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HomeMy WebLinkAboutMIN FC 2023/12/05 (2022-2024) Committee on Finance 24th Session Hawaii County Building 25 Aupuni Street Kilo, Idawai`i December 5, 2023 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 9:30 a.m., in the Council Chambers, Hilo, by Mr. Matt Kaneali`i- Kleinfelder, Chair. ROLL CALL: Present: Mr. Matt Kaneali`i- Kleinfelder, Chair Ms. Cindy Evans, Vice Chair Ms. Michelle M. Galimba, Member Mr. Holeka Goro Inaba, Member Ms. Jenn Kagiwada, Member Ms. Ashley L. Kierkiewicz, Member Ms. Heather L. Kimball, Member Ms. Susan L. K. Lee Loy, Member Ms. Rebecca Villegas, Member 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.) CHR. KANEALI`I-KLEINFELDER: Okay, thank you very much. Mr. Clerk, let's go to the top of the agenda, please, starting with Communications. COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 12.20: REPORT OF FUND TRANSFERS AUTHORIZED: OCTOBER 1 — 15, 2023 From Controller Kay Oshiro, dated October 26, 2023. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 12.20. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Council Members, discussion on the measure. Hearing and seeing none, motion is on the floor. All in favor? Any opposed? FC-24 December 5,2023 Vote on Comm. 12.20: The motion to close file on Comm. 12.20 was carried (Filed) by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. Comm. 12.21: REPORT OF FUND TRANSFERS AUTHORIZED: OCTOBER 16—31, 2023 From Controller Kay Oshiro, dated November 15, 2023. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 12.21. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Is there any discussion on this measure? Council Member Lee Loy? Thank you. Okay, hearing and seeing none, the motion is on the floor. All in favor? Vote on Comm. 12.21: The motion to close file on Comm. 12.21 was carried (Filed) by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. Comm. 13.23: REPORT OF CHANGE ORDERS AUTHORIZED: OCTOBER 16—31, 2023 From Finance Director Deanna Sako, dated November 3, 2023, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 13.23. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member Evans. MS. EVANS: Yes, please. CHR. KANEALI`I-KLEINFELDER: Thank you. MS. EVANS: Can I have the Finance Department? Page 2 FC-24 December 5,2023 (Note: At this time, Deputy Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Good morning, Council Members, Diane Nakagawa, Deputy Finance Director. Okay, can you hear me? Okay, thank you. MS. EVANS: Welcome aboard. The question I have is, I've been looking at the Change Orders, and appreciate the purpose and the remarks. What I'm seeing is that you're executing an awful lot of options and that creates the contract change. Is this kind of a standard operating procedure when we write these contracts? Instead of saying, we think this may take three years, but it goes then across fiscal years. So basically, it means you're committing out three years in the future. Does this help the County by drafting these contracts in such a way that they're always optioning them so that it kind of changes the impact to our budget because of it? MS. NAKAGAWA: So exactly. So, normally when we're writing these types of solicitations, RFPs (Request for Proposals), it's normally a one-year contract and some option years to give us the flexibility. So, this allows us to not have to enter into the supplemental year, but it gives the County the option to. And it's up to the program, the specifics of what is needed, to determine how many option years will be added into the contract. But these are added in at time of solicitation and time of contract execution. MS. EVANS: Do you have the maximum amount of option years? I mean at some point, if you think it's going to take five years to do something, that would be one year with four option years. I mean, do you have some limitation on this? MS. NAKAGAWA: We normally don't see more than four years as option years, but it would really depend on what the project is. MS. EVANS: Okay, it's interesting to me because you probably know it's going to go into other years. It seems like a great way, maybe, to manage the finances to do it that way but you're still committing. MS. NAKAGAWA: We do have the option to do a multi-year contract if that is what is for the best interest of that particular contract. It just depends on the contract. MS. EVANS: Okay, alright. Thank you. MS. NAKAGAWA: But we do have that option as well. MS. EVANS: Thank you. Thank you, Chair. I yield. Page 3 FC-24 December 5, 2023 CHR. KANEALI`I-KLEINF'ELDER: Thank you. Okay, seeing no further discussion. Deputy Director Nakagawa, I have one question. The second change order, Implementation and Management of a Homeowners Assistance Fund Program. Going above and beyond the original contract amount, correct? MS. NAKAGAWA: Correct. CHR. KANEALI`I-KLEINFELDER: Then, what is that for? Is that part of the COVID (Coronavirus disease) relief? MS. NAKAGAWA: These are ARPA (American Rescue Plan Act) funds. CHR. KANEALI`I-KLEINFELDER: Oh, we're going to continue to extend that? MS. NAKAGAWA: Yeah, and the first—I think Housing might be on. I spoke with Sharon this morning. But the success of the pilot program, with the 3.5 was a success. It increased it to 5.5 to get these funds out to the community where needed. CHR. KANEALI`I-KLEINFELDER: Okay. Are we sitting on a lot of funds still relating to, or needing to be expended, under COVID type? MS. NAKAGAWA: Under ARPA? We can come back and provide an update for you on that as well. We've been talking to Director Adams about that. CHR. KANEALI`I-KLEINFELDER: Okay, maybe offline. Thank you. MS. NAKAGAWA: Yeah. You're welcome. CHR. KANEALI`I-KLEINFELDER: Is anyone from Housing online this morning? Not requesting,just wondering. Okay, thank you. Thank you, Ms. Nakagawa. Okay, we do have the motion on the floor to close file on Communication 13.23, all in favor? Any opposed? Vote on Comm. 13.23: The motion to close file on Comm. 13.23 was carried by (Filed) the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder–9. Noes: None. Absent: None. Excused: None. Page 4 FC-24 December 5, 2023 Comm. 95.3: FIRST QUARTER REALLOCATION REPORT: JULY 1 — SEPTEMBER 30, 2023 From Acting Human Resources Director Danny B. Patel, dated November 1, 2023. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 95.3. Seconded by Mr. Inaba. CHR. KANEALII-KLEINFELDER: Council Members, discussion. Okay, I think Mr. Patel would appreciate that. All in favor on closing file on Communication 95.3? Any opposed? Vote on Comm. 95.3: The motion to close file on Comm. 95.3 was carried by the (Filed) following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. Comm. 139.2: FIRST QUARTER CLAIMS REPORT: JULY 1 — SEPTEMBER 30, 2023 From Claims Investigator/Adjustor Clifford D. Victorine III, dated November 16, 2023, transmitting the above report pursuant to Section 2-9 of the Hawai`i County Code. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 139.2. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Council Members, discussion. Council Member Evans. MS. EVANS: Thank you, Chair. I'm going to be excusing myself from the vote since I'm a recipient and a client. CHR. KANEALI`I-KLEINFELDER: Oh, I see you there. Okay. Thank you, Council Member. Mr. Victorine, thank you for joining us this morning. I do have a question for you. It's the fourth one down, Piercy, Janice. (Note: At this time, Corporation Counsel Claims Investigator/Adjuster Clifford D. Victorine III came forward to address the members of the Committee.) MR. VICTORINE: Cliff Victorine, Corporation Counsel Claims Adjuster. Page 5 FC-24 December 5,2023 CHR. KANEALI`I-KLEINFELDER: Thank you for being here this morning. Just looking at this, this is an interesting claim. Chair damaged by County P&R (Parks and Recreation) employee during home visit for$1,100. MR. VICTORINE: Yeah, it's the elderly care program, I guess. He'll go out and he'll do some stuff with them. And he's a large person who sat in a chair that was obviously not designed for someone of his stature. CHR. KANEALI`I-KLEINFELDER: Oh okay, understood. Thank you. Okay, and then on the bottom, we have another DEM (Department of Environmental Management) Service Truck backed into claimant's car. And these ones, I keep watching these and keep wondering if we're going to implement—I'm just saying it because it needs to be said—we've got to implement something to help our drivers and these different vehicles from the Fire Department to DEM; have a vehicle backup camera or something. I think it would be worthwhile. MR. VICTORINE: Yeah, and I think we've discussed this, and I totally agree. Not just cameras, but more sensors. But a lot of times, if we look at this, we'll bring it up with the departments. We get the accident report. The accident report indicates there's more than one person, and they're talking about, "we have a blind spot." Then why wasn't someone out of the car, backing you out? We've talked about that in the past. CHR. KANEALI`I-KLEINFELDER: That's right. When you've got multiple employees in the car. MR. VICTORINE: So, you know, we do notify the departments, especially when we see the same thing over and over, and not just that department. We do know there's other vehicles. So, we'll notify other departments. Hey, this is something that we consistently see. Please be aware. Make sure you mention to your department drivers and maybe look into putting in new programs. But that is their call. On the ordering of that, that's something, you know I'm not sure who handles ordering of the vehicles. But it's something that they should be, you know, I agree, looking into. CHR. KANEALI`I-KLEINFELDER: Thank you for that. We'll keep saying it and I think someone will pick it up eventually. MR. VICTORINE: I hope so. CHR. KANEALI`I-KLEINFELDER: Thank you. Ms. Kagiwada, go ahead. MS. KAGIWADA: Thank you. Chair, may I have a tiny little leeway here on just one question? Page 6 FC-24 December 5,2023 CHR. KANEALII-KLEINFELDER: As long as it's close and we stick to the matter at hand. MS. KAGIWADA: Mr. Victorine, are you the claims adjuster, right? Investigator for all these smaller claims that come to the County? MR. VICTORINE: Yeah, anything that is initially filed as a claim goes through me. MS. KAGIWADA: Okay, I've just been trying to find the person who is working on looking at anything for Downtown Hilo businesses that are experiencing losses because of the roadwork we've been doing. Would that be you? MR. VICTORINE: The claims, yeah, would come to me. MS. KAGIWADA: Okay, I'll take it up with you elsewhere. I just needed to know that because I haven't been able to find you. Thank you so much. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, looking around the room and seeing no more discussion. Thank you for your time this morning. MR. VICTORINE: Thank you. CHR. KANEALI`I-KLEINFELDER: With that we have a motion on the floor to close file on Communication 139.2. All in favor? Any opposed? Vote on Comm. 139.2: The motion to close file on Comm. 139.2 was carried (Filed) by the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder— 8. Noes: None. Absent: None. Excused: Committee Member Evans— 1. BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. Page 7 FC-24 December 5,2023 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 BILL 104: The following individual registered to speak and came forward when called by the Chair: Claudia Rohr: Comment. Bill 104: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19-2; CHAPTER 19, ARTICLE 7, SECTION 19-53; AND CHAPTER 19, ARTICLE 11, SECTION 19-90, OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO THE CREATION OF A LONG-TERM RENTAL CLASS FOR REAL PROPERTY TAXES Establishes a Long-Term Rental tax assignment classification for properties that are occupied under a lease for at least ten consecutive months by the same tenant and properties with leases of less than ten months that provide housing for multiple tenants who are students, traveling physicians, or nurses as long as the total number of days under the lease is equivalent to at least ten months per calendar year. Reference: Comm. 600 Intr. by: Ms. Kagiwada and Ms. Galimba (Note: Comm. 600.1 dated December 1, 2023, from Council Member Kagiwada, transmitting a proposed amendment to Bill 104; and Comm. 600.2 dated December 4, 2023, from Council Member Kagiwada transmitting a power point presentation were circulated.) Motion to Approve: Ms. Kagiwada moved to recommend passage of Bill 104 on first reading. Seconded by Ms. Galimba. CHR. KANEALII-KLEINFELDER: Council Members? Council Member Kagiwada, go ahead. MS. KAGIWADA: Thank you, Chair. I'm going to just talk a little bit about background, and then turn it over to my colleague who has some slides. So, increasing rental housing options for our residents has been one of my top priorities. Building more housing is necessary for meeting our housing needs in this County, but freeing up more properties for our residents to rent can chip away at, and maybe even take a great big bite out of our housing shortage. So first, I just want to thank people who have helped develop this draft. It was a team effort. My staff especially, my Legislative Assistant Shannon Matson. Obviously, Council Member Galimba and her staff. Leslie Chow from Page 8 FC-24 December 5,2023 Legislative Research Branch; and our fabulous Real Property Tax folks, Lisa Miura, and Keita Jo. I also got some input from several other people in the departments, but those are the main people who worked on the bill with us. My interest in this was first peaked when I was working actually as a Legislative Assistant, and I noticed that our Apartment Tax Class has the highest rates. And I was wondering, why are we taxing people in apartments, or apartment owners, so high? I found out that, you know, our Apartment Tax Class includes timeshares and condominiums, and that's why it was being taxed at that rate. So, in order to appropriately tax timeshare vacation rentals and condos that are vacation rentals, that rate was higher. But many apartments provide housing for our residents. So, I had a concern there. Then when I was walking door-to-door and walking in the neighborhoods all over Hilo, I noticed so many vacant homes. I started thinking about how can we encourage folks to either rent or sell these properties, so that our residents who are, you know, desperately in need of housing can live in them. Lastly, I want to thank a friend of mine. Somebody that I've played pickleball with. Bruce, here, who explained to me how he had been trying to do a good thing by renting his ohana unit to an elderly senior woman, and she needed a safe place to live when she was downsizing. The setup worked really well because he had a nice tenant, and she had someone who kind of looked after her a little bit. That was until he got his tax bill, and his entire property was now being taxed because he had a commercial, you know, income property at a much higher rate. So, he was very dismayed about that, given that he was just trying to do something good for the community. So, we worked with RPT (Real Property Tax) to come up with a solution to address kind of all three of these scenarios, and I think this bill kind of takes a stab at that. Really looking forward to seeing what our colleagues here have to say and we know that there might be some things that need to be tweaked. But I also just want to give a special mahalo out to Council Member Keani Rawlins-Fernandez. She did a similar bill in Maui and really looked at that and used that as a basis for kicking off looking at our bill. So, that's what we have here and I'm going to turn it over to my colleague to talk about the specifics, and then we'll also be bringing up Keita Jo from RPT to help us out. Thank you. Thank you, Chair. CHR. KANEALII-KLEINF'ELDER: Thank you. Council Member Galimba. MS. GALIMBA: Okay, yeah, thanks so much, Council Member Kagiwada, who's really the inspiration lead on this and her Legislative Aide, Shannon Page 9 FC-24 December 5,2023 Matson, who did so much work as well as our RPT team. Thank you so much for all your help. So, let's see. There we go. So, the rationale and summary for this bill is, everyone knows we have a problem on our island and throughout the state. High cost of housing for everyone. So, this particular bill is focused on market rate and rental housing. And just looking at—if you go on to Zillow, I mean there's just hardly any housing, long-term at any cost. So, this is our attempt, you know, it's one tool in the toolbox. An attempt to address that situation. I just want to point out that data point there, that the Office of Housing reported that we need 6,600 rental units by 2025. So yes, this is our solution, that we want to reduce the tax burden for existing long-term rental property owners and incentivize new participation. I think the two points that are important is that we are asking for a ten-month minimum lease term to qualify with the exceptions for students and traveling nurses and doctors. The reason that we chose that ten-month number is that we wanted to make it—obviously, we need it to be a long-term lease,but we also wanted to have some flexibility in there, especially for our students. The ten months would work with the students, especially. The requirements would be providing a lease to RPT to prove that you have the lease that would qualify you. We chose a rate of 125 percent of the affordable rental rate, and the rationale behind choosing this rate—it's really having to thread the needle or walk a very narrow line here, because we want to be able to make it something that incentivizes long-term rentals, but we don't want to impact the affordable rentals. So, that's the rate that we chose. It's definitely up for discussion. I don't necessarily, you know, I'm not going to say that it couldn't be discussed, but that's what we came down to as sort of the goldilocks point for a rate. Just to sort of put it out there, we do intend to offset the fiscal impact by appropriate tax increases on some of the other tax classes, which we obviously are not going to be doing that now because we still have the tax rates later on in the year. So, we will be taking that up later, if this bill passes, and we will be discussing the potential fiscal impact. We honestly—none of us really know what it's going to be because there's a lot of unknowns, as far as uptake on this tax class if it should pass. So,just to give you sort of an overview of the tax classes and their rates. So, at 125 percent of the affordable rental rate, the current rate, rounded to the nearest five cents, that would be $7.70, would be the initial rate, if we keep the affordable rental rate at its current rate. Then you can see some of the other tax classes up there, affordable rental and homeowners are the same at this time. Page 10 FC-24 December 5,2023 As Council Member Kagiwada pointed it out, the apartment rate is much higher. So, that's just there for reference and I will be passing this on to Keita Jo to talk through some of the thoughts and potential participation, and fiscal impact, as well as timing. Thank you so much. (Note: At this time, Assistant Real Property Tax Administrator Keita Jo came forward to address the members of the Committee.) MR. JO: Keita Jo, Assistant Real Property Tax Administrator. So, I'll be going over some of the numbers, lots of numbers. (Note: At this time, Mr. Jo provided PowerPoint presentations to the members of the Committee. For viewing of the presentations, see the DVD copy of the proceedings on file in the Clerk's Office, or online at http://hawaiicountv.granicus.com. Copies of the presentations are made part of the record, see Comm. 600.2.) MR. JO: And that's it. MS. GALIMBA: If I could make one sort of comment based on those fiscal impact numbers. So,basically if someone puts their house into this program, we would be getting a long-term rental for$3,200 plus, of course, we have to put in all of the time that RPT—so, let's say, $4,000 or $4,500 to get a long-term rental housing into the market, which is a very good price to pay to get some housing into our housing market. We are going to be giving $17 million out in our Office of Housing to get 1,076 units. And that's at $16,000 per unit, and some of that money, it's just to prepare. It's not an actual unit. So, I think this could represent a real win for our County if we can get folks to participate. Thanks. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, opening it up to the Council for discussion. Council Member Evans. MS. EVANS: Well, first of all, thank you for everyone who's participating and putting in a lot of work into this. And thank you for us having this discussion. Obviously, I haven't worked on this so I'm a little—whoa—there's a lot to digest here. But one reaction I'm having is about the use of traveling nurses and physicians. And there might be an unintended consequence here. In my community of Waimea, it's pretty common to have the traveling nurses and physicians, and they pay more monthly rent, probably than most people. They pay very, very high rent. So, these people are, you know, taking their homes and putting them in, you know, one bedroom. They're taking, you know, houses and Page 11 FC-24 December 5, 2023 taking the bedrooms and renting them out. And I'm just thinking, this is really trying to go for long-term rentals and trying to get people into long-term rentals. So, I wonder if there's an unintended consequence of giving them, not only a tax break, but they're charging way more than what the current market value for rental housing is in Waimea. So, are they going get a double, like a nice reward, for doing that? I'm just concerned of the unintended consequence. I don't think this would make them lower the rents for the traveling nurses and physicians. It just gives them a nice tax break. So, I do have a concern with that part of this bill, but that's just my initial reaction. The other thing I would say, because it is new, I got on the phone when I saw that it was—when we got it posted on the agenda on the Hawaii County website, I immediately called and tried to get a hold of the board of realtors and some other folks at the Chambers saying, you really need to get on top of this and read this. Because we really need to have a big discussion about this, if this is really going to achieve what the intent is. I think the last thing is, obviously, the affordable rental housing section of the bill that we have that's really trying hard to incentivize people to commit to lower rents. And maybe we can relook there and maybe look at maybe the class rate there, and that might be an alternative to this bill, to try to get more people involved in long-term rental. So anyway, that's my initial reaction. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball, go ahead. MS. KIMBALL: Thank you. Just want to start out by also thanking the makers of this bill for putting this forward for conversation. I think it is an important piece of the overall puzzle when we think about how many units we need for housing across all price points in this County. You know, a lot of the lower affordable rentals, those are subsidized, supported by the County, and it's this market rate that often is a challenge. A couple of quick questions. So, Administrator Keita Jo, with the timeframe, if I understand correctly, we would have a sense of how many would be entering into this program prior to the point where we would be setting the tax rates in 2025, correct? MR. JO: That is correct. So, it would actually show up on the certification that's provided to County Council prior to setting the rates. And so, County Council would have visibility in terms of how this impacts that particular tax classification and the value and whatnot. Page 12 FC-24 December 5,2023 MS. KIMBALL: Okay. Then also, I'm curious why specifically ten months, not a full year? I don't know if that's a question for you or to the makers. Chair, I don't know if you want me to ask all my questions and then yield. I can do it either way. CHR. KANEALI`I-KLEINFELDER: I like the discussion. So, if you could— MS. KIMBALL: Okay. So, if I could ask the makers if they could just respond. The time period,just the basis for that decision. MS. KAGIWADA: May I respond, Chair? Thank you. So, I think two-fold; one as Council Member Galimba mentioned, looking at students, possibly as that working for them, and they might not want to do a full-year lease. And actually, the second one is that there are people who have vacant homes here as their vacation home. They keep them vacant all year long, and they only come here for a month or maybe two months. So, you know, not to necessarily reward those people, but to try to get those homes into our market so that we can have more residents in homes. That was one thing we looked at. I don't think we are completely wed to this, and I think we're really open to discussion around this particular issue, especially. So, would love to hear from everybody on your thoughts about that. Maui did do a full 12 months,just so you know. MS. KIMBALL: Thank you for that. I appreciate the explanation and I do understand the merits of it, but it's something that I'd actually like to consider as something maybe we want to start with a full year, and then see how that goes, and then go to a shorter period. The other comment that I had in terms of exceptions, and I actually was over visiting Keita and Lisa last week, and we talked about this briefly. Council Member Kierkiewicz and I have been working on the Short-Term Vacation Rental (STVR) legislation and planning to do that early next year. We have exceptions built into that draft for medical professional traveling nurses and stuff like that; tied to Chapter 237D of the Hawaii Revised Statutes, which is where the State defines who a transient is. So, there are some other classes of folks like military personnel, diplomatic folks. I mean that is maybe worth considering as looking at a list of folks that might be exceptions. It would be ideal in my mind to have coordination between the Short-Term Vacation Rental bill language and this language, in terms of who we are putting into this exemption class as not being transient. Students and traveling physicians are already included in that. Page 13 FC-24 December 5,2023 The other comment that I would like to make at this point is just a question as to whether or not there were any noticeable impacts on the number of affordable rentals in Maui once this went into place. You know, the testifier did make that comment, and I don't think it's unfounded that, "Oh. Okay, I can still get a tax break if I go to market rate instead of staying in the affordable." Did they see any sort of migration of properties, to your knowledge, that were in the affordable that now were in the long-term program? And I yield after that, Chair. MR. JO: From what I can gather, Maui does not have a specific affordable rental program that provides benefits, so it's unique to Hawai`i County. So, I don't have any information in regards to that impact. MS. KAGIWADA: May I just add one thing? So, yeah, that's my understanding as well. Just so you know, so when they did this, they actually matched their homeowner's rate, their long-term rate with their homeowner's rate. So, that's why we specifically made it higher than both our homeowners and our affordable rentals rate. The other thing that Maui did that we decided not to do at this time was that they gave a pretty hefty additional exemption to people who were doing long-term rentals as an additional incentive. And we decided, once again, to try to make sure there were still incentives for doing the affordable rental. We didn't want to go too crazy, and like you know, make this to be the place to go. I will say that affordable rentals have a few additional things built in for landlords that make it more attractive in some ways. Like having a fund available if people do any damage to their property, they have funds available for that. So, we do not have that at this time for the long-term rental bill. So, there are some differences still, and I think people that are already in, I feel like, you know, they're already in and they don't really see. It could, you know, if people were making a choice, make a difference, I guess, in people making a choice if they're newly potentially going into affordable rentals or long-term rentals. But we're really just trying to move people who are not doing either of those right now into renting to our residents. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball? MS. KIMBALL: Yeah, thank you, I had a couple more follow-up questions, now that I'm thinking about it, and this is for RPT. What are you anticipating in terms of, in particular if there are these exceptions, monitoring the actual usage. Say for example, I'm going to apply for this long-term rental and I'm only doing it for traveling nurses, do you envision the department having to do some oversight enforcement around that? Page 14 FC-24 December 5,2023 MR. JO: I would imagine there would be a level of oversight that would be required. The benefit of this program is that it's a year-to-year application. So, you're always kind of looking at what's in play. You have accurate data that's not going to change too significantly over time. But yes, there would be a compliance component to make sure that individuals are adhering to their commitment. MS. KIMBALL: Then, you know, one of the other benefits in the Affordable Class, of course, thanks to Vice-Chair Inaba's legislation earlier this year, is that the three percent cap now applies. If I recall the language around the cap, it's language that excludes certain things. Would this automatically get the three percent cap as a new class or not? MR. JO: So, the way that the bill is written, the three percent cap is not a benefit that's going to be extended to this particular tax classification. It would be limited to homeowners or affordable rental. MS. KIMBALL: Okay, great. I think you know, and again, as a kind of a pilot program, that might be wise to just figure out how this is going to potentially work first, and then look at maybe some of those other incentives if we don't have a significant amount of participation. Then finally, I'd just like to ask either Director Sako or Deputy Director from Finance to just kind of speak to the position on the potential impacts on revenue. And with that, I yield, Chair. (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: Good morning. Deanna Sako, Director of Finance for a little while more. I think, like Keita said, it's hard to get exact numbers right now. It is challenging because we don't know who's going to sign up. The next thing is with the application program being done by December 3 Pt; we'll at least have an idea of how many people apply by the time the rates have to be set for the following year's budget. So, that hopefully will be helpful. But you know, I think Keita's estimate on, you know, that $7 to $15 million range is probably the best we're going to get right now. And yeah so, we deal with it. You know, I think the makers suggested adjusting the other rates, and that's probably the best thing that's going to happen. Because, you know, we definitely have upcoming expenditures in the next few years that we're going to have to pay for one way or another. So, we do need some revenue in neutral. CHR. KANEALI`I-KLEINFELDER: Okay, looking at the other Council Members. Council Member Lee Loy. Page 15 FC-24 December 5,2023 MS. LEE LOY: Thank you. I've been sitting here for a long time, and I clearly remember one tax raise we put in, which was in my first session, which is where actually this rate came up. And I clearly remember at that time, Aaron Chung said, "This all looks great, but we really stuck it to apartments." And part of the push and pull at that time was, we wanted to make sure there were great rates for certain areas of our large real property tax base. We wanted to see it go to homeowners. We wanted to make sure we were taking care of kupuna. We wanted to balance commercial rates. So, apartments have carried us. When I look at this bill and I listen to the intentions, I just don't see how it translates into lower rent to that traveling nurse or to that single mother. It translates to the homeowner, but there's no real way of saying, the rent is now from $1,500 to $1,000, and that's where we really want to tackle. The other area of concern I have is, as one of our testifiers, Ms. Rohr, mentioned, in speaking to a lot of the realtors and people who deal with properties, this all looks great on paper. But as Ms. Sako just mentioned, we can lower it here, but that might mean it bumping up in other areas. And that's just all the different complexities of the levers that have to be pushed and pulled in this very complex tax code. Which is something I absolutely learned during my time here on the Council through Deanna Sako and Aaron Chung. I think finally, while I recognize the makers looked at other municipals, Maui had a very different tax base. From day one when I started here, they were at a billion dollars, and I was like, wow, we're only $400 million. And today, we're at $850 million and Maui is taking a huge hit with their fires. And I can guarantee you, they're going to be raising rates to make their budget come together, and it's going to be eye popping. So that being said, right now I cannot support it because I don't think we've had enough play with community. I really am challenged on this fiscal impact and how much it really does impact our future budgets. Because we're going to have to make the business decision on who's rates we're going to put up so that we could at least get to where we are now. All into tax savings, but it has to be across the board, and everybody has to feel it. I would love to hold it in committee or maybe even commit this to a special hearing that's provided for us in our Rules and Procedures, under Rule 2. Where we can commit this one particular bill, and maybe a future bill that a couple of my other colleagues have with the Short-Term Vacation Rental bill and compare them side-by-side with our budget, with our real property tax base. Yes, there's things to learn from other counties, but we're not Maui County. We don't have their same tax base nor their values. That's where I stand with this. Page 16 FC-24 December 5,2023 Even as I'm sitting here, people are just sending me text messages, like crazy; like they want to see it, they want to read it. And on their initial read, it looks good, but which pocket are they going to take it out of to make it match? Yes, less money in the left pocket, but plenty of money coming out of the right pocket, or the chest pocket, or the jacket pocket. Yeah, that's where I stand. Thank you. Thank you, Ms. Sako, for being here. Thank you for teaching me so much while I sat here. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. First, I just want to thank Council Members Galimba and Kagiwada for putting something forward so we can have this discussion. I think we're all feeling the pinch with the increase of cost of living and making sure that, you know, local families have somewhere affordable to live. I have real concerns about how we are going to recoup the costs of implementing this bill if the projections are, we may need to find an additional $7 to $15 million. The cost of doing business is dramatically increasing. And one of the biggest points of testimony that is coming up is around, "Looks good." But as Sue mentioned, how are we going to pay for this? What other tax classes are going to have to see adjustments. I think that needs to be presented as part of this bill so we can make a decision in totality. I also have concerns as Council Member Kimball pointed out about people gravitating away from the affordable housing rental program, which has a lot of different sort of requirements. And shifting to this because pretty much the same benefit and not a lot of requirements. I have a lot of wonderings around, again, why the ten months and why a particular tenant? I'm not a landlord, but if I put myself in a landlord's shoes, sometimes tenants are having to go for whatever reason. Oftentimes, you may need to do some rehabilitation to your homes, so there's some in-between phase where you may not be renting out. But is it certainly a dedicated long-term rental. So,just wondering if there are carveouts in the program for this. Then, I'm really curious around Real Property Tax's ability to implement this program. It seems like there is going to be staff that's required to design and carry this out. Are we prepared to do it with the current staff that Real Property Tax Office has or is there going to be a requirement for additional folks going forward? Page 17 FC-24 December 5,2023 MR. JO: That might be a reality, is additional resources. I would just have to say this, currently the Affordable Rental Program represents about 1,500 applications that we get annually. So, even though we're looking towards 3,200 with this legislation, based off of our best estimates, there are some resources that we would need to look at. Either shifting or gaining some additional resources to accomplish the task. MS. KIERKIEWICZ: Thank you for being honest. I mean these are tough business decisions that we are going to have to make. I'm going to encourage that we keep this legislation in Committee and continue to have the conversation. And I would love for the introducers to identify and propose what adjustments we may need to make so that we can make a really informed decision on whether or not this is going to have, I think, the positive impact that it's intended to have. Thank you, Chair. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Anyone who hasn't spoken yet? If not, we'll go back to the makers. Council Member Inaba. MR. INABA: Thank you. And again, thank you to the makers. Just in running through these numbers, I don't think I can support the bill as it's presented. I, you know, in the previous budget cycle, attempted to reduce the rates for our Affordable Rental and for our Homeowner Class. We weren't able to do that at that time, but I think we're needing to. Especially in places like Kona where rent is just so astronomical right now. Finding that balance between getting people. How much can we incentivize to get people into the Affordable Rental Class? I think that's where we are. I can't support creating a halfway point that might get people out of the Affordable Rental Class. I guess the only major difference would be the three percent protection. But if I run my numbers based on the example provided on page four, the benefit, they'd only be saving $100 more a month in the Affordable Rental than they would in this new proposed tax class. In the meantime, they could be making $2,000 more a month on the rent that they would be collecting at market rate versus at the affordable rate. So, based on this example, and I know there's different examples across the island, I can't support that, and I think our efforts really should be committed towards finding what that sweet spot is to get people to jump over. I don't think it's that hard,but I might be taking a more simplistic view just running through these numbers, but you know, that's a conversation that I think we can have with the Real Property Tax Division. Again, if we move the Affordable Rental Class rate down, we'd be moving down the Homeowner Class too. And we'd be providing benefit to really the folks who Page 18 FC-24 December 5,2023 need housing as their one and only housing option for their `ohana. So, I'll leave it at that for now. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you. So, I guess I'll challenge everybody to think about why it is that rents are so high. And my understanding is, the main driver of why rents are so high is because we don't have enough housing stock. We don't have enough places for people to live. So, if we increase our housing stock by several thousand units, that is going to be a huge pressure reliever on our County. So, that is some of my thinking on this. And the other,just kind of general thing I'll say is, I disagree with my esteemed colleague over there. That, you know, whenever we look at tax rates, lowering, raising, whatever, we have to look across the board and make sure that we treat every tax class equally. I feel like, you know, real property tax rates are the one way that we really have to try to change behavior in our County and try to get people to do what we think is best for the community. And so, I'm happy to come back and work with Council Member Galimba on some scenarios. I was advised to kind of keep that discussion out of this discussion as far as setting tax rates in the future, because it's kind of a separate thing. But we could come back with some scenarios if you will. If that would be helpful, I'm happy to do that. But you know,just in general, what I'd be thinking, and you know, I talked about this with my colleague, Council Member Galimba. And we were, you know, discussing what other ways can we move in the same direction. So, maybe this is a type of carrot, and are there sticks that also go with that carrot to move people to rent to our residents instead of keeping vacant homes or renting to vacationers? So, that's just general thoughts there. I agree that we can discuss the ten-month thing for sure. Happy to look into kind of lining up with what the State says, as far as definitions about some of these exemptions. Also, happy to consider not doing exemptions if people feel like that is a better way to go here. Those are just my individual thoughts. Thank you for the suggestions about, you know, talking to the Board of Realtors and the Realtor's Association. Happy to do that. I did send this over to our Housing Administrator, Susan Kunz, a couple of times; asked for her feedback. She said she had no comments at this time, or concerns. I asked for concerns. So, hopefully, you know, that alleviates some concerns you may have around us dipping into, say, the Affordable Rental Category. Because I do believe that if that was a big concern of hers, she would have brought it forward. Page 19 FC-24 December 5,2023 I hope I answered what I could at this point, and happy to keep talking about it. But it looks like other people have more input, so I yield. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Go ahead, Ms. Galimba, and then I'll go to those who haven't spoken already. MS. GALIMBA: Okay. Yeah, so,just real briefly, and I do recognize it is a very complicated area to be doing adjustments. However, we are just in crisis, emergency. I mean we were discussing earlier in a previous committee, people needing to live in their cars by the side of the road. So, I mean that's everywhere. So, this is—I think we really need to take some measures. To Council Member Inaba's point of it not providing enough incentive, that is something that we can do. We can create the incentive on the top side with the stick. So, that is in our hands. We just need to have this tool to enable us to do that, to create a class that will incentivize, to have the carrot there to create long- term rentals. And that will also solve the fiscal impact element. But we're just going to have to be able to keep that in mind in 2025 when we go to adjust things. So, those are my thoughts, and I will yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Villegas. MS. VILLEGAS: I just want to start off by commending and expressing deep gratitude for my counterparts for the creativity, the initiative, and the tenacity to take on the Tax Code when it comes to navigating our housing crisis. And I really have the utmost appreciation for trying to navigate how to motivate people that often times have way more than they personally need. So, a resource like a home sits empty. I hear from a lot of people that we don't have enough homes, and my response is, we have plenty of homes. It's just how they're currently allocated based on the disparity of resources, unfortunately, in society right now. So, I'm on the fence about this particular piece of legislation because there are so many variables that I don't yet have a level of comfort with. But I like where this is going. I have the utmost respect for Keani (Rawlins-Fernandez) and what she navigates in Maui and her intentions and how she leads there and connectivity to that community. So, you know, I don't know what's going to happen if you guys are going to want to hold it in Committee or whatnot. But I have a deep appreciation for where this is going. I wish I could have the confidence that the vacant homes in my district, that this would be enough to motivate people to rent those places for ten months to somebody else instead of letting it sit, but that's another conversation about the disparity and inequity of allocation of resources and whatnot. Page 20 FC-24 December 5,2023 But I really appreciate the conversation. I really appreciate the creativity. The rent on what can be charged, I really recognize some of these questions about what the rent is going to be. And the reason for the high rents is, you know, in my district, if your average home is a million dollars, that's a$5,000 a month minimum mortgage payment. I barely bring that home myself in a month from my earnings. So, I mean, that dictates our rental market too. Unless somebody got in years ago and they have a lower mortgage, then they can afford a lower rental amount. Otherwise,just to cut the mortgage is $5,000 a month. So, we're navigating figures that are just—but once again, I appreciate the creativity. I appreciate the tenacity to tackle something like this and start this discussion. And even if this isn't where we end up, this is getting us farther along in the conversation and it brings up for, you know, whoever's out there; constituents watching, people who have multiple homes. People that wonder about—you know, our job would be a lot easier if we didn't have to make policy for everything, if people just kind of did the most generous, kind, community minded things to begin with. So, yeah, if we could all be participating in the solution in whatever resources we have, we know the world would be a better place. So, thank you for trying to write policy that provides a carrot for people behaving in those capacities. So, I yield. CHR. KANEALII-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Yes, as we continue to discuss this bill, and you know, these slides are helpful, I think it would be helpful to provide the members of this body with the current rates; the proposed, and then also the affordable rental, kind of, comparison. So, we can see, not just from what market rate and the Residential Class to the proposed new rate would be, but then really seeing what that difference is between the proposed rate and the homeowner rate. Because if it's very close, again, there's going to be probably that movement towards this new class with the amount of money that could be made. It's almost, I mean, looking at the numbers more, it's almost unrealistic to provide the kind of benefit that we'd need to provide. For example, in Kona at a$5,000 market rental, when our affordable rental guidelines, it's about $2,500 for a four-bedroom house. You know, we can't really provide that kind of$2,500 a month benefit. But that's kind of what we're needing to shoot for to get people over. And we have that three percent assessment cap, as an additional benefit. But I guess it's looking island-wide and making sure that we're getting three comparisons so that we can make a good decision. Residential rate, proposed new rate, and the affordable rental rate. Page 21 FC-24 December 5, 2023 I just wanted to clarify the bill that we had passed last year didn't add the three percent assessment cap for affordable rentals that already existed. So, I can't take credit for that, but thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. Maybe this is question for Lisa because I see Lisa over in Kona. I keep hearing about these vacant homes that are not being rented, and I am looking for where that stat is coming from. Lisa's laughing over there. And Lisa, you guys have a lot of tools in your toolbox about who's on the property, how they're using it; you know, ways or tools to indicate there's a rental agreement or electric bill. How do I get this information? Because I drive around the homestead all the time. There are some houses vacant; there are some lots vacant too. So, we work on that with DHHL (Department of Hawaiian Homelands). How do we get to this vacant number? (Note: At this time, Real Property Tax Administrator Lisa Miura came forward to address the members of the Committee.) MS. MIURA: Good morning, Real Property Tax Administrator, Lisa Miura. I was really trying hard to defer everything to Keita Jo today. But when it comes to the vacant houses, I mean, that's been a question that the State agencies, ourselves, City and County and to a degree, Maui County, especially right now, and Kaua`i County are trying to figure out. Because we looked at trying to take water bills, but people will still pay for watering their yards, even if they're not living here. We were looking at their utility charge, but then you have some that are on solar power, and sometimes they still have solar running some things on their property. Especially if you have a pool, then you're going to be using power. So, those mechanisms didn't work. So, Keita is right. We don't have a way to tell you, or even ourselves, if there's somebody here two months a year, two months every couple of years, if it's partly rented. The one thing we are cracking down on, and getting more information on, is the Short-Term Vacation Rentals. Because we do have a compliance officer who's pretty much dedicated to working on that. But it's very, very difficult to figure out which homes are actually vacant for the majority of the year. So, I don't know where they're getting the statistics from. In some states they send out mailers to the owners,but you're basically asking them to be honest so they can get penalized, and that just doesn't tend to usually work with most people if they know what's happening. Page 22 FC-24 December 5,2023 MS. LEE LOY: Thanks Lisa. You know again, to my colleagues, thank you. It is very complex. I think we've demonstrated it here. You know, it's not lost on me how much housing we need. This is definitely one tool, but we have a whole bunch of other tools, too, in our toolbox when it comes to people proposing housing opportunities, right, incentivizing other areas. I'm a big proponent of modifying existing commercial uses into residential spaces. It's a push on all these different things, and I don't think we've even tackled that idea of mobile homes, right? We have it in our Zoning Code. But there's this push and pull about a mobile home. Or to your point, right, where we have challenges with housing and they're in their cars. And why do we provide a safe space for that? So again, I would love to commit this to a very special meeting where we can look at these two things side by side or hold it in Committee and look forward to getting some of that information that we keep hearing getting shared. I just can't find it. I yield. CHR. KANEALII-KLEINFELDER: Thank you. Council Member Kimball. MS. KIMBALL: Thank you, Chair. And with just a little bit of leeway, there just came out a new fact sheet on housing. And what's really nice about it is, it's broken down by zip code, and it has the methodology in there. So, I will send that out as a communication as an attachment to this bill number for you folks to put into the public record. But you know, one of the things that I'm hearing that I think is useful to consider, and you may have, and I don't know that there was merit or there was a reason you chose to leave it out. But, with our affordable housing, there are guardrails in terms of what the allowable rental rates are. And so, I wonder if it might assuage some of the concerns of folks here on the dais to actually have a similar set of guardrails around whether it's you know, 140 percent AMI (Area Median Income), those HUD (Housing and Urban Development) statistics, or something like that. So, we're creating another bin, but it has guardrails around what the rental rates could be. I'm not sure what the title of this bill is and where that would live if that amendment could be made, but just something to consider. I'm also thinking that, and Holeka maybe you and I can sit down with—I think there's a calculation we can make, especially if we were to put those guardrails on the rental rates. About where the rates should be in relationship to the affordable rental rate to make it balance out in terms of the benefit that the taxpayer gets. I think there's a way to get that. Maybe you could figure that out. You could probably figure that out. What am I talking about? Page 23 FC-24 December 5,2023 So, I think that maybe for some of what your concern is, we need to look at that rate, and maybe it's not 125 percent. Maybe it's, you know, 150 percent or something. But I'd really encourage the makers to think about whether or not, you know, if we're trying this out, put that sort of guardrail on the rental rates for this first pass, as a way to address some of the concerns that I'm hearing up here. Thank you, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Evans. MS. EVANS: Thank you. Wow, there's a lot to this. I know there was a comment by Member Kagiwada that hopefully what we're trying to do is increase renting for residents. So, I encourage that we focus on residents instead of trying to fix the workforce housing shortage for nurses, and doctors, and physicians. Because if we give a benefit to homeowners, I mean, these people pay much higher rent than our residents, then I don't think we're achieving that goal of getting housing for our residents. But if the focus is housing on residents, then I'm kind of hoping that we hold it in Committee and get feedback from realtors and Homeowners Associations. And have, actually, maybe even interview some of the people that are participating in the Affordable Rental Rate Class and ask them why. Why are you doing this and what would you like to see it encourage more of your friends, you know, and people in the community that you know to participate? Do they have any insights that maybe they could share? Because I really like the idea of incentives versus sticks when it comes to this. But the people that I've talked to that don't go into long-term rentals, is they say it's the Landlord-Tenant Code, it's not the taxation. It's not the real property tax. It's not the rates that they're getting in the market. They're saying to me, "The Landlord-Tenant Code is brutal." Plus, squatters, you know. Maybe the squatter thing would get more people into long-term rental instead of having the squatters show up on their vacant property. But maybe we need to do some public relations, a little bit more outreach into the community that are investors. I'm assuming most people are investing when they do rental properties. So, you know, maybe even some of the—I'm just thinking out loud here, maybe some VaR CPAs (Value at Risk Certified Public Accountants), the people that do income tax returns, maybe they have some insights. But I think you're on the track of something really good,but I'm not sure this is the solution yet. But I do think we need more input on this topic. So, I yield. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Galimba. MS. GALIMBA: Thank you, and thanks everyone for your input. Some really good input. And I think, you know, providing more information about comparison and maybe some scenarios are a really good idea. Page 24 FC-24 December 5,2023 I just want to point out sort of the timeline slide that Keita Jo put up. I just want to say that, under that timeline, this would come into effect in 2025. And we had to really push hard on our RPT to do that. That'll give them a pretty tight timeline to set this up. But basically, if we don't get it done here in the next month or two, it would go into 2026. So, not wanting to put any pressure on anybody, but just saying if we want to get it done by 2025, you know, in our legislative lifetimes. So, to speak, we need to do it fairly rapidly. Otherwise, it'll be out to 2026. So, just that thought. And totally understand people needing some more time to think, and we're happy to provide more information. But kind of hoping we could move it forward,just for more conversation. And we have two more times to converse about it, of course. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Yes, thank you, Chair. So, we do have a proposed amendment already. I don't know if we want to take this up now. It's really just meant to clarify what we were already saying. Sorry, it's Communication 600.1 in your packet, and it's really changing Section 3(k)(4), adding a(4). And this is just really what was recommended. Point or Order: MS. KIMBALL: Chair, I think the motion should be made first prior to the—. MS. KAGIWADA: Okay, I guess I'll go ahead and make this motion. We can discuss this now and decide if we want to amend and then perhaps keep it in Committee. Motion to Amend: Ms. Kagiwada moved to amend Bill 104 with the contents of Comm. 600.1. Seconded by Ms. Kimball. CHR. KANEALI`I-KLEINFELDER: Council Members, discussion. MS. KAGIWADA: Yeah, sorry. As I was saying, if you turn and look at the second page, that's really where the change is. And it's just saying that we've got to this discussion, that in commercial properties, this rental rate would not apply. Say you have, you know, store and you have one apartment above, you're still going to be taxed at the commercial rate under this form of this bill. Because RPT is not able to tax different parts of one TMK (Tax Map Key) in different ways. So,just pointing that out. I don't know if my co-introducer has anything to add to that, or if RPT has anything to add. You want to add anything, Keita Jo? Page 25 FC-24 December 5, 2023 MR. JO: I would just add that this language mirrors the language that's similar to the Affordable Rental Tax Classification. In that, it limits properties from receiving this benefit if they're commercial income producing. CHR. KANEALI`I-KLEINFELDER: Okay, thank you. Discussion? Council Member Kimball. MS. KIMBALL: Yeah,just a point of clarification on that then. Is it implied that the income being produced does not include the rental income? MR. JO: Correct. MS. KIMBALL: Okay, thank you. That just came up in the testimony. So, I wanted to make sure we were distinguishing between commercial activities producing income versus rental income. I'm fine with supporting this amendment at this time. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Evans. MS. EVANS: Just a little confused by the language. It says, real property is used for commercial or income-producing, shall not qualify as long-term rental. What I'm confused about is the exception. So, it says, except, real property with uses legally permitted in a home occupation in accordance with the zoning code. Do you really need to have that exemption language even in there? I'm confused why you would have to put that in there. MR. JO: So yeah, historically that language was in there in order to protect things that were historically seen as home occupations. For example, someone who has a home office, from being excluded from receiving this benefit. So, you want to have that carve out to make sure that there's not any unintended consequences of kicking someone from that eligibility threshold. MS. EVANS: So, they could have a commercial or an income-producing property, and they would qualify for it if they've already got a legally permitted home occupation on their commercial property? MR. JO: A permitted home occupation use would allow them to continue to see this benefit. MS. EVANS: On a commercial property? MR. JO: Yes. MS. EVANS: Okay, and also ag uses? Page 26 FC-24 December 5, 2023 MR. JO: Correct. MS. EVANS: So, if it's commercial ag property that they have a home? MR. JO: So, you could imagine under that scenario if you had workforce housing, you had farm workers that were renting more than ten months, but you had a commercial agricultural operation. The intention of this language, as I understand it, was not to penalize that type of scenario, and ensure that they would still receive the Long-Term Rental Classification. MS. EVANS: In the long-term, when you calculate it, it would only be for the square footage of the house itself, separated out from commercial property? MR. JO: Yeah, so because this is like tax classification, it's an all-or-nothing proposition. So essentially, the whole property, the entirety of it, both the land and the building, would be eligible for that $7.70 tax rate. MS. EVANS: So, you could have 40 acres, and basically the long-term rental calculation would apply to all 40 acres. Because you have, maybe one of your workforce housing is long-term rental versus month-to-month or whatever. MR. JO: Correct. MS. EVANS: Interesting. Okay, thank you. MS. KAGIWADA: Just a clarification there. Sorry, Chair, may I go ahead? CHR. KANEALII-KLEINFELDER: Council Member Evans, were you done? MS. EVANS: Yeah. CHR. KANEALI`I-KLEINFELDER: Okay. Council Member Kagiwada. MS. KAGIWADA: Just, but all rentals on the property must be long-term rentals, correct? They cannot do, for instance, one long-term rental and some short-term vacation rentals, or have vacant rentals. That would not be allowed. Is that correct? MR. JO: That is correct. And if there is only one dwelling and that dwelling is a long-term rental then it would be eligible for this. CHR. KANEALI`I-KLEINFELDER: Thank you. Further discussion? Okay, seeing none, motion is on the floor to amend Bill 104 with the contents of Communication 600.1. All in favor? Any opposed? Page 27 FC-24 December 5,2023 Vote on Motion The motion to amend Bill 104 with the contents of to Amend: Comm. 600.1 was carried by the following voice vote: (Approved) Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: Back to the main motion, Bill 104, as amended with the contents of Communication 600.1. Discussion? MS. KIMBALL: Chair, I just had one quick question. CHR. KANEALI`I-KLEINFELDER: Go ahead. MS. KIMBALL: Council Member Lee Loy mentioned a special meeting which we do have, you know, the authority to do. My question would be, is that, in order to maybe have it later in the day or something like that, is there a reason for a special meeting in your mind, as opposed to keeping it in our committee? CHR. KANEALI`I-KLEINFELDER: Council Member? MS. LEE LOY: Thanks, Chair. I saw the usefulness of a special meeting to be focused. I mean, we had this in Finance, absolutely. I actually envisioned that special meeting of Finance to still be chaired by Mr. Kaneali`i-Kleinfelder. But it's something that we can really focus on, commit all the time and energy to, and have various members of the departments, the Administration, or others who could actually help us really, kind of, rumble with the ups and downs of it. I think the challenge that I have is, I don't mind keeping it in Finance, but then it's stacked up against other very important issues that we want to discuss. And that was why I suggested the special meeting. Similar to that of like the Committee of the Whole that we've had in the past. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member? MS. KAGIWADA: I don't mind doing that. And I think my co-author is good with that too. If anybody has some concerns about that method, I'd love to hear them now, otherwise I can make the motion. CHR. KANEALI`I-KLEINFELDER: The motion right now is the main discussion for the main motion, which is Bill 104, as amended with the contents of Communication 600.1. Page 28 FC-24 December 5,2023 MS. KAGIWADA: But I'm considering making a motion to do a special meeting and keep it in Committee but do a special meeting that's dedicated. Committee of the Whole, dedicated to this one bill. MR. BROWN: If you don't mind, Chair, I'd like to take a quick recess. I'd like to look at, when we make the motion, if you guys want to take up a special meeting for this, we probably should set a specific date and time, so the public is well aware. I want to check on that real quick. That might be our County Clerk right here. We can talk about that and then we make sure the motion is clear. CHR. KANEALII-KLEINFELDER: Thank you. Before we take that motion and recess, I actually have some comments, because as the Chair I've been waiting. But before I do that, Council Member Inaba? Okay. So, my thoughts are, listening to the discussion, and good discussion today. Something that I've realized in my time here on the Council is, fair market value of what you're going to see for home prices for sale and for rent is dictated by the private market, in my eyes. And our role in taxation is separate. And while it may affect the overall rental price, so the for-sale price of the home, apartment or whatever it might be, they correlate but they're not directly linked. That's how I've always seen it. So, I'm looking at this bill, and I wanted to ask Mr. Jo, in your eyes, this bill incentivizes what? MR. JO: I think it's providing that carrot to incentivize people to then enter into the rental market and increase the rentals that are on the market and create housing. It's going to do it across the board. You know, you talked about market value, so it's going to—that tax incentive is going to hit a $2 million home just the same, as it would a $500,000 home, as it would a $200,000 home in Puna. So, that's, you know, some added context. CHR. KANEALI`I-KLEINFELDER: Okay, that is a good answer. I mean your first sentence really kind of clarified it for me. And I think that's what the makers were getting at, is incentivizing. Not that we're going to lower rental prices across the County, but that we may incentivize homeowners to offer a long-term rental to people in our County and offer more housing in that manner, which I see as a benefit. But there were some good points, too, maybe how to clarify language to really center around the people that we're looking to assist, and to the people who would be wanting to participate in the program. Looking over the testimonies, we had six testimonies provided. And actually, Matthias Kusch wrote in support of the bill, which I thought was nice, and he's a landlord of 24 years. So, point well taken. Page 29 FC-24 December 5,2023 And then, we had Ms. Rohr who opposed today. But for the most part, your testimony was fairly supportive of the bill, but looking for more clarification across the board. So, I like that. One comment that came up in the testimony was STVRs and the way that it applies to nurses or traveling practitioners. And I forgot, Mr. Jo, can you refresh me? How does the STVR apply to traveling nurses in that lens? MR. JO: In a house that is not receiving any other benefit, whether it's being in the homeowners' class as a primary residence, or affordable rental, it has no impact to the actual taxes an individual pays on the property. However, if someone's in the homeowners' tax class, so they've already dedicated or indicated to the division that that is their primary residence, if they do change the use and start renting it out to traveling and nurses and whatnot, that would preclude them from receiving the homeowners' exemption and that tax class. So, that's kind of the implication of that. CHR. KANEALI`I-KLEINFELDER: If someone participated in the long-term program, bill as written—there's information provided for homes that have a second home or a detached home that's available and also primary homeowners. Can you be a primary homeowner and offer a long-term lease within part of your home? And then qualify to get the three percent cap, as well as the homeowners' exemption? MR. JO: Currently, no. If you were to rent that second home long-term, it would prevent you from receiving that three percent cap and the homeowners' tax rate. CHR. KANEALI`I-KLEINFELDER: Within the language of this bill? MR. JO: With the language of this bill, the owner would have to make a decision. Because renting out that second home, while they would not go up to a higher tax rate, like a residential tax rate. They would go to that $7.70. Which is higher than the $6.15 they're in now. They would also lose that three percent cap. So, there's a decision to be made by that owner, whether to convert that second house and rent it long-term or keep it vacant. That would be a decision by the homeowner. CHR. KANEALI`I-KLEINFELDER: And is the financial impact that you provided, does it show that and kind of lay that out? Not so much the financial impact on the County, but your examples that you provided. MR. JO: The examples I provided were all single-dwelling homes. So, single homes. CHR. KANEALI`I-KLEINFELDER: Okay. Page 30 FC-24 December 5, 2023 MR. JO: And it was based off of the base classification. So, that high Residential Tax Class. These are, for all intents and purposes, vacant homes that are unused, not on the rental market. CHR. KANEALI`I-KLEINFELDER: You didn't do an example for someone who lives in a home and is moving from homeowners to long-term rental? MR. JO: No, I did not. CHR. KANEALI`I-KLEINFELDER: Okay. I'd be interested to see that proposed. Because we're looking at both numbers in the amount of homes that are floating around that could potentially utilize the program, correct? MR. JO: Correct. CHR. KANEALI`I-KLEINFELDER: Okay. Yeah, I'd like to see that. Those were my only questions. I like the intentions of the bill. The bill's intention is good. I like incentivizing folks to participate in becoming long-term landlords. There is definitely a tie into the Landlord-Tenant Code, which I hear if fairly brutal for people who rent out homes and have a potential problem with tenants. So, that could be addressed, but I don't think it's going to be addressed in this bill. But with that, those are my thoughts. Thank you for bringing it forward. Back to the maker. And just as a comment for the group, our next committee started at 11:00, so we're about ten minutes past that, and we have two more items on the agenda for today. So, Mr. Clerk, do you want to share any information on the special meeting, or would you like that to be taken off-line with the makers perhaps at another time? MR. BROWN: I think our County Clerk maybe can shed a little more light on the situation; some of the options that the Council has. CHR. KANEALI`I-KLEINFELDER: Thank you, Mr. Brown. Mr. Henricks, go ahead. MR. HENRICKS: Good morning, Mr. Chair and Finance Committee Members. Jon Henricks, County Clerk. If the intention is to create a meeting where this bill could be isolated for full attention to talk with staff, I think to leave your options open, the appropriate motion would be just to postpone this to the Call of the Chair. Then that would provide the ability for us to get together to find out a good time with the Administration and also the Council. Because I think the Council Members can have unfettered discussions about logistics. It's not a Sunshine Law issue to see if that's a possibility. But by postponing it to the Call Page 31 FC-24 December 5,2023 of the Chair, you pretty much leave all the options open as far as date, time, and place. Then if it's going to be a separate Finance Committee or what we're going to call it. So, if that's the goal, it just again, it leaves all those options open. Even just to bring it back in this committee along with other things if that's the determination at the end of the day. CHR. KANEALI`I-KLEINFELDER: Thank you, Mr. Henricks. To the makers, I would also offer, the Committee Hearings are exactly what this is for. And you have had department heads from different departments. You have all the Council Members' attention, and you also have the public participating. So, to me this is the area where you would hold this meeting. That's my thoughts. I yield, and then off to Ms. Kagiwada. MS. KAGIWADA: Okay, I just had a clarification question to our Clerks. So, if we postpone to the Call of the Chair, we still could meet in two weeks with the Committee. We just have to abide by Sunshine Laws on how far apart or it could be a different day, okay. MR. HENRICKS: That's correct. It leaves your most options open, including the standard, placing it all on the side with other items in a Finance Committee meeting that would be then scheduled for our regular calendar time, and date, and place. MS. KAGIWADA: Okay. Alright. I think I will make a motion to postpone to the Call of the Chair, so that we can work with our staff here and figure out the best option, if that's okay with folks. Motion to Postpone: Ms. Kagiwada moved to postpone Bill 104, as amended, to Draft 2 to the Call of the Chair. Seconded by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: Any discussion on the motion? Council Member Inaba. MR. INABA: Yeah, I just want to second your mana`o. I prefer not to have this in a special meeting. But just bring it back to the Finance Committee, and we can take care of it there with the additional information that we've requested. I don't think we should start holding special meetings. We took up tax bills before and we can do it here. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you for that. Council Member Kierkiewicz. Page 32 FC-24 December 5,2023 MS. KIERKIEWICZ: Thank you. I think it's the most appropriate thing to do, to keep this in committee. I think we've heard a lot of really great feedback from, you know, our colleagues, from different departments and agencies that are involved in supporting you and Council Member Galimba. And I know that you had mentioned that there's a timeline to get this done. I don't want to feel rushed because this is a very significant change that we would be implementing. And I'm more concerned about getting it right and giving us a longer runway to work off of. So, I do support this staying in committee. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Lee Loy. MS. LEE LOY: Yeah, thanks. I support the motion to postpone to the Call of the Chair. Again,just trying to give us all the options. There's a lot of stuff we have in our rules that we have not even scratched or tried to use. But at the end of the day, if this gives us more time to look at it; work on it, but also, we've also heard some great samplings today. So that, at any future Finance meeting, we actually have an appropriate amount of time, and-or closer to an evening time, where other members of the public could participate. That's all available to you at the Call of the Chair. So, I will be supporting this motion. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay with that, seeing no further discussion, the motion is on the floor. All in favor? Any opposed? Vote on Motion to: The motion to postpone Bill 104, as amended to Postpone: Draft 2 to the Call of the Chair was carried by the (Approved) following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. Page 33 FC-24 December 5,2023 Bill 106: AMENDS ORDINANCE NO. 23-51, AS AMENDED, RELATING TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF FOR THE FISCAL YEAR JULY 1, 2023 TO JUNE 30, 2024 Adds the Public Works Federal Highway Administration Mamalahoa Highway Rehabilitation Part 2—Kamalani Street to Kalamauka Road—Federal Project ($3,000,000) to the Capital Budget. Funds for this project shall be provided from the Federal Grants Receivable Fund, and would be used for paving and resurfacing. Reference: Comm. 608 Intr. by: Mr. Kaneali`i-Kleinfelder (B/R) Motion to Approve: Ms. Lee Loy moved to recommend passage of Bill 106 on first reading. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Any discussion, Council Members? Okay, hearing and seeing none, motion is on the floor, all in favor? Vote on Bill 106: The motion to recommend passage of Bill 106 on first (Approved) reading was carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. Bill 107: AMENDS ORDINANCE NO. 23-51, AS AMENDED, RELATING TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF FOR THE FISCAL YEAR JULY 1, 2023 TO JUNE 30, 2024 Adds the Public Works Puna Makai Alternate Route Study—County Project ($500,000) and the Puna Makai Alternate Route Study— State Project ($1,000,000) to the Capital Budget. Funds for this project shall be provided from General Obligation Bonds, Capital Projects Fund—Fund Balance and/or other Sources ($500,000) and State Grants Receivable ($1,000,000), to identify an alternate route to relieve traffic congestion and increase evacuation capacity, if needed. Reference: Comm. 609 Intr. by: Mr. KAneali`i-Kleinfelder(B/R) Motion to Approve: Ms. Kierkiewicz moved to recommend passage of Bill 107 on first reading. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Discussion? Council Member Kierkiewicz. Page 34 FC-24 December 5,2023 MS. KIERKIEWICZ: Thank you, Chair. First, I just wanted to start off by saying, you know, mahalo nui to Representative Greggor Ilagan, District 4, House Rep for lower Puna. He worked really, really hard this last legislative session to secure some funding to do a study. This is just a study. This isn't a promise of a road, but it's an important study to figure out how we alleviate the traffic congestion in the lower Puna region, because we have seen an explosion in population growth over the last couple of decades. This is something. This kind of study has been, I think, needing to be done for decades now. And we finally have support from this Administration and Department of Transportation to, guess what, make the County do the work. We got some money from the State. The County's putting in a little bit too. And I'd like to invite our Public Works Director, Steve Pause, forward to kind of talk about timing here; what the process is. What is the first and next step? There are a lot of communities that are really interested from a variety of viewpoints. Not wanting a highway to go through their particular subdivision. We've also heard a lot from the homestead community in Pana`ewa, making sure that this potential road does not go into their homestead. So, a lot of different viewpoints, interests to consider that I really think helped to narrow down what the potential solutions are. One thing I forgot to add was the large property owners that we would need to make sure are on board with any of the suggestions that, you know, come forward in this study. So, Director, if you could just enlighten us around process, next steps, timing, and even cost estimates of what it would take to build something like PMAR (Puna Makai Alternate Route)? (Note: At this time, Department of Public Works Director Stephen Pause, came forward to address the members of the Committee.) MR. PAUSE: There's a lot to unpack there. Steve Pause, Director of Public Works. So, thank you for that. PMAR became probably first known to me—we had a working group meeting back in May, I think. Council Member Kierkiewicz, you participated in that. But it's based on work that was done by Planning. I believe it was back in November of 2005. The Puna Regional Circulation Plan was done by County Planning. But the study itself is really building on some of the work that was previously done, and you've mentioned there's been a number of groups. I've already received emails from many of them voicing opinions. Page 35 FC-24 December 5,2023 But what we're going to do here is just pretty much start with doing, I guess I would call it, in alignment of alternative studies. So, there's the initial—I mean the driving force for the alternative roads are really based on the need for the identified need for emergency evacuation routes, alternate routes, because of the Highway 130 congestion. Connectivity between neighboring subdivisions, and also too, as Council Member said, to accommodate growth and increased traffic. So, setting that at a high bar, what the study will do, and the study, as you nicely stated, landed in the lap of the County's Public Works Department to see through. But it's really going to be an alignment study to look at the options that exist. You know, a number of things have been identified to do some preliminary engineering, and you asked about costs. We cannot really put numbers on any of the options or alternatives at this point until you actually go through and do some minimum level of engineering, looking at the options. But costs, another large one would be environmental constraints. This is not going to be an EIS (Environmental Impact Statement) or an EA (Environmental Assessment). It's going to be an options analysis. Identify, you know, what are the pros and cons of each of the options that are developed in benefits and costs. And a large component of this study, as well, is going to be community engagement. It was brought to our attention early on that there's a lot of folks that are actively needing to be engaged and involved in doing this. So, with the County's portion of the money being added to the money that, I believe, House Bill 1403, provided our next steps. Really, they're just starting to work on that scope of work, and the schedule. Right now, I anticipate probably 12 to 18 months to do the complete study—is what I'm looking at once we get some assistance onboard to work with that. But the work will be done with our engineering group, and then there'll be, like I said, a large amount of public involvement. Once the department gets its PIO (Public Information Officer) back from Maui, Sherise has been over there, and I don't think comes home until the new year. She'll have a large role in helping us engage the communities. So, that's pretty much, at a high level, what we're looking to do. MS. KIERKIEWICZ: Thank you, Director. Some clarifying questions. So, assuming this passes out of Committee, and is approved at Council in two weeks, at that point, will you be designing a scope of work to issue a RFP (Request for Proposal) to engage an outside consultant to help us complete this study? How much of it is going to be handled in-house versus by an independent contractor? MR. PAUSE: I believe that we will need—it all comes down to resource loads. But I believe that we would be looking at getting some assistance from an outside contractor. Potentially even, they also are able to bring more resources when it just comes to engaging the community, coordinating community activities, and Page 36 FC-24 December 5, 2023 making sure that we're reaching out to the right locations and folks to get involved in this. MS. KIERKIEWICZ: How long does it take to get a RFP out? Is that about three to six months where you're issuing it and then identifying someone to award? Or is that included in the 12 to 18 months to complete the study? MR. PAUSE: No, I would say to engage professional services probably takes up to three months for us to do. So, we get them onboard and then we start working on the study immediately. Like I said, you know, if you're asking for a bit more exactness, I'd say the 18-month time period would start after we get someone onboard and we've got a work scope of moving forward. MS. KIERKIEWICZ: Perfect . Just wanted that clarification. That way I can manage expectations within the community around when we're actually going to get started with the community engagement. You know, you mentioned the Regional Circulation Plan that was developed by Planning. How much is Planning involved in this effort? MR. PAUSE: To this point, I've not had any direct communication, but there's definitely some knowledge base there that we need to tap into and engage. I don't know to what extent that looks like. Obviously, all of our departments are busy, so I've not sat down with the Director or the Deputy Director, but I would envision having them involved as much as we can get them involved. MS. KIERKIEWICZ: Do you think it's possible that by Council you could have had a conversation with them to identify their role going forward? I want to prevent, where possible, departments working in silos. And they're actively working on getting the General Plan out to the community. And again, I just want to make sure our communities are well planned for because it was serious afterthought when these private subdivisions were created in the past. So again, we're having to fix a lot of issues that we didn't have any hand in creating, and so, don't want any unintended consequences. Just want there to be some coordination where it makes sense. MR. PAUSE: So, the answer to your question, yes, I probably should have, could have, talked to them before this. You know, I have been participating in the General Plan discussions as well, so I have that basic knowledge. But moving forward, yeah, there's a definite need to make sure that we're all engaged in doing the same things in the same direction. You know, we don't want to go off, for example, and do a study that is not taking into account, the General Plan, and the things that Planning's doing. So, you have my assurances that we'll appropriately engage them. Page 37 FC-24 December 5,2023 MS. KIERKIEWICZ: Beautiful. And if we can hear from the Director or Deputy at Council on their role with this particular project, that would be helpful. Just a couple other things. Engaging our Puna CDP (Community Development Plan) Action Committee to ensure that they are a stakeholder in these conversations. And definitely include myself and Council Member Kaneali`i-Kleinfelder. Portions of his district do include Lower Puna; you've got Ainaloa, Orchidland. So, make sure we're involved in the conversation so that we can be messaging out to our communities; and also letting them know when there are meeting opportunities so that they can share their mana`o. We just want everybody to be aware, and for this study to be as accurate and successful as possible. MR. PAUSE: I agree with you. And again,just based on the initial conversations and correspondence received from a number of stakeholders, there's going to be an opportunity to have a lot of really good discussions about this study and the options as we go forward. So, thank you for bringing that to my attention. But I completely agree. MS. KIERKIEWICZ: Thank you for taking this on. It's a big lift, but we appreciate it. Chair, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Lee Loy. MS. LEE LOY: Thanks, Chair. First of all, I'm going to encourage all of my colleagues to support this amendment. As Ms. Kierkiewicz mentioned, there's a number of stakeholders along that proposed or envisioned area. One being the homestead community that I represent that has been very clear about not wanting a lot of that traffic to end up in the homestead. So, in standing in solidarity with my community, I'm going to be voting no, but still urge the rest of my colleagues to push this through. Because I really believe at this point, me saying "no" actually elevates the conversation to make sure that that homestead community is at the table for the discussion. On top of which I would also love to see, while this is a study in plans and designs, one option that has not been explored, is how Puna could actually look at areas for commercial development where so much of that traffic is not headed into Hilo but staying right in their own neighborhoods. You know, Uncle Pat Kahawaiola`a always says, "Sometimes Puna has to stop being a bedroom community and carry some of that services that they're heading into Hilo for." Some of the decisions we can make on the dais is also offering those opportunities to the General Plan. And then allowing applicants and other landowners to take advantage of that. Page 38 FC-24 December 5,2023 So again, completely urging my colleagues to support this. I'm going to be voting no,just as an opportunity to elevate the conversation about the stakeholders in Pana`ewa, who really want a seat at the table. And have their own Community Development Plans acknowledged because there's a statement within the Pana`ewa Community Development Plan that is very clear. They do not want to see connectivity on Railroad. They say Railroad, but they never say other roads or other areas even more makai or more mauka of that. So, thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball. MS. KIMBALL: Thank you. And thank you, Council Member Lee Loy, for raising some of the contextual issues around this. So, I did have a quick question. I don't know if this is for you, Council Member Kierkiewicz or for you, Director. Is this study exclusively about the installation of a roadway? Or is it possible that it's broad enough to include things like—I mean we do have the Mass Transit Plan expanding commercial area in Puna so that fewer people are having to commute in. Or providing other resources, whether it's—or not, commercial medical facilities, educational facilities, whatnot. I'm going to support this either way. I should be clear about that. But I just am very aware of the need for particularly an alternate emergency route. But I'm concerned about expansion of a roadway just to reduce traffic because traditionally, what happens is we just get more traffic. Like if you build it, they will come. So, I'm wondering if we can have a more holistic approach with this or if the guardrails are just exclusive to the study of the installation of a roadway. MR. PAUSE: So, to answer that, I don't know the exact scope relative to, you know, what fits in within those guardrails. But, given that this study has been given to Public Works, and specifically utilizing engineering resources, it seems to me that it's based on development of infrastructure, right? So, it's not necessarily a Planning exercise. The Planning exercise was done. This is more of a, you know, what are the physical options? You know, what are the costs associated with them? What are the environmental constraints relative to potentially locating infrastructure in certain locations? So, it's something that I can explore further. But my sense is that it really is more about developing viable options, engaging the community to find out what's good, what's not good; what will work, what might not work. But I believe this is more geared towards being an exercise in developing the infrastructure associated with a couple of things that I mentioned early on. MS. KIMBALL: Thank you for that. I appreciate the response and like I said, I'll be supporting it regardless because I think it's important information for us to have as far as decision making going down the road. So, you know, I think we as Page 39 FC-24 December 5,2023 a body need to have continued dialogues about those larger, more holistic; picturing of course, the General Plan provides an opportunity to do that as well. So, thank you Chair. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Members Evans, go ahead. MS. EVANS: Thank you. I'll support moving this on to Council, but I do hope at the Council Meeting that you could provide us with some more information about House Bill 1403 and the fact that it's kind of a State project with matching dollars from the County. So, it'll be nice to see how the State has framed this, and you know, what their purpose is; what they'd like to see. Because I think that they're definitely partners in this. So, it'll be great to know what their expectations are so that we get the complete picture of it before we make our final vote. But I do want to support my colleague who understands that sometimes the community gets negatively impacted. And some communities just don't have enough clout or voice to be able to change momentum, and the momentum become more from the State that's got the bigger hammer than the County on this. So, I'd really like to know what the County's expectations are when we get to Council. Thank you, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. Just trying to be supportive of my colleague and her comments about making sure that the communities that will be affected are really involved. So, I guess I have a question. The way this is worded and stuff, does this preclude you from including the Keaukaha Community in developing this plan? MR. PAUSE: No, not at all. I've actually met with Uncle Pat twice. They were on other matters, but most of the discussion was particularly about this project. So, no, they will be front and center. And as you are aware, Sherise has a large presence within that community as well. So, they won't be forgotten. MS. KAGIWADA: Okay, thank you. I'll be supporting this measure. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kierkiewicz. MS. KIERKIEWICZ: Director, I think it's really easy to just make the policy decision. The commitment that the road is not going to traverse through Pana`ewa. I mean there was so much testimony at the State side. I'm going to look up the bill because I thought this was addressed. I thought there was a commitment to ensure that that community was not negatively impacted. I'll follow-up with Rep Ilagan and have something to report back at Council. But that Page 40 FC-24 December 5,2023 was one of the only ways that I could get behind a study like this. And if we are the ones to implement this study, we can set the parameters, right? It's going to be a County road. So, it's really, I think, easy for us to just make that policy commitment now. The other thing is, I love plans, they're great, but there has to be an appendix where we list out the actions that we will take, the funding that are able to secure the other kinds of leverage from State and Federal partners that we can get in order to implement the plan. Because if not, it's just again, another really nice wish list. MR. PAUSE: I agree with you, and I think part of our work scope here—you know, I focused on defining the alternatives or the options, and then working through them. You know, what does this involve? What does it cost? What impacts are there on the community? What does the community want? But a large chunk of, you know, reaching the end of this study is going to be identifying how we're going to implement it. You know, we can't forget the fact that—I think paraphrasing, right, it's a paper study, but if there's nothing behind it. You know, we've got to identify how do you move forward, and that's part of it. It's, you know, what are the funding opportunities? What exists at the County, State, Federal levels? So, that needs to be included in the study. MS. KIERKIEWICZ: Okay, thank you. And I don't know if I'm going beyond my abilities here in offering myself to help review any scopes of work before they get issued for RFP. MR. PAUSE: I thought you were going to write a check, but okay, thank you. MS. KIERKIEWICZ: That's later, got to do the study first. Thank you, Chair. I yield. MR. PAUSE: No, I appreciate the help. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Villegas. MS. VILLEGAS: Yeah,just to quickly chime in. This sounds—I mean, I think of District 7 and our traffic congestion and being at capacity and our infrastructure needs. So, this resonates island wide. It's so connected to broader issues of capacity, and if you build it. I mean, it's been proven, you build more roads, you get more traffic. It's not reversely proportionate to one another. So, as you're navigating these issues in your district, I just want to say, hey, we have the same issues, and it's the more urban area in a lot of capacities. So, I don't know what could be replicable, as far as creating the template and how we look at things like this for our island as a whole. Page 41 FC-24 December 5,2023 But yeah, that's just what was resonating with me as I'm listening to the conversation and honoring the impacts to certain neighborhoods and areas that don't want to be sped up, pun intended. But how we navigate those things as we look at a broader, more holistic plan for our island and balancing growth, roadways where we can and should be focusing more growth and where we do need roads widening and whatnot. MR. PAUSE: It's a big challenge island wide, and I think you all know this. I mean I get emails, letters, phone calls, you know. The area you're talking about, I think, you once called it the "Lako block-o". That area is absolutely horrible, you know, when there's traffic in the morning and the afternoon. People are always talking about, you know, lower Puna. Highway 130 is an issue. Waimea, right, is another one where, you know. Oh gosh, we've got a piece of paper that says, here's where the bypass road goes, but there's no money, and you know, the State doesn't want to build new roads. They just want to take care of the ones they have. So, yeah, I hear you loud and clear. It's an issue that like is front and center. Everybody—all of us have gotten stuck in traffic somewhere. Just saying, why don't they just put in another road or why don't they widen? So, whatever we can do to push that forward. Again,just dealing with what we have. MS. VILLEGAS: Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Thank you. I think we've had adequate discussion. We're behind time, and we have folks from the community here. So, I'd like to take the vote. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. I do have some comments. Mr. Pause, so 50 percent match for the County, yes? Requirement of the bill or— MR. PAUSE: No, it's actually, we're putting in $500,000 and the State's giving us, a million. CHR. KANEALI`I-KLEINFELDER: So, $1.5 million total to do a study? MR. PAUSE: Yes. CHR. KANEALI`I-KLEINFELDER: Okay. Second question. Have you looked over HB 1403, the bill we've mentioned? Have you read it through? MR. PAUSE: I have a copy of it, and at one point, I did read it. But it's not going to be right front and center in my head right now. Page 42 FC-24 December 5,2023 CHR. KANEALI`I-KLEINFELDER: Okay, please look it over. From my memory, this bill was very much specific to below Highway 130, and I appreciate that it's the representative's district. But what's missing in that is a wholistic view of Puna. And I say that because, as I watch this bill evolve, and in my discussions with DOT (Department of Transportation), Puna as a whole, uses 130 and Highway 11, Volcano Highway, to come to basically a standstill every day on Pana`ewa stretch. So, alternate routes are needed. But if you don't look at Puna as a whole and understand the way traffic flows in and out of the entire area, even from places as far as Ka`u. And we all end up deadlocked on Pana`ewa stretch, finding an alternate route may just move people faster to a pinch point. I expressed this from the beginning to Mr. Ilagan, that I do appreciate the commitment for the Puna Makai Study, anything below 130. But there's a lot of folks above 130 that need help as well, and need alternate routes, which is why we've looked at Stainback and other routes. I'm saying that to you today because it sounds like with the County involvement, we have an ability to guide this study. And in my lens, after almost two decades of living in Puna Mauka, I find it very important to not look at boundary lines between districts of representatives, but more so, to look at the area as a whole and how we can better travel in and out. The Planning Department being crucial to that because we've allowed to continue density increase in the area with no limits. So, that's my comments. Look forward to hearing from you, and I'll do my review too of Bill 1403 before our next meeting. But just wanting to give that to you as something to think about and mull over. MR. PAUSE: I appreciate that, and I know some of the previous work, as much as it's called the makai, there's also a couple of mauka type alternate roads that were in the original Planning study as well. So, I appreciate the input and I too will field better with more homework before the next meeting. Thank you. CHR. KANEALI`I-KLEINFELDER: Beautiful. Also included in that bill is an exclusion of any State-owned lands including Department of Hawaiian Homelands or DLNR. So, good for us maybe to all read that bill before we come back to Council to understand the full repercussions of what we're voting on today. MR. PAUSE: Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, with that, motion is on the floor to forward Bill 107 to Council with a favorable recommendation. All in favor? Any opposed? Page 43 FC-24 December 5,2023 Vote on Bill 107: The motion to recommend passage of Bill 107 on first (Approved) reading was carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Villegas, and Chair Kaneali`i-Kleinfelder— 8. Noes: Committee Member Lee Loy— 1. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: That brings us to the end of our agenda. ADJOURN- There being no further business, at 11:45 a.m., Ms. Lee Loy moved to adjourn MENT: the meeting. Seconded by Ms. Kimball and carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: We are adjourned. It is 11:45 a.m. Thank you. Approved: talk VI 2t( Mr. Matt Kaneali` Kleinfelder, hair (Date) Finance Committee MK/dt Page 44