2011-04-27 Cost of Government Commission Minutes

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collections for specific services becomes very difficult for the Finance Department. And part of that is because our biggest segment I think of our cost are salaries and wages. There’s only so much you can cut before you start having to cut back on services. Impact fees –Wrong time and I don’t like it because it’s half of what I collect under fair share. And the idea that you’re going to collect more through it or faster through it, it means that I will collect some fees in Puna and Ka‘u, but it will cut in half of what I collect in Kona. Because Kona is mainly new development. So, you pass the impact fee at the proposed rate of $6,000, it immediately cuts my fair share assessment against Palamanui by 50%. Kaloko Makai is going to be coming in to reclassify land. If they came in we would access them at $12,000 under fair share. If they come in under the impact fee as proposed by the council, they would be assessed at $6,000 per unit. That’s my main opposition right now is that the area that I have the fastest growth which is Kona occurring, that under the impact fee, it reduces our collections by 50%. And so the reality is there is no political will to adopt an impact fee at 100% at the $12,000. And that’s because every time somebody pulls a building permit for a house in Hawaiian Paradise Park and they say, before you can get your building permit, you’ve got to cough up $12,000 to the county before you build your house. What you’re going to hear happen is guys are going to continue to build houses without permits in Ocean View and other remote areas because they’re not going to have the $12,000 extra, cause they haven’t factored that in. We’re not talking about a development. We’re talking about aguy who bought a lot. He gets enough money to build a house and then you tell him $6,000. Even $6,000 before he can get the building permit is real tough for guys. And so the other problem I have is unless you’ve identified specific projects that you’re going to expand that money on, are you even going to expand it in six years and at the end of the six years I have to return it to people with interest. One of the other issues with the assessments is just that in this economy right now I think where most of the construction is occurring is in single family residences rather than big developments. You impose the impact fee, then you basically are going to shut down some of that. And somebody builds a house, we wouldn’t collect some revenue off the value of that house. If the impact fee becomes an impediment than it’s just vacant land or illegal structures which then I have to go and enforce. It is hell on wheels. We were going to basically allow guys to come in and make their homes legal if you built without a building permit. That’s easier said than done because you put your drywall up, well part of the permit is we have to inspect the electrical. We have to inspect the plumbing. So you have to rip off the drywall in order to get that inspection done. You also need to get either an architect or an engineer to sign off on those plans after the fact. And so anything that I view as resulting in more illegal structures,to me is just creating a huge problem that we will have to deal with later. So, I view this impact fee as a problem. I think that fair share is legally defensible and it does hit the new developments and it hits them in the area that are most rapidly growing, which is Kona. So, I’m kind of happy with the system as it is. I have people who’ve paid fair share but in theory, they’ve paid like partial. And if the impact fee is passed, then I have to reassess what they owe. And so they’re telling me that I don’t have to reimburse money if under the new scenario they’ve now overpaid. But if they’ve only paid a portion, then I have to reassess, and then they’ll not pay me anything more. And the problem is, is that in the Puna area where there’s a tremendous demand for services, I think that it will make it harder. We’re actually getting better at collecting as people build out we’re already starting to use some of that money. But what people don’t understand is you don’t collect until 31