HRS §46-101 Short title
46-101. Short title
This part shall be known and may be cited as the "Tax Increment Financing Act".
L
1985, c 267, pt of §1
Tax Increment Financing
HRS div. 1, tit. 6, ch. 46, pt. VI
in effectHRS §46-102 Definitions
46-102. Definitions
As used in this part, the following words and terms shall have the following meanings unless the context indicates a different meaning or intent:
"Adjustment rate" means a percentage
rate or rates of adjustment of the assessment base determined by the director
of finance at the time the 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 tax increment district and the projected
cost increases to the county for servicing the new developments within the tax
increment district.
"Assessment base" means the total
assessed values of all taxable real property in a tax increment district as
most recently certified by the director of finance on the date of creation of
the tax increment district.
"Assessment increment" means the
amount by which the current assessed values of taxable real property located
within the boundaries of a tax increment district exceeds its assessment base.
"Community development plan" means a
plan established pursuant to section 206E-5.
"Council" means the council of the
county in which a tax increment district is situated.
"County" has the same meaning as set
forth in section 1-22 and means the county in which a tax increment district is
situated.
"Director of budget" means the office
or chief budget officer of the county charged with the responsibility of
preparing and reviewing the operating and capital budget programs of the
county.
"Director of finance" means the
officer or officers of the county charged with the responsibility of
administering the real property taxation function of the county.
"High technology parks" means an
industrial park that has been developed to accommodate and support high technology
activities including the Hawaii technology park at Mililani town, city and
county of Honolulu, the Maui research and technology park, Maui county, and the
Hawaii ocean science and technology (HOST) park, Hawaii county.
"Project costs" means expenditures
made or estimated to be made or monetary obligations incurred or estimated to
be incurred by the agency 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:
(1) 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 land;
(2) 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;
(3) Professional service costs, including
architectural, planning, engineering, marketing, appraisal, financial
consultant, and special services and legal advice;
(4) Imputed administrative costs, including
reasonable charges for the time spent by employees of the agency in connection
with the implementation of a tax increment financing plan;
(5) Relocation costs to the extent required by
federal or state law;
(6) 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;
(7) Payments determined by the county council to be
necessary or convenient to the creation of a tax increment district or to the
implementation of the tax increment financing plan for the tax increment
district.
"Redevelopment agency" or
"agency" means an agency defined in section 53-1 or the Hawaii
community development authority as established pursuant to chapter 206E.
"Redevelopment plan" means a plan as
defined in section 53-1.
"Tax increment" means the amount of
real property taxes levied for one year on the assessment increment.
"Tax increment bonds" mean bonds,
notes, interim certificates, debentures, or other obligations issued pursuant
to this part.
"Tax increment district" or
"district" means a contiguous or noncontiguous geographic area
designated pursuant to section 46-103 by the county council for the purpose of
tax increment financing.
"Tax increment financing plan" means
the plan for tax increment financing for a tax increment district submitted to
the county council. The tax increment financing plan shall contain estimates
of: project costs; amount of tax increment bonds to be issued; sources of
revenue to finance or otherwise pay project costs; the most recent assessed
value of taxable real property in the district; the duration of the district's
existence; and statements from the county's department of finance, and the
county's department of budget, if applicable, regarding the financial and
budgetary impacts on the county resulting from the proposed tax increment
financing plan.
"Tax increment fund" means a fund
which shall be held by the director of finance or other fiduciary designated by
the county council and into which all tax increments and other moneys pledged
by the county for payment of tax increment bonds 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.
[L 1985, c
267, pt of §1; am L 1987, c 248, §2]
HRS §46-103 Establishment of tax increment district
46-103. Establishment of tax increment district
Any county 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:
(1) Describe the boundaries of the tax increment
district;
(2) Provide for the date of commencement of the tax
increment district and date of termination of the district;
(3) Provide for the establishment of a tax increment
fund for the district; and
(4) Provide for such other matters deemed to be
pertinent and desirable for tax increment financing and not inconsistent with
any relevant redevelopment plan, community development plan, high technology
park plan, or telecommunication development plan.
[L 1985, c 267, pt of §1; am
L 1987, c 248, §3]
HRS §46-104 County powers
46-104. County powers
A county may exercise any power necessary and convenient to establish tax increment districts, including the power to:
(1) Create tax increment districts and determine the
boundaries of the districts;
(2) Issue tax increment bonds;
(3) Deposit tax increments into the tax increment
fund created for a tax increment district; and
(4) Enter into agreements, including agreements with
the redevelopment agency and owners or developers of project lands and
bondholders, determined to be necessary or convenient to implement
redevelopment plans or community development plans, as the case may be, and
achieve their purposes.
[L 1985, c 267, pt of §1; am L 1987, c 248, §4]
HRS §46-105 Collection of tax increments
46-105. Collection of tax increments
(a) The county by ordinance shall provide for the allocation of real property taxes and tax increments in the manner required by this part.
(b) If a county exercises the power allowed
under this part, then commencing with the first payment of real property taxes
levied by the county subsequent to the time a tax increment district takes
effect, receipts from real property taxes shall be allocated and paid over as
follows:
(1) The amount of real property tax produced from the
assessment base shall be paid to the county general fund; and
(2) The tax increments produced from the assessment
increment in the tax increment district shall be applied as follows:
(A) First, an amount equal to the installment
of (i) principal and interest falling due of any tax increment bonds, or (ii)
any project cost approved by the county, shall be deposited into the tax
increment fund established for the tax increment district.
(B) Second, an amount equal to the adjustment
rate times the amount of real property tax produced from the assessment base
shall be computed and paid to the county general fund.
(C) Third, the remaining amount of tax
increments, if any, shall be deposited into the tax increment fund established
for the tax increment district.
(c) The allocation of real property taxes
pursuant to this part shall in no way limit the power of the county under
section 47-12 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 the
principal and interest of its general obligation bonds.
[L 1985, c 267, pt of
§1; am L 1990, c 34, §5]
HRS §46-106 Tax increment bonds
46-106. Tax increment bonds
(a) A county may issue tax increment bonds, the proceeds of which may be used to pay project costs for a tax increment district or to satisfy claims of bondholders. The county may issue refunding bonds previously issued by the county for the purpose of paying or retiring or in exchange for tax increment bonds previously issued by the county. Principal and interest on tax increment bonds shall be made payable, as to both principal and interest, solely from the tax increment fund established for the tax increment district.
A 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 a redevelopment plan or community development plan, as
the case may be, to be used to pay principal and interest on the tax increment
bonds and, if a county so agrees, the owners or holders of the tax increment
bonds may have a lien or mortgage on any facility acquired, improved, or
constructed with the proceeds of the tax increment bonds.
(b) Tax increment bonds, and the income
therefrom, issued pursuant to this part shall be exempt from all state and
county taxation, except estate and transfer taxes.
The bonds shall be authorized by ordinance and
may be issued in one or more series. The tax increment bonds of each issue
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 in a medium of payment 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
provided by the ordinance providing for issuance of the bonds or by the trust
indenture or mortgage issued in connection with the bonds. The county may sell
tax increment bonds in such manner, either at public or private sale, and for
such price as it may determine.
(c) Prior to the preparation of definitive tax
increment bonds, the county may issue interim receipts or temporary bonds
exchangeable for definitive bonds when such bonds have been executed and are
available for delivery.
(d) 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 exchange
and 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:
(1) Has paid reasonable expenses and charges in
connection therewith;
(2) 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
(3) Has furnished indemnity satisfactory to the
county.
(e) Notwithstanding any of the provisions of
this part or any recital in any tax increment bond issued under this part, all
tax increment bonds shall be deemed to be investment securities under the
Uniform Commercial Code, chapter 490, subject only to the provisions pertaining
to registration.
(f) 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 a 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.
(g) All banks, trust companies, savings banks and
institutions, building and loan associations, savings and loan associations,
investment companies, and other persons carrying on a banking or investment
business; all insurance companies, insurance associations, and other persons
carrying on an insurance business; and all personal representatives,
administrators, curators, trustees, and other fiduciaries legally may invest
sinking funds, money, or other funds belonging to them or within their control
in tax increment bonds issued by a county pursuant to this part. The bonds
shall be authorized security for all public deposits. Any person, political
subdivision, and officer, public or private, are authorized to use funds owned
or controlled by them for the purchase of tax increment bonds. This part does
not relieve any person of the duty to exercise reasonable care in selecting
securities.
(h) Tax increment bonds shall be payable only
out of the tax increment fund. The county 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. 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.
(i) 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
part shall not be general obligations of the State or county, nor in any event
shall they give rise to a charge against the general credit or taxing powers of
the State or county or be payable other than as provided by this part. No
holder of bonds issued under this part shall have the right to compel any
exercise of the taxing power of the State or 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.
(j) 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.
(k) 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.
[L 1985, c 267, pt of §1]
HRS §46-107 Tax increment bond anticipation notes
46-107. Tax 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 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 part 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.
[L 1985, c 267, pt of §1]
HRS §46-108 Annual report
46-108. Annual report
The county council by ordinance may require the director of finance to prepare a report to the county council on the status of the tax increment district. The county council shall determine what information and data are required to be included in the report.
[L 1985, c 267, pt of §1]
HRS §46-109 Termination of a tax increment district
46-109. 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.
[L 1985, c 267, pt of §1]
HRS §46-110 Tax increment fund
46-110. Tax increment fund
(a) Money shall be disbursed from the tax increment fund for a tax increment district only to satisfy the claims of holders of tax increment bonds issued for the tax increment district or to pay project costs for the district, or to make payments to the county as provided by subsection (c).
(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 of 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 tax increment
district falling due and the amount paid to the county general fund pursuant to
section 46-105(b)(2)(B), and subject to any agreement with bondholders, any
excess money in the fund at the option of the county 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 county general
fund, or any combination thereof.
[L 1985, c 267, pt of §1]
HRS §46-111 Computation of tax increment
46-111. Computation of tax increment
(a) Upon or after creation of a tax increment district, the director of finance of the county in which the district is situated 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 by reason of a court-ordered
abatement, stipulated agreement, or voluntary abatement made by the director of
finance, the reduction shall be applied to the assessment base of the district
when the property upon which the abatement 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 abatement relates to improvements made
after the date of creation.
(b) The director of finance shall certify the
amount of the assessment increment to the county and redevelopment agency each
year, together with the proportion that the assessment increment bears to the
total assessed value of the real property within the tax increment district for
that year.
[L 1985, c 267, pt of §1]
HRS §46-112 Tax on leased redevelopment property
46-112. Tax on leased redevelopment property
Whenever property in the tax increment district has been redeveloped and thereafter is leased by the county or redevelopment agency to any person or whenever the county or agency 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.
[L 1985, c 267, pt of §1]
HRS §46-113 Cumulative effect
46-113. Cumulative effect
Neither this part nor anything contained in this part shall be construed as a restriction or limitation upon any power which a county might otherwise have under any law of this State, but shall be construed as cumulative. The authorization granted may be carried out by the county council acting at any regular or special meeting.
[L 1985, c 267, pt of §1]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol02_Ch0046-0115/HRS0046/HRS_0046-.htmFetched: 11/10/2026