Hawaii Revised Statutes 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]

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Last modified: October 27, 2016