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HomeMy WebLinkAboutMIN CRCOC 2023/07/18 (2022-2024) Committee on Communications, Reports, and Council Oversight 11th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii July 18, 2023 CALL TO The regular meeting of the Committee on Communications, Reports, and ORDER: Council Oversight was called to order at 10:06 a.m., in the Council Chambers, Kailua-Kona, by Ms. Rebecca Villegas, Chair. ROLL CALL: Present: Ms. Rebecca Villegas, Chair Ms. Cindy Evans, Member Ms. Michelle M. Galimba, Member Mr. Matt Kaneali`i-Kleinfelder, Member Ms. Ashley L. Kierkiewicz, Member Ms. Heather L. Kimball, Member Ms. Susan L. K. Lee Loy, Member Absent and Excused: Mr. Holeka Goro Inaba, Member Ms. Jenn Kagiwada, Vice Chair STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 341: REQUESTS A PRESENTATION BY STATE OF HAWAII DEPARTMENT OF TRANSPORTATION, MINDY KIMURA, PROJECT MANAGER OF ITS HAWAII ROAD USAGE CHARGE, AND ANDREW MCLEAN OF CDM SMITH, REGARDING THE RECOMMENDATIONS OF THE FINAL REPORT FROM THE HAWAII ROAD USAGE CHARGE DEMONSTRATIONS PROJECT RELATING TO ITS HAWAII ROAD USAGE CHARGE From Council Member Heather L. Kimball, dated June 5, 2023. ; and CRCOC-11 July 18,2023 Comm. 341.1: From Council Member Heather L. Kimball, dated June 20, 2023, transmitting a PowerPoint presentation. Motion to Close File: Ms. Kimball moved to close file on Comm. 341. Seconded by Ms. Lee Loy. CHR. VILLEGAS: Chair Kimball, would you like to say a few words before we move into the PowerPoint, or would you like us to just move forward on this end? MS. KIMBALL: I'll just make one quick note that there is an updated PowerPoint in your pinkie folders which you should be referencing for this presentation rather than the one that is attached to your boards. Minor changes, that's all. Happy to have our guests take it away,just want to thank them for being here. CHR. VILLEGAS: Fantastic. We have that updated PowerPoint, and with that let's hand it to you (Note: At this time, Department of Transportation Deputy Director of Highways Robin Shishido came forward to address the members of the Committee.) MR. SHISHIDO: Good morning, Chair, and members of the Council. I'm Robin Shishido, Highways Deputy Director. Angelo was not able to make it, he had travel issues. Director Sniffen, yeah, with the storm coming he's attending HI-EMA (Hawai`i Emergency Management Agency) matters. But again, thank you for having us here, allowing us to present, and with that I'll turn it over to Mindy Kimura our Project Manager. (Note: At this time, Department of Transportation Project Manager Mindy Kimura came forward to address the members of the Committee.) MS. KIMURA: Good morning. Today I'll be talking about the Hawaii Road Usage Charge Demonstration Project and then, kind of our next steps moving forward and what we've learned from our Phase 1 project. (Note: At this time, Department of Transportation Project Manager Mindy Kimura provided a PowerPoint presentation to the members of the Committee. For viewing of the presentation, see the DVD copy of the proceedings on file in the Clerk's Office, or online at http:Hhawai i county.grani cus.com. A copy of the presentation is made part of the record, see Comm. 341.2.) Page 2 CRCOC-11 July 18,2023 CHR. VILLEGAS: Thank you, so much. With that if there's not anything you want to add at this time, we'll open it up for comment from my colleagues. Anyone with questions or comments? Council Member Evans. MS. EVANS: Yeah. I have quite a few questions, so is it okay to go? CHR. VILLEGAS: Yeah, you have the floor. MS. EVANS: Thank you. I noticed later in the presentation there was a comment that currently, electrical vehicle owners have an annual registration surcharge. So currently every year when someone does their annual car registration, they're paying $50? MS. KIMURA: Yes, that is for the state flat fee for the electric vehicle registration. MS. EVANS: Does that$50 go to the state, into their highway fund? MS. KIMURA: Yes. MS. EVANS: So right now the county is not getting any of that$50 to help us with our roads? MR. SHISHIDO: No. So right now I don't think Hawaii County has a surcharge, I believe only Maui County has issued one for their specific county. MS. EVANS: So Maui County has an annual surcharge for electrical vehicles, but we don't in our county? MR. SHISHIDO: Correct. MS. EVANS: That's important. Okay. The other thing is, was there discussion about the fact that at the time they get their vehicle inspection and the mileage, and then they would know this is how many miles, maybe I drove 8,000 miles for example for the year. I go and get my vehicle inspection 8,000 and cap because they're talking about doing a cap, let's say the cap is $100 or $75, whatever the number comes in at, is there an expectation that, that day they will pay that$75? And so now we're working with the people that do vehicle inspections to collect that money, is that expected that will be at the point of inspection that they collect the money. MS. KIMURA: No. So the RUC charge would be administered at the same time as the registration payments are due, not at the time of the safety inspections, because the safety inspections are administered by private entities that do the Page 3 CRCOC-11 July 18,2023 safety inspections. So just like how when you pay your weight tax or registration, the road usage charge will be tacked on to that process in that sense of billing. MS. EVANS: Okay. I noticed on the advisory group there was the City and County had their fiscal people there. There was Hawaii State Department Taxation, but the Hawaii County Fiscal Department, none of the other counties were present talking about that fiscal impact. How do you collect money, how do you account for it. So we're going to have to create some type of—pay some consultant to do some software system, I'm playing this out, right. So the vehicle inspection person looks at the mileage, enters it into a computer that will go into some magic database by individual county. And then the county, when the people go into our motor vehicle over here and pay for their annual motor registration, that will appear somewhere in the computer, that they have to collect this RUC (Road Usage Charge) charge at the time. Is that how people see it? MS. KIMURA: Yes. So we're not sure exactly what will happen on the backend of who's going to be processing the software or who will be in charge of that. Most likely the DMV's (Department of Motor Vehicles) are the ones who are going to be administering that cost, but in terms of actual implementation, that is something that we still need to develop in our phase two planning process. So we will have a deadline of July 1, 2025, to create that implementation plan. MS. EVANS: To come up with implementation, how you would transition it out. Okay. I have more questions, but I'll turn it over and come back. CHR VILLEGAS: Okay. Sounds good, Council Member Evans. Anyone else? Anyone in Hilo? MR. KANEALI`I-KLEINFELDER: Chair, I have a couple of questions, if I can. CHR. VILLEGAS: Okay, Council Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Mahalo for the presentation. Your last line kind of said what our first steps are and that paves the way for what's coming, I believe. So with that, that last slide, your recommendations aligned with RUC legislation. I kind of think back to a previous Council Member, and the use of the slides to say how many drivers' support. When I lean back on our previous Council Member, Mr. Chung, I always hear him in my mind saying there's lies, there's damn lies, and there's statistical lies. I wanted to check on some of these statistics that have been provided to us today. So the Island of Hawaii, 49,756 mailers sent and you're saying that every single survey received a response, is what I'm seeing from this document? MS. KIMURA: That is not the updated survey response, so the infographic on the left side in the orange is correct. The one on the right, the green is not. So, Page 4 CRCOC-11 July 18,2023 the numbers aren't exactly correlated like that, so the exact numbers for that was MR. KANEALI`I-KLEINFELDER: What were the responses for Hawaii Island? MS. KIMURA: Five thousand two hundred ninety-nine. MR. KANEALI`I-KLEINFELDER: A lot of these say that 75 percent of drivers support moving RUC forward. Sorry, the survey responses were only from drivers on Hawaii Island? MS. KIMURA: No, that 75 percent rate was for statewide. MR. KANEALI`I-KLEINFELDER: Statewide. MS. KIMURA: And that was from the survey responses that we received, not the mailers sent. MR. KANEALI`I-KLEINFELDER: What is the difference between the survey responses received and the mailers? MS. KIMURA: So the mailers sent is the amount that we sent out to Hawaii residents. And the survey responses received were those Hawaii residents who actually mailed us back the surveys. So that's how we collected our data, the numbers are based off of that. Ging Ging, is there anything that you wanted to add to that? (Note: At this time, CDM Smith Senior Project Manager Ging Ging Fernandez came forward to address the members of the Committee.) MS. FERNANDEZ: Ging Ging Fernandez with CDM Smith (privately owned engineering and construction firm),part of the project team. So basically what happened was that all drivers that were eligible received the driving report. And then it was completely voluntary, there was no incentive for folks to respond to this survey. You could respond to the survey online or there was a survey printed on paper that you can mail back with a self—addressed envelope. So, that's how their responses were received and distributed. MR. KANEALI`I-KLEINFELDER: Okay, what made a driver eligible,just having a license or certain age? MS. FERNANDEZ: So basically, the requirement was that just like in how a wreck would be calculated, as long as they had two vehicle inspections in the Page 5 CRCOC-11 July 18,2023 database prior to the date that the driving report was sent out. Then we were able to calculate what their road usage charge was based on the number of miles that they drove per year. As long as the number—once in while there were some funny numbers where there were too many miles over 100,000 miles driven in a year, where we thought it could be something where a number was punched in wrong or a negative driving report. If their addresses matched and their names matched from year to year indicating the vehicle was not sold or you know, ownership was transferred, then somebody was eligible to receive a driving report. MR. KANEALI`I-KLEINFELDER: Okay, so an eligibility would be having at least two vehicle inspections in the database? And then, not being over a certain amount of mileage or not having less than a certain amount of mileage? MS. FERNANDEZ: If it was a reasonable amount of mileage. So, it would be really difficult for somebody to drive, I don't remember what the cut off was, but if it was way too many for somebody to have driven so it indicated like an incorrect number, then we do not send that out. I think, also, there were some vehicles that were not light vehicles that got vehicle inspections like golf carts, do not get driving reports because they would not be subject to our road usage charge. MR. KANEALI`I-KLEINFELDER: Okay. Can you give me just an idea of what was considered reasonable, like 5 to 90,000 miles per year. What was that reasonable area? MS. FERNANDEZ: The typical driver drives about 10,000 miles a year in Hawai`i. And so, I think we took a look at what was possible for even a business to drive in the course of a year in Hawaii and that was the cutoff. So I don't remember exactly what the number was, but basically assuming they weren't driving 24 hours a day, that was kind of the cutoff. MR. KANEALI`I-KLEINFELDER: I didn't get a number ranged yet, so it's not really a clear number range then? MS. FERNANDEZ: If you want to give me a minute, I can look it up. MR. KANEALI`I-KLEINFELDER: Okay. I'd love to have that; it just helps me understand the statistics that we're saying. When we say 75 percent of drivers support moving RUC forward, and I want to know who those drivers were that were surveyed. I don't remember receiving a survey. And then, the first question we got a thumbs up statewide Hawaii Island, this is our initial reaction. The question is what your initial reaction to the idea of funding roads and bridges in Hawaii through RUC is based on how many miles you drive instead of a tax on the gallons of gasoline you buy? Strong initial support being 40, about 50 percent Page 6 CRCOC-11 July 18,2023 and about half of those people being somewhat supportive, but rest of the people being either unsure, very opposed, or somewhat opposed. So I appreciate you looking into that. Chair, I'm going to yield for the time being. CHR. VILLEGAS: Thank you, Council Member Kaneali`i-Kleinfelder. Anyone else in Hilo have any comments? MS. KIMBALL: Chair, if I may? This is Council Member Kimball. CHR. VILLEGAS: Alright, thank you, Council Member Kimball. MS. KIMBALL: Thank you. Thank you to our presenters for being here today, appreciate you making the time to go through this with us. I'd like for you to go into a little bit more detail, if possible, about the equity piece. I understand the concept that somebody with a lower income might have a less fuel-efficient vehicle. Therefore, they might pay a little more with a traditional fuel tax then they would with a road usage calculation. But what about, you know, I'm thinking particularly about our friends from Puna, here, about how that actually works when you're talking more about folks that have a bedroom community type arrangement. And our property values are lower in Puna and Hawaiian Ocean View, because a lot of folks are having to do that daily commute. And so both at the local level, can you speak to that equity piece. And then comparing Hawaii Island to the other counties, you know, we're the Big Island everybody drives here more. And I know that just looking from the greenhouse gas emissions perspectives, a larger fraction of our greenhouse gas emissions come from transportation, because of the fact we just have to drive further to get to various places. So can you speak to the equity both at the county level and also in terms of Hawaii County's contribution to the overall state budget with respect to a road usage charge. And would you foresee the distribution from state would be equivalent, I mean has that been discussed at all, would the counties get back the same amount that they put in? MR. SHISHIDO: Yeah, as far as the equity piece, I mean like you mentioned for folks like in Puna. I'm from Maui, so like in Hana they drive further, but also when they have older vehicles less fuel efficient, so they're paying more in gas tax. But if you go to a road usage charge, now they're paying by the miles they drive. So it doesn't matter what type of vehicle they have, whether it's a newer more fuel efficient, older big four-wheel drive, you know, they'll be paying on what they actually drive and not by the efficiency of their vehicle. And so that's where the equity piece comes in. And comparing to other islands like I mentioned Maui, you know, Hana. Folks there, they have to drive a long distance. And a lot of those folks, again, have the older bigger vehicles; so for them it would be the same situation, you know,paying the usage charge on what they drive and not by the vehicle that they drive as far as the contribution to Page 7 CRCOC-11 July 18,2023 the state. So for this road usage charge program, right now we're talking about the state gas tax. And that's just part of the next step we were looking at the county, and if they wanted to participate. And also go to a road usage charge rather than a gas tax. But overall, you know, with the state funding it is divvied up by vehicles miles traveled for each county. But in general, I mean that's kind of starting point going forward especially with this IIJA (Infrastructure Investment and Jobs Act) which has a lot more funding, and a lot more funding for even some of the county projects. You know, we're going to where the need is. And we have shovel ready projects, and we want to advance those. So, it's not necessarily set that each county would get back what they put in with the gas tax. MS. KIMBALL: Okay. I think of course that's going to be an important consideration for us, especially as we are the Big Island. What fraction that, that would come to projects, in our area and appreciate the mention of the IIJ Act funding. My further question was, you know, I'm an EV(Electric Vehicle) owner and I'm absolutely happy to pay my fair share with respect to, you know, I realize my electric vehicle impacts the roadway and I should be paying something. So I'm totally okay with that. Was there any component of your study that kind of looked at the impact of switching to a road usage charge on the rate of adoption of electric vehicles. Maybe not necessarily in our county, but elsewhere, in the places that have adopted a RUC, have you seen any decrease in the rate of adoption of electric or hybrid vehicles? MS. KIMURA: Ging Ging, can you answer that please? MS. FERNANDEZ: Yes, sure. That was actually one of the top questions. We had a few policy questions that were asked in many of the community meetings, was sincere interest in ensuring that any road usage charge did not affect EV adoptions, since it's also one of the state's goals and policy goals. So, the study did take a hard look at the effect it might have on electric vehicles, that was actually one of the questions that was asked in the survey was whether or not such a road usage charge could impact their decision on whether or not they would buy an EV vehicle. Most people indicated it would not affect their decisions. And we believe the reason behind that is we took a deeper dive into the cost of vehicle ownership and electric vehicles, and the cost of road usage charge is rather small compared to the overall cost savings that would be achieved by owning an electric vehicle. So if you took a look at the cost of ownership of a gas vehicle versus the cost of ownership of an electric vehicle, there are savings achieved from maintenance and electricity that would overshadow are larger than the road usage charge cost that would be incurred by a user per mile. Page 8 CRCOC-11 July 18,2023 MS. KIMBALL: Great, thank you for that. And I appreciate that was explored as part of this research. Yeah, I mean the point is well made that even though there would be this additional fee that currently electric vehicle owners don't pay, it's still so far below the cost savings of not having to buy gasoline all the time. And like you said, the other associated cost with maintenance is that it still ends up being a win, win situation for the vehicle owner. That's all I have at this time, Chair. Thank you, I yield. CHR. VILLEGAS: Thank you, Council Member Kimball. With that if there's no one else MR. KANEALI`I-KLEINFELDER: Chair? CHR. VILLEGAS: I'm sorry. MR. KANEALI`I-KLEINFELDER: I have a follow up before you wrap it up. CHR. VILLEGAS: You have a follow-up question? MR. KANEALI`I-KLEINFELDER: Yes. CHR. VILLEGAS: Okay, fantastic. I'm just going to bring it back here at Council Member Evans, she had some follow-up questions as well. So then we'll come back to you. MR. KANEALI`I-KLEINFELDER: Thank you. CHR. VILLEGAS: Council Member Evans. MS. EVANS: Thank you. So my question has to do about the timing of this, because of what's going to happen between now and then? Best case scenario, when would this roll out that you would show up and get your vehicle inspection, and you get your first RUC charge, or your mileage being submitted and going to go pay motor vehicle registration and have that on it. What's the best-case scenario? MS. KIMURA: So right now in the RUC legislation starting July 1, 2025, that is when the RUC project will roll out. At that point,the RUC charge will be either in or opt out program. So you can either pay the $50 flat fee, or you can pay according to what the RUC rate is in the legislation. Up until July 1, 2028, that's when the flat fee goes away, and it switches over to just a complete RUC system. So we have that adoption period for about three years to see how RUC would actually impact these EV owners. Page 9 CRCOC-11 July 18,2023 MS. EVANS: Okay. That's good to know. Has there been any talk about, I mean obviously there's discussion about creating a cap for electrical vehicles, right. So we cap it at$50 or $75, whatever the number is. Are we going to do the same thing for gasoline drivers, are we going to cap their taxes? And the reason I'm saying that is we have a gas price break down here and people are paying in the County of Hawaii 23 cents a gallon right now. At the state they're paying 16 cents a gallon, at the Feds they're paying 18.4 cents a gallon, and I don't believe we cap what gasoline people pay. This goes back to the equity piece. So, how are we going to do this during the transition, obviously you want to come to 2028. The policy makers between now and 2028 are going to talk about should we go to the RUC charge, miles driven charge for gas as well as electric, right. They're going to try to equalize it between now and 2028, is that the goal? MS. KIMURA: Yeah. So the only reason why the EV's have a cap right now is because there is a flat surcharge, so that's where that cap number comes from. As of now there is no cap for a gas tax, so we don't see something like that coming forward from the gas taxes. That is something that we could take into possibility, or we could just go straight into RUC system. But that needs to be further explored and researched, as we move into the implementation fees. MS. EVANS: Yeah, I'm just concerned because a lot of people can't afford electrical vehicles. You might have a gas card for a long time. I guess my last question, thank you. Thank you, members. My last question has to do a lot about the weight tax. So in the future, you still see the combination of road usage, mileage, plus the weight tax. These will be the two ways to create a revenue stream because our roads are wearing out, and the cost of asphalt, everything is going up. And so at some point, are these the two that we're going to play with in terms of how to create more revenue? MR. SHISHIDO: I mean right now with the gas tax, that revenue stream has been going down because of more fuel-efficient cars. So that's what the road usage charge is intended to, you know, have a sustainable revenue source. With the weight tax, I mean it's all combined and how we get our highway revenue, but you know, that one, the heavier vehicle the more impact you have on roads and so it charges you more for that. So, I think it would remain separate, two separate revenue streams. MS. EVANS: It would be separate, but it's the only two ways that we're going to generate revenue to help us with our road repair maintenance. I mean; besides the match you get from the Federal Government; I'm just talking about us trying to create revenue. Those would be the two. Page 10 CRCOC-11 July 18,2023 MR. SHISHIDO: So Hawaii, our main revenue stream, there's a fuel tax, car rental surcharge, the registration, and then the heavy weight. So there's four big components. MS. EVANS: Carbon surcharge. MR. SHISHIDO: Car rental surcharge. MS. EVANS: Okay. I would hope, and I don't know if you have the available or if the Department of Transportation has available, but it would really be nice to see your year to year, this revenue streams that we have and how things are changing because it was very enlightening, and I don't know. This one slide, five, which is showing that fuel tax we had 47 percent. Our revenue stream was from fuel tax in the year 2000. It's now 29 percent, it may continue to keep going down, down, down. So how again, do we supplement the revenue? It'll be nice to see the annual, if we could get it on the DOT (Department of Transportation) website or whatever. I'd love to have you take it back and ask Department of Transportation to have that information available to us,just to see how—quickly it's going down getting taxes from fuel. MS. KIMURA: So on the previous page before that on slide four, it shows how the fuel tax kind of shifted throughout the years from 2020 until 2000. MS. EVANS: Right, this is 2023 going on 2024. I'd love to see how much it shifted in the last four years,just to see how it keeps shifting. I think that says a lot, but thank you. Thank you, Chair. CHR. VILLEGAS: Thank you, Council Member Evans. Council Member Kaneali`i–Kleinfelder, coming back to you. MR. KANEALI`I-KLEINFELDER: Thank you, Chair Villegas. Going back to Ging Ging, did you get a number for the reasonable miles driven per year? MS. FERNANDEZ: Yes, I did. It was 100,000. And if you break it down 100,000 miles a year, would be the equivalent of driving 280 miles a day, every day of the year. So, that's how we came up with that number. MR. KANEALI`I-KLEINFELDER: That was the reasonable driving per year. MS. FERNANDEZ: That was the cap, yeah. MR. KANEALI`I-KLEINFELDER: The cap. MS. FERNANDEZ: If you go more than 100,000 miles a year, we felt that there could be something wrong; the driving report was not sent out, yes. Page 11 CRCOC-11 July 18,2023 MR. KANEALI`I-KLEINFELDER: Okay. Then one more question for you folks unless something else comes up. So looking at this, this number one HDOT (Hawai`i Department of Transportation)recommendations to charge EV's eight cents per mile minus the registration fee, fare enough. So if someone drove an EV 10,000 miles in a year, because I've always looked at about 12,000 miles being the average. For most people on Hawaii Island, because of our size. And that's not someone who drives to Kona every day,back and forth for their job, which is a lot of our island. But let's say you drive ten thousand miles a year just for ease of math, so 10,000 miles times eight cents a mile is $800 dollars. MS. KIMURA: The charge for the EV's is 0.8 cents per mile, so that equates to less than a penny. So when you multiply it out, it's 0.008. MR. KANEALI`I-KLEINFELDER: My bad, may bad, that's a math mistake right there that's completely my fault. I was stressing, I was going to say I was stressing for a minute. That's $800, so I'll take the $50. Okay, so at 10,000 miles we're looking at—help me with the math, because apparently the math skills not so bright this morning. MS. KIMURA: Yeah so, another way we'd like to explain the math, is about eight dollars per 1,000 miles. MR. KANEALI`I-KLEINFELDER: Okay. eight dollars per thousand miles, so we're looking at about$80 dollars for 10,000 a year. Ten thousand miles a year driven RUC charge, for an EV owner. Ninety-six dollars, yeah? MR. SHISHIDO: Yeah, for 12,000 miles it will be $96. MR. KANEALI`I-KLEINFELDER: Okay. So about$80 to $96 per year for the for the RUC charge. And then this cap amount at$50 per year, that will be effective for how long? MS. KIMURA: The cap goes away on July 1, 2028. MR. KANEALI`I-KLEINFELDER: Okay. Two things to Ms. Kimball's point, it's kind of where I was headed. Puna, where a lot of us live, about a third of the population of Hawaii Island is the size of Oahu and it's a bedroom community. I would say a lot of our island commutes to and from our major town centers; Kona and Hilo. And what I found is the more rural, the cheaper the land, exactly what Ms. Kimball said. But that's our folks that we're trying to support. And I want to ensure the working group, and I know you folks are more than messenger and you're going to answer questions. But to the working group, if they are watching, if our rural communities are affected negatively by this kind of legislation, then we've done an injustice to our community. Page 12 CRCOC-11 July 18,2023 So there needs to be great caution towards the folks who drive a lot that have a gas-powered vehicle. If you live in town, great, this will do well for you because you're driving two miles to work and two miles home. But for most of our folks, you're going to be driving 40 to 50 miles a day. If not, 200 a day back and forth to where your job is, compared to where your home is. So I do really caution how we approach this legislation, and do it well so we protect our rural areas, which are outline areas and make sure we're not putting strain on them financially. But I appreciate the overview today, I've been watching this with interest. You know, I myself am an EV owner as well, so I've been watching this with interest. Appreciate the overview, and please keep in touch with us as you move on. Thank you, Chair. CHR. VILLEGAS: Thank you, Council Member Kaneali`i-Kleinfelder. Council Member Lee Loy. MS. LEE LOY: Yes, please, thank you. Thanks Mindy, Robin, Ging Ging, for being here. I kind of wanted and, you know, I'm going to be challenging some of the information you have here. Not to poke holes in it, but because I know you guys will do another round of studies. You know, I was part of a conversation with our economist Bob Brubaker, along with our R&D (Research and Development) Director Douglass Adams. And Hawaii County has the most vehicles per capita; apparently like Oprah, everybody has a car here on Hawaii Island. And I was just wondering as you guys refine some of these statistics, were you able to kind of calculate that database on registered owners on Hawaii Island, and what the fuel tax and RUC charges would look like based on that understanding? They're looking at you, Ging Ging. MS. FERNANDEZ: Thank you so much for that question. Absolutely, that was the purpose of the driving report is take a look at not just across the board but every single person and how they will be affected by a road usage charge. The average driver, because they drive about 10,000 miles a year, basically, would be paying about$70 to $80 dollars a year in a state road usage charge. Now, we confirmed that this actually impacted people just as expected as the average. Some people paid a little bit more, some people paid a little less, but the basic idea was that if your vehicle is currently higher fuel efficiency than the average, which is about 20 or 21 miles per gallon. Then you would pay a little bit more in a road usage charge than you would in a gas tax. If your vehicle is lower fuel efficiency than the average vehicle, so let's say you're getting 16 miles per gallon then you would pay less in a road usage charge. So that ended up being the best way to think about the impact, and so we did take a look at Hawaii Island. And in general, the more rural areas had vehicles that were slightly below the fuel efficiency of the average vehicle. That means that in that case most people will come out slightly paying a little less in road usage charge in that case, particularly in the rural areas. And so Hawaii Island was a Page 13 CRCOC-11 July 18,2023 little bit different when you compare it to some of the neighbor islands, because of the higher number of mileages by what we found; it wasn't based on the number of miles you drove, whether or not how it impacted you, but more about your fuel efficiency of your vehicle. MS. LEE LOY: Perfect segway, and I'm saying this out loud because we also have members from DPW (Department of Public Works) in the audience. You mentioned, Ging Ging, here in Hawaii Island we had below rates of fuel-efficient miles, right. So ours were lower, we weren't hitting like peak fuel efficiency. MS. FERNANDEZ: It was just slightly below, yes. MS. LEE LOY: Slightly below and again,just to challenge the information, was any consideration given because I want to acknowledge that cars get great mileage if our roads are nicely paved? And I see a lot of engineers in the room nodding their head, right. If you have a nicely paved road, you're going to reach that fuel efficiency per mile,per gallon. That's a fair statement. Nodding, okay, I see nodding. I think my challenge with this, and I think this is where my Puna colleagues' step in, is a lot of the roads in Puna are not paved. And so to reach that fuel efficiency per mile, they're not going to get there because two thirds of their drive is on roads that are substandard, privately owned, and they won't get that mileage efficiency. So I'm just asking out loud, if any consideration was given to those things when we're evaluating the RUC charges, and how we dial in moving away from fuel tax into this RUC charge? Anybody? Okay, maybe in the future studies. MR. SHISHIDO: I mean that's what the RUC charge does, right, it looks at your driving miles and not your fuel efficiency. And so exactly what you mentioned in those areas, because of poor roads or whatever the condition may be, they're not reaching that fuel efficiency. Then a road usage charge would be beneficial to them. And so like Ging Ging mentioned, you know, when we came up with those eight tenths of a cent per mile, it looked at the entire state fleet and what their average fuel efficiency was. And that's how those 22 miles per gallon came out. MS. LEE LOY: Perfect. The thing is we can't pave those roads with our fuel tax, and that's the hook that I think we're all trying to understand, right. We have to deliver this information to our constituency and here on Hawaii Island, specifically in our Puna area we have a lot of privately owned roads and we're not able to use some of these fuel taxes to pave those roads. And that's just the balance, right. Every island is very different, right? And Hawaii Island has the most privately held roads, specifically in Puna. So, absolutely appreciate this information. Thank you all for being here. As you guys move forward and start looking at more information and collecting more data, if you could refine some of that because at some point, you know, our policy-making body is going to have to take up that question. And information around how many miles of road we have Page 14 CRCOC-11 July 18,2023 here on Hawaii Island, how many are state, how many are county, and then how many are private, I think would help us make a really good decision. Thank you, I yield. CHR. VILLEGAS: Thank you, Council Member Lee Loy. Checking back in with anyone else. Council Member, Galimba. MS. GALIMBA: Thank you. I think the RUC sounds like a more direct way of taxing at this point, we're indirectly taxing the fuel to pay for the roads and that's increasingly becoming not an assumption that is valid. So I do definitely support the overall concept of going towards a road usage charge, because you're going to be paying on the fuel anyway, so it's better to pay it directly. That being said, my colleagues, I think it is slightly outside of the RUC versus fuel charge question. But they're bringing up this larger question of percentage of state highways versus county versus private roads. So, I guess that is a larger policy question that we need to think about. But thanks for the very clear and thoughtful presentation. CHR. VILLEGAS: Thank you, Council Member Galimba. And with that I'll just wrap it up by thanking you guys for being here and for navigating; it's kind of ironic during a storm that those dealing with transportation have had to take extra care and precautions. But thank you for prioritizing and being here with us today and for enduring and navigating a lot of these challenging questions. Our County is unique in so many ways in its size and its makeup, socioeconomically, and the existence of neighborhoods with private roads that have been highlighted in the news quite a bit. In the last few years, especially, with the eruption and the devastation caused by that. So still recovery happening in those areas, but definitely touches on a number of these issues that you are touching on and highlighting. I am personally grateful to see this continued effort to mitigate the challenges brought forth with, ironically, the transitions which are also fantastic when we're moving into more EV usage, which decreases our carbon admissions. You know, sometimes it's such a double-edged sword, then people talk about the price of EV batteries. There're just two steps forward and one step back, but I appreciate the diligence and determination that it's taken to look at all the data that's out there and try and put it into a report that provides some clarity. And as a State, as we continue in this path to figuring out how do you utilize RUC, and how to minimize the negative impacts while maximizing the positive, you know, risk versus reward, right. So, thank you for continuing with that deep dive, and I appreciate the comments and questions made by my colleagues today, especially as they represent the districts they live in and the unique characteristics of those spaces, and all connected on one big, big island. So I look forward to learning more and continuing through this process in providing more equitable distribution in the Page 15 CRCOC-11 July 18,2023 fees for usage of our roads Yeah. So, thank you so much and with that, can I get a motion to close file on Communication 341, oh we already have a motion. All those in favor of closing file on Communication 341, please say "aye." Vote on Comm. 341: The motion to close file on Comm. 341 was carried Filed by the following voice vote: Ayes: Committee Members Evans, Galimba, Kanealii—KI einfelder, Kierkiewicz, Kimball, Lee Loy, and Chair Villegas —7. Noes: None. Absent: Committee Members Inaba and Kagiwada—2. Excused: None. Comm. 363: PERFORMANCE AUDIT 2023-03: DEPARTMENT OF PUBLIC WORKS CONSTRUCTION CONTRACTS, CHANGE ORDERS, AND SUPPLEMENTAL AGREEMENTS From County Auditor Tyler J. Benner, dated June 30, 2023, transmitting the above audit report, pursuant to Section 3-18(d)(2) of the Hawaii County Charter. Motion to Approve: Ms. Lee Loy moved to close file on Comm. 363. Seconded by Ms. Galimba. CHR. VILLEGAS: Thank you for being here with us, Mr. Benner. I'm going to let you take it away. Please introduce yourself for the record, and we'll look forward to your presentation. (Note: At this time, County Auditor Tyler J. Benner came forward to address the members of the Committee.) MR. BENNER: Thank you. Aloha Council Members. My name is Tyler Benner, I'm with the Office of the County Auditor. We're here today to debrief Council on Audit Report 4 2023-03 Department of Public Works contracts, change orders, and supplements. I'm joined by Mike Cordova, who served as a lead auditor on this engagement. So if there's questions that may be of a real specific nature, I may call on him. (Note: At this time, County Auditor Mr. Tyler Benner provided a PowerPoint presentation to the members of the Committee. For viewing of the presentation, see the DVD copy of the proceedings on file in the Page 16 CRCOC-11 July 18,2023 Clerk's Office, or online at http://hawaiicounty.granicus.com. A copy of the presentation is made part of the record, see Comm. 363) MR. BENNER: Thank you, Council. Happy to field any questions or turn it over to the Director this time. CHR. VILLEGAS: Thank you, Mr. Benner. Mr. Pause, did you want to join us? Just give you an opportunity to make any comments you'd like, and then I'll open it up to my colleagues for any questions. (Note: At this time, Public Works Director Steve Pause came forward to address the members of the Committee.) MR. PAUSE: Thank you. Steve Pause, Public Works Director. Yes, this was a collaborative effort. And I'd like to just say that at this point we've had a number of conversations, but at this point we're really not in disagreement with any of the recommendations and the conclusions. Generally, you've heard me speak before. I have a large background in doing project management, but generally speaking the thought of introducing more discipline to our process, providing training for our people who manage projects, is a really, really, good idea. Where you heard me say this as well, you know, we're a work in progress. We're constantly looking for opportunities to continually improve. Especially on the project side of things, you know, the ability to pick the best projects to do front-end loading, to really analyze what our risk are to do things consistently to have prescriptive procedures and policies, to identify risk in ways to see things that are going to maybe bite us down the road. To do all of that work upfront is something that I'm very familiar with, and it's certainly relevant here. So I don't disagree with anything really, I think that there's an opportunity here to continue to make project delivery and project management better for the county. Right now applies to both our building divisions as well as our engineering divisions. One thing just also to point out, we did go through last year, I think we had four engineers that went through a project management training program. I've been through it myself, it's excellent. Mr. Benner mentioned PMBOK, it stands for the Project Management Book of Knowledge. It's actually somewhat of a bible, for how to start a project, how to manage a project, how to deliver a project. One of the areas and this is a large part, I've been here before we've talked about training in our budget for this year. It's an opportunity to take all of the engineers and manage projects, as well as the project managers and coordinators in the building division as well, to get them through this. I think there will be a noticeable improvement as far as our abilities to identify how to manage a project, how to look through options, how to really pick the best projects, how to prioritize projects. I see that's something that's going to be really, really, worthwhile. Page 17 CRCOC-11 July 18,2023 And I should mention today we have staff with us. We have our Division Chief for Engineering, Keone Thompson. Our Division Chief for Building, Julann Sonomura. We have our new Business Manager Tim Melko is here, and our accountant Kelsey Kalua is here, and also Valerie Tanimoto who's the Supervising Contracts Technician. So we have lots of people here to answer questions, but it's also good for them to be here and hear your feedback and your input. So that as we proceed forward and we take lessons learned, we can adopt them and move forward. Thank you. CHR. VILLEGAS: Thank you, Mr. Pause. With that Council Member Lee Loy. MS. LEE LOY: Thanks, Chair. Mr. Benner, I have a quick question because you did an excellent job again, you always do a wonderful job. MR. BENNER: Thank you. MS. LEE LOY: I was just wondering and building off of something Mr. Pause said, which is where we this particular year have completely front loaded a whole lot of money for education and training. And I was wondering if this audit had considered the amount of resources that were being placed in the department, while a lot of these deficiencies were occurring, if we have any indication in that area? MR. BENNER: I'll answer this to the best of my ability. And you're talking about just this division, I assume, right? I think that the progression of individuals in that department has been somewhat of a reactive process and has been, you know, learn as you go until the proficiency is enough that it passes for okay. Just given the highly specialized work that these folks do, I think everybody who we worked with was very cognizant of that. And it just becomes one of the scenarios that it's difficult to stop and breath and take stock of it when you have so much in process. But sounds unrelated but it's not. When we talked about the lessons learned recommendation that we made, we've presented that to the director, and he was the one who came back to us and gave us an example in one of his past projects of how stopping and taking stock of that ended up paying dividends on a future project. And I think the same thing can be projected and set for the workforce. And it doesn't seem in the date today, like you have the time to be able to stop and train up and increase that proficiency. But the multiplier and how that affects future outcomes, there's definitely a break-even point for that investment. MR. PAUSE: If I may add as far as resources go, I think one of the conclusions here was to get some inspectors on staff on our building side. We've got a number of facilities, especially aging facilities, that require a lot of project work. And Ms. Sonomura coming here, having been with us for a little bit more than a year, with an extensive background and project management, as well as construction is a tremendous resource. However, we have one project coordinator Page 18 CRCOC-11 July 18,2023 and a division that's supposed to have three project coordinators and two project managers. So as Mr. Benner says, we're constantly playing catchup, but I think that there's a reason to be optimistic because I think people are aware of and understand the benefits of being able to put that discipline in, and as we continue to staff up, it's well documented. The challenges of staffing and how it's been, but it is getting better. But I think staffing and then providing training not only helps us immediately, but it provides help with retention as far as providing training opportunities for our staff. I think all of that is hand in hand. MS. LEE LOY: You know, I asked that question cause, we just came off the heels of the budget, right. And just from the 30,000-foot look, you know, we had a prior audit in 2008, where some deficiencies were identified. But when I looked back in 2008, we were going through a recession. And so I don't know at that time, the committal of the budget would have allowed some of those efficiencies to be addressed. And you acknowledge that right up-front, right. So now here we are 15 years later, and we get to take a second bite out of that apple. And I'm just trying to identify how to build that budget for next year, to give them the tools that they need because you also mentioned a software program. You know, talking to individuals within the department, they do have software. And so I'm curious as to what type of resources that software program would look like. I guess that's why I was asking that question, you know, with the deficiencies, do we know how much resources we were putting in that area? And then looking ahead how much we would need to put to catch up, so that they can make up that area of deficiencies and then begin to improve. And I share that, and the most concerning part of this audit is on page 36, bottom last two paragraphs, considering the current trajectory without timely intervention, there is a genuine concern that the department may become incapable of effectively operating. My hands and feet get hot and sweaty reading that. This is a department that runs our CIP (Capital Improvement Projects)projects; the public's money, and if we don't change that trajectory, we're going to have problems using the public's money. And then the last paragraph, the department neglected to prioritize this crucial requirement and has been unable to address these needs. And so we have the budget that we have this year. Having a lot of foresight, we put a lot of money towards training. You know, we put a lot of money towards IT (Department of Information and Technology) and some of this software needs. I want to make sure that this department going into the next budget cycle can identify the amount of resources that was placed in and how much improvement, right, what kind of impact those dollars are having. And then in return we're seeing projects come in on time in budget, rather than over budget and delayed. Can you help us with that, Mr. Benner? Is there a way to Page 19 CRCOC-11 July 18,2023 MR. BENNER: You know, our function is primarily a look back. And so some of what you're talking about here is forecasting, and that's the go forward. And so there are unique needs that this department has. We had some good conversations with just the Division Chiefs outside waiting for this committee meeting, and they have in their mind what it is that they want to do to identify what those needs are going to entail. And the discussions were kind of surrounding moving fast or moving thoughtfully. And it would probably be easy for them to acquire software quickly, but are they going to acquire software that's actually going to meet their needs; it's going to deliver the data needs that might be needed by all the stakeholders. So I think with this document, this provides some guidance for them to be able to figure out what those needs are. Then to find the appropriate software, and other resources that are going to meet those needs, and then to make that to you folks in the budget request that will be coming out. So we're always available to resource them in terms of what we found and how deep it went, but it's going to be on the department to provide those kinds of forecast items. MS. LEE LOY: Great. Thank you very much for this. Mr. Pause, thank you so much for being here. Room for growth. MR. PAUSE: Always room for improvement. Thank you, Council Member. MS. LEE LOY: Alright. Thank you, Chair. I yield. CHR. VILLEGAS: Thank you, Council Member Lee Loy. Council Member Evans. MS. EVANS: Thank you. Good morning. I'm focusing on page 25, of the report. This is what really stood out for me versus all the other stuff. It looks like there's such importance to have staff that are trained in construction and knows all the different things about construction, and can inspect, and how this is kind of pointing out the inspections and the need to inspect. And yet, there's so many things that need to be inspected that you end up possibly using third party inspectors. And so that in itself, like how do you qualify your third-party inspectors and make sure, you know, what you're seeing is what you want. This gets back to an experience I had where the state had to use third party appraisers to tell them what the value of something was, and when we said who is evaluating the appraisal work, there was no one on staff that could actually evaluate what the appraisal was giving them. So my concern, I want to make sure that this particular area really has the ability of our staff to be able to look at the work that's given to him by other people, to make sure that it's adequate, that it meets a standard that we believe needs to be met. And so that kind of concerns me because inspections, if you don't get people Page 20 CRCOC-11 July 18,2023 out there it holds everything up. People will wait a long time and can't close the wall or can't do the next step if they don't have that inspection. So I kind of see that this might be an area that really needs kind of some support. I don't know, Director Pause, how you feel about that but I'm really hoping that somehow with the training money, whatever we've done that we can help in this specific area. Because I see that it's really pointing out kind of that there's too many things that need to be done, we don't have enough staff. You know, how are we going to really look at this kind of inspection, where I see kind of as a weak—area that could use improvement? Any comments? How do we move forward, how do we make a difference in one, two, or three years? MR. BENNER: We've laid out the weaknesses that we've seen in this audit. And it's going to start with—we haven't yet an opportunity to review what the management response is. But the management response is going to be the first plan of action, because they're going to state who's responsible for what and at what timetables. And potentially then state what resources are required in order to achieve it. And this is why we continue to place emphasis on that smart response, because it captures the elements of specific measurable, achievable, relevant, and time bound activities. So, we need to see that response before we can probably provide much comment on it. MS. EVANS: Okay. MR. PAUSE: So I think what you're referring to Council Member Evans is just one of the recommendations here was to improve our construction inspection staffing. So if you think about the engineering projects we do, and you think about a big highway project, and you think about a road project; under our engineering division we have construction inspectors and they go out and they do quality control, quality insurance, they do measurement, they perform all the tasks of a construction inspection person that then feeds back into looking at specifications, the drawings, and those sorts of things. We've not had that on the building side, so when we're doing a modification; when we're repairing a roof, when we're building the call center we've relied on our project person coordinator, project manager to go out and perform that task. What the message is here is that we really need to have a few dedicated people. I think I've got two folks in our supplemental budget, but somebody that can go out and perform the same task for facility construction projects that we're doing under the building division. I think at least what I gleaned from the report, there were probably greater gaps in that area with our building division, than there was necessarily in the engineering. As Mr. Benner pointed out, we've not put together a formal response. I tried to do one this weekend and it basically would have come up with agreed, agreed, agreed, I didn't necessarily have the information to provide details of our feedback. But that is something and again, through your actions with our budget that's going Page 21 CRCOC-11 July 18,2023 to be helpful. And then, the other thing we've also done is we managed to get some contract support. And again, that was done, I don't remember the time frame, but we came before you and you provided us the opportunity to get some construction help in the interim until we get those positions filled. So, we're grateful for that as well. MS. EVANS: Thank you. So I look forward to further discussion in this area, because clearly in the building department, division inspection, again, you know, we need to move things. And I know we hear about things being held in the building department and that might be one of the reasons, because you do have to inspect before you can move forward. MR. PAUSE: Well, we still have county building side of things as well, right. So we contract out of say it's a building construction project, you know, we own the contract where the owner is holding the contractor, we bid it out, we're holding them accountable. And we have to have people that can hold them accountable to our contract, but then they have a building permit. So we have to send our building inspectors out to hold them accountable to meet the requirements of the building code and such. So there's some checks and balances there, but you folks are all well aware of the aging facilities that we manage. And there's going to be a lot more work ahead again, fire stations, roofs, animal control. There's a lot of work out there, so this is a very timely informative opportunity for us to get better as we proceed. MS. EVANS: Thank you. Thank you, Chair. I yield. CHR. VILLEGAS: Thank you, Council Member Evans. Going to Hilo. MR. KANEALI`I-KLEINFELDER: Chair, can I? CHR. VILLEGAS: Yes, Council Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you, Ms. Villegas. Mr. Benner, wonderful report as usual. MR. BENNER: Thank you. MR. KANEALI`I-KLEINFELDER: My co-worker and I had some good comments about you that we can't share on this microphone, but you do a wonderful job. I wanted to ask some questions. I'm looking for more of an overview from you on our consultant contract process. If you could just give us a quick overview of what you found, because just being in this position we get a lot of phone calls from everybody, and we hear a lot of different things. And I think this part and the next section, which is the contracts themselves and our change orders, is interesting to me. So if you can, give a quick overview of this Page 22 CRCOC-11 July 18,2023 consultant contract selection process, and any issues that were found. And then we'll go to the next one. MR. BENNER: I think I'll ask if Mike wanted to come up here and provide that overview too. MR. KANEALI`I-KLEINFELDER: Okay. MR. BENNER: You're on page 12 of the report, Council Member? MR. KANEALI`I-KLEINFELDER: Correct, thank you. (Note: At this time, Audit Analyst Michael Cordova came forward to address the members of the Committee.) MR. CORDOVA: Hi, my name is Mike Cordova. I'm the Audit Analyst, the lead auditor on this particular project. So the consultant selection process is something that occurs as a result of—its run by the state under Section 103D-304 (Hawai`i Revised Statutes), where they go through the process of having consultants apply to become consultants for the county through that process. Then when a project occurs, what happens is they go through the process of selecting consultants that they think are going to work on this particular project or can work on this particular project. At that time, they're either invited or consultants put their name in the hat, and they come, and they build a list of consultants. And then, within the county side a panel is set up, usually I think it's like a panel of three is set up to go ahead and review all the different proposals from the consultants. And through that selection process, they rank them in numerical order. So they'll select three of those consultants, rank them in numerical order, and they put a proposal forward to the one that scores the highest of the three first. And if that particular consultant agrees to the process and they come to a financial agreement with that, that's how that consultant will then be assigned to that particular project. If that consultant doesn't agree to that, then they go to the next person, and so on down the line. And that's how the initial consultant process selection goes. MR. KANEALI`I-KLEINFELDER: Were there any inconsistencies or issues found in the consultant contracting? MR. CORDOVA: Actually, no. What I do is I review that whole process, and I reviewed over nine different consulting contracts, actually six different projects. I reviewed six different projects. And I took a close look at how that whole process worked, and I walked through the state regs that applied and ensured that all of those processes took place. MR. KANEALI`I-KLEINFELDER: Okay, that's good, that's a positive. Page 23 CRCOC-11 July 18,2023 MR. CORDOVA: They actually did quite well on that whole selection process. MR. KANEALI`I-KLEINFELDER: Thank you. I think it's important to know today this is designed to help us learn and grow. Not so much, although we're going to ask hard questions, the point here is to make DPW (Department of Public Works) better and more efficient. That's what I'm getting from this document, and I wanted to say that, you know, not just like we're going to blast DPW, because we got a good report in front of us. My second question for you is the audit activity on page 16, speaking to change orders of 20 contracts that you reviewed, which was only 20 percent of the total contracts I believe for this report. MR CORDOVA: It was 20 of 94 actually. MR. KANEALI`I-KLEINFELDER: Okay, so a little bit less than 20 percent? MR. CORDOVA: Yeah, it's like 21 percent, I think, right? MR. KANEALI`I-KLEINFELDER: Yeah, that's what we read, 21 percent. So 20 contracts reviewed, which is 21 percent of the total contracts, correct? MR. CORDOVA: Yeah. MR. KANEALI`I-KLEINFELDER: Nineteen of them had associated change orders. MR. CORDOVA: Yes. MR. KANEALI`I-KLEINFELDER: There were 56 change orders for 19 contracts, and 5 of the 20 contracts had some changes that could have been caught during the design phase. And then the report lists out those five, and I'm looking over these and I'm trying to grasp what it is that is being MR. CORDOVA: So you're talking about probably going back to the specifications. MR. KANEALI`I-KLEINFELDER: Yeah, exactly. Exactly, that areas and specifications that got tabled too that was submitted. MR. CORDOVA: So we reviewed these and through the process of review, we found there was certain areas of the contract of the change orders that looked like they shouldn't have been caught during this specification process. During that initial process when the consultants are building specifications working with the clients, this is all precontracted work; they develop the specifications. And we Page 24 CRCOC-11 July 18,2023 felt that some of the change orders that occurred during the development, during the contractor phase when we were out in construction and we got the change orders coming through, we felt that some of those change orders could have been caught when they were developing the specifications. And so that's how we came to that conclusion. Probably if you're looking for specific examples, I can take a look at the prosecuting attorney and here's a good line where it starts out by saying the original contract design failed to properly address the following terms, and then we went ahead and listed them. And so those did not happen on three occasions or three change orders in there where that occurred. Did you want to walk through all of them specifically? MR. KANEALI`I-KLEINFELDER: No, I don't. I think if anyone is really interested, they can read through this as well. Okay, a long time ago I was required to take project management classes, because I was the designer, installer, and lead on the jobs for the solar company that I worked with. That design process was crucial because, and these are simple jobs it's not large construction projects, but when you drive to a job site to do a job and you have limited time and limited funding and we're not talking taxpayer funds this is a private company. You don't have time to mess around or to drive back to Hilo to pick up a bolt. You need to make sure everything is in the van and your job was designed properly and that you're prepared to install it quickly and efficiently. So what stands out for me right now is yes, you can't think of everything, and every job is going to change, and things change, but the amount of change orders and the errors and specifications that's called out in this report as just your sampling of a little bit more than 20 percent of the projects in total, really does show that the planning efforts really need to be addressed. When we look at projects, what's needed, what kind of equipment is required, what codes we're meeting. I mean if you don't plan properly, and there's a lot of good sayings that go with this, but if you don't plan properly, then it's hard to get anywhere quickly. That's what this section says to me, and in anything, if we're not planning, we don't have the personnel to do the planning, and we're pushing into projects that are millions of dollars not just 10, 20,000 thousand dollars, but tens of million dollars of projects and we're not planning properly, then we have a problem. CHR. VILLEGAS: Council Member, Kaneali`i—Kleinfelder. MR. KANEALI`I-KLEINFELDER: Yup. CHR. VILLEGAS: The bell rang. MR. KANEALI`I-KLEINFELDER: Okay, let me just ask this one question then Chair. To Mr. Pause, this to me is the shining initial okay, anything that comes Page 25 CRCOC-11 July 18,2023 after this, this is the planning phase. What are we doing in this phase, and what is your department ready to do to address planning challenges which drives almost everything else in support. MR. PAUSE: Sure, that's a great question. I was smiling here because this section, in particular the report makes my case, which is change orders really come from two places. They come from failure to really do a good job of project definition; I call it front-end loading. It's not identifying what your work scope is and then down the road when you're in construction you go, oh man, I forgot this. Those things cost a lot more money. So the discipline of project management training, the discipline of doing front-end loading will help fix this. The other reason that we get change orders is for unknown conditions, right. You can be on a big site with all kinds of excavation, and you can put in a whole bunch of geotechnical borings and guess what, you missed that lava tube when you went to do your foundation, or you just didn't realize that once you got up on the roof that all the trusses were rotted. And you had to then go off and spend more money after the fact just to make repairs. So, I completely hear you. I completely agree with you that I think the key going forward is to do a better job of defining the project up front. And in concert with that when you're defining the project, you're also going to do a better job of writing your specifications, so that you'll avoid those pit falls later where you just forgot to put something into the project specs. CHR. VILLEGAS: Thank you, Director Pause. MR. KANEALI`I-KLEINFELDER: Chair, I have one follow-up, it's kind of a burning follow-up. I appreciate just a little leniency if I could. CHR. VILLEGAS: Can you just wait one second, and I'll come right back to you and just check with your colleagues to see if they have MR. KANEALI`I-KLEINFELDER: Thank you. MS. KIERKIEWICZ: Chair? CHR. VILLEGAS: Does anyone else have any questions at this time? MS. KIERKIEWICZ: Chair Villegas, we do. CHR. VILLEGAS: Okay. Are we, you and Heather? MS. KIERKIEWICZ: Yes. CHR. VILLEGAS: Okay. I'll let you guys decide who'd like to go first there. Page 26 CRCOC-11 July 18,2023 MS. KIERKIEWICZ: Thank you. She's going to defer to me very quickly. Thank you, Mr. Benner, to you and your team for another very thorough review, and for your very detailed and what I think very doable recommendations. I think this might be the first audit that I'm seeing delivered to us with no respond from the management. And I appreciate Director Pause, confirming that he and his division leads do agree with what has been put forth in the audit, but I haven't heard explicitly when we can expect a written response on how the department plans to implement the recommendations that are being put forward. Director, is that something you can speak to? MR. PAUSE: I can speak to the fact that yes, indeed we do need to put together a formal and written response. I was out of the office all last week. I did not get to confer with my team as far as timing goes, but it's certainly something happy to follow up with you. I don't think we're talking about months; I'm thinking we're talking about a couple of weeks and we'll be able to put something formal. Mr. Benner has provided us some specific guidance on what he would like that response to look like, he called it smart. I can't remember what all the letters stand for. But yes, that is our intent, Council Member Kierkiewicz, to actually put together a formal response. I think we've highlighted today that we are in agreement that there are opportunities in the course of addressing the recommendations, there are opportunities to expand and provide a bit more concrete detail. Not only in terms of what actions, but also put some timeframes with them as well. I will commit in the next few weeks, that we'll definitely be able to get that together. MS. KIERKIEWICZ: Great, I think we look forward to having that discussion. I think we all had sort of inklings over time about these particular issues within the department, but this audit certainly solidifies it and shows there is significant room for improvement within DPW's operations around this. And I think often times, you know, some of us that are coming from the private sector into government sort of take for granted that things are in place. Like project management software, like there being proper written policies and procedures which are really important, because they help to guide decision making, and ensure that it is fair, and that it is clear, and that it is equitable across the board. So, we do look forward to your response in making sure that there is actual progress that is going to be made in a realistic timeframe. And I say that because with all of these federal dollars, and we say this all time, with all the federal dollars that are available to help us improve our infrastructure and solve our problems that we faced for decades. It is a missed opportunity if we are not able to leverage those funds because we don't have either the workforce, or our workforce isn't trained up and upscaled properly to take on those larger infrastructure projects. So I want to thank you for being here, and your teams continued commitment to addressing the issues that were brought forward in the audit. Thank you, Chair. I yield. Page 27 CRCOC-11 July 18,2023 CHR. VILLEGAS: Thank you, Council Member. Moving on to Council Member Kimball. MS. KIMBALL: Thank you, Chair. Thank you again, Auditor Benner, for another excellent body of work. I wanted to kind of take the questions in a different direction from the lens of the HSAC (Hawai`i State Association of Counties). Some of the things that I think are outside of DPW's or even the Administrations direct control that impact some of these things. First and foremost, you know, really taking to heart the commentary and recommendations with regard to staffing and the lack of competitiveness for the salaries of those critical positions within the department, issues regarding other benefits and incentives, overall morale in the department. Can you perhaps, and maybe this is for both you and Director Pause can you kind of speak to what may need to happen with regard to interactions with the labor unions and the state to actually make progress on that? I mean, I'm not sure to what extent our hands are tied to actually influence that, even to the extent of changing position descriptions. MR. BENNER: I can speak to a couple of elements to this to a degree. First of all, I would say that one of the reasons why we felt it was important to reference this 2008 CIP audit was because, and this is somewhat we don't have empirical evidence to show it, but it appears that the Engineering Department was on equal footing with the Building Division on a number of these items in that 2008; it appears used this as a guiding document, to achieve some of its improvements. And we see a number of improvements that have taken place and we see that in the absence of the recommendations that we've made. And so you're able to compare and contrast the two departments and see that as far as its operational risk is that it doesn't affect the Engineering Division to the degree that it affects the Building Division. And that's what we mean by the interesting retrospect of looking at an audit where potentially somebody pursued those recommendations, achieved them, and they aren't dealing then with so much as the long-term consequence as another division who may not have followed the same guidance, and we can't say that with absolute certainty but there it is. We did also sit down with the Human Resources Department to talk with them about this concept of total compensation. Really one of the things we're talking about here is the perception of the value that they get from the job. So obviously, we want to improve the material things that make the position more attractive. But the other part of that equation is are we doing enough to sell the things that we are doing with the County currently, with the resources that we have, and are we making the prospect of what we have there attractive. And this is the concept that they're very aware of and we're excited to see it in the audit. And their indication was that it was something that could probably be replicated on a larger scale. So how that looks begins to leave our scope of work and what we're able to recommend in particular, but in concept I mean, what we put forward is simply that the County needs to do a better job of Page 28 CRCOC-11 July 18,2023 making the prospect of coming and working for us and a prospect of staying with us more appealing to the workforce, in order to recruit and to retain it. And I could definitely discuss more I suppose given a longer venue with you'd if you like, Council Member. MR. PAUSE: And just to follow up. I completely agree with everything that Mr. Benner has stated. We have been challenged with staffing for quite some time, at least in the three years that I've been here. It's been very difficult attracting engineers. We've had an architect opening, I think forever. So all of these professional staff, I mean we have to recruit,we have to attract, we have to retain. I think a lot of the training that we are able to offer to invest in the careers of our professional staff is going to be critical. I think it's a nice incentive to say, "Hey your work that you do is really important and we're willing to invest in you". I think that's good. I think we're still challenged to improve our work conditions. Somebody mentioned the word moral. I don't think that's necessarily as big of an issue. It's just the fact that we have crowded work conditions and we need to provide challenges for people. I think ultimately if you give them interesting work that is also a real benefit. And I think it's well documented that the salary structure here is also a challenging piece of overall recruitment. I come from private industry which I think you all know, and this has been eye opening for me. The one that always just gets me is, I sit here some days and I think I start a brand-new Civil Engineer I with a four-year college degree in engineering which was not easy at the same salary that I start a Labor I in my Highways Department. And the Labor I has opportunities to make a lot of overtime, because we get storms and all sorts of things. So somehow, it's been my hope that people far more intelligent than me with Human Resources can figure out ways to incentivize, and to maybe look at the salary structure for all of our professional staff. MS. KIMBALL: Thanks to both of you for that response. I really want to highlight this particular area, looking at the salaries that we're offering. Particularly like you said, folks with an engineering background or an architectural background, they are way, way, below the national average. And then when you look at the cost of living in Hawai`i, it becomes even less appropriate as a salary level. So, I don't know to what extent we need to have these conversations with the Labor Unions, to make sure that these salaries are appropriate for the level of work done. I think that is a big component of our ability to actually recruit and retain folks. Additionally, I hope that in terms of some of the things you might consider, flexible work hours; four tens as opposed to five eights. You know, things like that, that are more and more part of the creative approach to workforce incentivization programs. Page 29 CRCOC-11 July 18,2023 I know that I think with the Planning Department, we're starting a work from home option or flex schedule option. So, hope that's something in the consideration for DPW as well. With respect to the change orders and the comments by my colleague, Council Member Kaneali`i—Kleinfelder. And understanding and appreciating your comments Director Pause, about the uncertainty that is part parcel of what happens when you're doing construction. What is sort of broadly accepted as a general expectation for change order amount? Is it 10 percent, is it 15, is it a range of 10 to 15? Is there sort of an industry standard about what is a reasonable amount of change orders per the cost of the project? MR. PAUSE: Yes, the reasonable amount is typically 10 to 15 percent, as a project manager, as a construction manager we would challenge ourselves to bring that in lower. But that also goes part in parcel with the ability to come up with a project cost and identify contingency that would allow us to make those changes along the way. I mean change orders will happen, and I think we've documented today that there are a number of ways to minimize them and that would be a part of our plan going forward. Mr. Benner whispered 15 percent, I wanted to say a 10 but I'm the optimist, I guess. But yeah, that would be the range, Council Member Kimball. MS. KIMBALL: Thank you. And I bring it up again, sort of with a similar lens to the previous question which is the procurement process. When we are engaging the services of a design consultant to actually create the scope of work for some of these projects, and then the change order percentage ends up being significantly higher than that 10 to 15 percent. Are we pursuing errors and omissions from those original design consultants for their involvement in the failure to fully scope a project? MR. PAUSE: The short answer is no, but if you're getting at the issue of why does it cost more than what that initial estimate is, that's a challenge. Cost estimating, especially lately with COVID (Coronavirus disease), with all the things that had gone on, it's been very, very difficult to nail down costs. But in terms of being able to just necessarily point the finger back to that design professional, that's always a challenge. Work scopes change and again, I think that the key there would be if we can reach the point where we do a better job of defining the project. And that front-end loading, the front-end definition, it passes through several phases and stages. One thing that we've not talked about, and it was brought out in the report is stake holder engagement, right. So you're doing a project for the Fire Department, and you need to engage them and make sure you understand what their needs are, and you go through everything, and then you lock in that work scope. Guess what, once the work scope is locked in, the Fire Department doesn't get to tell me, "Oh I want this, and I want that." So that's sort of that interactive, the word they use is progressive Page 30 CRCOC-11 July 18,2023 elaboration, right. The further you go through defining your project, the further you get to the point where you have to lock in that work scope. And that work scope is hopefully clearly defined, well defined, good specs, good drawings, and that will be what keeps you on to that 10 percent margin for change orders. MS. KIMBALL: Before you respond Auditor Benner. One of the things that I've had concerns about with some projects. The whole idea of the low bidder when it comes to the RFP (Request for Proposal) going out and the selection of the contractor. To what extent folks are low bidding on projects, knowing that they're not even able to complete the project at that cost, but being aware of our procurement process and our requirement to select the low bidder. Is that—do you think something that I should actually be concerned about or is that not really happening? MR. BENNER: No, I think it's an extremely relevant concern. But again, this would be picked up as part of the lessons learned process, and part of the Project Management software. If you're documenting certain contractors who have a history of underbidding the project initially in order to catch it on the backend, you would begin to pick up on those patterns of behavior if you're tracking project to project. As it stands right now, we're not necessarily doing that. So, you can't manage what you don't measure. MS. KIMBALL: Absolutely. I don't know if you saw the screen over there, but I gave a total thumbs up to that response which is that is something we clearly need to be tracking; is who are the frequent folks that are underbidding and then having these excessive change orders. I know you wanted to add something too, Director Pause. MR. PAUSE: Yes, I refuse to turn around and look at Mr. Thompson behind me, but there are a number of contractors on this island that we deal with day in and day out. Some are better at playing the game than others, but we know who they are. But you're absolutely right. And the concept of accepting a low bid and public procurement laws. It's incumbent on us to do a better job of writing specs and doing drawing sheets, and that all goes back to doing a better job of defining the project, exactly what it is that you want, getting it into the documentation, getting it into the contract, and I think that level of discipline will help us all do a better job of letting the frequent flyer offenders of, you know, gamers if you will, keeping them at a bay. So, it's onus as well to do a better job of requesting in our specifications and drawings, what it is exactly that we need. MS. KIMBALL: Thank you for that, Director. I appreciate the level of accountability and responsibility you're willing to take on behalf of the office. And just want to acknowledge that I know that you're moving already in the direction of some of these recommendations, and some of the things here do apply to time periods that were before you were steering this ship. So, I wanted to Page 31 CRCOC-11 July 18,2023 acknowledge that as well. Thank you for your responses, and again thank you, Auditor Benner, for an excellent report. I yield, Chair. CHR. VILLEGAS: Thank you, Council Member Kimball. Council Member Kaneali`i-Kleinfelder, we can come back to you. MR. KANEALI`I-KLEINFELDER: Thank you, Chair. I'll try and make it quick. I believe the question was slightly answered. Mr. Pause, my last question for you which I didn't get a chance to ask, is it procedural, is it staff, I mean what is it when it comes to the planning and procurement contracting portion of the projects that is leading to the issues that we've been discussing today? MR. PAUSE: In my opinion, it's project definition. It's completely understanding what it is that you're trying to accomplish, it starts with a project charter. This is what I want to accomplish here, and it starts with a stakeholder register. Here are all the people I need to involve in the planning phase of my project, and it's walking through what my project could be and it's identifying options in doing options analysis, which might take into account risk. You know, am I going to encounter a risk that I cannot mitigate, or that I have no control over. It goes into the discipline of understanding what your scope is and where you want to get in getting that feedback from your stakeholders. It could be an economic analysis. It's a life cycle analysis, we do things where we don't—we might build the nicest building in the world, and nobody thought about how much it's going to cost us to operate it. So, looking at it over a 20-, 30-, 40-year horizon. So all of that discipline, I call it, needs to be front-loaded and then you reach a point where you lock the project in. This is our project. Council Member Kimball mentioned that I haven't been steering the ship for very long. And there's a few of those projects that are out there that may have been, how do I say, pet projects of previous administrations or somehow it was like let's just blast and get going on this. And the danger of those types of projects are by not having the scope locked in, by giving people a menu and saying, "Hey were in the middle of this project, are there any other things you want to do?" I mean it happens, I've seen it my entire life, it happens. But the key to kind of stopping that sequence from just occurring over and over again, it's kind of just stop and say, look going forward we're going to exercise a whole lot more discipline into defining what our projects are, selecting the right projects, and obviously managing them to the budgets. MR. KANEALI`I-KLEINFELDER: Thank you, Mr. Pause. Mr. Benner, do you have a response for that? Staffing, procedure, what were your thoughts on that initial phase of our projects? MR. BENNER: I think it's time and conversations, and making sure that you're asking the right questions, you're going in with the right documents to uncover Page 32 CRCOC-11 July 18,2023 the complete scope of work, and really making sure you have the stake holder involvement in that. There were some projects where not all of the right voices necessarily were at the table at the right times, and that led to oversight and unnecessary change orders. And I think that the Director has obviously identified that in his scenario with the Fire Department, but we've seen that with some other departments. So, I think that's an excellent start. MR. KANEALI`I-KLEINFELDER: Okay. You both just described Project Management 101. Do all the folks that we have in initial phases of projects scoping, bidding,purchasing, contracting have project management or have taken project management courses? MR. PAUSE: The answer would be no. But part of the project manager's role here as they develop the project and they engage stake holders, is to help lead folks through that. You don't need to be a project manager to do procurement, you just need to know what your role is, is you build up project teams and everybody has a role, everybody has a voice. But,you know, that overall guidance I think is really the project manager's role. We used to refer to it as the spa, right, the single point of accountability. Who is accountable for delivering. MR. KANEALI`I-KLEINFELDER: That's a scary position, but it's very important, yes. MR. PAUSE: It is, thank you. MR. KANEALI`I-KLEINFELDER: Okay. Well you've given us some answers. I think you got your work cut out for you, Director Pause. Mr. Benner, mahalo for this report as usual. Thank you, Chair. I yield. CHR. VILLEGAS: Thank you, Council Member Kaneali`i-Kleinfelder. Council Member Evans, I'm just going to go to Council Member Galimba she hasn't spoken yet. That's okay, I'll come back to you. Alright, Council Member Galimba. MS. GALIMBA: Thank you, Chair Villegas. So yeah, my colleagues have asked a lot of really good questions. I've been sort of having to, like tick them off, ask them or go there, in the case of Chair Kimball. But I had some questions that came up as we were talking. And just as we were discussing how a lot of these problems with change orders would be mitigated if we had proper scoping, and I'm assuming that proper scoping is even prior to these steps on this chart, that's like not even on here, right? Or is it? MR. BENNER: Step one. Page 33 CRCOC-11 July 18,2023 MS. GALIMBA: Would be step one, it's already been there, okay. But before you get a consultant you would have a description, before you went to the consultant selection fees, or no? MR. PAUSE: So looking at this chart, it says step one and step two. That's what I refer to as front-end loading, and it's really three phases of that. The simple way to look at it is what could it be, what should it be, and what will it be. So here's my project, this is all the things in the world that we could make this project be. Then you identify your options, and you do an analysis of what you want your project to be, and what you're trying to accomplish, and then you fix the scope of work. And somewhere along the lines when you refer to the design phase, right, that first section you may be doing 10 percent design and under the next phase it's 25 percent, and then you have to lock in your work scope and design to that. So, it's a process that hopefully gets us a locked in work scope before we go out to bid, that would be the intent. MS. GALIMBA: Just like an iterative process within step one and two of making sure you get so much defined and much feedback as possible in there. Okay, thanks. Then the change orders could come potentially anywhere in this step phase, or would it mostly be towards the end? MR. PAUSE: So when we talk about change orders, you could get a change order from your design professional, because somehow, we decided to maybe steer in a different direction as we go through this process of trying to select the best project. That's going to be minimal. the painful, hurtful, expensive change orders occur during construction. So after we've written the contract documents, went out to bid, sign a contract, we have a fixed scope of work. That's typically when worry about the additional cost, because as I stated the time to make changes is all that up front stuff. Once you go out in the field and you have somebody in a contract, you've heard the phrase time is money, right. So if they run across an issue and you got a whole bunch of people standing around, you're paying for that while you're making a decision to change the work scope or some unforeseen circumstance. So the best way to minimize change orders and the expenses associated with them is to try and do a better job of up front defining what your project is. MS. GALIMBA: Thanks. I was looking on page 10, which is just a definition of a change order. We're sort of interested in that definition, a change order is a written order signed by the procurement officer directing the contractor to make changes etcetera, it kind of just made me think about—doesn't really say who the change order is coming from. So a change order could come from multiple folks in the process. Then, who decides yes or no on whether a change order is approved? It doesn't seem to be really talked about in that paragraph. Page 34 CRCOC-11 July 18,2023 MR. PAUSE: So I look at it a little differently. So we have change orders, and we have change directives, right. We as the owner may direct the contractor to do additional work, that would be a change directive. And then they need to go out and do the work, and then we kind of circle back, and we have to decide on what the cost is as well as what method of, you know, will it be a time or material change or will it be a lump sum. But in either case, they need to provide that documentation. A change order may be when a contractor comes across an unknown condition and says, "Hey, this isn't at all what's in your drawing or your specifications, this is a change." And then you have those conversations. I think in the past we called them field change order, but the short of it is that if the contractor reaches out to us requesting a change order, that has to be solved at that project team level. MR. BENNER: And I think it should also be clarified that not all change orders are negative, I mean they don't all add to the project. So, we have seen in this body of work several that did save the County of Hawaii dollars, and we want as many of those instances as we can get. MS. GALIMBA: It was interesting that there were some indications, some of the change orders there was sort of a tradeoff happening of like we need this, but then maybe we can let go of that. And so, that way we can stay more or less within the budget. And so that seems almost like a back and forth between the contractor and the customer. MR. BENNER: Yeah, like some of our instances where we see like a swapping of technology. You know, technology is not going to serve the initial purpose, and they're able to acquire alternate technology for A slightly lesser amount, than that's exactly what you'd expect. MS. GALIMBA: Okay. Thanks for some of that. I guess the last question I have would be about changing the description for the project coordinator. Seems to be a pretty big item, and that position just has to do too much. So, I was wondering if you could talk a little bit more about that, will that be sort of making two positions out of it? What would be the strategy that you're thinking about potentially to do that? MR. BENNER: For us that kind of wanders a little bit into how we accomplish a territory, which how is a question is one we don't generally answer. I think that department would be,probably, well advised to work with Human Resources in order to find out what an adequate scope of work commensurate to that pay is, and to ensure that the duties that they're asking them to perform doesn't exceed that. Whether that involves adding it to another position or creating a new Page 35 CRCOC-11 July 18,2023 position or some similar solution, that's going to probably be a conversation that's outside of our scope. MS. GALIMBA: Thank you. Director Pause, you have any thoughts on that? MR. PAUSE: No. Again, I think the intent there is to make sure that the needs that we're looking for are covered by the proper project description for the staff or the personnel that are assigned to do the work. MS. GALIMBA: Oh, I see, okay, alright. Thank you very much, I yield. CHR. VILLEGAS: Thank you, Council Member Galimba. Council Member Evans. MS. EVANS: Thank you. I just wanted to weigh in on a change order discussion,just a few comments. I'm glad we're having the change order discussion, but I was disturbed when we implied that certain people know how to play the game and might be favoritism, and certain people may be taking advantage, and I don't agree with that. I think that change is inevitable when you're in the process that we have created that the state legislature passes laws, the building council passes laws, the federal government passes laws. There are problems with staffing, so we can't meet deadlines. And every time a deadline moves out here in Hawai`i, we may not be able to get the building supply that we specked out for that particular building, and we're stuck because we can't buy tat material anymore. We have to figure out what we are going to do to replace it, so it has the same specifications. Everything is always moving; time, materials, it's always changing. So I think changing is really inevitable. So, I love the discussion moving to the Project Manager and Building Construction Manager because there's always going to be substitution and changes, you know, things out of your control. And so I think that some of the people that are successful with low bidding, have figured that out. They just know, they know that things are always changing. So they're a little bit better may be at other ones who aren't watching, but if you really watch what goes on outside of our island and the influence of what's happening from Honolulu, and the State Capitol, and the Federal Government on a lot of these regulations rolling out towards us. Some people are just better at reading what's coming their way, and they can predict it. But I have to say one thing about the builders that might be listening to this. I really have my hats off to those that are able to keep their staff available as we're negotiating change orders, because they may stop the job, they may time out, you know that carpenter or that electrician can't do their work because we're in the middle of discussing a change order. He has to be able to pay them and keep them going and moving them around, to be able to keep them, because I'm Page 36 CRCOC-11 July 18,2023 hoping that when we negotiate the original contract and we award it, that they have that flexibility to be able to stay with us, as we keep changing the deadline and we keep moving out. They have to keep people employed. And so it's really tough to build here right now, and I don't see it getting any better. Because of supply chain, ability to get employees, I mean it's really complicated. So I just want to take back, I think, an impression that people are playing us. I think we need to understand it's very, very, tough right now to do construction in Hawaii. MR. BENNER: I would just say that our audit didn't look to establish intent of developers at all, we're simply focused on making sure we have a system of checks and balances internally, in order to ensure people are bidding according to what the expectation is of the project. And that we have methodology to be able to ensure that on our side of things, that there's an alignment between numbers being proposed and what is provable. So we don't have any—for developers who did their job quickly and efficiently, that's fantastic, but that wasn't the scope of this audit. MS. EVANS: I just want to add there's just a lot of things out of their control. MR. BENNER: Yep. MR. PAUSE: And I just wanted to maybe correct an earlier statement when I made the statement about playing the game. I wasn't suggesting anything unsavory or unethical in behavior, it's just if we do a better job upfront of defining the work then it removes from play anything that could be contributed as the county delaying because delays cost money, right. We pay change orders for delays. And I will tell you that almost all the contractors out there are very good at working with us. You know, things change every day; we get our rainfall, we find unknown conditions. You know, I don't think we see people stop work, they're very good at okay, we're going to do something else, and we can substitute out, and then come back to this until we resolve that. But, by no means was I implying anything bad by the contractors, it's just we need to do abetter job upfront, because it is a partnership, right. Once you got these guys under contract, I was once told early in my career right, we're married right, we have to make this work. And contractors are very capable of multitasking and doing things in a way, I mean their ultimate goal in life is to make money. And our ultimate goal is to pay them to do the job that we've asked them to do. So, I think as long as we continue with that attitude and we take whatever steps we can to improve on our side to give them a better recipe, right. They're the cook or the chef, we give them the recipe and then they follow it, and they make money, we get our project done, and life goes on. MS. EVANS: Right. I think based on what Heather Kimball said earlier, and I agree with this. I really hope that we can work with Human Resources and really Page 37 CRCOC-11 July 18,2023 bump up. Maybe not even call it a project coordinator, but we need someone that's so trained in building and construction that they're experts maybe in retired buildings all over for 20, 30 years. We need people that when these problems occur where we can't get our building materials, where the design is flawed because we didn't understand the soil condition, and then we discovered it inadvertently, that we have that expert that can really work with that contractor and figure that all out. We're going to have to raise the bar and make sure that we pay and get people in that can really make those decisions quickly. So, I'm hoping any support I can give at the council level in terms of our supplemental budget or whatever, you got me on that one because you need that to be able to quickly respond and make those decisions to keep these things moving in a timely manner. Thank you, I yield. CHR. VILLEGAS: Thank you, Council Member Evans. Anyone in Hilo, before I wrap this up. Nope, okay, fantastic. Thanks for being here again, Mr. Benner, for this excellent report. Mr. Pause, for your graciousness and humility, and your leadership of a department that obviously has lots of room for improvement. You're acknowledging those opportunities and sitting here recognizing the support that you have in order to that. And as Council Member Kierkiewicz mentioned, many of these are things that have been on people's minds and suspected of, but having this articulated document in front of us, I feel let's us know where we are. And it creates an inventory of the protocols,processes, the goods, the bad, and the uglies that we can look forward to utilizing as we move this department, which has struggled historically. Sometimes with leadership, sometimes with resources, sometimes with staffing, but it's a really big lift what lives under DPW and the people doing it to help bring us all into the 21"century with training, resources, technologies. A quick question, does your department have a specific HR (Human Resources)person, like let's say DPW has their own Corp. Counsel. Do you have an HR person that works specifically with and for you? MR. PAUSE: Yes. We have an HR person who reports under our admin, but they're tied back to main HR. So yes, we do, and an HR technician as well. CHR. VILLEGAS: Okay, great. So I saw some things here in the report that some of these job descriptions, that they haven't been reviewed since 2007. So just recognizing the opportunities, and raising that bar, and the benchmark for excellence, I know even for myself in my life when I know what that benchmark is and I can attain it. But if it's not even in my wheel house, then it's easy for us all to get sometimes too comfortable in our roles and positions. I appreciate the part of this conversation being brought up about under bidding. And I appreciate Mr. Benner your comments on that it being a very good question, because in my role and this position, unfortunately, I hear a lot of people about and it's tragic and unfortunate. But based on some of the things that have happened in other municipalities and at the state level and the national level, our government and Page 38 CRCOC-11 July 18,2023 our workers are perhaps appropriately, but the perception from a lot of people becomes that things aren't operating above board, and that there is nepotism, and that there is self-interest. And we live on a small island with a small number of contractors, and sometimes it's perceived that the same people get the same jobs, and over, and over, and over again. And sometimes it's for a great reason, but sometimes it doesn't help raise the bar of excellence. We can also get so ingrained in our positions that change comes as a threat, and people get protected of and fear of being obsolete. And so what I hear happening Mr. Pause, from an ethos standpoint, is this kind of re-inventorying of the culture within DPW of the support systems that are there, of the expertise that exists. And so helping one another, as new people get brought in. And those that have been there for, I mean there's some legacy people that have been working in our DPW department and have the skills and the knowledge of the history. So many different projects around this island, that really is priceless, but those things could be utilized and collaborated with in order to mitigate the negative assumptions by constituents, and allow our county to really step into and be what I know every one of us really want us to be as leaders in our fields. And to ensure that questions about payroll, and why people aren't looking and checking things. Things that just seem like common sense. As somebody mentioned, about the difference between public sector and private sector and having all these things in alignment, but providing the people that work so hard in these departments with the skills and resources to their jobs, and to get the positive reinforcement and the success. So, as much of a bummer as some of the things are in here, I am so grateful for the honesty and integrity of our auditor and your team, and the graciousness and the humility. I mean if somebody audited my life, I'm sure I'd have my own report that might be thicker. And so, we all have opportunity for growth, and learning, and improvement. And so together we can do that. And thankfully we are at a time in our county budget, where we have resources to support and improve on these things, and by the specific identification of them. I am confident under your leadership, Mr. Pause, that we can take DPW into the 21st century. And we can realign the ethos, and the pride of those that work in DPW and the support that they receive in the confidence of our people. So, with that I yield. Mr. Benner, did you have something you wanted to say? MR. BENNER: I just wanted to take the opportunity to thank the Division Chiefs who worked with us, really appreciate the that one component consideration and auditing is the risk appetite of management. They can operate in a very risk adverse environment, or they can operate with a large degree of risk. And there's been a lot of inflection, and a will to tackle some of these issues. So when we saw that genuinely as we dealt with the department, and we look forward to working with them further. Page 39 CRCOC-11 July 18,2023 CHR. VILLEGAS: Thank you. Thank you, everyone that's worked on this. And for your patience with our long conversation about it today. But I think it really brings positive perspectives for the future. And with that, can I get a vote on closing file on Communication 363, all those in favor? Anyone opposed? Vote on Comm. 363: The motion to close file on Comm. 363 was carried Filed by the following voice vote: Ayes: Committee Members Evans, Galimba, Kaneali`i—Kleinfelder, Kierkiewicz, Kimball, Lee Loy, and Chair Villegas —7. Noes: None. Absent: Committee Members Inaba and Kagiwada—2. Excused: None. CHR. VILLEGAS: With that, I just have to ask for a five-minute recess. Thank you, we'll be right back at 12:45 (p.m.), we're in recess. Recess: At 12:40 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 12:47 p.m. CHR. VILLEGAS: Alright, we have quorum so we're ready to go. At this time, 12:47 (p.m.) I'd like to call the Communications, Reports, and Council Oversight Committee back into session. Mr. Clerk, do we have any testimony? Comm. 364: ANNUAL AUDIT PLAN FOR THE FISCAL YEAR 2023-2024 From County Auditor Tyler J. Benner, dated June 30, 2023, transmitting the above audit plan,pursuant to Section 3-18(d)(2) of the Hawaii County Charter. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 364. Seconded by Ms. Kimball. CHR. VILLEGAS: And with that I'll turn it over to Mr. Benner. (Note: At this time, County Auditor Tyler J. Benner came forward to address the members of the Committee.) MR. BENNER: Aloha Council, my name is Tyler Benner. I'm with the office of the County Auditor, good to be with you here today. I'm here to present our annual audit plan to Council. Because we have some new Council Members, I'll spend a few minutes to explain the plan. Section 3-18(d)(2) of the Hawaii County Charter requires the County Auditor to set forth the annual audit plan that shall be transmitted to the County Council and the Mayor, and filed with the County Clerk as a public record. We fulfilled this year's obligation with our Page 40 CRCOC-11 July 18,2023 Fiscal Year 2023-2024 annual audit plan. Work in the plan itself initiated by our office. We intend to conduct a countywide risk assessment every three years our last one having been conducted in August 2021. We used the department's feedback in combination with several other factors including complexity of transactions, compliance and regulations, critical infrastructure, inherent and emerging risks, and other indicators. Our categories are weighed, and they create a final rank scoring. Based on the results, we select engagements that aligned areas identified through the analysis. This analysis provided insights related to Environmental Management, Public Safety, and Critical Infrastructure. We select five audits to perform with the following departments and subjects. So the first audit is the County of Hawaii building permit process. We're seeking to answer the question of does the Chapter 5-5A through 5F of the Hawaii County Code and other applicable governance align with software procedures and staff resources to guarantee that the County of Hawaii administers the building permit process for residential and commercial construction timely, uniformly, accurately, and completely. Our audit will evaluate the efficiency and effectiveness of the County of Hawai`i's building permit process by aligning the stated permit procedures with the actual user experience. We'll assess all project elements from permit application to certificate of occupancy issuance, to ensure a timely, accurate, and streamlined process, compliant with applicable regulations and service standards. Our second audit, assessment of community service expectations, mental health support, and training programs for the Hawaii County Police Department. We seek to answer the question as, is the Hawaii County Police Department providing public safety services, mental health support for officers, and training in accordance with the commission on an accreditation for law enforcement agencies in the international association of chiefs of police,to effectively uphold professional standards and accountability while fostering a positive work environment enhancing the officer well-being, performance, and safety. Our audit will compare the community service expectations versus the departments capabilities, mental health access, and support for officers in training program within the Hawaii County Police Department. Our third audit, Department of Public Works bridges and culverts. This will be done with the Highways Division. We're seeking to answer the question of does the Department of Public Works repair and regularly maintain bridges and culverts in accordance with the U.S. Department of Transportation, Federal Highway Administrative standards, and other applicable governance. Our audit will assess repair and maintenance practices, work order processes, infrastructure conditions and resource utilization, culverts, and bridges, to ensure safe and reliable transportation infrastructure. Page 41 CRCOC-11 July 18,2023 Our next audit is with the Department of Environmental Management, we're going to evaluate the abandoned vehicle program. Asking the question, does the Department of Environmental Management implement its abandoned vehicle program in accordance with HRS 290 (Hawai`i Revised Statutes, Chapter 290), and other relevant governance to identify, remove, and dispose of abandoned vehicles thereby enhancing public safety,protecting environment, and maintaining community aesthetics. Our audit will examine the Department of Environmental Management's abandoned vehicle program to access sufficiency compliance and coordination efforts. Finally, we're going to conduct a performance audit with the Department of Animal Control; being a newly formed department, it doesn't have the risk criteria that we're able to judge, which allow us to sort of—the empirical model. But our audit is going to evaluate and assess the adequacy of the newly formed department by assessing policies and procedures, training programs, communication, and performance. In addition to the items I've stated, we will conduct the following activities as part of our special projects. We'll be doing grant and aid monitoring, a multiyear contract for the annual comprehensive financial report, and single audit of federal funds, maintain and update our remediation tracker, conduct surprise cash counts, conduct investigation and tips requiring research from our fraud ways and abuse hotlines. And if the Council should approve a resolution calling on OCA (Office of the County Auditor) to conduct an audit, we'll weigh it against the proposed projects to determine how it compares to our work plan. That's the end of this presentation. And I'm happy to take any questions Council might have. CHR. VILLEGAS: Thank you so much, Mr. Benner. You also win the award for speed presenting. MR. BENNER: I'm sure you've had enough of me by now. CHR. VILLEGAS: I like it. Alright, Council Members, anyone have any questions? Council Member Galimba. MS. GALIMBA: So just wanted to ask about that last one, can you talk a little bit about how you're going to do an audit for animal control given that department barely exists at this point. I know that they've been deep in animal control for the past year, etcetera, but can you talk a little bit more about that? MR. BENNER: Yeah, thank you for that. So I would say that this is going to be the final audit that we're going to conduct in the plan year. We plan probably to be in engagement, when we present our next annual audit plan to you, but it would ultimately be a carryover item. We had a good conversation with the Administration, this was in passing of that conversation. I think what they wanted to ensure was that this department was stood up with good bones, and Page 42 CRCOC-11 July 18,2023 that its staff was pursuing best practices from the onset. Rather than to engage in the practice for a number of years, and then having something catastrophic happen as a result of failure to institute something that was foundational and fundamental than having to go and putting into place after something negative happens. So, they encouraged us to go in and look at the newly formed department after formation, and after it had a little bit of time to kind of assess its position, and begin to pursue, you know, whatever strategic planet it plans on, to ensure that it has the bones to be successful. MS. GALIMBA: Thank you for that. Yes, great list, looking forward to next year. I yield. CHR. VILLEGAS: Thank you, Council Member Galimba. Council Member Evans. MS. EVANS: Hi there, is this the time we enter in if we want to see something audited? MR. BENNER: I mean, generally what we'd ask is if that be presented through a resolution, the Council have discussion, and pass it through robust discussion. MS. EVANS: Okay. So I have a particular interest in Parks and Recreation. And given your audit objectives, will Parks and Rec be something you'd be looking at with or without a resolution? MR. BENNER: Not in the current plan year, no. MS. EVANS: Okay, alright. Thank you very much. I yield. CHR. VILLEGAS: Thank you, Council Member Evans. Going to Hilo. MS. KIERKIEWICZ: Hi, Chair. Yes, please. CHR. VILLEGAS: Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you. Thank you, Auditor Benner, for the overview. I had a few questions. The first is related to community service expectations, mental health support, and training programs for the Police Department. I'm wondering if there's any way to also include the Fire Department in that assessment, or if a similar audit can be conducted. And the mental health piece really does stick out for me, because with Police and Fire as, you know, both being front line responders in emergency situations and seeing sometimes very traumatic things, I do have concerns about making sure that they are provided the proper mental health support. Page 43 CRCOC-11 July 18,2023 MR. BENNER: Council Member, thank you for that comment. I think it's well placed. I had the opportunity to sit down with our new Police Chief, Chief Moszkowicz, and he brought in a number of his leadership team. It was just kind of an open dialog to find out what risks they believed to be inherited in their operation. We know that the county provides its general staff members with an EAP (Employee Assistance Program)program,where they can receive access to counseling and other mental health services. But I think the difference between the police and our general, excuse me the police and fire, they do fall into that category. And the rest of the staff in and throughout the county is exactly what you said that the incidents can be very, very traumatic and it can also be very, very acute. So, their access to those kinds of services may not be sufficiently encompassed in the existing EAP program, whether or not we call it part of the official scope of the work or depending on what findings. I think we had said earlier, when we mentioned this last audit that we had just debriefed, that it's possible that recommendations can be extrapolated. But we'll have to kind of let the evidence take and guide that. I see the value in what you're recommending. MS. KIERKIEWICZ: Okay, I hear you. Thank you. The next question I have is related to the timing of the abandoned vehicle program audit. And I ask that because I recently had a conversation with Torey Keltner in the traffic division within police, and he's alerting my office as well as Council Member Kaneali`i— Kleinfelder. We have a great interest in this program because there are numerous abandoned vehicles in our districts, but there are some issues that they are facing related to what's contained in our Hawaii Revised Statues. And so I just wonder as we prepare for the next legislative session, if your report can be delivered say by end of October, November to give us time to work with our state legislatures to make necessary updates. MR. BENNER: I would ask if you'd allow me to look at—we have this listed according to a Gantt schedule, and to see if we can make those timelines work or not. MS. KIERKIEWICZ: Okay, that would be helpful. And I'm also flagging this for Torey so he can be directly in touch with you folks. And then my final question is related to special projects, tips requiring further research from fraud and whistle blower hotlines. Could you expand upon that? MR. BENNER: We have one investigation in progress currently, and we've received 41 calls to date. Let's see this is encapsulated in the Hawaii County Charter. MS. KIERKIEWICZ: I know that we've worked to introduce an update to Charter last election cycle, that would provide your office with the tools to proceed with doing assessments and further research relating to tips that come Page 44 CRCOC-11 July 18,2023 into these hotlines. So I'm just wondering if it is as a result of that, you're finding that you might need a few more tools based on what's being reported. MR. BENNER: At this time, we don't. So it's in Section 3-18, I'm just offering this for the new Council Members who may not know that it exists. Section 3-18(d)(4) is an investigation of reports of fraud, waste or abuse within the county operations, and the County Auditor determines that the allegations of fraud, waste or abuse warrants investigation. County Auditor may provide findings and recommendations to the appropriate county official or officials after completing the investigation. You know, there was a time when we opened the lineup initially, we were receiving quite a few calls from individuals who were kind of trying to place us in the spectrum of opportunities to voice grievances, and that has largely passed. I think we're pretty well defined, and the folks who are calling us are generally speaking pretty clear, when the concern should be addressed to us and not addressed to us. In the beginning of this program, we were also in the process of mapping that out when it was most appropriate to refer those to other entities, or to ensure that they had followed other re-courses that were available to them. And we largely have that pretty well determined now. So, we feel like we can effectively navigate these things as they come through the office. However,there's such a wide degree of issues that come to us, a lot of times it's having to work through those individual situations, individually. I can't think of a resource that I need at the moment. MS. KIERKIEWICZ: Okay, thank you. And I'm on your website and really do appreciate the dashboard that you have for fraud,waste and abuse hotlines. Your categorization of the reports that are coming in, whether or not those are our jurisdiction like I see some folks that are calling about Maui Humane Society and Maui Real Property Tax, and the status of all those inquires. It's very transparent and useful. MR. BENNER: Yeah, that's okay, we still point them to Animal Control. I mean, we give them that referral information. So,we still try to assuage the concern. MS. KIERKIEWICZ: Yeah, very helpful. Thank you very much for this presentation. We look forward to your findings with the audits that you will be initiating. Thank you, Chair. I yield. CHR. VILLEGAS: Thank you, Council Member Kierkiewicz. Anyone else in Hilo? No, alright coming back to Kona. Council Member Lee Loy? Nope, okay, great. With that we'll wrap this up. Thank you again, Mr. Benner. We had just an incredible amount of information from you today, that's been really helpful. I look forward to seeing the results of these audits. And thank you to you and your team, it takes an exceptional skill set in order to really deep dive Page 45 CRCOC-11 July 18,2023 into departments, and come up with this kind of information and answers, and potential solutions. So, thank you for that. MR. BENNER: Thank you, Council. CHR. VILLEGAS: Alright. And with that, may I have a vote to close file on Communication 364. All those in favor? Any opposed? Vote on Comm. 364: The motion to close file on Comm. 364 was carried (Filed) by the following voice vote: Ayes: Committee Members Evans, Galimba, Kaneali`i—Kleinfelder, Kierkiewicz, Kimball, Lee Loy, and Chair Villegas—7. Noes: None. Absent: Committee Members Inaba and Kagiwada—2. Excused: None. ADJOURN- There being no further business, at 1:05 p.m., Ms. Evans moved to adjourn the MENT: meeting. Seconded by Ms. Lee Loy and carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Kaneali`i—Kleinfelder, Kierkiewicz, Kimball, Lee Loy, and Chair Villegas—7. Noes: None. Absent: Committee Members Inaba and Kagiwada—2. Excused: None. CHR. VILLEGAS: We come to the end of today. And I just want to quickly wish everyone, please stay safe and healthy, and take any and every precaution you feel necessary to ensure that your family has the water you would need, the food you would need. And let's all remember that in times of crisis, is the time when the Big Island is most adept at pulling together and supporting one another. So instead of succumbing to the fear, let's support one another as we navigate this storm. Be safe. Approved: 40-3 Ms. Rebecca Villegas, Chair (Date) Communications, Reports, and Council Oversight Committee RV/rk Page 46