City and County of Honolulu $250,000,000 General Obligation Bonds, Series 2001C Year of Year of Maturity Principal Maturity Principal (December 1) Amount (December 1) Amount 2006 $16,600,000 2014 $16,700,000 2007 16,700,000 2015 16,700,000 2008 16,700,000 2016 16,700,000 2009 16,700,000 2017 16,600,000 2010 16,700,000 2018 16,600,000 2011 16,700,000 2019 16,600,000 2012 16,700,000 2020 16,600,000 2013 16,700,000 City and County of Honolulu State of Hawaii (Incorporated 1907) MAYOR Jeremy Harris CITY COUNCIL Jon C. Yoshimura Chair and Presiding Officer John DeSoto Vice-Chair Steve Holmes Floor Leader Duke Bainum John Henry Felix Rene Mansho Andy Mirikitani Gary H. Okino Romy M. Cachola DIRECTOR OF BUDGET AND FISCAL SERVICES Caroll Takahashi CORPORATION COUNSEL David Z. Arakawa BOND COUNSEL Orrick, Herrington & Sutcliffe LLP San Francisco, California The information contained in this Official Statement has been obtained from the City and County of Honolulu and other sources deemed reliable. No guaranty is made, however, as to the accuracy or completeness of such information. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. This Official Statement, which includes the cover page and appendices, does not constitute an offer to sell the Bonds in any state to any person to whom it is unlawful to make such offer in such state. No dealer, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds, and if given or made, such information or representations must not be relied upon. The information contained herein is subject to change without notice and neither the delivery of this Official Statement nor any sale hereunder at any time implies that the information contained herein is correct as of any time subsequent to its date. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. IN CONNECTION WITH THIS OFFERING THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS Page Page INTRODUCTION........................................................ 1 Leases ....................................................................26 AUTHORITY FOR AND PURPOSE OF Special Assessment Indebtedness ..........................26 ISSUANCE ................................................................ 1 Revenue Indebtedness............................................26 Authority for Issuance ............................................. 1 No Default .............................................................26 Purpose of Issuance................................................. 1 BUDGET PROCESS AND FINANCIAL THE REFUNDING PLAN........................................... 1 MANAGEMENT .....................................................27 THE BONDS................................................................ 2 Budgets and Expenditures......................................27 Description of the Bonds......................................... 2 H-Power Waste Disposal Facility..........................27 Payment of Bonds ................................................... 5 Cash Management and Investments.......................28 Determination of Interest Rates............................... 6 Inter-Fund Borrowing ............................................28 Alternate Rates ........................................................ 6 FINANCIAL INFORMATION AND Conversion to Fixed Rate Mode.............................. 7 ACCOUNTING........................................................29 Purchase of Bonds................................................... 7 Independent Audit..................................................29 Remarketing of the Bonds....................................... 9 Financial Statements ..............................................29 Redemption Prior to Maturity................................ 10 EMPLOYEE RELATIONS; PENSIONS ...................34 SECURITY FOR THE BONDS................................. 10 Employee Relations ...............................................34 Security Provisions................................................ 10 Pensions .................................................................34 Outstanding and Expected General Obligation PENDING LITIGATION ...........................................35 Bonds................................................................. 11 TAX MATTERS.........................................................35 BOND INSURANCE................................................. 11 APPROVAL OF LEGAL PROCEEDINGS ...............36 LIQUIDITY FACILITY............................................. 12 BOND RATINGS.......................................................37 THE CITY AND COUNTY OF HONOLULU.......... 12 UNDERWRITING......................................................37 Introduction ........................................................... 12 CONTINUING DISCLOSURE..................................37 Government and Organization............................... 12 MISCELLANEOUS ...................................................38 CITY AND COUNTY REVENUES.......................... 14 APPENDIX A: General Purpose Financial General Fund ......................................................... 14 Statements for the Fiscal Year Ended June 30, Special Revenue Funds.......................................... 19 2000 Projected Revenues And Expenditures.................. 19 APPENDIX B: Economic and Demographic Recent Events........................................................ 19 Factors DEBT STRUCTURE ................................................. 20 APPENDIX C: Proposed Form of Opinion of Legal Requirements............................................... 20 Bond Counsel Funded Debt and Debt Margin .............................. 21 APPENDIX D: Proposed Form of Continuing Trend of General Obligation Indebtedness............ 24 Disclosure Certificate Reimbursement to General Fund for Debt APPENDIX E: Book-Entry System Service ............................................................... 25 APPENDIX F: Specimen Bond Insurance Policy Pension Liability.................................................... 26 i OFFICIAL STATEMENT $250,000,000 City and County of Honolulu General Obligation Bonds, Series 2001C INTRODUCTION This Official Statement, which includes the cover page hereof and the appendices hereto, is provided for the purpose of presenting certain information relating to the City and County of Honolulu (the “City and County,” the “City,” “Honolulu” or “Oahu”), and its $250,000,000 aggregate principal amount of General Obligation Bonds, Series 2001C (the “Bonds”). AUTHORITY FOR AND PURPOSE OF ISSUANCE Authority for Issuance The Bonds are being issued pursuant to and in full compliance with Ordinance No. 94-43 for Fiscal Year 1994-95 of the City and County, Ordinance No. 96-39 for Fiscal Year 1996-97 of the City and County, Ordinance No. 98-29 for Fiscal Year 1998-99 of the City and County, Ordinance No. 99-28 for Fiscal Year 1999-00 of the City and County, Ordinance No. 00-24 for Fiscal Year 2000-01 of the City and County, Ordinance No. 01-27 for Fiscal Year 2001-02 of the City and County, Resolution No. 01-295 of the City and County, the Constitution and laws of the State of Hawaii, including Chapter 47, Hawaii Revised Statutes, and the Revised Charter of the City and County. The Bonds are being issued pursuant to a Certificate of the Director of Budget and Fiscal Services of the City and County (the “Authorizing Certificate”). Purpose of Issuance The proceeds of the Bonds (exclusive of accrued interest and premium, if any) will be used to provide funds for (i) a portion of the unfunded balance of $35,969,984 for public improvements authorized in the Capital Budget Ordinance for the Fiscal Year 1994-95, (ii) a portion of the unfunded balance of $4,527,918 for public improvements authorized in the Capital Budget Ordinance for Fiscal Year 1996-97, (iii) a portion of the unfunded balance of $31,669,258 for public improvements authorized in the Capital Budget Ordinance for Fiscal Year 1998- 99, (iv) a portion of the unfunded balance of $114,531,211 for public improvements authorized in the Capital Budget Ordinance for Fiscal Year 1999-00, (v) a portion of the unfunded balance of $243,312,023 for public improvements authorized in the Capital Budget Ordinance for Fiscal Year 2000-01, (vi) a portion of the unfunded balance of $366,313,800 for public improvements authorized in the Capital Budget Ordinance for Fiscal Year 2001- 02, and (vii) the refunding of certain outstanding general obligations of the City and County, as described in “THE REFUNDING PLAN.” THE REFUNDING PLAN The Bonds are being issued in part for the purpose of refunding certain outstanding general obligation commercial