HomeMy WebLinkAbout2018-07-27 Letter to Valerie Poindexter re Bill for Ordinance Authorizing the issuance of General Obligation Bonds Myr OF .
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Harry Kim ; ,•�A.. �r,;
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Barbara J.Kossow
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25 Aupuni Street,Suite 2603 • HJo,Hawaii 96720 • (808)961-8211 • Fax(808)961-6553
KONA 74-5044 Ane Keohokalole Hwy,Bldg C • Kadua-Kona,Hawaii 96740
(808)323-4444 • Fax(808)323-4440
July 27, 2018
Valerie Poindexter, Council Chair and
Members of the Hawai`i County Council
Hawai`i County Council
25 Aupuni Street
Hilo, Hawai`i 96720
Re: Bill for an Ordinance Authorizing the Issuance of General Obligation Bonds
Attached for your consideration is a bill authorizing the issuance of up to $3,699,000 in general
obligation bonds for the County of Hawai`i for the purpose of financing a portion of the costs of
constructing a public sewer system serving the Lono Kona Subdivision; fixing the form,
denomination, and certain details of such bonds; providing for the issuance and sale of such
bonds; and providing for other matters or actions pertaining to the issuance and sale of the bonds.
Time is of the essence regarding this bill and the accompanying resolutions. We therefore ask
that a breach be authorized to submit this resolution after the July 20, 2018 submission deadline,
and to waive it from the Finance Committee in order to be placed on the August 8, 2018 Council
agenda. We also request that the five-day hold be waived in order to further expedite this bill. If
y ave any questions, please do not hesitate to call me at 961-8211.
Harry ti_
Mayor
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County of Hawaii is an Equal Opportunity Provider and Employer.
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COUNTY OF HAWAII : ; STATE OF HAWAI I
BILL NO.
ORDINANCE NO.
AN ORDINANCE AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION BONDS
OF THE COUNTY OF HAWAII IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO
EXCEED$3,699,000 FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS
OF CONSTRUCTING A PUBLIC SEWER SYSTEM SERVING THE LONO KONA
SUBDIVISION; FIXING THE FORM, DENOMINATION, AND CERTAIN DETAILS OF
SUCH BONDS; PROVIDING FOR THE ISSUANCE AND SALE OF SUCH BONDS; AND
PROVIDING FOR OTHER MATTERS OR ACTIONS PERTAINING TO THE ISSUANCE
AND SALE OF THE BONDS.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. Findings and Determinations. It is hereby found and determined that:
A. Pursuant to Chapter 12, Hawaii County Code 1983 (2016 Edition, as amended) (the
"Hawaii County Code"),and Resolution Nos. 264-14, 519-14 and 72-15,the Council of the
County of Hawaii(the"County")has authorized the creation,definition and establishment
of a Sewer System Improvement District (the "Improvement District") for the purpose of
undertaking and financing the costs of a project consisting of the construction, acquisition
and installation of a public water system to serve the Lono Kona Subdivision(the"Project").
Pursuant to Chapter 12 of the Hawaii County Code, non-exempt properties within the
Improvement District are subject to assessments to be used to reimburse the County for a
portion of the costs of the Project, including financing costs, debt service costs and
administrative expenses.
B. Pursuant to a Letter of Conditions dated August 13, 2013 (the "Original Letter of
Conditions"), the United States of America, acting through the Department of Agriculture,
Rural Utilities Service ("USDA")offered to assist in the financing of the Project by making
(1) a loan to the County (the "Original USDA Loan") in a principal amount not to exceed
Two Million Four Hundred Thirty-Seven Thousand and No/100 Dollars ($2,437,000) and
bearing interest at a rate not to exceed Two and One-Eighth Percent (2 1/8% ) per annum,
and(2)a grant to the County(the"Original USDA Grant")in an amount not to exceed Four
Million Twenty Four Thousand Eight Hundred and No/100 Dollars ($4,024,800).
C. The County Council has authorized the Original USDA Loan and the Original USDA Grant
pursuant to Resolution No. 377-17. In order to evidence and secure the Original USDA
Loan,the County enacted Ordinance No. 17-73 authorizing the issuance of general obligation
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bonds (the "Original USDA Bonds") to the USDA in a principal amount equal to the
principal amount of the Original USDA Loan.
D. Subsequent to the County's authorization of the Original USDA Loan,the Original USDA
Grant and the Original USDA Bonds, it was determined that the costs of the Project will
exceed the original cost estimates and,accordingly,that additional funding will be required
in order to proceed with the Project. Pursuant to Amendment 1 —Cost Overrun dated July
25, 2018 (the "Amendment"), the USDA amended the Original Letter of Conditions to
provide for (1) an additional loan from the USDA to the County (the "Additional USDA
Loan") in a principal amount not to exceed Three Million Six Hundred Ninety-Nine
Thousand and No/100 Dollars($3,699,000)and bearing interest at a rate not to exceed Two
and Three-Eights Percent(2 3/8%)per annum,and(2)an additional grant from the USDA to
the County (the "Additional USDA Grant") in an amount not to exceed One Million
Seventy-One and No/100 Dollars ($1,071,000).
E. It is advisable and desirable for the County to obtain the Additional USDA Loan and the
Additional USDA Grant and, in order to evidence and secure the Additional USDA Loan,it
is further necessary, advisable and desirable that the County authorize, issue and sell to
USDA general obligation bonds of the County in a principal amount equal to the principal
amount of the USDA Loan.
SECTION 2. Authorization of Bonds. There are hereby authorized for issuance and sale general
obligation bonds of the County(the "Additional USDA Bonds") in an aggregate principal amount
not to exceed Three Million Six Hundred Ninety-Nine Thousand and No/100 Dollars($3,699,000),
the proceeds derived from the sale of which shall be used to pay a portion of the costs of the Project
and costs incurred by the County in connection with the issuance of the Bonds.
SECTION 3. Details of the Bonds. The Additional USDA Bonds authorized for issuance and
sale in Section 2 hereof shall be issued and sold to USDA in one or more series to evidence and
secure the Additional USDA Loan. Such Additional USDA Bonds shall be issued and sold to
USDA, as lender with respect to the Additional USDA Loan, shall be in an aggregate principal
amount equal to the principal amount of such Additional USDA Loan, and shall bear interest and
mature upon the applicable terms of such Additional USDA Loan. The Additional USDA Bonds
may be issued and sold in their entirety at one time or in portions from time to time, as shall be
determined by the Director of Finance to be in the best interest of the County. The Additional USDA
Bonds shall be issued in fully registered form without coupons in such denominations or as a single
instrument, all as the Director of Finance shall determine. The Additional USDA Bonds of a series
shall be numbered from 1 upwards in chronological order of delivery or shall be numbered in any
other manner as the Director of Finance shall determine. The Additional USDA Bonds of a series
shall mature annually on such day in each year in substantially equal installments of principal or in
substantially equal installments of principal and interest, the first of such maturities to be no later
than five years from the date of the Bond of such series and the last of such maturities to be not later
than thirty-five years from the date of the Additional USDA Bonds of such series, may be
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redeemable prior to the stated maturity thereof at any time at prices not exceeding 103 % of the
principal amount thereof, and shall bear interest at such rate or rates per annum,not to exceed Two
and Three-Eighths Percent(2 3/8%)per annum,as may be determined by the Director of Finance and
agreed to by USDA. In accordance with and subject to the provisions of this ordinance,the Director
of Finance is hereby authorized to determine with respect to the Additional USDA Bonds of a series,
the series designation; the date of the Additional USDA Bonds of such series;the interest rates and
payment dates of the Additional USDA Bonds of such series; the maturity dates of the Additional
USDA Bonds of such series and the principal amount of such Additional USDA Bonds maturing on
each maturity date; the registration privileges and place or places at which the Additional USDA
Bonds of such series may be paid or registered which may include the office of the Director of
Finance; whether or not the Additional USDA Bonds of such series shall be subject to redemption
prior to the stated maturities and, if subject to such prior redemption,the times,prices,methods and
other provisions for such prior redemption; and all other details of the Additional USDA Bonds of
such series.
SECTION 4. Redemption of Bonds. In the event any of the Additional USDA Bonds shall be
subject to prior redemption and if any Additional USDA Bond(or portion thereof)is to be redeemed,
notice of redemption shall be given in such manner as the Director of Finance shall determine. If any
Additional USDA Bond shall have been duly called for redemption and notice of such redemption
duly given in the manner determined by the Director of Finance, and if moneys for the payment of
such Additional USDA Bond at the then applicable redemption price and the interest accrued on the
principal amount thereof to the date of redemption are made or duly provided for by the County,
interest on such Additional USDA Bond shall cease to accrue and become payable from and after the
date fixed for redemption.
SECTION 5. Payment of Bonds. The principal of and interest and premium, if any, on the
Additional USDA Bonds 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.
SECTION 6. Execution and Form of Fully Registered Bonds. The Additional USDA Bonds
shall be lithographed or steel engraved, typewritten, printed or other reproduced as the Director of
Finance shall determine. The Additional USDA Bonds of a series shall bear the manual or facsimile
signatures of the Director of Finance and of the Mayor of the County,shall be impressed with or bear
a facsimile of the seal of the County,and shall be authenticated by the Registrar(unless the Director
of Finance is serving as Registrar and has manually signed the Additional USDA Bonds as
aforesaid). The Director of Finance may, at such official's election,prepare such number of blank
Additional USDA Bonds of any series executed and sealed as aforesaid as such official shall
determine and deliver such executed blank Additional USDA Bonds to the Registrar for such series
(if other than the Director of Finance) for safekeeping prior to the time such Additional USDA
Bonds are actually issued, exchanged or transferred.
The Additional USDA Bonds shall be designated and the form of the Additional USDA Bonds,
the Registrar's certificate of authentication,if applicable,and the assignment shall be substantially in
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the form of EXHIBIT A attached hereto,with such appropriate insertions,variations and omissions
as are required or deemed advisable by the Director of Finance with respect to a particular series of
the Additional USDA Bonds, book-entry provisions, single instrument provisions or other
provisions.
SECTION 7. Sale of Bonds. To secure the payment of the Additional USDA Loan,without any
further authorization from or action by this Council but subject to the provisions hereof and of
applicable law,the Director of Finance is hereby authorized to issue and sell the Additional USDA
Additional USDA Bonds at a negotiated sale to USDA in accordance with Section 47-8, Hawaii
Revised Statutes, as amended, at such price or prices and upon such terms and conditions as such
official shall approve and determine to be in the best interest of the County. Without limiting the
generality of the foregoing,with respect to the issuance and sale of the Additional USDA Bonds to
secure the payment of the Additional USDA Loan, the Director of Finance is hereby authorized to
retain bond counsel, paying agents, registrars and financial and accounting consultants, upon such
terms and conditions as such official shall deem advisable and in the best interest of the County,to
select the date for such sale,to enter into one or more agreements with USDA pursuant to which the
Additional USDA Loan shall be made and the Additional USDA Bonds or portions thereof shall be
issued to secure such USDA Loan, in each case in such form and containing such terms and
conditions as such official shall approve and deem advisable,and to take such other actions as such
official may deem advisable. Subject to the provisions of Section 3 hereof,without further action of
this Council, the Additional USDA Bonds shall bear interest at the rates per annum as specified in
the agreement or agreements so approved. The Mayor, Director of Finance and all officials of the
County are hereby authorized to take such action and execute such orders, receipts and other
documents as may be necessary in order to effectuate the sale of the Additional USDA Bonds,and,if
any agreement therefor be approved or any bid therefor be accepted,the preparation execution, and
delivery thereof, in accordance with the provisions hereof and applicable law.
SECTION 8. Reimbursement of Expenditures. The County expects that it may pay certain
capital expenditures for the Project prior to the issuance of the Additional USDA Bonds, and
reasonably expects to reimburse such expenditures from the proceeds of such Additional USDA
Bonds. The County hereby declares its official intent to use proceeds of the Additional USDA
Bonds to reimburse itself for such capital expenditures. This ordinance is adopted in part for the
purpose of establishing compliance with the requirements of Section 1.150-2 of the Treasury
Regulations. This ordinance shall be reasonably available for inspection at the office of the County
Clerk, commencing within fifteen (15) days after its effective date.
SECTION 9. Security for the Bonds. The Additional USDA Bonds are general obligations of
the County, the full faith and credit of the County is hereby irrevocably pledged to the punctual
payment of the principal of and interest on the Additional USDA Bonds according to the terms
thereof, and the principal and interest payments on the Additional USDA Bonds shall be a first
charge on and shall be paid from the General Fund of the County.
SECTION 10. CUSIP Identification Numbers. The Director of Finance may authorize the
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printing of a CUSIP identification number upon the Additional USDA Bonds. Such number and the
printing thereof shall be subject in all respects to the provision of Section 47-10, Hawaii Revised
Statutes, as amended.
SECTION 11. Repeal of Conflicts. All ordinances and resolutions, and any portions of
ordinances and resolutions, heretofore enacted or adopted by the Council which are in conflict or
inconsistent with any provision of this ordinance shall be and are hereby repealed to the extent of
such conflict or inconsistency.
SECTION 12. Effective Date. This ordinance shall take effect upon its approval.
INTRODUCED BY:
COUNCIL MEMBER, COUNTY OF HAWAII
Hilo, Hawaii
Date of Introduction
Date of 1st Reading
Date of 2nd Reading
Effective Date:
REFERENCE: Comm.
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EXHIBIT A
[FORM OF BOND]
UNITED STATES OF AMERICA
COUNTY OF HAWAII
STATE OF HAWAI`I
PUBLIC IMPROVEMENT BOND,
[SERIES DESIGNATION]
Dated: , 2013 Interest Rate: % Final Maturity: , 20_
The COUNTY OF HAWAII, State of Hawaii (hereinafter called the "County"), for value
received,hereby promises to pay to the United States of America, acting through the United States
Department of Agriculture, Rural Utilities Service ("USDA"), or registered assigns, as Registered
Holder (a)on 1 in each of the years set forth in the following Maturity Schedule,the principal
installment amount set forth for such year in such Maturity Schedule,and(b)semiannually on
I and 1 in each year, commencing on 1, 20_, interest on the outstanding principal
amount hereof,until the payment of all Principal Installment Amounts shall be made or provided for
in full, at the rate specified above.
MATURITY SCHEDULE
Maturity Maturity Maturity
Date Date Date
( 1) Amount ( 1) Amount ( 1) Amount
All Principal Installment Amounts and interest thereon,except the last Principal Installment
Amount and interest thereon, shall be paid by check or draft mailed or by wire sent to the Registered
Holder at the Registered Holder's address or account as it appears on the Bond Register kept
pursuant to the proceedings authorizing this bond or otherwise as agreed upon by the County and the
Registered Holder. The last Principal Installment Amount and interest thereon shall be payable upon
presentation and surrender of this bond at the office of , Paying Agent,in
, or at the office of any successor Paying Agent appointed from time to time by the County.
All amounts due hereunder 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.
This Bond is issued under and pursuant to and in full compliance with the Constitution and
laws of the State of Hawaii,including Part I of Chapter 47,Hawaii Revised Statutes,as amended,the
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Charter of the County, proceedings of the aforesaid Council duly taken thereunder and a Certificate
of the Director of Finance of the County providing for the issuance and sale and fixing the form and
details of this Bond (the "Authorizing Certificate"). Reference is hereby made to the Authorizing
Certificate for additional provisions applicable to this Bond,to all of which provisions the registered
owner hereof by acceptance of this Bond hereby assents.
This Bond is subject to redemption in whole or in part at the option of the County, prior to
maturity, at any time [, on and after ,] at the principal amount thereof,
the interest accrued thereon to the date fixed for redemption [and the following redemption
premiums expressed as a percentage of the principal amount redeemed: [Redemption Premiums, if
applicable]
In the event this Bond is redeemable,as aforesaid,and shall be called for redemption,notice
of the redemption hereof stating the designation,date,number and maturity of this Bond,the portion
of the principal sum hereof to be redeemed, the date fixed for such redemption and the premium
payable upon such redemption, shall be mailed,at least once not less than thirty(30)days prior to the
date fixed for the redemption hereof,to the holder hereof in whose name this Bond is registered upon
the Bond Register as of the close of business on the forty-fifth(45th)day(whether or not a business
day) next preceding the date fixed for the redemption hereof. The failure of the Registered Holder
hereof to receive such notice by mail or any defect in such notice shall not affect the sufficiency of
the proceedings for the redemption of this Bond. If less than all of the principal sum hereof is to be
redeemed, in such case upon the surrender of this Bond to the Registrar there shall be issued to the
Registered Holder hereof,without charge therefor,for the then unredeemed balance of the principal
sum hereof, Bonds of like series, maturity and interest rate in any of the authorized denominations
provided by the proceedings of the County authorizing the issuance of the series of Bonds of which
this Bond is one. If this Bond(or any portion of the principal sum hereof)be redeemable and shall
have been duly called for redemption and notice of such redemption duly given as aforesaid, and if
on or before the date fixed for such redemption payment of the principal sum hereof to be redeemed,
the premium payable upon such redemption and the interest accrued on the principal sum to be
redeemed to the date fixed for such redemption shall have been duly made or provided for,then this
Bond(or the portion of the principal sum hereof to be redeemed)shall become due and payable upon
such date fixed for redemption and interest shall cease to accrue and become payable from and after
the date fixed for such redemption on the principal sum hereof to be redeemed.
This Bond is transferable only upon the Bond Register at the office of
, Registrar, in the City of , or at the office of its successors
from time to time appointed by the County, by the Registered Holder hereof, or by the Registered
Holder's duly authorized attorney,upon surrender of this Bond(together with a written instrument of
transfer satisfactory in form to the Registrar duly executed by the Registered Holder or the
Registered Holder's duly authorized attorney,which may be the form endorsed hereon)and subject
to the limitations and upon payment of the charges,if any,provided from time to time by the County
and the Registrar, and thereupon a new Bond or Bonds, in the same aggregate principal amount in
authorized denominations and of the same series,interest rate and maturity as the Bond surrendered,
shall be delivered to the transferee in exchange thereof. The County,the Registrar, and the Paying
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Agent may deem and treat the person in whose name this Bond is registered as the absolute owner
hereof for the purpose of receiving payment of the principal hereof,premium,if any,and interest due
hereon and for all other purposes, and they shall not be affected by any notice to the contrary.
This Bond is authorized by the Council of the County to be issued to provide funds for
payment of a portion of the costs of a public sewer system for a Sewer System Improvement District
established by the County pursuant to Chapter 12,Hawaii County Code. This Bond is issued under
and pursuant to and in full compliance with the Constitution and laws of the State of Hawaii,
including Part I of Chapter 47,Hawai`i Revised Statutes,as amended,the Charter of the County,and
proceedings of the aforesaid Council duly taken thereunder. This Bond is a general obligation of the
County, and the payment of the principal and interest hereof is a first charge on the general fund of
the County. The full faith and credit of the County is irrevocably pledged to the punctual payment of
the principal of and interest on this Bond according to its terms.
[This Bond shall not be valid or obligatory for any purpose unless the certificate of
authentication hereon has been duly executed by the Registrar.]
It is hereby certified and recited that all the conditions, acts, and things essential to the
validity of this Bond and the issue of which it forms a part exist, have happened, and have been
done;that every requirement of law affecting the issue thereof has been duly complied with;and that
the amount of this Bond,together with all other indebtedness of the County, is not in excess of any
constitutional or statutory limitation on indebtedness.
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IN WITNESS WHEREOF, the COUNTY OF HAWAII, State of Hawaii has caused this
Bond to be signed by the facsimile of the signatures of its Director of Finance and of its Mayor,and
to be sealed with the facsimile of the seal of the County of Hawai`i, and this Bond to be dated as of
the day of , 20
[MANUAL OR FACSIMILE SIGNATURE]
Director of Finance
[SEAL] [MANUAL OR FACSIMILE SIGNATURE]
Mayor
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[FORM OF CERTIFICATE OF AUTHENTICATION, IF APPLICABLE]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within-mentioned proceedings of the
County of Hawaii, State of Hawaii.
Date of Registration:
Registrar
By [MANUAL SIGNATURE]
Authorized Officer or Signatory
[FORM OF INSTRUMENT OF ASSIGNMENT]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto (please insert
social security or other tax identifying number of assignee):
(name and address of assignee)
the within-mentioned Bond and hereby irrevocably constitutes and appoints
attorney-in-fact, to transfer the same on the Bond Register in the office of the within-mentioned
Registrar with full power of substitution in the premises.
Date:
Signature Guaranteed:
(name of assignor)
(address of assignor)
NOTE: The signature to this assignment must correspond with the name as written on the
face of the within Bond in every particular, without alteration or enlargement or any change
whatsoever.
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