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November 25, 2025 <br />Page 2 <br />2. AHP Funds Lapsing <br />Under current County fiscal procedures, annual lapsing is expected and occurs even when <br />AHP projects are active. These include: <br />a) Multi -Phase Project Timelines <br />Many OHCD large-scale projects progress through multiple phases, including <br />regulatory approvals, environmental review, planning, design, and permitting, before <br />infrastructure or construction contracts can be procured. Because these phases <br />cannot occur simultaneously, only early -phase funding is typically ready for <br />encumbrance in the first fiscal year. Remaining funds will lapse even while the <br />project is actively advancing. <br />Similarly, financial assistance programs encumber funds on a rolling, case -by -case <br />basis as homeowners complete inspections, secure contractors, and enter into <br />agreements at different times throughout the year. Because each transaction follows <br />its own schedule, not all funds can be encumbered by fiscal year-end despite <br />continuous program activity. <br />b) Required Contingencies and Due Diligence <br />Before executing agreements, OHCD must ensure that awardees meet required <br />contingencies such as securing additional funding commitments, completing <br />environmental reviews, confirming land tenure, and satisfying commitments made in <br />their proposals. Funds may lapse when additional time is required to meet these <br />requirements. This approach reflects OHCD's commitment to safeguarding public <br />resources by ensuring that funds are encumbered only after projects have been <br />thoroughly verified for compliance with all applicable laws and regulations and <br />demonstrated to be positioned to advance responsibly with full accountability. <br />c) Unused Administrative Funds <br />Under AHP Administrative Rules §1-3(5), OHCD may set aside up to 10% of the <br />annual appropriation to administer the program. Any portion not expended by fiscal <br />year-end lapses and must be reappropriated before it can be applied toward future <br />projects. <br />As these funds remain dedicated to affordable housing under Ordinance 22-77, Bill 105 <br />seeks to reappropriate amounts that were not encumbered before June 30 but continue to <br />be designated for their intended purposes. <br />3. Transparency and Annual Reporting <br />All projects, expenditures, and administrative allocations have been reported to the Hawai'i <br />County Council through OHCD's AHP Annual Reports, as required by AHP Administrative <br />Rules §2-2. These reports are also available for public viewing on OHCD's website. <br />OHCD appreciates the Committee's request for clarity and the opportunity to provide <br />additional detail. Accordingly, we are providing the following documents for review: <br />Exhibit A - Breakdown of AHP Funds Reappropriation <br />Exhibit B - Overview of AHP Program Projects <br />