Special tax administrator services Other necessary consultant services incidental to the administration of the Proposed District Rating agency fees B-1 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 foregoing enumeration is supplemented in its entirety by the items listed in the definition of "Administrative Expenses," set forth in the Rate and Method of Apportionrnent, and shall not be regazded as exclusive but rather shall be deemed to include any other incidental expenses of a like nature which may be incurred from time to time with respect to the Proposed District. B-2 EXHIBIT C HAWAII COUNTY COMMUNITY FACILTTIES DISTRICT NO. 2-2OOH (KAMANU STREET EXTENSION RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A Special Tax applicable to each Tax Map Key Parcel in the Hawaii County Community Facilities District No. 2-2008 (Kamanu Street Extension) [herein "the CFD"] shall be levied and collected according to the tax liability determined by the County Council of the County of Hawaii, through the application of the appropriate amount or rate for Taxable Property, as described below. All of the property in the CFD, unless exempted by law or by the provisions of Section F below, shall be taxed for the purposes, to the extent, and in the manner herein provided. A. The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of a TMK Parcel as shown on a Tax Map, or if the land area is not shown on a Tax Map, the land area shown on the applicable Final Map, Development Plan, or other recorded parcel map. "Administrative Expenses" means any or all of the following: the fees and expenses of any fiscal agent or trustee (including any fees or expenses of its counsel) employed in connection with any Bonds, and the expenses of the County carrying out its duties with respect to the CFD and the Bonds, including, but not limited to, levying and collecting the Special Taxes, the fees and expenses of legal counsel, charges levied by the County, costs related to property owner inquiries regarding the Special Taxes, costs associated with complying with any continuing disclosure requirements for the Bonds and the Special Taxes, and all other costs and expenses of the County in any way related to the establishment or administration of the CFD. "Administrator" means the person or firm designated by the County to administer the Special Taxes according to this RMA. "Assigned Special Tax" means, in any Fiscal Year, the amount determined pursuant to Section C.l.a. below. "Authorized Facilities" means those facilities that are authorized to be funded by the CFD. Couary oJHawaii CFD No. 2-2008 1 Apri[ 13, 2008 "Backup Special Tax" means, in any Fiscal Year, the amount determined pursuant to Section C.l.b. below. "Bonds" means bonds or other debt permitted pursuant to the Code, whether in one or more series, issued or assumed by the County to fund Authorized Facilities. "CFD Formation" means the date on which the Ordinance of Formation to form the CFD was adopted by the County Council. "Code" means the Community Facilities Districts Code (1994, Ord. No. 94-77, sec. 3), being Chapter 32 of the Hawaii County Code 1983 (2005 Edition, as amended). "County" means the County of Hawaii. "County Council" means the County Council of the County of Hawaii, acting as the legislative body of the CFD. "Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Final Mapped Property, Excess Open Property, and Excess Public Property, for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. "Development Plan" means a site plan or other development plan that identifies such information as the type of structure, acreage, and/or square footage that is approved to be developed on Taxable Property within the CFD. "Excess Open Property" means the acres of Open Property that exceed the acreage exempted in Section F below. In any Fiscal Year in which a Special Tax must be levied on Excess Open Property pursuant to the steps set forth in Section D below, Excess Open Property shall be those TMK Parcels that most recently became Open Property based on the dates on which Final Maps recorded creating such Open Property. "Excess Public Property" means the acres of Public Property that exceed the acreage exempted in Section F below. In any Fiscal Year in which a Special Tax must be levied on Excess Public Property pursuant to the steps set forth in Section D below, Excess Public Property shall be those TMK Parcels that most recently became Public Property based on the dates on which Final Maps recorded creating such Public Property. "Final Map" means a final map approved by the County pursuant to the Subdivision Control Code (Hawai`i County Code Chapter 23) that creates individual lots on which building permits for new construction may be issued without further subdivision. "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Excess Open Property, and Excess Public Property, which as of January 1 of the previous Fiscal Year was located within a Final Map. "Fiscal Year" means the period starting July 1 and ending on the following June 30 County oJHawaii CFD No. 2-2008 2 Apri123, 2008 "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, and any instrument replacing or supplementing the same. "Maximum Special Tax" means the greatest amount of Special Tax that can be levied on a TMK Parcel in any Fiscal Year determined in accordance with Section C below. "MCX Property" means all TMK Parcels of Developed Property that are zoned MCX (Industrial-Commercial Mixed Districts) according to the Hawaii County Code Chapter 25, Article 5. "MG Property" means all TMK Parcels of Developed Property, not to exceed 61.72 Acres, that are zoned MG (General Industrial Districts) according to the Hawaii County Code Chapter 25, Article 5. At such time that the total Acreage of MG Property exceeds 61.72 Acres (the total Acres anticipated at CFD Formation), all subsequent Acreage of MG Property shall be classified as Other Property. "Open Property" means all TMK Parcels in the CFD that are zoned O (Open Districts) according to the Hawaii County Code Chapter 25, Article 5. "Ordinance of Formation" means the ordinance adopted by the County Council to form the CFD. "Other Property" means all TMK Parcels of Developed Property that are not MCX Property, MG Property, or Open Property. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all TMK Parcels of Developed Property. For Final Mapped Property, "Proportionately" means that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all TMK Parcels of Final Mapped 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 Excess Open Property, "Proportionately" means that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all TMK Parcels of Excess Open Property. For Excess Public Property, "Proportionately" means that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all TMK Parcels of Excess Public Property. "Public Property" means any property within the boundaries of the CFD that (i) is owned by or irrevocably offered for dedication to the federal government, State of Hawaii, County, or 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 or preservation making impractical its use for any purpose other than that set forth in the easement or recorded restriction. County oJHawaii CFD No. 2-2008 3 Apri[ 23, 2008 "RMA" means this Rate and Method of Apportionment of Special Tax. "Special Tax" means a special tax levied in any Fiscal Year to pay the Special Tax Requirement. "Special Tax Requirement" means, in the following order of priority, the amount necessary in any Fiscal Year to: (i) pay Administrative Expenses up to $50,000; (ii) pay principal and interest on Bonds which is due in the calendar year that begins in such Fiscal Year; (iii) create and/or replenish reserve funds for the Bonds; (iv) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year or (based on existing delinquencies in the payment of Special Taxes) are expected to occur in the Fiscal Yeaz in which the tax will be collected; (v) pay all remaining Administrative Expenses in excess of $50,000; and (vi) pay the costs of Authorized Facilities provided that Special Taxes shall not be collected from Excess Open Property or Excess Public Property for this purpose. The amounts referred to in clauses (ii) and (iii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to the Indenture; (ii) proceeds received by the CFD from the collection of penalties associated with delinquent Special Taxes; and (iii) any other revenues available to pay debt service on the Bonds as determined by the Administrator. "Taxable Property" means all of the TMK Parcels within the boundaries of the CFD that are not exempt from the Special Tax pursuant to law or Section F below. "Tax Map" means an official map of the County designating parcels by tax map key number. "Tax Map Key" or "TMK" means a unique number that is assigned by the County to identify each lot or parcel within the County's boundazies. "Tax Map Key Parcel" or "TMK Parcel" means a lot or parcel shown on a Tax Map with an assigned TMK. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Excess Open Property, or Excess Public Property. B. DATA FOR ADMINISTRATION OF THE SPECIAL TAX On or about April 1 of each Fiscal Yeaz, the Administrator shall identify the current TMK for all TMK Pazcels of Taxable Property within the CFD. The Administrator shall also determine: (i) whether each TMK Parcel of Taxable Property is Developed Property, Final Mapped Property, Undeveloped Property, Excess Open Property, or Excess Public County ojHawaii CFD No. 2-2008 4 April 23,1008 Property; (ii) for Developed Property, which TMK Parcels are MCX Property, MG Property, and Other Property; and (iii) the Special Tax Requirement. If a construction building permit has been issued for development of a structure on a TMK Parcel, and additional structures are anticipated to be built on the TMK Parcel as shown on the approved Development Plan for such TMK Parcel, a portion of the Acreage of the TMK Parcel shall be taxed as Undeveloped Property if building permits for all of the structures in the approved site plan for the TMK Parcel were not issued as of March 1 of the Fiscal Year prior to the Fiscal Year in which the Special Taxes are being levied. If the Acreage assigned to each building anticipated on the TMK Parcel is not clearly delineated on a Final Map, the Acreage of the portion of the TMK Parcel to be taxed as Developed Property shall be equal to the structure's pro rata share of the total Square Footage anticipated on the TMK Parcel, as determined by the County or the Development Plan, multiplied by the total Acreage of the TMK Parcel. The remaining Acreage within the TMK Parcel shall be taxed as Undeveloped Property. Determination of the amount of Developed Property and Undeveloped Property on a TMK Parcel shall be at the sole discretion of the County. C. MAXIMUM SPECIAL TAX Developed Property The Maximum Special Tax for Developed Property shall be the greater of the Assigned Special Tax or the Backup Special Tax as follows: a. Assi ng ed Special Tax The Assigned Special Tax for a TMK Parcel of Developed Property is shown in Table 1 below. Table 1 Assigned Special Tax for Developed Property Zonin Assigned Special Tax er Acre MG Pro e $3,150 MCX Pro e $7,830 Other Pro ert $7,830 b. Backup Special Tax The Backup Special Tax for a TMK Parcel of Developed Property shall be $7,830 per Acre. County oJHawaii CFD No. 2-2008 5 April 23, 2008 2. Final Mapped Property, Undeveloped Property, Excess Open Property, and Excess Public Property The Maximum Special Tax for Final Mapped Property, Undeveloped Property, Excess Open Property, and Excess Public Property shall be $7,830 per Acre. D. METHOD OF LEVY OF THE SPECIAL TAX Each Fiscal Yeaz, the Administrator shall determine the Special Tax Requirement for that Fiscal Year and levy the Special Tax on all TMK Parcels of Taxable Property as follows: Step 1: The Special Tax shall be levied Proportionately on each TMK Parcel of Developed Property up to 100% of the Assigned Special Tax for each TMK Pazcel for such Fiscal Year until the amount levied is equal to the Special Tax Requirement; Step 2: If additional revenue is needed after Step 1, the Special Tax shall be levied Proportionately on each TMK Parcel of Final Mapped Property up to 100% of the Maximum Special Tax for Final Mapped Property for each TMK Pazcel for such Fiscal Year until the amount levied is equal to the Special Tax Requirement; Step 3: If additional revenue is needed after Step 2, the Special Tax shall be levied Proportionately on each TMK Parcel of Undeveloped Property up to 100% of the Maximum Special Tax for Undeveloped Property for each TMK Parcel for such Fiscal Year until the amount levied is equal to the Special Tax Requirement; Step 4: If additional revenue is needed after Step 3, 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 until the amount levied is equal to the Special Tax Requirement; Step 5: If additional revenue is needed after Step 4, the Special Tax shall be levied Proportionately on each TMK Parcel of Excess Open Property, up to 100% of the Maximum Special Tax for Excess Open Property for such Fiscal Year until the amount levied is equal to the Special Tax Requirement; Step 6: If additional revenue is needed after Step 5, the Special Tax shall be levied Proportionately on each TMK Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Excess County ojHawaii CFD No. 2-2008 6 Apri[ 23, 2008 Public Property for such Fiscal Yeaz until the amount levied is equal to the Special Tax Requirement. E. COLLECTION OF SPECIAL TAX The Special Taxes will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that prepayments are permitted as set forth in Section G below and provided further that the County may directly bill the Special Taxes and 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. F. Notwithstanding any other provision of this RMA, no Special Tax shall be levied on up to 54.62 Acres of Open Property and 34.51 Acres of Public Property. However, should a TMK Parcel no longer be classified as Open Property or Public Property, its tax-exempt status will, without the necessity of any action by the County Council, terminate. A Special Tax may be levied on Excess Public Property pursuant to the steps set forth in Section D; however, a public agency may require that the special tax obligation on land conveyed to it that would be classified as Excess Public Property be prepaid pursuant to Section G below. Similazly, a qualified non-profit organization, as determined by the County, may require that the special tax obligation on land conveyed to it that would be classified as Excess Public Property be prepaid pursuant to Section G below. In addition, no Special Tax shall be levied in any Fiscal Year on Pazcels that have fully prepaid the Special Tax obligation pursuant to the formula set forth in Section G. G. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section G: "Construction Fund" means the account (regardless of its name) identified in the Indenture to hold funds which aze currently available for expenditure to acquire or construct public facilities eligible under the Code. "Outstanding Bonds" means all Previously Issued Bonds which remain outstanding, with the following exception: if a Special Tax has been levied against, or already paid by, a TMK Parcel making a prepayment, and a portion of the Special Tax will be used to pay a portion of the next principal payment on the Bonds that remain outstanding (as determined by the Administrator), that next principal payment shall be subtracted from the total Bond principal that remains County ojHawaii CFD No. 2-2008 7 April 23, 2008 outstanding, and the difference shall be used as the amount of Outstanding Bonds for purposes of this prepayment formula. "Previously Issued Bonds" means all Bonds that have been issued on behalf of the CFD prior to the date of prepayment. "Public Facilities Requirements" means either $8,450,000 in 2007 dollars, which shall increase by the Public Facilities Inflation Index on July 1, 2008, and each July 1 thereafter, or such lower number as (i) determined by the Administrator as sufficient to provide the public facilities to be provided by the CFD under the authorized bonding program for the CFD, or (ii) shall be determined by the County Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this RMA as described in Section D. "Public Facilities 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 Public Facilities Inflation Index shall be another index as determined by the Administrator that is reasonably comparable to the Honolulu Construction Cost Index: Single Family Residence. "Remaining Facilities Costs" means the Public Facilities Requirements (as defined above), minus public facility costs funded by Previously Issued Bonds (as defined above), developer equity, Special Tax prepayments, and/or any other source of funding. I. Full Prepayment The Special Tax obligation may be 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 County with written notice of intent to prepay. Within 30 days of receipt of such written notice, the County or its designee shall notify such owner of the prepayment amount for such TMK Parcel. Prepayment must be made not less than 75 days prior to any redemption date for Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount shall be calculated as follows (capitalized terms as defined below): County of Hawaii CFD No. 2-2008 8 Aprit 2$ 2008 Bond Redemption Amount plus Remaining Facilities Amount plus Redemption Premium plus Defeasance Requirement plus Administrative Fees and Expenses less Reserve Fund Credit equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount shall be determined by application of the following steps: Step 1. Confirm that no Special Tax delinquencies apply to such TMK Parcel. Step 2. Compute the total Maximum Special Tax that could be collected from the TMK Parcel prepaying the Special Tax in the Fiscal Year in which prepayment would be received by the County. For TMK Parcels of Developed Property, the Maximum Special Tax equals the greater of the Assigned Special Tax and Backup Special Tax. Step 3. (a) Divide the Maximum Special Tax computed pursuant to Step 2 for such TMK Parcel by the total estimated Maximum Special Tax revenues that could be collected in that Fiscal Year from property in the entire CFD, excluding any TMK Parcels which have prepaid their Special Tax obligation, and (b) Divide the Maximum Special Tax computed pursuant to Step 2 for such TMK Parcel by the Maximum Special Tax revenues that could be generated at buildout for the entire CFD as determined by the Administrator based on the Development Plan and other information currently available, excluding any TMK Pazcels which have prepaid their Special Tax obligation. Step 4. Multiply the larger quotien 3(b) by the Outstanding Outstanding Bonds to b Redemption Amount'. t computed pursuant to Steps 3(a) or Bonds to compute the amount of e retired and prepaid (the "Bond Step 5. Compute the current Remaining Facilities Costs (if any). Step 6. Multiply the larger quotient computed pursuant to Steps 3(a) or 3(b) by the amount determined pursuant to Step 5 to compute the amount of Remaining Facilities Costs to be prepaid (the "Remaining Facilities Amount'. County ojHawaii CFD No. 2-2008 9 April 23, 2008 Step 7. Multiply the Bond Redemption Amount computed pursuant to Step 4 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium'. Step 8. Compute the amount needed to pay interest on the Bond Redemption Amount starting with the first Bond interest payment date after which the prepayment has been received until the earliest redemption date for the Outstanding Bonds, which, depending on the Bond offering document, may be as early as the next interest payment date. Step 9. Compute the amount of interest the County reasonably expects to derive from reinvestment of the Bond Redemption Amount plus the Redemption Premium from the first Bond interest payment date after which the prepayment has been received until the redemption date for the Outstanding Bonds. Step 10. Take the amount computed pursuant to Step 8 and subtract the amount computed pursuant to Step 9 (the "Defeasance Requirement'. Step 11. Determine the costs of computing the prepayment amount, the costs of redeeming Bonds, the costs of recording any notices to evidence the prepayment and the redemption, and any other administrative costs associated with the prepayment (the "Administrative Fees and Expenses'. Step 12. If and to the extent so provided in the indenture pursuant to which the Outstanding Bonds to be redeemed were issued, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit'. Step 13. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 4, 6, 7, 10, and 11, less the amount computed pursuant to Step 12 (the "Prepayment Amount'. Step 14. From the Prepayment Amount, the amounts computed pursuant to Steps 4, 7, 10, and 12 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 Step 6 shall be deposited into the Construction Fund. The amount computed pursuant to Step 11 shall be retained by the CFD. County oJHawaii CFD No. 2-2008 10 April 23, 2008 For any TMK Parcel that is prepaid, the County 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 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 Excess Open Property and Excess Public Property) at buildout of the entire CFD, as determined by the Administrator based on the Development Plan and other information currently available, prior to the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds plus the estimated Administrative Expenses, and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds, excluding that portion to be retired as a result of the prepayment, plus the estimated Administrative Expenses. 2. Partial Prepayment The Special Tax on a TMK Parcel of Taxable Property may be partially prepaid. The amount of the prepayment shall be calculated as in Section G.1, except that a partial prepayment shall be calculated by the Administrator according to the following formula: PP=PFx%. The terms above have the following meanings: PP = the partial prepayment PF = the Special Tax Prepayment Amount (full prepayment) calculated according to Section G.1 = the percentage by which the owner of the TMK Parcel(s) is partially prepaying the Special Tax. The Special Tax partial prepayment amount must be sufficient to redeem at least a $5,000 increment of Bonds. The owner of any TMK Parcel who desires such prepayment shall notify the Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The 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 fee for providing this service. With respect to any TMK Parcel that is partially prepaid, the Administrator shall (i) distribute the remitted prepayment funds according to Section G.1, and (ii) indicate in the records of the CFD that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such TMK Parcel, equal County oJHawaii CFD No. 2-2008 11 Apri[ 23, 2008 to the outstanding percentage (1.00 - %) of the 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 Properly (excluding Excess Open Property and Excess Public Property) at buildout of the entire CFD, as determined by the Administrator based on the Development Plan and other information currently available, prior to the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds plus the estimated Administrative Expenses, and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds, excluding that portion to be retired as a result of the prepayment, plus the estimated Administrative Expenses. H. INTERPRETATION OF SPECIAL TAX FORMULA The County reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning the Special Taxes. In addition, the interpretation and application of any section of this document shall be left to the County's discretion. Interpretations may be made by the County by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this 1tMA. County of Hawaii CFD No. 2-2008 12 Apri123, 2008