Community Facilities Districts
What is a Community Facilities District?
A Community Facilities District (CFD) is a financing tool that is newly available to the County of Maui as a method to fund public infrastructure improvements. Specifically, a CFD creates a special taxing “district” to fund public facilities construction or improvements – including streets, bikeways, parking, lighting, shoreline restoration, water and wastewater, utility undergrounding, and other public projects – by levying a special tax assessment on property owners within the defined boundaries of the CFD. Thus, those owners effectively pay for public facilities improvements as part of their property tax bill.
Generally, CFDs are a mechanism used by developers to expedite the timeline for when public facilities are constructed. Further, if a CFD works as intended, upfront public infrastructure costs may be lower, which allows the developer to in turn lower the cost of homes. Finally, since a CFD funds public improvements the County would otherwise consider supporting itself, it may allow the County more flexibility to prioritize spending in other areas of need.
In order to form a CFD in the County of Maui, several steps must be completed, beginning with a proposed CFD being initiated by either property owners or Maui County Council action. The Council would then vote on a resolution of intention to form the CFD, and schedule a public hearing to approve the special tax. Finally, if the Council approves the CFD, the public improvements can either be funded by bonds or on a “pay as you go” basis.
While all four Hawaii counties have adopted ordinances enabling the creation of CFDs, to date there has been only one CFD formed and utilized in Hawaii. In 2008, the Kukui Ula Project on Kauai formed a CFD, and in 2012 County of Kauai sold its first bonds as a part of the CFD. The Kukui Ula Project CFD helped fund road and intersection construction and improvements, as well as the expansion of the county’s potable water system. Future planned Kukui Ula Project CFD improvements include civil defense and shoreline recreational improvements.
Below are additional materials and background information on CFDs, how they work, and their potential use as a financing tool for public infrastructure improvements on Maui.