HomeMy WebLinkAboutChapter 33 Tax Increment Districts CHAPTER 33
TAX INCREMENT DISTRICTS
Article 1. General Provisions.
Section 33-1. Purpose.
Section 33-2. Definitions.
Section 33-3. Authority; general provisions.
Section 33-4. Powers reserved to council.
Section 33-5. Private contributions.
Section 33-6. Administration; annual report.
Section 33-7. Requirements.
Section 33-8. Limitation on time to sue.
Article 2. Procedure.
Section 33-9. Initiation by council; study of proposed project.
Section 33-10. Tax increment financing plan.
Section 33-11. Establishment of tax increment district.
Section 33-12. Termination of a tax increment district.
Section 33-13. Provisional tax increment district.
Section 33-14. Restrictions on provisional district.
Article 3. Tax Increments.
Section 33-15. Computation of tax increments.
Section 33-16. Tax on leased redevelopment property.
Section 33-17. Collection of tax increments.
Section 33-18. Tax increment fund.
Article 4. Tax Increment Bonds.
Section 33-19. Tax increment bonds authorized.
Section 33-20. Exemption from taxes.
Section 33-21. Contents of bonds.
Section 33-22. Execution of bonds; records; funds for payment.
Section 33-23. Reserve fund.
Section 33-24. Sale of bonds.
Section 33-25. Lost, mutilated, stolen or destroyed bonds.
Section 33-26. General provisions; bonds.
Section 33-27. Bonds not chargeable against general revenue.
Section 33-28. Tax increment bond anticipation notes.
Section 33-29. General obligation bonds.
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Article 5. Refunding Bonds.
Section 33-30. Refunding authorized.
Section 33-31. Refunding bonds.
Section 33-32. Obligations unimpaired.
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TAX INCREMENT DISTRICTS § 33-1
CHAPTER 33
TAX INCREMENT DISTRICTS
Article 1. General Provisions.
Section 33-1. 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 noncontiguous
geographic area, which is also an improvement district or a community facilities
district, designated a tax increment district, by dedicating a portion of property tax
revenue increases 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 districts, or a combination of
the two methods in conjunction with tax increment financing.
(1994, ord 94-76, sec 3.)
Section 33-2. 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.
"Adjustment rate" means a percentage rate or rates of adjustment of the
assessment base recommended by the director of finance and approved by the council at
the time the tax increment 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 district and the projected cost increases to the County for
servicing the new developments within the district.
"Assessment base" means the total assessed values of all taxable real property in a
tax increment or provisional tax 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
tax 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 the 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 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;
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(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 uses; 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;
(4) 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;
(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.
"Council" means the council of the County of Hawai`i.
"County" means the County of Hawaii.
"Director" means the director of finance of the County of Hawaii.
"Project costs" means 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 tax
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 fixtures; 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 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;
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TAX INCREMENT DISTRICTS § 33-2
(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;
(I) Organizational costs, including the costs of conducting environmental impact
studies or other studies, the costs of publicizing the creation of a tax increment
district, and the cost of implementing the tax increment financing plan for the
tax increment district;
(g) Payments determined by the council to be necessary or convenient to the
creation of a tax increment district or improvement district, or to the
implementation of the tax increment financing plan for the tax increment
district.
"Property" means:
(a) Land, including land under water and waterfront property;
(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 noncontiguous
geographic area designated pursuant to this chapter by the council for the purpose of
financing preliminary costs for establishing a tax increment district in conjunction 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;
(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;
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§ 33-2 HAWAII COUNTY CODE
(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 tax 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.
"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.
"Tax increment district" or "district" means a contiguous or noncontiguous
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 tax
increment financing for a district submitted to and approved by the County council. The
tax increment financing plan shall contain estimates of:
(a) Project costs;
(b) 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 financial and budgetary impacts on the County resulting from the
proposed tax increment financing plan;
(g) The proposed adjustment rate as recommended by the director of finance.
"Tax 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 tax 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 "net assessed value."
(1994, ord 94-76, sec 3.)
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TAX INCREMENT DISTRICTS § 33-3
Section 33-3. 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 finding that the tax increment of the district and any other available
revenues will be sufficient to cover the full debt service on any such bonds. Both
principal and interest on tax increment bonds shall be payable solely from the tax
increment fund, all according to the provisions of this chapter.
(1994, ord 94-76, sec 3.)
Section 33-4. Powers reserved to council.
Any provision of law to the contrary notwithstanding, the council reserves the
following powers over any tax increment district proposal:
(a) If, for any reason whatsoever, the tax 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 tax 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 tax increment fund.
(b) In addition to the foregoing, at any time during the proceedings of any tax
increment or provisional tax increment district proposal up to and including the
adoption of the ordinance creating a tax increment district under section 33-11, the
council shall have the power and authority to terminate the entire tax increment
district project, or any part thereof, if it determines that the tax increment district
project is not in the public interest.
(c) In addition to the foregoing, at any time during the proceedings of any tax
increment district proposal up to and including the adoption of the ordinance
creating a tax increment district under section 33-11 hereof, the council shall have
the power and authority to require the inclusion of costs of off-site improvements
such as roads, water, sewers, drainage, which may be outside the tax increment
district boundaries but which service the tax increment district. In the event that
such costs are to be so included, the appropriate resolutions and ordinances shall be
amended accordingly.
(1994, ord 94-76, sec 3.)
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§ 33-5 HAWAII COUNTY CODE
Section 33-5. Private contributions.
The owner or owners of real property located in a tax increment district or
provisional tax 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 council
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.
(1994, ord 94-76, sec 3.)
Section 33-6. 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, as necessary for the purposes of
implementing this chapter.
(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.
(1994, ord 94-76, sec 3.)
Section 33-7. Requirements.
No tax increment district can be created unless the council finds that the proposed
district meets all of the following 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 tax
increment financing.
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TAX INCREMENT DISTRICTS § 33-7
(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 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 designated as an improvement district or community
facilities district pursuant to the Hawaii County Code.
(1994, ord 94-76, sec 3.)
Section 33-8. 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 tax increment authorized by this chapter, whether based upon
irregularities or jurisdictional defects, or otherwise, shall be maintained unless begun
within thirty days after performance of the act or the passage of the resolution or
ordinance complained of.
(1994, ord 94-76, sec 3.)
Article 2. Procedure.
Section 33-9. 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;
(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 director of public works 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.
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§ 33-9 HAWAI`I COUNTY CODE
(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;
(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 of a
water system or any part thereof, the director of public works shall
consult with the department of water supply in determining the estimate
of the cost to be included in the preliminary report to the council.
(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 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 33-7.
(2) Direct the finance director to prepare and submit to the council within sixty
calendar days a tax increment financing plan which shall contain estimates of:
(A) Project costs;
(B) 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;
(G) Statement regarding the financial and budgetary impacts on the County
resulting from the proposed tax increment financing plan.
(1994, ord 94-76, sec 3.)
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TAX INCREMENT DISTRICTS § 33-10
Section 33-10. Tax increment financing plan.
In preparing the report required by section 33-9(c)(2), the director of finance may
consult with the director of public works, 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 the estimate
of project costs.
(1994, ord 94-76, sec 3.)
Section 33-11. Establishment of tax increment district.
The council may provide for tax increment financing by approving a tax increment
financing plan and adopting an ordinance establishing the tax increment district. The
ordinance shall:
(a) Describe the boundaries of the tax increment district;
(b) Provide for the date of commencement of the tax increment district and the date of
termination of the district;
(c) Provide for the establishment of a tax increment fund for the district; and
(d) Provide for such other matters deemed to be pertinent and desirable for tax
increment financing and not inconsistent with the County general plan or any
relevant redevelopment or community development plan.
(1994, ord 94-76, sec 3.)
Section 33-12. Termination of a tax increment district.
A tax 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 tax
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.
(1994, ord 94-76, sec 3.)
Section 33-13. Provisional tax increment district.
A provisional tax increment district may be created by the council when an area
meets the definition of a targeted area and the council finds either that tax 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 tax 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.
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§ 33-13 HAWAI`I COUNTY CODE
(2) Direct the director of finance and director of public works to investigate and
report to the council the same information as required by subsections
33-9(a)(2) and 33-9(a)(3).
(3) Fix a date of public hearing upon the proposed provisional tax 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 sixty days, the council may proceed with
the district without such reports.
(c) After the adoption of the resolution, the County clerk shall 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 Hawai`i 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 examined 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 is located.
(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 similar process if
necessary, the council may at its sole discretion terminate the provisional tax
increment district proceedings.
(f) If the council decides to proceed with the creation of a provisional tax increment
district after the public hearing, it may by ordinance provide for the creation of a
provisional tax increment district. This ordinance shall accept the reports of the
director of finance and director of public works required by subsection (a) of this
section, and shall:
(1) Find that the area proposed to be included in a provisional tax increment
district meets all of the requirements of section 33-7;
(2) Create a provisional tax 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 33-11 to a tax increment district
before its termination;
(3) Describe the boundaries of the provisional tax increment district;
(4) Provide for the date of commencement and termination of the provisional tax
increment district;
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TAX INCREMENT DISTRICTS § 33-13
(5) At the option of the council, this ordinance may provide that until an
improvement district is approved by the owners of land in a proposed
provisional tax 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, Hawai`i County Code, including but not limited to the
cost of title searches, 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.
(1994, ord 94-76, sec 3.)
Section 33-14. Restrictions on provisional district.
(a) A provisional tax increment district shall be subject to the following:
(1) No tax 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.
(3) During the term of a provisional tax increment district, and subject to the
limitation of subsection 33-13(f)(5) above, if appropriate, the money in the tax
increment fund may be used only for:
(A) Preliminary costs for initiating an improvement district in accordance
with section 12-10, Hawai`i 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 tax increment district to accomplish its goals
through tax increment financing and/or the improvement district process
as established in chapter 12, Hawai`i County Code;
(C) Preparation of a tax 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.
(4) During the term of a provisional tax increment district, the council may not
exercise the power of eminent domain in connection with the acquisition of
property in the tax increment district.
(b) At any time during the term of a provisional tax increment district the council may
approve a tax increment financing plan in accordance with section 33-11 and by
ordinance convert the provisional tax increment district into a tax increment
district. The council at its option may require that an improvement district be
approved by the owners of land in the targeted area before a provisional tax
increment district is converted to a tax increment district.
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§ 33-14 HAWAII COUNTY CODE
(c) If a provisional tax increment district is converted to a tax increment district, the
adjusted assessment base of the provisional tax increment district at the time of the
conversion shall become the assessment base of the tax increment district.
(d) If at the end of its term a provisional tax increment district has not been converted
to a tax increment district, all money remaining in the tax increment fund of the
provisional tax increment district shall, to the extent it is not encumbered, be
returned to the general fund.
(1994, ord 94-76, sec 3.)
Article 3. Tax Increments.
Section 33-15. Computation of tax increments.
Upon or after creation of a tax increment district or a provisional tax increment
district, the director of finance shall certify the assessment base of the tax 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 tax exempt 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 becoming 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 tax exempt or being removed from the district.
If the assessed value of property located within the tax 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 the assessment increment of the district in each year
thereafter when the change relates to improvements made after the date of creation.
(1994, ord 94-76, sec 3.)
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Section 33-16. Tax on leased redevelopment property.
Whenever property in the tax increment district has been redeveloped and
thereafter is leased by the County to any person or whenever the County leases real
property in any tax increment district to any person for redevelopment, the property
shall be assessed and taxed in the same manner as privately owned property, and the
lease or contract shall provide that the lessee shall pay taxes upon the assessed value of
the entire property and not merely the assessed value of the lessee's leasehold interest.
(1994, ord 94-76, sec 3.)
Section 33-17. Collection of tax 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 tax produced from the original assessment base
shall be paid to the general fund; and
(2) The tax increments produced from the assessment increment in the district
shall be applied as follows:
(A) First, an amount equal to (i) the installment of principal and interest
falling due for any 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 tax increments, if any, shall be deposited
into the tax increment fund.
(b) The allocation of real property taxes pursuant to this section shall not limit the
power of the County under section 47-12, Hawaii Revised Statutes, to levy ad
valorem taxes 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.
(1994, ord 94-76, sec 3.)
Section 33-18. Tax increment fund.
(a) Money shall be disbursed from the tax increment fund for a tax increment district
only to:
(1) Satisfy the claims of holders of tax increment bonds issued for the tax
increment district;
(2) Pay project costs for the district;
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§ 33-18 HAWAII COUNTY CODE
(3) Make payments for project costs or debt service to a special assessment fund
established upon the creation of an improvement district whose boundaries
are identical to that of the tax increment district;
(4) Make payments to the County as provided in subsection (c) of this section or
section 33-29(d).
(b) Subject to an agreement with the holders of tax increment bonds, money in a tax
increment fund may be temporarily invested in the same manner as other funds in
the County.
(c) In any year in which the tax increment exceeds the amount necessary to pay all
project costs, and all installments of principal and interest of tax increment bonds
issued for a district falling due, and the amount paid to the general fund pursuant
to section 33-17(a)(2)(B), and subject to any agreement with bondholders, any
excess money in the tax increment fund at the option of the council shall be used to
redeem or purchase any outstanding tax increment bonds issued for the district,
discharge the pledge of tax 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.
(1994, ord 94-76, sec 3.)
Article 4. Tax Increment Bonds.
Section 33-19. Tax increment bonds authorized.
The council may authorize the issuance of tax 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 tax increment bonds shall be made
payable solely from the tax increment fund established for the district.
The County may provide in its contract with the owners or holders of the tax
increment bonds that the County will pay into the tax 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 section 53-1, Hawaii Revised Statutes, or a community development plan, as
defined in section 206E-5, Hawaii Revised Statutes, to be used to pay principal and
interest on the tax increment bonds and, if the County so agrees, the owners or holders
of tax increment bonds may have a lien or mortgage on any facility acquired, improved
or constructed with the proceeds of the tax increment bonds.
The County may issue such types of bonds as it may determine including bonds on
which the moneys in the tax 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.
(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 tax increment fund
pursuant to the provisions of this chapter.
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TAX INCREMENT DISTRICTS § 33-19
(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.
(1994, ord 94-76, sec 3.)
Section 33-20. Exemption from taxes.
(a) Pursuant to section 46-106(b), Hawai`i Revised Statutes, tax increment bonds, and
the income therefrom, issued under this chapter shall be exempt from all State and
County taxation, 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 tax 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.
For the purpose of ensuring that interest on bonds issued pursuant to this
chapter which is excluded from gross income for Federal income tax 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.
(1994, ord 94-76, sec 3.)
Section 33-21. Contents of bonds.
(a) The director of finance, upon authorization by the council by ordinance, may issue
tax increment bonds. Tax 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 may be determined by the council or the director of finance as
herein provided. The County may sell tax increment bonds in such manner, either
at public or private sale, and for such price as it may determine.
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§ 33-21 HAWAII COUNTY CODE
(b) Unless the council shall itself perform the actions, the director of finance shall:
(1) Determine 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 tender 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
(4) 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 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.
(1994, ord 94-76, sec 3.)
Section 33-22. Execution 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 engraved facsimile of
the seal of the County. If the council provides that no such tax 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.
(c) The bonds shall be payable only out of moneys in the tax increment fund of the
district for which they are issued or from the reserve fund established pursuant to
section 33-23, if the moneys in the tax 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.
(1994, ord 94-76, sec 3.)
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TAX INCREMENT DISTRICTS § 33-23
Section 33-23. Reserve fund.
The council may provide in the ordinance adopted pursuant to section 33-19 for a
reserve fund as additional security for the payment of principal and interest on tax
increment bonds issued in proceedings taken pursuant to this chapter. The reserve fund
may be initially funded from the proceeds from the sale of tax 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 33-22(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.
(1994, ord 94-76, sec 3.)
Section 33-24. 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 instruments deemed
required for the issuance and sale of bonds and retaining those financial,
accounting, and legal consultants, all 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 the 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 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:
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§ 33-24 HAWAI`I COUNTY CODE
(1) The figure obtained by adding together the amounts of interest payable on the
bonds from their date to their respective maturity dates at 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 shall
not include the amount of interest accrued on the bonds from their date to the
date of delivery 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
section shall be published at least once and at 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 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 fixed
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 County 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.
(1994, ord 94-76, sec 3.)
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TAX INCREMENT DISTRICTS § 33-25
Section 33-25. Lost, mutilated, stolen or destroyed bonds.
Should any bond issued under this chapter 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 exchange 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:
(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.
(1994, ord 94-76, sec 3.)
Section 33-26. General provisions; bonds.
(a) Notwithstanding any of the provisions of this chapter or any recital in any tax
increment bond issued under this chapter, all tax increment bonds shall be deemed
to be investment securities under the Uniform
Commercial Code, chapter 490, Hawaii Revised Statutes, 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 chapter or the security for a bond or note issued under this
chapter, 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 chapter.
(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,
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) Tax increment bonds shall not be issued in an amount exceeding the total costs of
implementing the tax increment financing plan for which they were issued.
(1994, ord 94-76, sec 3.)
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§ 33-27 HAWAII COUNTY CODE
Section 33-27. Bonds not chargeable against general revenue.
(a) Tax 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 of the bonds or interest or redemption premium, if any, on the bonds until
the bonds have been fully paid. If 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. Tax
increment bonds issued under this chapter 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 chapter shall have the right to compel
any exercise of the taxing 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 chapter shall state these restrictions on their face.
(1994, ord 94-76, sec 3.)
Section 33-28. Tax increment bond anticipation notes.
Whenever the County has authorized the issuance of tax increment bonds under
this chapter, 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 tax 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 proceeds of sale of the
tax 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 chapter with respect to tax increment bonds insofar as the
same may be applicable; provided that each 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.
(1994, ord 94-76, sec 3.)
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TAX INCREMENT DISTRICTS § 33-29
Section 33-29. General obligation bonds.
(a) For any project initiated pursuant to this chapter, the council, in lieu of the
issuance of tax 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 and expended only in accordance with section
33-18.
(b) All such general obligation bonds shall be authorized, issued and sold under,
pursuant to, and in accordance with chapter 47, Hawai`i 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 needs
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 increments to be collected.
(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 made, 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 33-17.
(e) The provisions of sections 33-23, 33-24, 33-25, 33-26 and 33-27 shall not apply to
the general obligation bonds authorized by this section and such sections shall be
restricted in their application to tax increment bonds.
(1994, ord 94-76, sec 3.)
Article 5. Refunding Bonds.
Section 33-30. Refunding authorized.
The County may issue tax increment refunding bonds for the purpose of paying or
retiring or in exchange 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 tax increment fund.
(1994, ord 94-76, sec 3.)
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§ 33-31 HAWAII COUNTY CODE
Section 33-31. Refunding bonds.
(a) Tax increment refunding bonds issued for the refunding of the outstanding
indebtedness of any tax increment district shall bear the name of the tax 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 tax increment refunding bonds may be
authorized to run for a term exceeding thirty years from the date of their issuance
or fifteen years from the final maturity date of the tax increment bonds being
refunded.
(c) If the final maturity date of the tax increment refunding bonds exceeds the final
maturity date of the tax increment bonds being refunded, the council shall, if
necessary, pass an ordinance amending the original ordinance passed in accordance
with section 33-11 to change the termination date of the district to coincide with the
final maturity of the tax increment refunding bonds. Such ordinance shall be
passed by the council prior to the issuance of such refunding bonds.
(1994, ord 94-76, sec 3.)
Section 33-32. Obligations unimpaired.
Nothing in this article shall be construed as giving the council the authority to
impair the obligations of the tax increment district under any outstanding tax
increment bonds.
(1994, ord 94-76, sec 3.)
33-22