HomeMy WebLinkAboutORD 1994-035 1992-1994COUNTY OF HAWAII STATE OF HAWAII
BILL NO. ~ ~~~
DRAFT 3
ORDINANCE NO. 94 35
AN ORDINANCE TO IMPLEMENT TAX INCREMENT FINANCING IN THE COUNTY OF
HAWAII BY ESTABLISHING THE PROCEDURES TO BE FOLLOWED IN THE
CREATION OF A TAX INCREMENT DISTRICT.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. Purpose. The purpose of this bill is to add a
chapter to the Hawaii County Code establishing the procedures to
be followed in the County of Hawaii for the creation of taa
increment districts. The council recognizes that taa increment
financing can provide funds for needed planning and improvements.
The council also recognizes that taa increment financing, througri
the provisional tax increment district mechanism, can provide
needed resources to enable the county to comprehensively address
conditions in a targeted area simultaneously with improvement
districts or community facilities districts. The council intends
that taa increment financing in the County of Hawaii is to be
adopted simultaneously with improvement district or a community
facilities district.
SECTION 2. The Hawaii County Code 1983, as amended, is
hereby amended by the addition of a new chapter to be
appropriately designated and to read as follows:
"CHAPTER
Taz Increment Districts.
Article 1. General Provisions
Section -1. Purpose. The purpose of this chapter is
to enable the county to utilize tax increment financing to finance
public improvements within a specific contiguous or non-contiguous
geographic area, which is also an improvement district or a
community facilities district, designated a tax increment
district, by dedicating a portion of property ~.ax revenue
inc~'eases within the district to the funding of specific
projects. This chapter also allows the creation of provisional
tax increment districts, which can provide resources to enable the
county to comprehensively address conditions in a targeted area
through improvement districts, community facilities district, or a
combination of the two methods adopted simultaneously with tax
increment financing.
Section -2. Definitions. As used in this chapter,
the following words and terms shall have the following meanings
unless the context indicates a different meaning or intent:
"Adjusted assessment base" means the value of the
assessment base for a tax increment or provisional tax increment
district after adjusting the original assessment base annually by
the adjustment rate, the effect of which shall be cumulative.
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"Adjustment rate" means a percentage rate or rates of
adjustment of the assessment base determined by the director of
finance at the time the tag increment district or provisional tax
increment district is established, based on the historical and
projected increases to the assessed values of taxable real
property within the boundary of the tag increment district or
provisional tax increment district and the projected cost
increases to the county for servicing the new developments within
the taa increment district or provisional tax increment district.
"Assessment base" means the total assessed values of all
taxable real property in a taa increment or provisional tas
increment district as most recently certified by the director of
finance on the date of creation of the district.
"Assessment increment" means the amount by which the
current assessed values of taxable real property located within
the boundaries of a tax increment or provisional tag increment
district exceeds its assessment base.
"Blight" means a condition resulting in a reduction in or
lack of proper utilization of the area to such an extent that it
constitutes a serious physical, social or economic burden on
county. Specifically, this improper utilization must be caused by
either:
(a) the existence of residential, commercial, industrial or
other types of buildings which are unfit or unsafe to
occupy and are conducive to ill health, transmission of
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disease, infant mortality, juvenile delinquency, and
crime because of any one or a combination of the
following factors:
(1) defective design and character of physical
construction;
(2) faulty interior arrangement and exterior spacing;
(3) high density of population and overcrowding;
(4) inadequate provision for ventilation, light,
sanitation, open spaces, and recreation facilities;
or
(5) age, obsolescence, deterioration, dilapidation,
mixed character, or shifting of ,as -a; or
(b) the existence of properties which suffer from economic
dislocation, deterioration, or whose use is unreasonably
impaired because of one or more of the following factors:
(1) faulty planning;
(2) the subdividing and sale of lots of irregular form
and shape and inadequate size for proper usefulness
and development;
(3) the laying out of lots in disregard of the contours
and other topography or physical characteristics of
the ground and surrounding conditions;
(9) the existence of inadequate public improvements,
public facilities, open spaces, and utilities which
cannot be remedied by private or governmental action
without tax increment financing;
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(5) a prevalence of depreciated values, impaired
investments, and social and economic maladjustment;
or
(6) the existence of lots or other areas which are
subject to being submerged by water.
"County" means the County of Hawaii.
"Council" means the council of the County of Hawaii.
"Director" means the director of finance of the County of
Hawaii.
"Project costs" mean expenditures made or estimated to be
made or monetary obligations incurred or estimated to be incurred
by the district that are listed in a tax increment financing plan
as costs of public works or public improvements in a taz increment
district, plus other costs incidental to the expenditures or
obligations. Project costs include:
(a) Capital costs, including the actual costs of the
construction of public works or public improvements, new
buildings, structures, and futures; the actual costs of
the demolition, alteration, remodeling, repair, or
reconstruction of existing buildings, structures, and
fixtures; and the actual costs of the acquisition,
clearing, and grading of property;
(b) Financing costs, including, but not limited to, all
necessary and incidental expenses related to the issuance
of tax increment bonds and all interest paid to holders
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of evidences of indebtedness or other obligations issued
to pay for project costs, any capitalized interest, and
any premium paid over the principal amount of the
obligations because of the redemption of the obligations
prior to maturity;
(c) Professional service costs, including architectural,
planning, engineering, marketing, appraisal, financial
consultant, and special services and legal advice;
(d) Imputed administrative costs, including reasonable
charges for the time spent by employees of the county in
connection with the implementation of a tax increment
financing plan;
(e) Relocation costs to the extent required by federal or
state law;
(f) Organizational costs, including the costs of conducting
environmental impact studies or other studies, the costs
of publicizing the creation of a taa increment district,
and the cost of implementing the tag increment financing
plan foz the tag increment district.
(g) Payments determined by the council to be necessary or
convenient to the creation of a tag increment district or
improvement district, or to the implementation of the tag
increment financing plan for the tag increment district.
"Property" means:
(a) Land, including land under water and waterfront property;
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(b) Buildings, structures, fixtures, and improvements on the
land;
(c) Any property appurtenant to or used in connection with
the land.
(d) Every estate, interest, privilege, easement, franchise,
and right in land, including rights-of-way, terms for
years, and liens, charges, or encumbrances by way of
judgment, mortgage, or otherwise and the indebtedness
secured by such liens.
"Provisional tax increment district" means a contiguous
or non-contiguous geographic area designated pursuant to this
chapter by the council for the purpose of financing preliminary
costs for establishing a taa increment district simultaneously
with an improvement district or community facilities district.
"Public works" or "public improvements" means any one or
any combination of the following which shall be constructed to
standards acceptable to the county at the time of the commencement
of the project:
(a) The establishment, opening, extension, widening, or
altering of any street, alley, or other highway or
sidewalk;
(b) The grading, paving, curbing, or otherwise improving of
the whole or any part of any existing public street,
alley, or other highway or sidewalk;
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(c) The construction, installation, extension, maintenance,
reconstruction, additions or improvements of a storm
drainage facility or sanitary sewerage system;
(d) the construction, installation, extension, maintenance,
reconstruction, additions or improvements of a street
lighting system;
(e) The construction, installation, extension, maintenance,
reconstruction, additions or improvements of a water
system;
(f) The construction, installation, extension, maintenance,
reconstruction, additions or improvements of underground
or overhead utility facilities including gas, electrical,
telephone, or television facilities, and the removal,
relocation, replacement or reconstruction thereof;
(g) The establishment, extension, or construction of public
off-street parking facilities, pedestrian mall, parks,
playgrounds, beach areas, or other public recreational
areas and facilities;
(h) To make improvements related to the foregoing and to
otherwise improve any of the foregoing to an extent
exceeding maintenance or repair thereof;
(i) Any other public improvement deemed necessary for the tas
increment district by the council.
"Targeted area" means a specific geographic area proposed
to be included in a tax increment or provisional tax increment
district in which the Council finds that blight significantly
impacts and injuriously affects the entire area.
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"Tax increment" means the amount of real property taxes
levied for each fiscal year on the assessment increment.
"Tax increment bonds°' means bonds, notes, interim
certificates, debentures, or other obligations issued pursuant to
this chapter.
"Taa increment district" or "district" means a contiguous
or non-contiguous geographic area designated pursuant to this
chapter by the council for the purpose of tax increment financing.
"Tax increment financing plan" or "financing plan" means
the plan for taa increment financing for a district submitted to
and approved by the county council. The tax increment financing
plan shall contain estimates of:
(1) Project costs;
(2) Amount of tax increment bonds to be issued;
(3) Sources of revenue to finance or otherwise pay
project costs;
(4) The most recent assessed value of taxable real
property in the district;
(5) The duration of the district's existence;
(6) the financial and budgetary impacts on the
county resulting from the proposed tax
increment financing plan;
(7) The proposed adjustment rate as recommended by
the director of finance.
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"Taa increment fund" or "fund" means a fund held by the
director or other fiduciary designated by the council and into
which all tax increments, other moneys pledged by the county for
payment of tax increment bonds and any moneys available for
project costs are paid, and all proceeds from the sale of taa
increment bonds are deposited, and from which moneys are disbursed
to pay project costs for the tax increment district or to satisfy
claims of holders of tax increment bonds issued for the district,
or as otherwise authorized herein.
"Total assessed value" means the gross assessed value
less any applicable exemptions, and is also referred to as the
"nr'..t assessed value."
Section -3. Authority; general provisions.
(a) Whenever in the opinion of the council it is desirable to
create a tax increment or provisional tax increment district, the
district shall be created and the project financed under the
provisions of this chapter.
(b) All project costs of a tax increment or provisional tax
increment district shall be paid from the tax increment fund of
that district.
(c) The County may issue and sell tax increment bonds to
provide funds to pay project costs upon
increment of the district and any other
sufficient to cover the full debt servi
principal and interest on tax increment
solely from the tax increment fund, all
provisions of this chapter.
finding that the tax
available revenues will be
~e on any such bonds. Both
bonds shall be payable
according to the
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Section -4. Powers reserved to council. Any
provision of law to the contrary notwithstanding, the council
reserves the following powers over any tag increment district
proposal:
(a) If, for any reason whatsoever, the taa increment bonds
authorized under article 4 are not sold or cannot be sold to any
acceptable purchaser within a reasonable time, then the council
shall have the power and authority to terminate the project to be
financed by the tag increment district, or any part thereof. in
the event that the project is terminated, all project costs
incurred to the date of termination shall be paid from the taa
increment fund.
(b) In addition to the foregoing, at any time during the
proceedings of any tag increment or provisional taa increment
district proposal ug to and including the adoption of the
ordinance creating ~ tag increment district under
section -11, the council shall have the power and authority
to terminate the entire tag increment district project, or any
part thereof, if it determines that the taa increment district
project is not in the public interest.
(c) In addition to the foregoing, at any time during the
proceedings of any taa increment district proposal up to and
including the adoption of the ordinance creating a taa increment
district under section -11 hereof, the council shall have the
power and authority to require the inclusion of costs of off-site
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improvements such as roads, water, sewers, drainage, which may be
outside the taa increment district boundaries but which service
the taa increment district. In the event that such costs are to
be so included, the appropriate resolutions and ordinances shall
be amended accordingly.
Section -5. Private contributions. The owner or
owners of real property located in a taa increment district or
provisional tag increment district may advance funds for project
costs. Any funds advanced under this section shall be deposited
in the tax increment fund for the district. To the extent that
such funds are used to pay project costs of the district, the
co4ncil shall authorize partial or full reimbursement from the tax
increment fund to the property owners who advanced such funds upon
the termination of the district if money is available in the fund
to make such reimbursement. If the funds advanced are not used to
pay project costs within three years of the date they are
advanced, the money shall be returned at that time to the property
owners who advanced the funds along with the interest earned, if
any, on the investment of the funds advanced while they were on
deposit with the district.
Section -6. Administration; annual report.
(a) The director of finance shall be responsible for the
administration of this chapter, including any tax increment
districts enacted hereunder, and shall adopt rules pursuant to
Chapter 91, Hawaii Revised Statutes, if necessary for the purposes
of implementing this chapter.
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(b) The director of finance shall prepare an annual report to
be submitted to the council by August 15 of every year on the
status of every tax increment and provisional tax increment
district. The report shall:
(1) Update the estimates and projections provided in the
original plan(s);
(2) Certify the amount of the assessment increment to
the council, together with the proportion that the
assessment increment bears to the total assessed
value of the real property within the district for
that year; and
(3) Provide such additional information as the director
deems necessary or the council requests.
Section -7. Requirements. No taa increment district
can be created unless the council finds that the proposed district
meets all of the f_~llowing requirements:
(a) The project area proposed to be included in the district
is a targeted area.
(b) The improvements necessary to remedy the conditions in
the targeted area cannot reasonably be expected to be accomplished
in a reasonable time without taa increment financing.
(c) The assessment base of the property proposed to be
included in the district shall not cause the total assessed
valuation of all property included in tax increment districts,
determined at the time the districts were created as supplemented
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by the assessed valuation of property subsequently included in a
district at such time of inclusion, to exceed ten percent of the
total assessed value of all taxable real property in the county.
(d) The project area is also simultaneously designated as an
improvement district or community facilities district pursuant to
the Hawaii County Code, 1983, as amended.
Section -8. Limitation on time to sue. No action or
proceeding to review any acts or proceedings or to question the
validity or enjoin the performance of any act, the issue or
payment of any bonds, or the allocation of any tag increment
authorized by this chapter, whether based upon irregularities or
j~zcisdictional defects, or otherwise, shall br _:~~~ntained unless
r,e~;un within thirty days after performance of the act or the
passage of the resolution or ordinance complained of.
Article 2. Procedure
Section -9. Initiation by council; study of proposed
project.
(a) The council shall, by resolution requiring not more than
one reading for its adoption:
(1) Determine the boundaries of a proposed district.
(2) Direct the director of finance to investigate and
report to the council within sixty calendar days:
(A) The total assessed value of:
(i) All taxable real property in the county,
and
(ii) The assessment base of the proposed
district;
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(B) The total assessed values of all taxable real
property in the proposed district compared to
the total assessed values of all taxable real
property in the county over the two years
immediately preceding the current year;
(3) Direct the chief engineer to investigate and report
to the council within sixty calendar days:
(A) Preliminary data concerning the current status
of improvements within the proposed district,
including:
(i) Any revisions recommended to the proposed
boundaries of the district;
(ii) The present extent of public and private
infrastructure located within the
boundaries of the proposed district;
(iii) The infrastructure needs within the
proposed district, listed in order of
their priority.
(B) The general character and extent of any
improvements to be proposed, and their
estimated cost;
(C) Whether any new land will be necessary to be
acquired, and the estimated cost thereof and
the proportion of the cost, if any, which
should be borne by the county;
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(D) Upon consultation with the planning director,
determine:
(i) the present zoning within the proposed
district;
(ii) The extent to which the present land use
within the proposed district conforms to
the county general plan;
(iii) The extent to which the present land use
within the proposed district relates to
any community development plan for the
area;
(iv) The likelihood of the needs identified in
subsection (a)(3)(A)(iii) of this section
being addressed by the county or private
means without the use of tax increment
financing;
(v) Any additional information which may
assist the council in determining if the
proposed district is a targeted area.
(E) If the proposed district includes the
construction or improvement
or any part thereof, the ch
consult with the department
determining the estimate of
included in the preliminary
council.
of a water system
ief engineer shall
of water supply in
the cost to be
report to the
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(b) After the above reports have been furnished and filed
with the council, they shall not be acted upon until one week 'r~~s
elapsed from the date of the filing of the last report. If any
one or more of the reports required in subsection (a) above are
not filed with the council within the required sixty days, the
council may proceed with the district without such reports.
(c) Thereafter the council may, by resolution requiring one
reading for its adoption:
(1) Find that the area proposed to be included in a tax
increment district meets all of the requirements of
section -7 of this chapter.
(2) Direct the finance director to prepare and submit to
the council within sixty calendar days a taa
increment financing plan which shall contain
estimates of:
(A) °roject costs;
(8) Amount of tax increment bonds to be issued;
(C) Sources of revenue to finance or otherwise pay
project costs;
(D) The most recent assessed value of taxable real
property in the district;
(E) The duration of the district's existence;
(F) The recommended adjustment rate for the
district;
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(G) Statement regarding the financial and budgetary
impacts on the county resulting from the
proposed tag increment financing plan.
Section -10. Taz increment financing plan. In
preparing the report required by section -9(c)(2), the
director of finance may consult with the chief engineer, the
planning director, or with such financial consultant as has been
specially employed by the mayor on behalf of the county to assist
in the proceedings or who may otherwise be available to the
county. The report may include such sums as deemed proper by the
director of finance for reserve funds, bond discount allowances,
and construction contingencies in determining ?:'~~~ estimate of
prr7'~+~t COStS.
Section -11. Establishment of tag increment district.
The council may provide for taa increment financing by approving a
tag increment financing plan and enacting an ordinance
establishing the taa increment district. The ordinance shall:
(a) Describe the boundaries of the taz increment district;
(b) Provide for the date of commencement of the taa increment
district and the date of termination of the district;
(c) Provide for the establishment of a taz increment fund for
the district; and
(d) Provide for such other matters deemed to be pertinent and
desirable for tag increment financing and not
inconsistent with the county general plan or any relevant
redevelopment or community development plan.
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Section -12. Termination of a tax increment district.
A taa increment district shall terminate at the time designated in
the ordinance creating the district or at an earlier time
designated by a subsequent ordinance, but in no event shall the
district terminate until such time as all project costs and taa
increment bonds issued for the district and the interest thereon
have been paid in full, or sufficient funds have been irrevocably
deposited in a special fund or other escrow account held in trust
for all outstanding tax increment bonds issued for such district
to provide for the payment of such bonds at maturity or date of
redemption and interest and premium, if any, thereon.
Section -13. Provisional taz increment district. A
provisional tas increment district may be created by the council
when an area meets the definition of a targeted area and the
council finds either that taa increment financing alone will be
unable to adequately address the conditions in the targeted area
or that the owners of land in the targeted area should participate
in the expense of addressing the conditions to a greater extent
than is provided for with taz increment financing.
(a) The council shall, by resolution requiring not more than
one reading for its adoption:
(1) Determine the boundaries of a proposed district.
(2) Direct the director of finance and chief engineer to
investigate and report to the council the same
information as required by subsections -9(x)(2)
and -9(x)(3).
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3. Fia a date of public hearing upon the proposed
provisional taa increment district, which date shall
be not less than fifteen days after the first
publication of notice thereof in a newspaper of
general circulation in the county.
(b) After the above reports have been furnished and filed
with the council, they shall not be acted upon until one week has
elapsed from the date of the filing of the last report. If any
one or more of the reports required in subsection (a) above are
not filed with the council within the required sizty days, the
council may proceed with the district without such reports.
(c) After the adoption of the resolution, t: ii? county clerk
sYiall. cause a notice of the public hearing to be published twice a
week for two successive weeks (four publications in all) in
accordance with the requirements of the county charter and the
Hawaii Revised Statutes for public notice, giving notice,
generally, to all owners of land proposed to be included in the
provisional district and to all others interested in the general
details of the improvements as proposed by the council and stating
the time and place of public hearing and where the resolution and
reports and other data may be seen and eaamined prior to the
hearing. Like notices shall be posted at least ten days prior to
the hearing at a public place in the judicial district in which
the proposed provisional district in located.
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(d) Any failure to post, mail, or receive the notice
described above, shall not invalidate the proceedings held
thereafter.
(e) If, as a result of the public hearing, the council finds
that the owners of property in the proposed district do not
support the proposed improvements, or are not willing to pay for
the improvements through the improvement district or community
facilities district if necessary, the council may at its sole
discretion terminate the provisional tag increment district
proceedings.
(f) If the council decides to proceed with the creation of a
provisional tag increment district after the public hearing, it
may by ordinance provide for the creation of a provisional tag
increment district. This ordinance shall accept the reports of
the director of finance and chief engineer required by subsection
(a) of this section, and shall:
(1) Find that the area proposed to be included in a
provisional tag increment district meets all of the
requirements of section -7 of this chapter;
(2) Create a provisional taa increment district which
will terminate not later than five years from the
date of its creation if it has not been converted by
ordinance passed in accordance with section -11
to a taa increment district before its termination;
(3) Describe the boundaries of the provisional tag
increment district;
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(4) Provide for the date of commencement and termination
of the provisional tax increment district;
(5) At the option of the council, this ordinance may
provide that until an improvement district or
community facilities district is approved by the
owners of land in a proposed provisional taa
increment district, funds in the tax increment fund
may be used only for:
(A) Preliminary costs for initiating an improvement
district in accordance with section 12-10,
Hawaii County Code, including but not limited
to the cost of title searc~z~, postage, and
other administrative costs;
(B) Any preliminary plans and engineering
specifically authorized by the council as
necessary for the initiation of an improvement
district in the targeted area.
Section -14. Restrictions on provisional district.
(a) A provisional tax increment district shall be subject to
the following:
(1) No taa increment bonds or bond anticipation notes
shall be issued to provide funds for a provisional
tax increment district.
(2) The council may by ordinance extend the term of a
provisional tax increment district for no more than
two years beyond its original term.
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(3) During the term of a provisional tag increment
district, and subject to the limitation of
subsection (f)(5) above, if appropriate, the money
in the tag increment fund may be used only for:
(A) Preliminary costs for initiating an improvement
district in accordance with section 12-10,
Hawaii County Code, including but not limited
to the cost of title searches, postage, and
other administrative costs;
(B) Professional service costs and administrative
costs to prepare financial projections and to
identify all methods available to remedy the
condition in the targeted area, including but
not limited to determining the feasibility of
the proposed taa increment district to
accomplish its goals through tag increment
financing and/or the improvement district
process as established in chapter 12 of the
Hawaii County Code;
(C) Preparation of a taa increment financing plan
for the district if this mechanism is
determined to be feasible; and
(D) Professional service costs and administrative
costs for the district to prepare detailed
plans and specifications for the projects
proposed.
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(4) During the term of a provisional tax increment
district, the council may not eaercise the power of
eminent domain in connection with the acquisition of
property in the tag increment district.
(b) At any time during the term of a provisional taa
increment district the council may approve a taa increment
financing plan in accordance with section -11 and by
ordinance convert the provisional tag increment district into a
ta$ increment district.
(c) If a provisional taa increment district is converted to a
tax increment district, the adjusted assessment base of the
pruc•zsional tax increment district at the time ~~:L the conversion
shall become the assessment base of the tag increment district.
(d) If at the end of its term a provisional taa increment
district has not been converted to a taa increment district, all
money remaining in the taz increment fund of the provisional ta%
increment district shall, to the extent it is not encumbered, be
returned to the general fund.
Article 3. Taa increments
Section -15. Computation of taa increments. Upon or
after creation of a taa increment district or a provisional tax
increment district, the director of finance shall certify the
assessment base of the taa increment district and shall certify in
each year thereafter the amount by which the assessment base has
increased or decreased as a result of a change in taa exempt
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status of property within the district, or reduction or
enlargement of the district. The amount to be added to the
assessment base of the district as a result of previously tax
exempt real property within the district becoming taxable shall be
equal to the assessed value of the real property as most recently
assessed or, if the assessment was made more than one year prior
to the date of transfer rendering the property taxable, the value
which shall be assessed by the director of finance at the time of
such transfer. The amount to be added to the assessment base of
the district as a result of enlargements thereof shall be equal to
the assessed value of the additional real property as most
recently certified by the director of finance as of the date of
modification of the tax increment financing plan. The amount to
be subtracted from the assessment base of the district as a result
of previously taxable real property within the district becominc
tax exempt, or a reduction in the geographic area of the district,
shall be the amount of assessment base initially attributed to the
property becoming taa exempt or being removed from the district.
If the assessed value of property located within the taa
increment district is reduced or increased by reason of a Board of
Review decision, court-ordered abatement, stipulated agreement, or
voluntary abatement made by the director of finance, the increase
or reduction shall be applied to the assessment base of the
district when the property upon which the change is made has not
been improved since the date of creation of the district, and to
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the assessment increment of the district in each year thereafter
when the change relates to improvements made after the date of
creation.
Section -16. Taa on leased redevelopment property.
[a) Whenever property in the taz increment district or
provisional taa increment district has been redeveloped and
thereafter is leased by the county to any person or whenever the
county leases real property in any taa increment district or
provisional district to any person for redevelopment, such use or
occupancy of the property shall be assessed and tazed in the same
amount and to the same eatent as though the lessee were the owner
c.f !3',e property and provided in subsection (b;r: provided that this
sha;.l not apply to any property or portion thereof which is taaed
under any conflicting or incompatible section of the Hawaii County
Code, Chapter 19, Real Property Taxes to the eatent and for the
period or periods ta$ed.
The term "lease" shall mean any lease for a term of one year
or more, or which is renewable for such period as to constitute a
total term of one year or more. A lease having a stated term
shall, if it otherwise comes within the meaning of the term
"lease," be deemed a lease notwithstanding any right of
revocation, cancellation, or termination reserved therein or
provided for thereby.
The assessment of the use or occupancy shall be made in
accordance with the highest and best use permitted under the terms
and conditions of the lease.
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(b) The tax shall be assessed to and collected from such
lessee as nearly as possible in the same manner and time as the
taa assessed to owners of real property, except that the tax shall
not become a lien against the property. In case the use or
occupancy is in effect on January 1 preceding the tax year, the
lessee shall be assessed far the entire year but adjustments of
the tax so assessed shall be made in the event of the termination
of the use or occupancy during the year so that the lessee is
required to pay only so much of the taa as is proportionate to the
portion of the tax year during which the use or occupancy is in
effect, and the director is hereby authorized to remit the tax due
for the balance of the tax year. In case the use or occupancy
commences after January 1 preceding the taa year, the lessee shall
be assessed for only so much of the tax as is proportionate to the
period that the use or occupancy bears to the taa year.
The assessment of the use or occupancy of real property rnade
under this section shall not be included in the aggregate value of
taxable realty for the purposes of section 19-90 but the council,
at the time that it is furnished with information as to the value
of taxable real property, shall also be furnished with information
as to the assessments made under this section, similarly
determined but separately stated.
If a use or occupancy is in effect on January 1 preceding the
taa year, the assessment shall be made and listed for that year
and the notice of assessment shall be given to the taapayer in the
_2~_
manner and at the time prescribed by this chapter, and when so
given, the taxpayer, if he deems himself aggrieved, may appeal as
provided for by this chapter; if a use or occupancy commences
after January 1 preceding the tag year or if for any reason an
assessment is omitted for any taa year, the assessment shall be
made and listed and notice thereof shall be given in the manner
and at the time prescribed by this chapter, and an appeal from an
assessment so made may be taken as provided by Hawaii County Code,
Chapter 19, "Real Property Taxes."]
Whenever property in the tag increment district has been
redeveloped and thereafter is leased by the county to anv person
or whenever the county leases real property in anv taw increment
discrict to any verson for redevelopment, the property shall be
assessed and tweed in the same manner as provided for in Chapter
19. Hawaii County Code.
Section -17. Collection of taz increments.
(a) Commencing with the first payment of real property taxes
levied by the county subsequent to the time a district takes
effect, receipts from real property taxes collected for this
district shall be allocated and paid as follows:
(1) The amount of real property taw produced from the
original assessment base shall be paid to the
general fund; and
(2) The tag increments produced from the assessment
increment in the district shall be applied as
follows:
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(A) First, an amount equal to (i) the installment
of principal and interest falling due for ar.y
tax increment bonds, or (ii) any project cost
approved by the council, shall be deposited
into a tax increment fund established when the
district was created.
(B) Second, an amount equal to the amount of real
property tax produced on the adjusted
assessment base reduced by the amount already
paid to the general fund in subsection (1) of
this section shall be paid to the general fund.
(C) Third, the remaining amount of taa increments,
if any, shall be deposited into the taa
increment fund.
(b) The allocation of real property taxes pursuant to this
section shall not limit the power of the county under the Hawaii
Revised Statutes Section 47-12 to levy ad valorem taaes without
limitation as to rate or amount on all real property subject to
taxation by the county for the payment of principal and interest
of its general obligation bonds.
Section -18. Taz increment fund.
(a) Money shall be disbursed from the tag increment fund for
a taa increment district only to:
(1) Satisfy the claims of holders of taa increment bonds
issued for the taz increment district;
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(2) Pay project costs for the district;
(3) Make payments for project costs or debt service to a
special assessment fund established upon the
creation of an improvement district, community
facilities district or combination thereof, whose
boundaries are identical to that of the tag
increment district;
(4) Make payments to the county as provided in
subsection (c) of this section or
section -29(d) of this chapter.
(b) Subject to an agreement with the holders of taa increment
bo~ads, money in a taa increment fund may be tc~~i~orarily invested
iii the same manner as other funds on the county.
(c) In any year in which the tag increment eaceeds the amount
necessary to pay all project costs, and all installments of
principal and interest of taa increment bonds issued for a
district falling due, and the amount paid to the general fund
pursuant to section -17(a)(2)(B), and subject to any agreement
with bondholders, any excess money in the taa increment fund at
the option of the council shall be used to redeem or purchase any
outstanding tag increment bonds issued for the district, discharge
the pledge of tag increment therefor, be paid into an escrow
account dedicated to the payment of such bonds, be paid over to
the general fund, or any combination thereof.
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Article 4. Taa Increment Bonds
Section -I9. Taa increment bonds authorized. The
council may authorize the issuance of taa increment bonds, the
proceeds of which may be used to pay project costs for a district
or to satisfy claims of bondholders. Both principal, interest and
premium, if any, on taa increment bonds shall be made payable
solely from the tag increment fund established for the district.
The county may provide in its contract with the owners or
holders of the taa increment bonds that the county will pay into
the taa increment fund all or any part of the revenue or money
produced or received as a result of the operation or sale of a
facility acquired, improved, or constructed pursuant to either a
redevelopment plan, as defined in Hawaii Revised Statutes
Section 53-1, or a community development plan, as defined in
Hawaii Revised Statutes Section 206E-5, to be used to pay
principal and interi~st on the tag increment bonds and, if the
county so agrees, the owners or holders of taa increment bonds may
have a lien or mortgage on any facility acquired, improved or
constructed with the proceeds of the tag increment bonds.
The county may issue such types of bonds as it may determine
including bonds on which the moneys in the taa increment funds are
derived:
(a) Exclusively from the income and revenues of the projects
financed with the proceeds of the bonds, or with such proceeds
together with financial assistance from the state or federal
government in aid of the projects.
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(b) Exclusively from the income and revenues of certain
designated projects whether or not they were financed in whole or
in part with the proceeds of the bonds.
(c) In whole or in part from taxes allocated to, and paid
into the tas increment fund pursuant to the provisions of this
chapter.
(d) From its revenues generally.
(e) From any contributions or other financial assistance from
the state or federal government.
(f) By any combination of these methods.
Section -20. Exemption from taxes.
(a) Pursuant to Hawaii Revised Statutes ~~ection 46-106(b),
tax increment bonds, and the income therefrom, issued under this
chapter shall be exempt from all state and county taaation, except
estate and transfer taxes.
(b) Bonds issued under this chapter, to the extent
practicable, shall be issued so as to comply with requirements
imposed by valid federal law providing that the interest on those
bonds shall be excluded from gross income for federal income
purposes (except as certain minimum taxes or environmental taxes
may apply). The director of finance is authorized to enter into
arrangements, establish funds or accounts, and take any action
required in order to comply with any valid federal law. Nothing
in this chapter shall be deemed to prohibit the issuance of bonds,
the interest on which may be included in gross income for federal
income tax purposes.
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For the purpose of ensuring that interest on bonds issued
pursuant to this chapter which is excluded from gross income for
federal income taa purposes (except as provided above) on the date
of issuance shall continue to be so excluded, no county officer or
employee or user of an undertaking or loan program shall authorize
or allow any change, amendment, or modification to an undertaking
or loan program financed or refinanced with the proceeds of the
bonds which change, amendment or modification would affect the
exclusion of interest on the bonds from gross income for federal
income tax purposes unless the change, amendment or modification
shall have received the prior approval of the director of
finance. Failure to receive the approval of the director of
finance shall render any change, amendment, or modification void.
Section -21. Contents of bonds.
(a) The director of finance, upon authorization by the
council by ordinance, may issue tax increment bonds. Taa
increment bonds shall bear the name of the district, shall be
dated, be payable upon demand or mature at a time or times not
exceeding thirty years from their date of issuance, bear interest
at a rate or rates, be in a denomination or denominations, be in
registered form, have a rank or priority, be executed in a manner,
be payable at a place or places, and be subject to terms of
redemption (with or without premium), be secured in a manner, and
have other characteristics as maybe determined by the council or
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the director of finance as
tas increment bonds in such
sale, and for such price as
(b) Unless the council
director of finance shall:
(1) Determine the
Herein provided. The county may sell
manner, either at public or private
it may determine.
shall itself perform the actions, the
date, denomination or denominations,
interest payment dates, maturity date or dates,
place or places of payment, registration privileges
and place or places of registration, redemption
price or prices and time or times and terms and
conditions and method of redemption;
(2) The rights of the holder to tenue for purchase and
the price or prices and time or times and terms and
conditions upon which those rights may be exercised;
(3) The rights to purchase and price or prices and the
time or times and terms and conditions upon which
those rights may be exercised and the purchase may
be made; and
(9) Determine all other details of bonds issued under
this chapter.
(c) The principal of and interest and premium, if any, on all
bonds issued under this chapter shall be payable in any coin or
currency of the United States of America which at the time of
payment is legal tender for public and private debts. Tax
increments bonds shall be subject to call but not prior to the
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second interest date thereof as hereinafter provided and at such
premium, if any, as may have been provided for in the ordinance
authorizing such bonds.
(d) Prior to the preparation of definitive tax increment
bonds, the county may authorize issuance of interim receipts or
temporary bonds exchangeable for definitive bonds when such bonds
have been executed and are available for delivery.
Section -22. Eaecution of bonds; records; funds for
payment.
(a) Tax increment bonds shall be executed by the director of
finance, or by a deputy of the director of finance duly designated
by the director to execute such bonds, and issued pursuant to and
under the authority and requirements of the ordinance of the
council. The bonds shall bear the lithographed or engraved
facsimile signature of the mayor and shall be impressed with a
lithographed or eng~:aved facsimile of the seal of the county. tf
the council provides that no such taa increment bond shall be
valid or obligatory unless and until there shall be manually
executed a certificate of authentication thereof, all signatures
of county officials on the bonds may be facsimiles of their
respective signatures.
(b) The director of finance shall preserve a record of the
bonds in a suitable book kept for that purpose. The council shall
provide for books of registry to be kept for the registration of
improvement bonds issued in fully registered form.
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(c) The bonds shall a payable only out of moneys in the taa
increment fund of the district for which they are issued or from
the reserve fund established pursuant to section -23, if the
moneys in the taz increment fund are insufficient to pay the bonds
or the interest thereon as they become due. The county shall not
otherwise guarantee payment of any such bonds issued under the
provisions of this chapter.
Section -23. Reserve fund. The council may provide in
the ordinance enacted pursuant to section -19 for a reserve
fund as additional security for the payment of principal and
interest on taa increment bonds issued in proceedings taken
pursuant to this chapter. The reserve fund me_g- ~.~e initially
L:~nded from the proceeds from the sale of taa increment bonds with
respect to which such reserve fund is established in such amount
as is designated by the council in the ordinance authorizing such
bonds. Moneys in a reserve fund shall be used in accordance with
the provisions of section -22(c) and to pay the principal or
interest, or both, in whole or in part, on the last outstanding
maturity or maturities of the bonds.
Section -24. Sale of bonds.
(a) The director of finance may make such arrangements as may
be necessary or proper for the sale of each issue of bonds or part
thereof as are issued under this article, including, without
limitation, arranging for the preparation and printing of the
bonds, the official statement and any other documents or
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instruments deemed required for the issuance and sale of bonds and
retaining those financial, accounting, and legal consultants, ail
upon such terms and conditions as the director of finance deems
advisable and in the best interest of the county. The council may
authorize the director of finance to offer the bonds at
competitive sale or to negotiate the sale of the bonds to:
(1) Any person or group of persons;
(2) The United States of America, or any board, agency,
instrumentality, or corporation thereof;
(3) The employees retirement system of the state;
(4) Any political subdivision of the state;
(5) Any board, agency, instrumentality, public
corporation, or other governmental organization of
the state; or of any political subdivision of the
state.
(b) Subject to any limitation imposed by the council by t_~.e
ordinance authorizing the bonds, the sale of the bonds by the
director of finance by negotiation shall be at such price or
prices and upon such terms and conditions, from time to time in
such manner, as the director of finance shall approve.
(c) Subject to any limitation imposed by the council by the
ordinance authorizing the bonds, the sale of the bonds by the
director of finance at competitive sale shall be at such price or
prices and upon such terms and conditions, and the bonds shall
bear interest at such rate or rates or such varying rates
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determined from time to time in the manner, as specified by the
successful bidder, and the bonds shall be sold in accordance with
this subsection. The bonds offered at competitive sale shall be
sold only after published notice of sale advising prospective
purchasers of the proposed sale. The bonds offered at competitive
sale may be sold to the bidder offering to purchase the bonds at
the lowest interest cost, the interest cost, for the purpose of
this subsection, being determined on one of the following bases as
selected by the director of finance:
(1) The figure obtained by adding together the amounts
of interest payable on the bonds from their date to
their respective maturity dates a~ the rate or rates
specified by the bidder and deducting from the sum
obtained the amount of any premium offered by the
bidder;
(2) Where the interest on the bonds is payable annually,
the annual interest rate (compounded annually), or,
where the interest on the bonds is payable
semiannually, the rate obtained by doubling the
semiannual interest rate (compounded semiannually),
necessary to discount the principal and interest
payments on the bonds from the dates of payment
thereof to the date of the bonds and to the price
bid (the price bid for the purpose of this paragraph
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shall not include the amount of interest accrued on
the bonds from their date to the date of deliverv
and payment); or
(3) Where the interest on the bonds is payable other
than annually or semiannually or will vary from time
to time, upon such basis as, in the opinion of the
director of finance, shall result in the lowest cost
to the county; provided that in any case the right
shall be reserved to reject any or all bids and
waive any irregularity or informality in any bid.
(d) Bonds offered at competitive sale, without further action
of the council, shall bear interest at the rate or rates specified
by the successful bidder or varying rate or rates determined from
time to time in the manner specified by the successful bidder with
the consent of the director of finance. The notice of sale
required by this se^tion shall be published at lease once and a*_
least five days prior to the date of the sale in a newspaper
circulating in the county and in a financial newspaper or
newspapers published in any of the cities of New York, Chicago, or
San Francisco, and shall be in such form and contain such terms
and conditions as the director of finance shall determine. The
notice of sale shall comply with the requirements of this section
if it merely. advises prospective purchasers of the proposed sale
and makes reference to a detailed notice of sale which is
available to the prospective purchasers and which sets forth the
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specific details of the bonds and terms and conditions upon which
such bonds are to be offered. The notice of sale published and
any detailed notice of sale may omit the date and time of sale, in
which event the date and time shall be either published in the
same newspapers in which the notice of sale has been published or
transmitted via electronic communication systems deemed proper by
the director of finance which is generally available to the
financial community, in either case at least forty-eight hours
prior to the time fined for the sale.
(e) The proceeds of the sale of bonds shall be applied to pay
the project costs of the district. If no purchaser is found, the
ccr~,~rt.y may be the purchaser of any such bonds, using any funds
available and unspent. Bonds sold to a purchaser other than the
county may be sold for such discount as is acceptable to the
council.
Section -25. Lost, mutilated, stolen or destroyed
bonds.
Should any bond issued under this part become mutilated or be
lost, stolen, or destroyed, the county may cause a new bond of
like date, number, and tenor to be executed and delivered in
eachange and substitution for, and upon the cancellation of such
mutilated bond, or in lieu of and in substitution for, and upon
the cancellation of such mutilated bond, or in lieu of and in
substitution for such lost, stolen, or destroyed bond. Such new
bond shall not be executed or delivered until the holder of the
mutilated, lost, stolen, or destroyed bond:
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(a) Has paid reasonable expenses and charges in connection
therewith:
(b) In the case of a lost, stolen, or destroyed bond, has
filed with the county or its fiduciary satisfactory evidence that
such bond was lost, stolen, or destroyed, and that the holder was
owner thereof; and
(c) Has furnished indemnity satisfactory to the county.
Section -26. General provisions; bonds.
(a) Notwithstanding any of the provisions of this part or any
recital in any tax increment bond issued under this part, all taa
increment bonds shall be deemed to be investment securities under
the Uniform Commercial Code, chapter 490; subject only to the
provisions pertaining to registration.
(b) In any suit, action, or other proceeding involving the
validity or enforceability of a bond issued under this part or the
security for a bond or note issued under this part, a bond
reciting in substance that it had been issued by the county for
the tax increment district shall be conclusively deemed to have
been issued for that purpose, and the development or redevelopment
of the district conclusively shall be deemed to have been planned,
located, and carried out as provided by this part.
(c) The tax increment bonds bearing the signature or
facsimile signature of officers in office on the date of the
signing thereof shall be valid and sufficient for all purposes,
-41-
notwithstanding that before the delivery thereof and payment
therefor any or all persons whose signatures appear thereon shall
have ceased to be officers of the county.
(d) Tas increment bonds shall not be issued in an amount
exceeding the total costs of implementing the taa increment
financing plan for which they were issued.
Section -27. Honds not chargeable against general
revenue.
(a) Taa increment bonds shall be payable only out of the tax
increment fund. The council may pledge irrevocably all or a part
of the fund for payment of the bonds. The part of the fund
pledged in payment thereafter shall be used only for the payment
or the bonds or interest or redemption premit~,n, if any, on the
t~~n~3s until the bonds have been fully paid. Sf the council has
pledged a part of the fund for payment of bonds, a holder of the
bonds shall have a lien against the fund for payment of the bonds
and interest thereon and may either at law or in equity protect
and enforce such lien.
(b) No officer of the county including any officer executing
tax increment bonds shall be liable for the tax increment bonds by
reason of the issuance thereof. Tag increment bonds issued under
this part shall not be general obligations of the county, nor in
any event shall they give rise to a charge against the general
credit or taxing powers of the county or be payable other than as
provided by this chapter. No holder of bonds issued under this
part shall have the right to compel any exercise of the taxing
-42-
power of the county to pay such bonds or the interest thereon, and
no moneys other than the moneys in the tax increment fund pledged
to the bonds shall be applied to the payment thereof. Tax
increment bonds issued under this part shall state these
restrictions on their face.
Section -28. Taz increment bond anticipation notes.
Whenever the county has authorized the issuance of tax increment
bonds under this part, tax increment bond anticipation notes of
the county may be issued in anticipation of the issuance of such
bonds and of the receipt of the proceeds of sale thereof, for the
purposes for which such bonds have been authorized. All tag
increment bond anticipation notes shall be authorized by the
county, and the maximum principal amount of such notes shall not
exceed the authorized principal amount of the bonds. The notes
shall be payable solely from and secured solely by the praceFCis ~f
sale of the tag increment bonds in anticipation of which the notes
are issued and the moneys in the tax increment fund from which
would be payable and by which would be secured such bonds;
provided that to the extent that the principal of the notes shall
be paid from moneys other than the proceeds of sale of such bonds,
the maximum amount of bonds authorized in anticipation of which
the notes are issued shall be reduced by the amount of notes paid
in such manner. The authorization, issuance, and details of such
notes shall be governed by this part with respect to tag increment
bonds insofar as the same may be applicable; provided that each
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note, together with renewals and extensions thereof, or refundings
thereof by other notes issued under this section, shall mature
within five years from the date of the original note.
Section -29. General Obligation bonds.
(a) For any project initiated pursuant to this chapter, the
council, in lieu of the issuance of tag increment bonds, may in
its sole discretion issue general obligation bonds of the county
or authorize payment of the required amount from the general fund
of the county. The proceeds of such general obligation bonds or
any amount paid by the county out of the general fund shall be
deposited in the tax increment fund for the appropriate district
a~9 expended only in accordance with section _--___:-18 of this
chapter.
(b) All such general obligation bonds shall be authorized,
issued and sold under, pursuant to, and in accordance with
chapter 47, Hawaii Revised Statutes, as amended, all of the
provisions of which chapter shall be applicable thereto. Without
limiting the generality of the provisions of the foregoing
sentence, the form, name, date, denomination, numbers, maximum
interest rate, method of execution and all other details of such
general obligation bonds shall be fixed and determined in
accordance with and as provided by chapter 47. No right of prior
redemption need to be reserved in the issuance of such bonds, nor
shall either the amounts or dates of the maturities of any such
bonds be required to conform in any way to the amounts of tax
ir•crements to be collected.
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(c) The validity of such general obligation bonds shall not
be dependent on or affected in any way by any proceedings taken or
any contracts make, acts performed or done in connection with, or
in furtherance of, any improvement or any assessments for such
improvement.
(d) If general obligation bonds are issued as provided in
this section, all moneys collected on account of the tax increment
may, to the extent so directed by the council, be applied to the
reimbursement of the general fund of the county to the extent of
the amounts paid for interest on and principal of such general
obligation bonds. Any amounts collected on account of the tax
increment as aforesaid to the extent not so directed by the
council to be applied to such reimbursement or in excess of the
amounts required for such reimbursement shall be applied in the
manner set forth in section -17 of this chapter.
(e) The provisions of sections -23, -24,
-25, -26 and -27 shall not apply to the general
obligation bonds authorized by this section and such sections
shall be restricted in their application to taa increment bonds.
Article 5. Refunding Bonds
Section -30. Refunding authorized. The county may
issue taa increment refunding bonds for the purpose of paying or
retiring or in eachange for tax increment bonds previously issued
by the county. Both principal and interest on tax increment
refunding bonds shall be made payable solely from the taa
increment fund.
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Section -31. Refunding bonds.
(a) Taa increment refunding bonds issued for the refunding of
the outstanding indebtedness of any tag increment district shall
bear the name of the tag increment district for which they are
issued, and shall be issued and sold under all the conditions and
terms as prescribed by article 4 of this chapter, except as
otherwise provided in this chapter.
(b) A different rate of interest than that authorized in the
original issue of tax increment bonds may be prescribed and the
taa increment refunding bonds may be authorized to run for a term
exceeding thirty years from the date of their issuance or fifteen
yFacs from the final maturity date of the tag ~?..~c:r.ement bonds
be;..~g refunded.
~c) If the final maturity date of the tag increment refunding
bonds exceeds the final maturity date of the date increment bonds
being refunded the council shall if necessary pass an ordinance
amending the original ordinance passed in accordance with
section -11 to change the termination date of the district to
coincide with the final maturity of the tas increment refunding
bonds. Such ordinance shall be passed by the council prior to the
issuance of such refunding bonds.
Section -32. Obligations unimpaired. Nothing in this
article shall be construed as giving the council the authority to
impair the obligations of the tag increment district under any
outstanding tag increment bonds."
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SECTION 3. If any provision of this ordinance or the
application thereof to any person or circumstance is held invalid,
such invalidity shall not affect other provisions or applications
of the ordinance which can be given effect without the invalid
provision or application, and to this end, the provisions of this
ordinance are declared to be severable.
SECTION 4. This ordinance shall take effect upon its approval.
I
COUNTY OF HAWAII
Hilo, Hawaii
Date of Introduction:
Date of 1st Reading:
Date of 2nd Reading:
Effective Date:
February 23, 1994
February 23, 1994
March 23, 1994
April 14, 1994
Ari €?~i~OED s o
/ fJ,T~.I~(t and L. G ITY
CORPORATION OUNSEL
COUNTY CAF HAWAII
Data
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