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HomeMy WebLinkAboutCOM 0468.006 1998-2000 vvw~ ~~.y_......? Stephen K. Yamashiro '-~acry A. Takahashi Mayor -Director rn r S. K. S~~c~phputte r~ •~h «M'~~. ~U~.1 Ili~ll l~ Def it ~l 11 ?t) County of Hawaii ~ . , , , DEPARTMENT OF FINANCE 25 Aupuni Street, Room 118 • Hilo, Hawaii 96720-4252 (808)961-8234 • (808)961-8248 March 13, 2000 The Honorable Aazon Chung Chair Committee on Finance Hawaii County Council Hilo, Hawaii 96720 Re: Comm. 468.002 Special Study on County of Hawaii Leases with Nonprofit Organizations Dear Chairman Chung: The Department of Finance submits the following response to the above-mentioned special study. I. Article 19, Chapter 2, Hawaii County Code, Relating to Real Property Disposition Based upon the comments expressed during the Committee on Finance meeting of Mazch 9, 2000, it is recommended that the entire article dealing with the disposition of real property be reviewed. II. Terms and Conditions The Department of Finance has submitted a request to Corporation Counsel for their assistance in preparing boilerplate terms and conditions. III. Procedures The department has also transmitted to the departments and agencies proposed procedures for handling future leases. Actually our proposal addresses the disposition of real property as covered under Article 19. We have attached a wpy of our Vansmittal to the departments and agencies. Responses are due by the end of March. N. Central Repository The Department of Finance has always looked to the County Clerk as the keeper of the County's records, and we have always felt that original real estate documents should be filed with the County Clerk. Departments and agencies should be provided working copies not originals. In the case of the Department of Finance, we would need copies for the purposes of preparing and maintaining a perpetual inventory of all lands, roadways, streets, easements and other land interests owned, leased, rented or controlled by the County. Comm. No, bg • ~6 File No. Ref. To: F~i Ref. Date MAR 13 2000 The Honorable Aazon Chung Page 2 Mazch 13, 2000 The study cites instances where the Director of Finance is not involved in reviewing lease agreements. We note that Corporation Counsel approves all legal documents. We would recommend that they be included in the process and they be responsible for citing the authority for all real property transactions so that departments and agencies can be assured that they are following the proper procedure and that they will be in compliance with legal requirements. While the scope of the study focused upon leases, real property disposition also includes sale, exchange, license, permit, and easements. Let us work together in developing a process by which the disposition of real property will be more accountable and practical. Sincerely, '~1 Harry A. T ahashi Finance Director Enclosures Stephen K. Yamashiro Harry A. Takahashi Mayor Diregor • 5. K. Sdtutte n.« M•+J PAY De County of Hawaii DEPARTMENT OF FINANCE 25 Aupuni Street, Room 118 • Hilo, Hawaii 96720-0252 (808)961-8234 (808)961-8248 Mazch 7, 2000 MEMORANDUM TO: All Departments and Agencies 1 FROM: Harry A. Takahashi, Finance Director SUBJECT: Special Study on County of Hawaii Leases with Nonprofit Organizations The Legislative Auditor of the Hawaii County Council recently issued the above-mentioned special study. Although the main issue of the study focused on County leases with nonprofit organizations, it also attempted to identify and review lease agreements between the county and private entities. Article 19, Chapter 2, of the Hawaii County Code provides for the disposition of real property. Section 2-111, Powers of Council, provides that: "Except as otherwise provided by law and subject to other provisions of this article, the council may, by resolution approved by a majority of the members, direct the finance director or chief engineer: (1) To dispose of real property in fee simple by lease, license, or permit; provided that any lease, license, or permit whose term is for less than one hundred eighty days may be granted, without the necessity of council action, by the finance director or chief engineer through direct negotiation and without recourse to public auction; (2) To grant easement for particular purposes, subject, however, to reverter to the County upon termination or abandonment of the •specific purpose for which it was granted, provided that any easement may be granted by direct negotiation and without recourse to public auction when the sale price of such easement is less than $1,000; (3) To exchange real property for private property." Memorandum to All Departments and Agencies Page 2 Mazch 7, 2000 It is appazent that department and agencies are unawaze of the provisions of Article 19, Chapter 2. The Department of Finance is concerned that wntrol of county facilities is being transferred through lease, license, permit, exchange or easement without the knowledge or involvement of the Departrnent of Finance. In these types of transactions, ownership still remains with the County, thus ownership information is not affected. In order to insure that disposition of real property is done in compliance with Article 19, we aze requiring that the attached form be used to initiate action to dispose of County property. As indicated in the special study, the Council may need more information prior to consideration of the resolution, thus for negotiated transactions, discussions with the interested party may be conducted simultaneously with the processing of the request. The study has also been critical of the collection effort on lease fees. Agencies also need to be accountable for the collection of lease payments. There aze a number of leases that provide fora $1.00 annual rent. The study also cites that a number of leases have fallen delinquent or lease fees have never been collected. Agencies need to realize that in many cases unless billed, lease payments will not be processed. We aze proposing that the Department of Finance be the repository of leases and that it will be responsible for billing and collecting. Please note that while the discussion focuses on leases, the same would apply to licenses, permits, easements, etc. The Department of Finance will be increasing minimal annual leases from $1.00 to $25.00 to accommodate the cost of keeping record, billing, and collection. We would still expect lead agencies to insure that the terms and conditions of the leases be carried out. To insure that the terms and conditions are monitored, we will be requiring lead agencies to famish at least annually a certiScation that the terms and conditions have been met. We have also attached a draft process for nonprofit lease negotiations. Please review the foregoing and submit your comments by Mazch 31, 2000. Attachments cc: William G. Davis, Managing Director ®~Q~~ DEPARTMENT OF FINANCE PROPERTY DISPOSITION REQUEST FOR ACTION Article 19, Chapter 1, HCC DATE: DEPARTMENT: CONTACT: TELEPHONE: PARCEL/FACILITY: INTERESTED PARTY: TELEPHONE: (Business) (Home) Action Requested: Sale or Lease Sealed Bid Negotiation Exchange Remnant Lease or Permit Govermnent, Governmental Agencies, Nonprofits, Affordable Housing Sale Lease Exchange License, Permit or Easement Others: Public Purpose: Attach copy of request, if available. Finance Use Only Date Received: Date Completed: Notes: DRAFT COUNTY OF HAWAII NEGOTIATION AND CONTRACTING PROCEDURES FOR LEASING OF COUNTY-CONTROLLED REAL PROPERTY TO NON-PROFIT ORGANICATIONS 1. The Department of Finance receives a written request for lease from the non-profit organization. 2. The Department of Finance reviews, then refers the request to the appropriate departrnent or agency for comments and recommendations. 3. The Department of Finance receives the response from the department or agency and if favorable, prepares a proposed resolution for the Hawaii County Council. 4. The Hawaii County Council reviews, then approves or disapproves the proposed resolution. 5. (a) if approved, the Department of Finance informs the department or agency to proceed with negotiating the lease agreement with the non-profit organization. (b) If disapproved, the Department of Finance notes the non-profit organization of the Hawaii County decision. 6. The department or agenry returns the negotiated lease agreement to the Department of Finance. The Corporation Counsel is asked to review and prepare the lease agreement 7. The lease agreement is sent to the department or agency to obtain the non-profit organization signature. Then the department or agency head recommends approval. The Director of Finance will attached the contraM routing form and wilt be responsible for its execution. 8. The original copy of the executed lease ageement is returned to the Department of Finance and copies are sent to the department or agenry and the non-profit organization 9. The Department of Finance is responsible for billing and collecting of the lease fees and maintaining a file for the lease agreements and a perpetual inventory of the leased real property. 10. The department or agenry is responsible for the lease negotiation of real property under its jurisdiction as well as the administration of the teens and conditions otthe agreement An annual report certified by the department or agency head is submitted to the Director of Finance, indicating whether the lessee has or has not met all the terms and conditions in the lease agreement during the past year.