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HomeMy WebLinkAboutMIN FC 2023/12/19 (2022-2024) • Committee on Finance 25th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawai`i December 19, 2023 CALL TO The regular meeting of the Committee on Finance was called to ORDER: order at 1:18 p.m., in the Council Chambers, Kailua-Kona, by Ms. Cindy Evans, Acting Chair. ROLL CALL: Present: Mr. Matt Kaneali`i- Kleinfelder, Chair (via videoconference from Hilo) 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 Acting Chair directed the Committee to proceed to the next order of FROM THE business, Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: The following individuals registered to speak and came forward when called by the Acting Chair: Joy Dillion: Bill 104, Dr. 2 (Comm. 600.10), oppose. Jonathan Hilton: Bill 104, Dr. 2 (Comm. 600.10), comment. (Representing Grass Root Institute of Hawaii) Nancy Cabral: Res. 384-23 (Comm. 641), support; and Bill 104, Dr. 2 (Comm. 600.10), comment. Garth Yamanaka: Bill 104, Dr. 2 (Comm. 600.10), comment. (Representing Japanese Chamber of Commerce) Claudia Rohr: Bill 104, Dr. 2 (Comm. 600.10), comment. FC-25 December 19,2023. ACTING CHR. EVANS: Thank you, Mr. Clerk. Please read in Communication 12.22. COMMUNI- The Acting Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 12.22: REPORT OF FUND TRANSFERS AUTHORIZED: JUNE 16—30, 2023 AND NOVEMBER 1 - 15, 2023 From Controller Kay Oshiro, dated November 30, 2023. Motion to Close File: Ms. Kimball moved to close file on Comm. 12.22. Seconded by Ms. Kagiwada. ACTING CHR. EVANS: Any discussion? Member Kaneali'i- Kleinfelder? MR. KANEALI`I-KLEINFELDER: No, thank you. ACTING CHR. EVANS: Seeing none, all in favor? Vote on Comm. 12.22: The motion to close file on Comm. 12.22 was carried by (Filed) the following voice vote: Ayes: Committee Members Galimba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans— 8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 13.24: REPORT OF CHANGE ORDERS AUTHORIZED: NOVEMBER 1 — 15, 2023 From Finance Director Deanna Sako, dated November 21, 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. 13.24. Seconded by Ms. Kimball. ACTING CHR. EVANS: Any discussion? Seeing none, hearing none. All those in favor? Page 2 FC-25 December 19,2023 Vote on Comm. 13.24: The motion to close file on Comm. 13.24 was carried by (Filed) the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball,Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. Comm. 623: NOTIFICATION OF FUND BALANCE AS OF JUNE 30, 2023 From Finance Director Deanna Sako, dated November 30, 2023, transmitting the above pursuant to Section 2-12.4, Hawai`i County Code,indicating a total budgetary fund balance of$132,666,592.66. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 623. Seconded by Ms. Kimball. ACTING CHR. EVANS: Any discussion? Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. Is anyone from Finance in Hilo Chambers or on Zoom? (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: Good afternoon. MS. KIERKIEWICZ: Hi Deanna, Director Sako, great to see you. I think this is probably the largest fund balance I've ever seen, $132 million. I track every year since I've been on the Council. This year, 2019, $33 million; in 2020, $40 million; 2032, $52 million. Last year, we saw a pretty big increase in fund balance of$70 million, and this year, it's almost doubled at$132 million. Can you just maybe summarize for us, what's contributed to this very high fund balance? MS. SAKO: Sure, happy to. So, couple different things have happened. One, keep in mind, as state in the County Code, we need to have between five and 15 percent of general fund expenditures between fund balance and the budget stabilization fund. And the budget stabilization fund hasn't really been growing. We only put in $250,000 per year. However, fund balance has been growing. So, last year we were at 17 percent of general fund expenditures. Five to 15 percent is a little bit low. GFOA, our Government Finance Officers Association says, you should really have two months of expenditures put aside. And just to, Page 3 FC-25 December 19,2023 you know, in case of a rainy day. So, that's really closer to 17 percent, and that's kind of where we were last year. So, as our budget grows, even if we stayed at 17 percent, the fund balance requirement would still grow with it. In addition, we've discussed with you before that there are some pending items, you know, that we have outstanding that was going to require quite a bit of funding. So, when those come through, and if I subtract those estimated items from the fund balance we have, we would actually be down to 16 percent of general fund expenditures. But for this last year, the contributors were actually—we had a lot higher revenue than we anticipated, and our real property taxes (RPT)between penalties, interests, and real property taxes were actually an extra$17 million and our TAT (Transient Accommodation Tax) was almost$15 million higher than what we budgeted. So, those were two contributing factors, as well as some reductions and expenditures. So, hopefully that answered your question. MS. KIERKIEWICZ: Could you please repeat the numbers one more time, the increase in revenue pieces. The TAT, I think you said, was $17 million? MS. SAKO: Yeah, so real property tax was $17.6 million; TAT was $15 million, and I forgot to mention, that you know, the interest rate started climbing last fiscal year. So, we actually had an extra$8.8 million in interest revenue. And when I say, extra, I guess I really mean we collected more than we budgeted. MS. KIERKIEWICZ: Okay, and then you talked about there being different factors; economic trends, policy changes, projects that are currently top of mind for this Administration that we have to factor in and then pay for eventually. At what point, are we going to be funding that work? MS. SAKO: Not necessarily. How can I say this without going into, you know, going into executive session? So, you know, there are pending matters before the Council that we still need to pay for. MS. KIERKIEWICZ: Okay, timeframe, I'm just thinking about this fiscal year. MS. SAKO: I hope this fiscal year,but some of those matters are out of our control. But, yes, we would hope this fiscal year. MS. KIERKIEWICZ: Okay, and then the last question I had was in relation to our credit rating. Does our fund balance have anything to do with, like the County's credit worthiness. MS. SAKO: Yes, it most certainly does, and that's one of the factors they look at as part of our credit worthiness and if we have the ability to repay the debt. Page 4 FC-25 December 19,2023 MS. KIERKIEWICZ: Okay, perfect. Thank you, Director. Chair, I yield. ACTING CHR. EVANS: Member Lee Loy. MS. LEE LOY: Thank you, Chair. Thanks, Deanna, for being here. Thanks for answering those questions. That's exactly where I was at. I was also wondering if that unspent ARPA (American Rescue Plan Act) funds is also part of this fund balance? MS. SAKO: That's different. So, any unspent ARPA funds or any grant funds, for that matter. It doesn't matter whether it's ARPA's or other. Those get carried forward as part of—it almost gets like encumbered at the end of the fiscal year, just to carry it forward into the new fiscal year. So, that's not part of the fund balance. MS. LEE LOY: Then, I know you mentioned the RPT and the TAT. And I also know that the fuel tax is separate. Do we know where we are with that fund balance in fuel tax? Thanks Deanna. MS. SAKO: Fortunately, I brought my Monthly Budget Status Report, so let me look at that. Yeah, that's not something we normally report on. But I believe at the next meeting, you guys will probably have the final Monthly Budget Status Report. We did finally get the books closed in all the Special Account Groups. So, Highway Fund. Their fund balance did come down a little bit. But it's still at $24.4 million over and above what they budgeted for fiscal year 2024. MS. LEE LOY: Great. Then you mentioned the percentage, right? We like to hover around the 16-17 percent. MS. SAKO: Correct. MS. LEE LOY: So,based on real property tax collections, what is that sweet spot? I mean, this is an eye-popping number, right? But it sounds like this is where we want to be conservatively, to be about 16-17 percent. MS. SAKO: Yes, so we definitely want to be around 16-17 percent after we pay down those expenditures, hopefully this fiscal year. That's actually where we would have been if I subtract that out. So, normally we don't expect to be this far above our budgeted revenues. The fact that, you know, the interest rate market was climbing. TAT was new, so we probably did budget a little bit conservatively. But normally we hit real property tax pretty close on. So, last year was just kind of an unusual year in that we had that much additional revenue. Of course, TAT tourism was very high last year. So, we're not expecting those same trends to continue this year. Page 5 FC-25 December 19,2023 MS. LEE LOY: Okay, thanks Deanna. You know, it's a big number. So, got to ask. I'll just watch for Council of Revenues coming out at the beginning of the Leg. Thanks, Deanna, for everything, appreciate it. ACTING CHR. EVANS: Okay, in Hilo? Member Kaneali`i-Kleinfelder? MR. KANEALI`I-KLEINFELDER: Thank you, Chair. Ms. Sako, thank you for the overview. I was thinking back on some of the things that have gone on in the past few months, you know, a lot of bonds. And a lot of increase in physicians. So, it is a large number, but I think it's good to be a little conservative and be ready than be caught off guard and not be ready. MS. SAKO: Yeah, that's kind of been our thought process as well. MR. KANEALI`I-KLEINFELDER: Well, thank you for keeping that in mind, and I'll be passing over to the nice person behind you in the back with a full basket instead of an empty basket. It'll be a nice transition. Thank you very much, appreciate it. MS. SAKO: Thank you. MR. KANEALI`I-KLEINFELDER: I yield, Chair. ACTING CHR. EVANS: Thank you. Member Galimba. MS. GALIMBA: Thank you. I was just curious about that comment that you just made, Director Sako, about that you're not thinking that the Tourism members would continue. MS. SAKO: We're already down this year. The TAT collections are much lower than they were last fiscal year. They're still high, we're still going to make our budgeted numbers, but last fiscal year, there were a lot of people traveling. A lot of the foreign markets hadn't opened up yet. So, we had a lot of tourism to our island. Tourism is just slowing down right now for whatever reason. So, we're not anticipating TAT to remain at the same levels it did last year. Then when tourism is down our GET (General Excise Tax) is also impacted. MS. GALIMBA: Thanks for that, but what like would you say what percentage down are you seeing as far as TAT? MS. SAKO: We're about half-a-million down per month. So, 10-15 percent, probably lower,just going by TAT collections. It doesn't mean people aren't coming visiting families and staying with them. But definitely in the TAT market, it's probably down a good 10-15 percent, if not more in some months. Because holidays are coming, so, it may change. Page 6 FC-25 December 19,2023 MS. GALIMBA: Yes, here. Thanks. ACTING CHR. EVANS: Okay. So, I see no other lights on, I just have a question. So, I was trying to get the code here on my phone, but I'm assuming this is a semi-annual report that's required by the code? MS. SAKO: This is the annual report. So, at the end of each fiscal year, then we submit fund balance per section. I think it's 2-12.4. ACTING CHR. EVANS: Fiscal year ended June 30th, and it's almost December 30t. Is this normal to take this long to settle the books and get in front of the Council? MS. SAKO: No, so, I believe we did send a letter earlier. The County Code requires a letter by October 15th. So, on October 15t, we sent a letter saying, due to our staffing issues—and some of the staffing issues of the department as well, we were behind on closing. So, we did send a letter on November 30t,but it took till today to get agendized. ACTING CHR. EVANS: Okay. Is there any discussion on getting the report and what is to be provided to us? Because I think that Member.Kierkiewicz asked some really good questions about the different areas of revenue and funding, and you know, expenses in revenues received. Did we get more? MS. SAKO: Yeah, if you get the Monthly Budget Status Report. We were waiting to close one on the asset account groups. So, that just got published, and I believe came down to Council. I'm not sure when it will be agendized,but I'm guessing on the next Committee meeting. ACTING CHR. EVANS: So, we'll see more of a breakdown on what happened in Fiscal Year 2023. MS. SAKO: Yeah, you'll have the complete revenues expenditures and balance sheet. ACTING CHR. EVANS: Alright. Thank you. Seeing no further discussion, all in favor? Any opposed? Page 7 FC-25 December 19,2023 Vote on Comm. 623: The motion to close file on Comm. 623 was carried by (Filed) the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball,Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. ORDER OF The Acting Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 383-23: AUTHORIZES THE PAYMENT OF FUNDS OF A LATER FISCAL YEAR AND OF MORE THAN ONE FISCAL YEAR FOR A MULTI-YEAR AGREEMENT FOR AN INDEPENDENT AUDITOR(S) Authorizes the Chair of the County Council to enter into a five-year agreement with an independent auditor, to be determined by the Request for Proposal process, to provide an annual audit of accounts and other financial transactions of the County. Reference: Comm. 640 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Ms. Lee Loy moved to recommend adoption of Res. 383-23. Seconded by Ms. Galimba. ACTING CHR. EVANS: Any discussion? I know we have the Auditor in the audience. Member Inaba. MR. INABA: Sure, I'm just calling on Auditor Benner, if could provide any thoughts you have on this resolution before us? Thank you. (Note: At this time, Hawai`i County Auditor Tyler Benner came forward to address the members of the Committee.) MR. BENNER: Aloha, Council Members. Good to be with you today. My name is Tyler Benner. I'm with the Office of the County Auditor and here to speak with you on Resolution 393-23. I believe this request is fairly straightforward. I'll provide some brief information and background, and then I stand ready for any questions that you might have. So, as the County Auditor, I want to clarify that the responsibilities that are outlined in Sections 10-13 and 3-18(d)(1) of the Hawai`i County Charter for members of the public and our newer Council Members. Page 8 FC-25 December 19,2023 So, I'm just going to paraphrase here. Section 10-13, Post-audit mandates that the Hawai`i County Council is responsible for ensuring an independent audit of the County's financial transactions and accounts as well, as those of all County agencies and executive agencies. This audit must be conducted at least once a year. The audit is carried out by certified public accountants or affirmed with public accountants chosen by the Council. Importantly, these accountants must not have any personal interests whether direct or indirect in the Council's fiscal affairs or those of its agencies. This audit of the Annual Comprehensive Financial Report (ACFR) who's formally referred to as CAFR (Comprehensive Annual Financial Report), but that term has been retired. The audit has a dual purpose. It assesses both the financial accountability and the adequacy of our financial and accounting systems. If the State performs such an audit, the Council has the option of accepting as fulfilling the requirements in this section. Now, regarding the authority to carry out the activity. It's delegated to the County Auditor. This delegation if found in Hawai`i County Charter, Section 3-18(d)(1) which states that the County Auditor is responsible for conducting or arranging for the conduct of the annual financial audit of the County, as specified in Section 10-13 which we just discussed. This means that the County Auditor acts on behalf of the Council in ensuring that the annual financial audit is performed in accordance with law. So, a quick background. Over the last ten years, and N&K CPA (Certified Public Accountants) has performed the ACFR for the County under two contracts. Initially, they were awarded a four-year contract; subsequently, following a competitive bidding process, they were once again awarded a five-year contract. However, last year when the contract was again open for bidding, despite our diligent efforts and pursuing the competitive bidding process, we encountered a challenge despite a robust outreach program and extensions of the offering. We didn't receive any interest parties from audit firms. So, as a result, we engaged in a one-year direct negotiation with Plante &Moran, PLLC to conduct the audit for the period ending June 30th, 2023. This year we once again initiated a multi-year agreement, a procurement process, and this time we have successfully received competitive bids from interested audit firms. Currently, we're in the process of selecting a vendor. So, Resolution 383-23, which is presented today, serves as a prerequisite step in a contract execution process. So, we kindly requests the Council approve Resolution 383, which will enable us to proceed with seeking the necessary contract execution for the upcoming ACFR audits. And that is all I have for you. Page 9 FC-25 December 19,2023 MR. INABA: Thank you, Mr. Benner. Just to confirm, you said the one-year contract was for the fiscal year ending June 30th, 2023? MR. BENNER: Yes. MR. INABA: Okay, so is this resolution supposed to be covering fiscal year ending June 30th, 2024 through June 30th, 2028 then, if it's a five-year? MR. BENNER: Yes, Sir. MR. INABA: Okay, so, do we need a revision then? I believe it was submitted by Finance, but your name is on the B-52. So, I think we might just need to correct the dates in the `Be It Resolved" and in the last"Whereas,"if I'm reading things correctly? MR. BENNER: Yeah, I have Finance in my ears that say's we'll get a correction out to you. Thank you. MR. INABA: Okay, perfect. Thank you so much. Thank you for the information. Chair, I yield. ACTING CHR. EVANS: Thank you. Okay, Members are there any other discussion? Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Mr. Benner, thank you very much for getting this done. And then, Ms. Sako, thank you for getting the amendments to us before Council in the next two-three weeks. Mr. Benner, with all this rain, how's the roof on your building doing. MR. BENNER: We're dealing with an indoor waterfall. MR. KANEALI`I-KLEINFELDER: Okay, thank you for saying that. Because you know, I was looking at things like what we're spending money on, and financial transactions. It's good to make sure that we're taking care of the things that we have and the assets that we do have. So, thank you for saying that, appreciate that. Ms. Sako, thank you very much for your help. Chair, I yield. ACTING CHR. EVANS: Thank you. No further discussion, I assume we will get an amendment when it gets forwarded to Council to make that correction in the "Whereas." So, no further discussion, all in favor? Any opposed? Page 10 FC-25 December 19,2023 Vote on Res. 383-23: The motion to recommend adoption of Res. 383-23 was (Approved) carried by the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. Res. 384-23: AUTHORIZES THE MAYOR TO ENTER INTO AN AGREEMENT WITH THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Allows for the receipt of$13,000,000 of federally-derived funds to be applied towards the renovations to the Hilo Memorial Hospital, located at 34 Rainbow Drive, South Hilo. Reference: Comm. 641 Intr. by: Mr. Kaneali`i-Kleinfelder (B/R) Motion to Approve: Ms. Lee Loy moved to recommend adoption of Res. 384-23. Seconded by Ms. Kagiwada. ACTING CHR. EVANS: Any discussion. Yes, please come up. We have the Deputy from Office of Housing and Community Development. (Note: At this time, Office of Housing and Community Development Assistant Administrator Harry Yada came forward to address the members of the Committee.) MR. YADA: Good afternoon, Chair and Committee Members. Harry Yada, Assistant Administrator, Office of Housing for the County. I'm here on behalf of the resolution authorizing the Mayor to enter into agreement for Federal funding for the renovation of Hilo Memorial Hospital. Thanks to the efforts of Senator Schatz and Hirono, we were able to be granted this funding and we're prepared to get into the grant agreement and would like the resolution passed. Thank you. ACTING CHR. EVANS: Okay. Member Kimball. MS. KIMBALL: Thank you. Congratulations to OHCD (Office of Housing and Community Development) for, you know, getting this funding. I'm going to take this opportunity to get on record to say I don't support County funding going towards the Memorial Hospital and any renovations there. Page 11 FC-25 December 19,2023 I've mentioned this to Director Sako, and this is not the only building that is in pretty bad shape that we're putting money towards. And you know, I appreciate the nostalgia for old buildings, and I appreciate people have memories of them. But some of them are old and they just don't have good bones, and there been a time when money was spent on making structures that last, especially in the tropics. And they're full of asbestos and lead and other toxins. So, we got this money. I'm not going to vote against free money,but I am going to make a protest vote on this one because I don't support County money going toward the repair of the hospital. Fully support of the site. I know, I've talked to Council Member Kagiwada at length. She's probably sick of hearing it. But I know that there is plenty of space to build other things on this site, but I do not support County money and taxpayer money going towards renovations of the hospital. Thank you, I yield. ACTING CHR. EVANS: Okay, Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you. I appreciate that comment by Ms. Kimball. Thank you, I yield. ACTING CHR. EVANS: Okay. Member Kagiwada. MS. KAGIWADA: Thank you. I also appreciate the comment. I feel like, you know, we have the money now, we need to proceed. Understood that there are buildings thar probably should not be renovated in our County and should be instead, replaced completely. But this one—the cow's out of the barn, so to speak, and I think we need to go ahead. So, respectfully, understanding that the issue—I hope that we can support going ahead. I would just like to ask Mr. Yada, what is the plan for people who are already in the building and how will that be worked out during the construction? MR. YADA: Well, I can tell you that we have a consultant on board. We're actually preparing to submit for permits for the replacement of roof and removal of hazmat. You know, "haz"if material from the building. We expect to be in for a permit, hopefully,by the end of the year. At this point, we feel that$13 million will cover the roof replacement and removal of hazmat. It may cover more, but we don't know until we actually get the bids in. But the comments by the consultants are the bones of the building still looks good. So you know, they feel like if we do the renovation, it'll be usable. Page 12 FC-25 December 19,2023 MS. KAGIWADA: So, what's going to happen with the current tenant that's in the building when you do the renovations? Is that a phasing or how will that work? MR. YADA: In terms of the current tenants. When we get the contract that they're on board, we'll work out probably questions of the building so we can screen that all and do the renovations and work around them. MS. KAGIWADA: So, hopefully, they won't be fully displaced during the time of the renovation. MR. YADA: No, we don't anticipate it at this time. MS. KAGIWADA: Okay, that's all I needed. Thank you, I yield. ACTING CHR. EVANS: Member Inaba. MR. INABA: Yes,just want to make sure I understand this correctly. So, Hilo Memorial, who owns the property? MR. YADA: The property is owned by the State. It's under EOD (State of Hawaii Executive Order) to the County for community use. I can appreciate the comments by Chair Kimball. I guess having been DLNR (Department of Land and Natural Resources); responsible for this building prior to my earlier job. The County at one point tried to return the building, and basically, I told the County, fix the building and then we'll take it back,but not in its current condition. So, it's kind of like, we're not in good place to you know, do much, other than renovate it and hopefully—and it's an historic building, so restoring a historic building is a challenge onto itself. MR. INABA: So, the grant period is from July 1st of this year, out through June 30`h of 2028. What is the timeframe in which you folks anticipate to get this job completed. MR. YADA: You're talking about spending this money? MR. INABA: Yeah, the $13 million. MR. YADA: Submitted for permit by the end of year, hopefully, bidding it out sometime first quarter of next year. Then the actual work, probably little over a year, is our anticipation. MR. INABA: Okay. And you and the Office of Housing and Community Development went out to seek this specific monies for this specific project? Page 13 FC-25 December 19,2023 MR. YADA: Right. MR. INABA: Okay. Interesting. Okay, thank you, Mr. Yada. Just a clerical editorial note, if we could have at the next reading, all of the apostrophes in Hawaii in this resolution, corrected to `okinas please. Thank you. Chair, I yield. ACTING CHR. EVANS: Okay. Member Villegas. MS. VILLEGAS: Yeah, thanks for being here. I was actually born in this hospital. So, the fact that it's a historic building now, makes certain things comes to roost at this point. I share the concerns of Council Member Kimball, but also recognize kind of the pinch that you guys are put in. Once something is designated as a historical building, what can be done with it becomes very narrowed, and you can't ignore $13 million—and what you could build with$13 million, probably far surpass what it's going to cost to refurbish a building like this. I remember seeing in the news and celebrating the transition of this being a shelter for those that find themselves unhoused. It concerns me that, you know, there's asbestos and all those other things wrong with the building. It just brings up to me, how much money will we spend and how expensive it's gotten in order to provide what should be a more simple form of shelter. I see that frustration from our constituents, and their perception that government wastes money. And I also see it. All you have to do is watch any episodes on TV, and it's always heightened, how many contractors that get government contracts for stuff like this make heaps of money for what my husband might call `putting perfume on a pig'. No offense to this historic building, but with this amount of money, you could build a facility that's really grand. So, somehow though, we've once again gotten ourselves into a conundrum. So, it doesn't seem like there's a real out for this, but I felt like I would be remiss not to just point out the ironies here and the frustration that comes from community with how much money we do get and then how much money it costs. It just seems like certain groups or companies continue to make the lion's share of that money off of government projects like this, and what really gets to the people we intend to serve is pennies on the dollar. And that is a tragic part to the cycle that breaks my heart and frustrates me. But at this point, I don't have a solution. So, I just point out the frustration and want to express to our constituents that, you know, solutions are always wanted if they are available out there. Page 14 FC-25 December 19,2023 So, thank you for being here and for helping to navigate this process. And my hope is that this is a really damn amazing building. You know, I was born there, after all. Just kidding, ha, ha. I yield. ACTING CHR. EVANS: Member Lee Loy, followed by Kierkiewicz. MS. LEE LOY: Yeah, thank you. I apologize for interrupting my colleague. We were joking about Harry, was a previous land manager at DLNR; gave it to the County. So, you basically, gave yourself this problem. That's where we were at. I completely understand. I think we set into motion, a bunch of things. And you know, this property was identified by a number of people, to kind of do the work that's going to go into that along with, you know, we're looking for funding to repair it. I would love to have a conversation with you offline just about the ownership of State assets and how they fall into this disrepair, aka Banyan Drive. And you know, other people are left carrying the burdens and how, maybe some strategies that we have to either get them sooner so they're not so in such disrepair or work better partnerships so that we can maintain the assets. You know, we're not having to look for these chunks of money. In support of this resolution, and you know, the timeline is to me personally with the building permits getting people in. I think it matches right in line with the resolution and the timeframe for the spend-down of the money. So, I think we're doing everything we can to make sure we get the money, spend it down, and really enhance an asset that you know, can serve for programs that really, really need in Hilo. So, I yield. ACTING CHR. EVANS: Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. Mr. Yada, how much money has been invested so far in this particular project? MR. YADA: .The money we invested so far? I can't speak to what's been spent in the past, because the County's occupied this for a while, years. Our prep for this project, I think, the County has put in$1.2 million in terms of planning, design, architectural fees. We're also looking at the master planning, the 20 acres surrounding this property for more affordable housing development. So, that's been spent by the County so far. MS. KIERKIEWICZ: Do you think by the next Council meeting you could give us a full accounting of how much funding has been spent on the County, State and Federal side for this particular project? You know, because at what point, are we going to keep throwing money at this situation knowing that it's Page 15 FC-25 December 19,2023 way more expensive to preserve this building, when it might just be more cost effective, the more responsible thing to do, is to start from scratch within the acreage or somewhere else. I'm not going to say, no, to Federal money. But again, I think in this time period, we just need to make an assessment of, what are we going to continue to do to improve this? And then when are we just going to move elsewhere and start investing in a new building? MR. YADA: I mean, I'm not an expert on building construction costs. MS. KIERKIEWICZ: No, no, we just want to know. We just want an accounting of how much has been invested and we should be careful as a County what we are accepting from the State going forward. It's not always a blessing. Thank you, Mr. Yada, for being here. We look forward to more information. Thank you. ACTING CHR. EVANS: Okay, seeing no other red lights. Hilo, would you like to talk, Member Kaneali`i-Kleinfelder? MR. KANEALI`I-KLEINFELDER: Yes, please. Thank you, Chair. I just wanted to say mahalo to Mr. Yada for coming and making sure this grant was done. You did possibly create yourself a problem to be fixed, but you went after Federal funding and you got it, and you brought it home. And that's probably the most important takeaway for this today. So, appreciate your efforts, Sir. Thank you, I yield. ACTING CHR. EVANS: Okay. So, my question is, it's kind of hard for me because I don't have a history on the Hilo Memorial Hospital, but I take it that maybe it shouldn't be called a hospital any more, and that's confusing me. So, if it was a hospital and it had a lot of individual rooms, which would lend itself to potentially rental housing, and you're the Office of Housing and Community Development. So, what's the vision of the use of this building? MR. YADA: Well, currently, the building is being used by HOPE Services for a homeless program, and the other half of the building is projected for use for BISAC (Big Island Substance Abuse Council) for their programs. Because of the condition of the roof, it's difficult to use the areas, where at least BISAC's ability to renovate because until we fix the roof, which hopefully will get done with these funds, then they'll be able to then renovate inside without it getting wet, right? ACTING CHR. EVANS: So, we're actually housing people in the building? MR. YADA: Yeah. Page 16 FC-25 December 19,2023 ACTING CHR. EVANS: Do you know how many rooms are available for use? It must be a pretty good-sized building. MR. YADA: It is a good size,but the housing itself, there's permanent housing on the third floor only. Then the second floor would be described as being used for homeless. They have bunks, so people come and go on those, while the third floor is permanent. ACTING CHR. EVANS: Okay, thank you. I'm in strong support. I think $13 million considering how much it costs to build one building today, we're talking $60-$80-$100 million what ever it is to build new. Plus, years of process. Right you know,because of where it's located and the current zoning. You have the ability to do this type of housing, I assume. And you just said you have 20 acres, and this money came out of HUD (U.S. Department of Housing Urban Development), and now the HUD money comes based on the AMI (Area Median Income), the need? You were targeting for a certain audience. So, you got the money because you were targeting? MR. YADA: Well, this was funding that was basically obtained through our congressional delegation, right? So, it was channeled through HUD through their program ACTING CHR. EVANS: So that would be targeting for the homeless? MR. YADA: That was the existing use. ACTING CHR. EVANS: Existing use? Okay. So, I'm just thinking the congressional delegation may be trying to help us with affordable housing. So, yeah, especially if we're being challenged using that third floor and we've got to fix the roof. Let's do it. So, I'm in strong support. Thank you. Any other—I don't see anything else. With that we'll take the vote. All in favor? Vote on Res. 384-23: The motion to recommend adoption of Res. 384-23 was (Approved) carried by the following roll call vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz,Lee Loy, Villegas, and Acting Chair Evans—8. Noes: Committee Member Kimball— 1. Absent: None. Excused: None. Page 17 FC-25 December 19,2023 Point of Personal MS. LEE LOY: Chair, point of personal privilege, if we could take Bill 111, Privilege: which is the companion bill to this resolution next? ACTING CHR. EVANS: Yes. Okay, Mr. Clerk, please read in Bill 111. Change Order As directed by the Acting Chair and with no object from the Council Members, of Business: the following item was taken out of order: BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. Bill 111: AMENDS ORDINANCE NO. 23-50, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUNE 30, 2024 Appropriates revenues in Federal Grants—Community Project Funding-Hilo Memorial Hospital Renovation account ($13,000,000); and appropriates the same to the Community Project Funding-Hilo Memorial Hospital Renovation account to be applied towards the renovations to the Hilo Memorial Hospital, located at 34 Rainbow Drive, South Hilo." Reference: Comm. 641 Intr. by: Mr. Kaneali`i-Kleinfelder (B/R) Motion to Approve: Ms. Lee Loy moved to recommend passage of Bill 111 on first reading. Seconded by Ms. Galimba. ACTING CHR. EVANS: Any discussion? Seeing none,Mr. Clerk,roll call, please. Vote on Bill 111: The motion to recommend passage of Bill 111 on first (Approved) reading was carried by the following roll call vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz,Lee Loy, Villegas, and Acting Chair Evans—8. Noes: Committee Member Kimball— 1. Absent: None. Excused: None. Page 18 FC-25 December 19,2023 Bill 112: AMENDS ORDINANCE NO. 23-50, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAII FOR THE FISCAL YEAR ENDING JUNE 30, 2024 Increases revenues in Federal Grants—State Homeland Security Program Fiscal Year 2023 account ($80,000); and appropriates the same to the State Homeland Security Program Fiscal Year 2023 account for a total appropriation of$780,000. Funds would be used by the Civil Defense Agency to enhance community preparedness and resilience, support law enforcement evidence storage and warehousing, and increase law enforcement personnel, and Civil Defense emergency response vehicles. Reference: Comm. 642 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Ms. Lee Loy moved to recommend passage of Bill 112 on first reading. Seconded by Ms. Galimba. ACTING CHR. EVANS: Any discussion? MR. HENRICKS: Madame Chair, before deliberations proceed, you know, I believe there's an error in our agenda, and I would just ask a member of the Council to inquire with somebody from Accounting, that's it's not to increase law enforcement personnel but it's to increase vehicles for law enforcement personnel and Civil Defense emergency response. And if that is the case, we'll correct that assuming this moves forward; or even if it doesn't move forward, we'll correct that. But just ask somebody to request if that is the accurate usage of the funds. Thank you. ACTING CHR. EVANS: Okay, so Member Lee Loy. MS. LEE LOY: Yeah, Chair, if I could, or if Department of Finance is available, I guess I was reading the bill but then listening to the introduction. And it just wasn't in alignment. Is someone from Finance available? MS. SAKO: Sorry, I'm pulling it up now, and Talmage is also here. MS. LEE LOY: Thanks Talmage, thanks Deanna for being here. I'm looking at the B-52 in the back, and its Civil Defense Agency regarding Enhancing Community Preparedness and Resiliency; Law Enforcement Evidence Storage and Warehousing; Law Enforcement Personnel Response Vehicle and Civil Defense Emergency Response Vehicles. (Note: At this time, Civil Defense Administrator Talmage Magno came forward to address the members of the Committee.) Page 19 FC-25 December 19,2023 MR. MAGNO: Good afternoon, Council. I guess the clarification is, it's not for personnel, it's for personnel carriers for the Police Department. MS. LEE LOY: Got it. Thank you for that. MS. SAKO: Yeah, I think just our cover letter is missing the word, "vehicle." Sony about that. MS. LEE LOY: Thank you so much. Chair, I yield. ACTING CHR. EVANS: Okay,Members, any other discussion? Seeing none, all in favor? Vote on Bill 112: The motion to recommend passage of Bill 112 on first (Approved) reading was carried by the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. MR. HENRICKS: Thank you for that, Madame Chair. Just note, that that is an error on the agenda, and that will be corrected prior to this moving forward to Council. ACTING CHR. EVANS: Thank you. Bill 104, please. Return to Order The Chair directed the Committee to return to the order of business. of Business: Bill 104: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19-2; CHAPTER 19, (Draft 2) 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. Page 20 FC-25 December 19, 2023 Reference: Comm. 600.10 Intr. by: Ms. Kagiwada and Ms. Galimba Postponed: December 5, 2023 (Note: There is a motion by Ms. Kagiwada, seconded by Ms. Galimba to recommend passage of Bill 104 on first reading.) (Note: Comm. 600.11 dated December 13, 2023, from Council Member Jennifer Kagiwada transmitting proposed amendments to Bill 104, Draft 2; Comm. 600.12 dated December 15, 2023, from Council Member Jennifer Kagiwada transmitting a Power Point presentation for Bill 104, Draft 2; Comm. 600.13 dated December 14, 2023, from Heather Kimball transmitting a link to The Hawaii Housing Factbook; and Comm. 600.14 dated December 18, 2023, from Council Member Jennifer Kagiwada transmitting a Q&A regarding Bill 104, Draft 2, were circulated.) ACTING CHR. EVANS: Member Kagiwada. MS. KAGIWADA: Thank you. Thank you everybody who testified and sent in testimony as well. Appreciative of working with the public on this bill. I did have the opportunity to meet with the Big Island Realtors Association yesterday on Zoom. And so, that was productive. I do think there's a lot of, you know, discussion points that we can have to hopefully improve this bill. But of course, we couldn't have any of this discussion until we brought to Council. So, very happy to you know, keep working on this with the whole Council and try to make improvements and get somewhere that we're all happy with. Specifically, I just want to bring up a couple points. The six-month issue versus the ten-month issue. Council Member Galimba and I spoke about this. I think we're willing to hear from folks on how you feel. I understand that since the Short-term Vacation Rentals, you know, are I think six months and under or under six months, it makes some sense for sure to say Long-term rentals are, you know, taken up at the same point and continue on. On the other hand, the bill that was passed in Maui was 12 months. So, you know, we had kind of talked about, playing with it a little with the 10 months. It seems like the 10 months is a little confusing for people. So, definitely willing to talk about that. People brought up the issues of where we're going to get the money, and I think Council Members also brought that up last time we discussed this. And we have some examples that RPT (Real Property Tax) will share with us today. Obviously, can't promise what's going to happen,but with what some of our thinking was on how we might balance things there. Page 21 FC-25 December 19,2023 I'm really happy for the people in the community that we haven't had the chance to meet with. So, I'd love to continue meeting. I do want to bring everybody's attention to Pinkie that was just brought while we were at lunch. It is an Q&A (Question and Answer) based on the specific questions that we've got so far and our attempts to get those answers out to the public. So, it's a two-pager Q&A, starting with, "What is the intent of Bill 104-23?" Nine questions and answers. And of course, as we continue, we're happy to add to this. At this point, I think I'll see if my colleague wants to add anything, and then we can maybe bring RPT up to share some additional information, if that's okay with the Chair. ACTING CHR. EVANS: Yes, it is. Member Galimba. MS. GALHvIBA: Thank you. It was also great to hear feedback from the public. I think one thing that I was hearing was wanting to have properties that have different uses have different tax rates, which makes some sense. But it also, I think, would be just pretty horrific for the Real Property Tax Office. So, I think, not wanting to blame them or anything,but that would be a very difficult tax to separate out a property into two different tax classes and figure out the square footage and all of that. So, although you know, we hear that, I think we also have to be very careful as far as trying to do that in our bill. But we did do hear it, and we're probably will be thinking about ways that we can perhaps address those issues short of trying to something overly complicated. And with that, I think I'll just ask Real Property to come up. Thank you again for your wonderful presentation. (Note: At this time, Real Property Tax Administrator Lisa Miura came forward to address the members of the Committee.) MS. MNRA: Good afternoon, Lisa Miura, Real Property Tax Administrator. Keita Jo is the Assistant Administrator. He's actually doing the presentation. He couldn't make It to Kona today. So, I'm just changing the slides. So, I'm his Administrative Assistant today. The only other person that was going to be here with us was our Deputy Corporation Counsel, Keyra Wong,because she did want to add something to it, but she had a 2:00 p.m. meeting. We didn't know it was going to go on so long, earlier. And if it's okay, I'll just give the one item she wanted to bring to our attention. On Page 2, (m)(1), I think when, and I missed this as well, but when the wording was changed to remove the physicians and nurses, the word"cumulative" was left in, and she just wanted to clarify with the makers of the bill if they wanted to change that to "consecutive" or leave it as "cumulative." Page 22 FC-25 December 19,2023 The only other thing I wanted to clarify from the discussion earlier, is the affordable rental, if you look at the County Code now, it actually says it's a one-year term. But we were allowing for six-month contracts as long as it was going month to month and filed every year. So, those are things that do need to be clarified in the rules and regulations. And I think for us, we understood what the testifier said that they'd rather have no ambiguity, so that it's not leaving Real Property to make certain discretionary thoughts on what Council was thinking. We 100 percent agree with that. We don't like to come back ten years later and read this as what the intent of anything was. So, I'm going to turn it over to Keita now. (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 Administrator for Real Property Tax . We have some slides to address some of the questions that were brought up last go-around. (Note: At this time, Mr. Jo provided a PowerPoint presentation to the members of the Committee. For viewing of the presentation, see the DVD copy of the proceedings on file in the Clerk's Office, or online at http://hawaiicounty.granicus.com. Copies of the presentations are made part of the record, see Comm. 600.12.) So, hopefully, these examples address some of the questions that came up during the last hearing. Lisa and I are more than happy to answer any questions you might have. MS. KAGIWADA: Okay. So, yeah, we tried to answer some of the questions. I know this is a ton of information. First of all we also have an amendment here, which is based on some of the discussion we had before. It's taking out the exceptions. So, taking out the multiple tenants. If they're students, traveling physicians and nurses. Point of Order: ACTING CHR. EVANS: Point of Order. Would you like to offer up a motion? Then we'll have discussion. Motion to Amend: Ms. Kagiwada moved to amend Bill 104, Draft 2, with the contents of Comm. 600.11. Seconded by Ms. Galimba. ACTING CHR. EVANS: Discussion. MS. KAGIWADA: So, it's taking out those exceptions people pointed out. And I think we agreed that if the intent is to rent to residents, then having exceptions for traveling physicians and nurses are unnecessary and maybe just complicates it. So, we're sticking with our mantra to try to keep things simple. Page 23 FC-25 December 19, 2023 The other change was just raising the amount slightly from 125 percent to 130 percent. And that brings us to the $8 that we're showing in the slides. And that was again, based on feedback we heard last time. So, yeah, that's the amendment. ACTING CHR. EVANS: Okay. Members, any questions, or discussion? Mr. Inaba. MR. INABA: Thank you for bringing this 135 percent. I'm just concerned, for Real Property Tax, are there any other tax classes that are set based on another besides the Affordable Rental and Homeowner? I know those have to be the same, right now, but is there anything else that has a provision like this? MS. MIURA: I can't think of anything that's set on a percentage of another one, other than looking at our Ag preferential values but not tax rates. There are other categories that go together like commercial-industrial, different tax classes, but we usually keep—Council has usually kept the tax rates together. MR. INABA: Okay, thank you. I have to think about this. I like the intention because it keeps us somewhere, but then it also locks us in somewhere in the future where we don't have that except for the Homeowner and Affordable Rental right now. I'll circle back. Thank you. Chair, I yield. ACTING CHR. EVANS: Okay. Member Villegas followed by Member Lee Loy. MS. VILLEGAS: Sure. Thank you. Wow, first off, thank you to Real Property Tax for running through all these different scenarios to try and highlight the potential of different effects, should this legislation go into effect. And I'll humbly admit, one of my comments relates sort of to the amendment. I mean the overall vision and purpose of the legislation including the amendment from what I can tell is to get those homes that—let's just say a generalization might be second homes that people are not living in. And for them to start using them for long-term rentals. Would that be a fair estimation? Okay, so then my concern comes as that based on this presentation, it appears that those are usually not, this isn't going to be their first homes. So, they're not getting taxed at the residential tax rate which is higher. And then it actually provides them an opportunity to join into a long-term rental tax class, which in the long run, then increases the tax rates for everybody else. So, while we're getting homes into the inventory, we're accidentally raising the taxes on these other classes. Page 24 FC-25 December 19,2023 Point of Order: ACTING CHR. EVANS: I've got to do a Point of Order. The Point of Order right now is just the content of the amendment right now. MS. VILLEGAS: Okay, got yah. I'll come back to that. ACTING CHR. EVANS: Yeah, it's very short of what the amendment is. We'll keep on that and then we can go back and call on you and come back to this. MS. VILLEGAS: Thank you. I yield. ACTING CHR. EVANS: So, Member Lee Loy, on the amendment. MS. LEE LOY: Thank you. On the amendment, we're on 600.11, correct? Yes, I share the same concern in that Section (g) at the 130 percent. I like tying it but then we lock ourselves in. So, it's kind of same but different, right? And if I'm looking at this, love the cleanup. Keeping everything consistent, I think, helps. As Lisa (Miura) mentioned, she doesn't want ambiguity or have to guess at it. So, keeping nice and tight. So, for me, support the cleanup. I still can't figure out if I like to don't like the percentage. Then I have some other comments on the bill as a whole once we get back there. Thank you, I yield. ACTING CHR. EVANS: Okay, Member Kagiwada. MS. KAGIWADA: Thank you. The reason we did the tie-in was we were trying to keep it between the, you know, higher than the affordable rental but still lower than the residential. So that it would maintain that kind of in-between quality at all times. If there are other good ideas on how we do that or think about that, totally willing to look at that. And I think my colleague is too. But that was the intent of why we did that. We were trying to keep that separation. The intent was that our intent would be to make sure that the long-term rentals and the affordable rentals maintain some distance between them. Thank you, Chair. ACTING CHR. EVANS: Okay, yes, Member Galimba. MS. GALIMBA: This maybe just repeating and stating the obvious. But the reason we wanted to keep that distance is that in that separation we're trying to delicately balance giving some incentive to folks to contribute to the rental market but also not impinge on the Affordable Rental Class because we fully support that and wanted to keep as much incentive around that, which would be again, the lower—the 615 percent or lower rate and the three percent cap. We want to make sure there are good incentives for staying in the Affordable Rental Class. Thanks. Page 25 FC-25 December 19,2023 ACTING CHR. EVANS: Okay, to Hilo, Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you. Just thinking about what Ms. Miura said at the beginning regarding consecutive versus cumulative in the definition within the amendment for long-term rental. Ms. Miura, if could you speak to that again. I was trying to catch what you were saying and what the intention or thought was. MS. MIURA: Sure. I apologize because I didn't have the current one, so I should not have spoken about that outside of the amendment, period. But Keyra Wong, Deputy Corporation Counsel, she's our Real Property Tax Attorney. The other thing she wanted me to bring up to the makers of the bill was if they wanted to change that wording in the first sentence from"cumulative" to "consecutive" since she was also aware of the amendment that was to remove the ten months for the traveling physicians, nurses, or students. So, if that was gone, she just wanted them to see if they still wanted that word to say, "cumulative" or not. MR. KANEALI`I-KLEINFELDER: Okay,back to the makers then for that. I mean intentionality would be consecutive for ten consecutive months makes sense, but just in listening to the department. Thoughts on that from Ms. Kagiwada or Ms. Galimba. ACTING CHR. EVANS: Do you have any comments on the amendment Comm. 600.11, or any more discussion? Okay,Member Galimba. MS. GALIMBA: I'm a little bit unclear now, too as well. But I think we were talking about the first consecutive—so, long-term rental means property occupied and under assigned lease for ten consecutive months. That's whether we want it consecutive or cumulative, right, that's what we're talking about that the Corporation Counsel brought to our attention. Is that correct? MR. HENRICKS: Madame Chair,just listening and I heard Ms. Miura at the beginning. I believe the word that Deputy Wong, the word "cumulative"that she's looking at is under (m) Breach of long-term rental class. Item(1) Failure of property owner to maintain a lease for at least ten cumulative months to the same tenant. I believe what her point was, was that with this amendment, it's only possible for ten consecutive months. There's no more accumulation based upon the other proviso. Therefore, that word"cumulative" should either be removed or changed to "consecutive." I think that was just a housekeeping matter that Deputy Wong had highlighted. And that's under(m), under either part of Communication 600.11. Either the front part or the copy. MR. KANEALI`I-KLEINFELDER: Thank you, Mr. Clerk. Page 26 FC-25 December 19,2023 MS. GALIMBA: Thanks. MR. KANEALI`I-KLEINFELDER: Yeah, I think it's a good point brought up by Corporation Counsel, and just keeping the words consecutively and cumulatively with each other. I like the intention of the amendment. I feel similarly to the other Members of the Council. Thank you, I yield. ACTING CHR. EVANS: Thank you. Member Kimball followed by Member Lee Loy. MS. KIMBALL: Thank you, Chair. Going to support the amendment. Like the cleanup of the language and look forward to further some discussion on the bill itself. I did decide I don't want to weigh in on the rate as a percentage, as I kind of got to thinking about it to play devil's advocate here. Administrator Miura, there is no link in the Code to my knowledge between the Residential Class Rate and the Affordable Rate? MS. MIURA: No, there's no link between the Residential Tax Rate and the Homeowner or the Affordable Rental. MS. KIMBALL: Right. So, we choose to incentivize the Affordable,by keeping that rate lower when we set the rates at a given time. MS. MIURA: Correct. The way the Code's written, although it doesn't say it has to match the homeowner. The reason it is, is because the way the Affordable Rental and the Homeowners is written is so that, if you're doing Affordable Rental and Homeowner, you can get the Homeowner Tax Class, which is a three percent. So, essentially, they are tied together. MS. KIMBALL: The Homeowners and the Affordable. But not necessarily, the Residential. There's no tie really between the Residential and the Affordable. What I'm trying to get at is these are the levers we pull, right, and the understanding is that our objective is to make long-term rentals more desirable. So, I'm thinking just in the long-term with the potential flexibility and rental rates, you'd want to have a looser tie. With the understanding that the intention is there,but maybe having that strict 130 percent or whatever the percentage is too rigid to allow for tweaking. Like even with these presentations, which thank you Keita, always excellent. You're my friend, love you. We're almost there, but I mean, I want to say about 135.75 percent, you know, but we're close. Like for me, what I want to see is that balance that comes where the money that you can accumulate from the long-term rent versus the savings that you get from renting in the affordable still makes the affordable more desirable but better than being in the Residential Class and not renting at all, right? That's that sweet spot we want to hit. I think if we restrict Page 27 FC-25 December 19,2023 ourselves to a strict percentage overtime, we won't get there. So, thank you. I yield, Chair. ACTING CHR. EVANS: Okay, Member Lee Loy, followed by Member Galimba. MS. LEE LOY: Thank you, Chair. That's exactly where I was going. I was thinking about, how many times we've had to raise taxes, and it's just nickels. We just dial in numbers to the nickel, and Deanna sat there and calculated in the back to see if we'd landed on a balanced budget, enough to cover operating expenses. So, to that point, right, that tying with this percentage—I was like at 150. That's where I was at, right? Only because what I did was take Affordable Rental with the Residential; add, divide by two and found the difference there, right? But I always look up at Lisa and Keita, and they just want the bright line of understanding on how to calculate so that if people are asking "why," they can give them the answer, why. So, to that point, having thought about it a little bit more, we've got to work on that percentage number and come up with a real strong understanding on why. That way it can be communicated out to whomever wants to jump in or, you know, they're weighing their options. Because my concern is this is going to turn into a tax shelter for certain individuals who don't want to pay the high Residential Class, right? They're going to say, oh, we'll just rent it for six months and one day, and now it's a tax shelter for them. That's where I was kind of looking at this number. That's my thoughts. I don't know where we go from here only because I get the sense, we're still going to be doing more tweaking. And there might be—maybe this gets withdrawn and another one comes forward that meets where we're all at. But those are my thoughts. Thank you, I yield. ACTING CHR. EVANS: Member Galimba. MS. GALIMBA: Well, I may be speaking out of turn,but maybe not. I don't think we're tied to the 130 percent. It was just our kind of way of cleaning some idea out there where we wanted to go, and I think, you know, we didn't want to be just like, you know, a number. So, Council Member Kagiwada is nodding. So, I think, you know, we're open to perhaps just—we know that there's going to be a point here that we're going to be setting those numbers, nickel by nickel. I guess we could put language in there, such that the Council at that time can weigh all of the information at that time. We just wanted to communicate the spirit of what we wanted to do with the number and where we wanted to be. And I see Lisa wants to speak. Page 28 FC-25 December 19, 2023 MS. MIURA: I just wanted to remind the makers when there was some discussion, it wasn't necessarily for you to—I think your thought wasn't to keep it between Affordable Rental, Homeowner, and Residential. You were also looking at the Agricultural Tax Class. And so, I just wanted to bring that up, because there's a big difference between the tax rate from the Agricultural Tax Class to the Residential. And I hear, you know, you guys going two different directions,but I believe that's where you were looking at when you came up with the percentage. Not saying it's right or wrong, or which way to go. Just to bring it back to the Ag Tax Rate, which is $9.35. ACTING CHR. EVANS: Members, if no other, I have a question. Question, the affordable rate is not tied or is it tied to a timeframe? Because we're talking about long-term being tied to ten months, maybe six months, maybe nine months. But is the Affordable Rental that we currently have, is it tied to a timeframe? MS. MIURA: Yes, the Affordable Rental is actually one year by Code, but we take six-month contracts that are current that can go to month-to-month. Because that's the majority of the contracts that are executed. But the Code says one year. It's for the calendar year that the benefit is given. Has there been any comments of increasing this Affordable Rate? I mean my take on it is we're looking at long-term rentals, okay, we already have an Affordable Rental Class. If we make the Affordable Rental Class tied to long-term and give it higher bump, will we get more people interesting in doing it? Instead of creating this whole new tax class. Because we already have one. I mean, we have the Affordable which we're trying to get people to put their homes or rental properties into affordable. Could we just beef up and do something with what we currently have and to see if it works and attracts more people. Because I've often thought the intent of this, which is a great intent, is try to encourage more people to put their properties into rental and that could be true, and that could be people live on our island that have a second home in the back or have an investment property here. Or are we targeting, you know, people that only come here one or two months out of the year, and then it sits there and we're giving them an opportunity. If we are then maybe we should go the six or nine months, so they get their three-month hangout in paradise for three months out of the year. But the rest of the time,put it in long-term rental. But would you consider that second home—see then it's a second home rate versus a long-term rental rate. I'm thinking out loud here. Would they quality? The ones that are stale birds that come here three months out of the year and have their, what we consider a second home investment property. But now they can throw in the ten months, maybe they're thinking nine months. Then could they just come out of that and go into this? Page 29 FC-25 December 19,2023 MS. MIURA: The way we take the bill currently at Real Property Tax is as long as they bring in a contract with ten months, the way the bill's written right now, yes. But I could be wrong. I mean, I'm going to look to the makers of it and their intent, because we would need rules to clarify that. But I believe they would qualify. ACTING CHR. EVANS: Okay. I think, let me get back to the original bill instead of the amendment. Yes, I'd like to. Okay, thank you. Any more discussion on the amendment? To the makers? Okay, we'll take a vote. Member Galimba. MS. GALIMBA: From what I'm hearing, it seems that a number of Council Members would prefer there not be a set number of the 130 percent. So, would we like to come back with an amendment? MS. KAGIWADA: If I may? I would propose if people are okay with passing this amendment in order to clean up the other language and continue discussion on how to figure out the amount, I'd prefer that if we can. Just to get this cleaned up part done. I see some nodding. I yield. ACTING CHR. EVANS: Member Inaba followed by Member Lee Loy. MR. INABA: I'm just thinking if we have further cleanups to make, like the "cumulative" to the "consecutive," we could just do it at one time. But I'll vote "yes" on this amendment if we're going to vote. ACTING CHR. EVANS: Member Lee Loy followed by Member Kimball. MS. LEE LOY: Yeah, bright line of understanding. I'm going to vote "yes" on this because I get it. I get when sometimes you've got to get it to set so that you can start lining out other things. So, I'm going to be supporting this amendment. I yield. ACTING CHR. EVANS: Okay, Member Kimball. MS. KIMBALL: Yeah, same. My preference is actually always to rather than do in one sweep amendment, do it in iterations just because if you get multiple things happening in one amendment, then you can have situations like this where in fact, I would have pulled these two things apart just to keep it cleaner. So, I will support this with the anticipation that there'll be further amendments to come on the percentage. Thank you. ACTING CHR. EVANS: Okay. Member Lee Loy, you still have your light on. MS. LEE LOY: Yeah, Chair,just as a suggestion. If it's a cleanup, keep all the cleanup amendments on one, so-on and so-forth. That way, you know, we did it Page 30 FC-25 December 19,2023 with the permit bill. There was a bunch of edits the people wanted to see, and we kept alike things like together. That way people could focus and vote on the point of each amendment. Thank you for allowing me to share a recommendation. ACTING CHR. EVANS: Okay, thank you. Following the recommendation of the makers, we'll take a vote. All those in favor? Any opposed? Vote on Motion The motion to amend Bill 104, Draft 2, with the contents to Amend: of Comm. 600.11 was carried by the following voice vote: (Approved) Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EVANS: We're back to the main motion? MS. VILLEGAS: Thanks for your patience with me getting off track on the amendment. But coming back to my prior question. What I think I am, and perhaps Ms. Miura you can help answer this,but what I think I see happening here is, with this great intention of getting people's empty second homes into the rental market and providing the carrot with which their tax class to change to a long-term rental. What I'm seeing then in the spreadsheets here that's provided, where that money would potentially be made up for is other tax classes having to pay for it. So that becomes for me, and I'm just going to speak off the cuff unless it went to an increase in tax rate for second homes worth over$2 million, I think it would be a really hard sell then add to residents or Ag or anyone else. Okay, so thank you. I hope there's an answer to this because I figured there would be, so I apologize for pointing out an issue if you've already negotiated it. ACTING CHR. EVANS: Okay, Members we have a question, and Member Kagiwada, I'll pass it to you. MS. KAGIWADA: Thank you so much. So yes, if you look at the Residential Class, who's left in there? It's not homeowners, because they're doing Homeowners. And it's not Affordable Rentals. They're doing Affordable Rentals. And if we do this it wouldn't be a long-term rental. So, it's who's left in Residential that are not those people. So, they're not homeowners, affordable rentals, or long-term rentals. So, who's left in there are second homes or vacant homes. That's who's left in those categories. So, it's called Residential,but people are already kind of fickled out if that makes sense. Page 31 FC-25 December 19,2023 Then to give a second scenario, including the Apartment Class. You know, one of the ways I originally looked at this and thought about this, was I thought it wasn't fair that people in Apartment that were renting to long-term residents were in the same tax class, which is pretty high, as people who had time shares and doing condos for vacationers. So, those people would also be pulled off into the long-term rental, and what's left in there is people that are renting to vacationers or have vacant homes or it's their second homes. So, that's kind of where we're headed with this if that makes sense? MS. VILLEGAS: Thank you, Council Member Kagiwada. That does make sense and that helps clarify for my mind, which if anybody else out there in the land of people watching, things on my mind was I was kind of stuck on that and where that then put things. So, it does make sense and it does balance. And the tax burden doesn't get transitioned to the people that we don't want to risk losing their homes by increasing their property taxes. Alright, thank you, with that I yield. ACTING CHR. EVANS: Okay,Mr. Inaba followed by Member Galimba. MR. INABA: Thank you, RPT for this updated slide. I think of it from my perspective serving and looking at the rents in my community. This has more potential to hurt people in my community than it does to help. Because if I was a property owner right now using the example here in West Hawai`i for a four bedroom, two-and-a-half bath, if it was an affordable rental, I would be taking in about$30,000 a year in rent. But I'm at market, you can call it$60,000 a year, so it's essentially double. But this class allows a property owner to continue renting at$60,000. So, if I was a property owner in an Affordable Rental program right now, I'd surely be jumping over to this new thing,because I'm going to be making $30,000 more a year on rent, and I'm going to be saving on my property tax. So, who does that benefit? It benefits the landowner, not perhaps the person who is currently locked in renting at that affordable rate. Understanding there's the opposite, right, for those who could be jumping in who are not renting at all, which is what we talked about. But I just see it here in West Hawai`i where we don't have the housing units. And any sensible person would jump over to collect$30,000 more a year in rent, and that's what this would allow. And for that I can't support this. I think we can do a better job in maybe shifting rates next time. So, even if there's concern about the overall budget and what we're needing to cover, operating and special circumstances, we can make those adjustments. But this Page 32 FC-25 December 19,2023 just—I'm afraid this is going to have negative consequences, especially here in West Hawai`i. So, I can't support the bill as it stands. Thank you. ACTING CHR. EVANS: Member Galimba followed by Member Lee Loy. MS. GALIMBA: Thanks, Council Member Inaba, and we totally understand your concern. It is something that we both are well aware of. It's sort of talked about and worried about as well. But I think we also do just want to create that incentive for folks. And I think we did actually did have a discussion with our RPT about who is in the Affordable Rental Class. There were the numbers of folks in it, and it was illuminating for us because we didn't realize—we just assumed that like Section 8 and Affordable was the same. But actually, Section 8 Housing, the amount of money that they get paid actually can take them out of Affordable Rental. So that fact created a smaller pool of Affordable Rental Housing that potentially could be adversely impacted by this. And that was a pretty small number. I believe it was about 1,200 or so, is that correct? MS. MIURA: Keita, do you recall that number? I know you ran it. MR. JO: I think it was about 200-300 of the properties participated in the Affordable Rental Program were Section 8 properties. And that's of the 1,500 properties. MS. GALIMBA: Right. That leaves about 1,200? MR. JO: Yeah. MS. GALIMBA: That is, you know, still 1,200 properties. But it's not a huge number. So, I still think that there is some potential there to get folks into this class. So, a positive effect. But we understand that there is a risk there. Thanks. ACTING CHR. EVANS: Okay, Member Lee Loy. MS. LEE LOY: Thank you, Chair,but I noticed Mr. Kaneali`i-Kleinfelder had his light on,but I wasn't sure. ACTING CHR. EVANS: So, Mr. Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you. Okay,back to the main bill, yes? This is optional, correct? It's not a requirement. MR. JO: Correct. Page 33 FC-25 December 19,2023 MR. KANEALII-KLEINFELDER: So no one's stuck with having to do this program or not, they'd have to opt in. MR. JO: Correct. MR. KANEALI`I-KLEINFELDER: So, if they choose to switch their class, they can. If they don't want to they can stay Residential, Apartment, Commercial, whatever they like, yeah? I appreciate the presentation,because I wanted to see what would happen to the folks who have two dwellings. That was brought up by some of our testimony this morning. You know, what happens if you have an ohana house and you decide to rent out the ohana, then you drop into the long-term rental classification. Your tax base increases, correct? Okay, I don't think that's going to make anyone jump over to that in my opinion. And the examples that you've given with the East Hawai`i, that's where my folks are from. Looking at about a$1,500 savings over a year by switching from Affordable Rental to Long-term Rental. I mean if someone is doing a Short-term Vacation Rental and they're going to save$1,500 a year by switching to Long- term Rental, does that work? It doesn't work, does it? MR. JO: I think you're wondering whether going from$5,500 in annual taxes as a Residential classification to Long-term Rental classification, which would save you $1,500 is enough of a carrot for someone to no longer do Short-term Vacation Rental. MR. KANEALI`I-KLEINFELDER: Yeah. MR. JO: I do not know the answer to that. MR. KANEALII-KLEINFELDER: No, I'm just going to say, if I was doing a Short-term Vacation Rental? I don't have one, but if I was, $1,500 a month probably is not going to be enough of a carrot. Because those houses are renting from$100 to $200 a day. They can make that in a week and not switch. I mean I love the intent of the bill,but if we're going to incentivize it, I don't know if this is going to incentivize it to make people roll over from what they are right now to jumping into this class. I really thought Ms. Evans' comment about existing classes and trying to wrap in some of the length of time we're requiring for a Long-term Rental be considered in the Affordable Rental Class would be beneficial because then we're not rewriting the book. You know, we're actually just using something that's existing to create the ability for people to see enough of a carrot to jump over and incentivize how we want to. That was a really excellent comment, I thought. Page 34 FC-25 December 19,2023 Recess: At 3:19 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 3:21 p.m. ACTING CHR. EVANS: Okay, we're reconvening the Finance Committee continuing our discussion. We are on Bill 104. Questions or comments? Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Okay, any way I'm not sure where I cut off. I'm going to try and summarize. You know, I like the intent of the bill. I'm not sure that this bill actually incentivizes folks enough, given the information I've been presented, to switch over from any class to the Long-term Rental Class. The last to the last page of the presentation by Mr. Jo, really points to some possible potentials, if the Council decided to increase rates. Correct me if I'm wrong,Mr. Jo, but these aren't requirements that if we pass this bill, we'd have to increase rates? This is to maintain where we stand right now? MR. JO: This would be to make up the loss in revenue. MR. KANEALI`I-KLEINFELDER: Okay. So, if we did pass this bill we are viewing today, that these could be potentials in making up the lost income. So, not a requirement. And I'm just saying that because some of the comments I've heard so far. But not a requirement but an option for us to look at as we assess where we stand as a County and the implications of the bill, and I just appreciate the information. Yeah, that's kind of where I stand so far. And again, I'm not sure where I cut off and if you caught any of what I said earlier to the rest of the body. But that is where I stand at this time. Thank you. ACTING CHR. EVANS: Thank you. Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. I just want to thank my colleagues for putting forward an idea for a robust discussion. I think affordable housing, giving families a chance to stay and buy a home, is something that is a priority for all of us. I'm concerned about Real Property Tax's ability to implement this new program. This is not to say that I don't believe in your leadership,Lisa and Keita, but this just seems like a really tall order. I worry about the potential unintended consequences of implementing a program like this, and I would be more of the mindset of, let's look at the existing programs that we have. Page 35 FC-25 December 19,2023 Are there refinements within Section 8, within the Affordable Housing Program that we can look at to further incentivize people in using whatever spare housing assets they have and putting those on the market for rental. I also take a look at the fund balance that we just got a report on, and clearly, we have a little bit of room to provide relief to folks in the Homeowner and potentially, Affordable Housing Class. And so, I wonder if we might take a pause on this legislation. Perhaps a motion for it moved to the Call of the Chair, and we can revisit this after Budget. I don't want to say "no" to this right now, because I think it's a lever that we might to pull. I just don't think it's the lever to pull right now. So, that's where I stand, and I want to again thank you for your willingness to put an idea forward, but I just worry about the implications implementing this right now. Thank you. ACTING CHR. EVANS: Member Lee Loy, followed by Member Kimball. MS. LEE LOY: Yeah, thank you. That's where I'm landing. I think there's this inequity between West Hawai`i and East Hawaii. And so, when we're looking at rents, trying to incentivize that piece, it might look good on one side of the island, and it doesn't look good on the other. Instead what happens is, million-dollar property owners would jump into these categories, right, to get the lower tax rate. And that's really going to upset the budget when it comes to kind of that incentivize with carrots,but what are the real sticks and those big ripples of impact? That's where I'm at on this. I laughed out loud when my colleague talked about that fund balance. It's the biggest. I know, because rates went up, and everything. Just from my time on the Council and when we started at a$385 million-dollar budget. And I'm going to guess that we're going to be at billion by the time I exit. So, I think when we talk about the nickels, there's probably places where we can go down where everybody can feel the relief, and we can be very strategical at who we truly want to help. Then, you know, under our Housing Code, we've done some work to incentivize rental pieces. We'd done that earlier. There are some things that I think will have to play out over a time. And why I'm really not ready to do this work right yet. And on top of which my largest concern is we started a pilot program with two-tier million-dollar properties that we are seeing great opportunity to address housing and construction of housing with those monies. My concern is if we put in what looks like a carrot, that some of those people will jump over; lease the properties to themselves to fall into this category. I'm not saying that they would,but who knows, there are supersmart CPA's (Certified Page 36 FC-25 December 19,2023 Public Accountant) who could suggest, create a rental agreement for yourself or your kid,right? Then what monies we're using from that two-tier Class million-dollar properties we actually end up losing. So, we end up deflating a really good program with that housing monies that are going. And those are the real big unintended consequences that I can't get my arms around right no. So, thank you. Thanks for the opportunity. I yield. ACTING CHR. EVANS: Okay. Member Kimball. MS. KIMBALL: Thank you. I'll join in thanking my colleagues for putting this forth. I'm feeling that this is a lever I'm going to want to have at my disposal. But to channel our former colleague, not ready for primetime. I think that, you know, part of what I hear you trying to address is that missing middle. So, we've got programs to support. What is the Affordable, up to 80 percent AMI (Area Median Income)? I think that's right. MR. JO: It's 75 percent of the HUD (Housing and Urban Development) standards. MS. KIMBALL: So, 75 for HUD standards for AMI for Affordable. And then, you know, there's this other range from there to maybe like 140, 180, depending. But it's kind of that missing middle that doesn't have any sort of support. Then you get above that, and that's people that have plenty of money to do whatever the heck they want. But you know, they are comfortable. So, I think I'd like to see potentially, guardrails around this Long-term. That would be, okay, it's the second bend, it's that missing middle from 75 percent to let's say 140 percent for the sake of argument. With that, I've already talked about maybe not defining the percentage, tying the percentage. But I wondered since we don't know—it's a voluntary program; you sign up. We don't know how many people will initially sign up. I would be curious to know, and I see our Corporation Counsel's busy in a discussion. So, I'll just wait for the next time. Or Keyra maybe could answer this. I'm wondering what would our ability be to do a pilot program while we actually limited the number where we said the first 2,000 people could sign up for this program for the next two years and we'll see how it works out, and then we might have some certainty about the fiscal impact. Because now, it could be ten people that sign up; it could be, you know, 5,000. We don't know. So, there's a broad range of possibilities as far as the fiscal impact. But I'm wondering if for the next conversation about this, we could do this as a true pilot Page 37 FC-25 December 19,2023 where we limited the participants just to see how it worked out for a little while. I mean, this is a big enough shift. Testing it a little bit might make sense. The last thing I'll say is, you know, one of the things that's potentially really important and not reflected in here, specifically, with the West Hawaii example, is that those folks in the Homeowner's Class or the Affordable Rental, they're going to have that three percent cap, whereas the Residential and the Long-term Rental wouldn't. And over time that becomes more of an incentive than some of the other things. Exclusively,just the rate. I mean when you see a jump in values of 17 percent, the three percent cap becomes really really,really important. So that's one of the things of the whole picture that I don't think is fully reflected. The other thing I'd like to look at mentioned by a couple of testifiers, and I'm sure you'd explore this, and I'm happy to hear a little bit about your conversations, would be instead of looking at this as a different tax class with a different rate, did you spend any time looking at what it might look like if it were another exemption, like the Homeowners exemption? It was a Long-term Rental tax class exemption. Please feel free to chime in if that's something you considered and maybe can share the pros and cons of. MS. MIURA: Yeah, our staff was pretty overwhelmed already. So, every exemption, I mean, the tax class is a lot of work. But an exemption is a lot of work as well. So, I think I'll leave it at that, unless Keita wants to add to it. But I will say that when it comes to the three percent cap, you're right, the longer a property is in it, the more savings they're already getting. We didn't have time to vet that for this for this meeting to come up with scenarios. I give Keita all the credit for it. When it came up it was coming up today, I truthfully, was like, we don't have time for this right now. So, he took it upon himself to do the work. So, I have to give him credit, MS. KIMBALL: Thank you again, for the time putting what you have together. I mean, I think we're still in very early phases of this conversation. You know, even with the extra work, potentially, for you guys, and not that I want to make things harder for you. I think it needs to be looked at in terms of, is it a more appropriate and potentially more equitable lever? Because percentages work very differently than exemptions do. Because the exemption becomes less and less meaningful the more your property value goes up. That is not true with percentages. So, going to say that we postpone it. I'm happy to, you know, keep working on it a little bit each couple of weeks. Or, if you guys need a little more time,maybe before the next version comes before us, I'm fine with that too, but obviously, it Page 38 FC-25 December 19,2023 needs to stay in Committee for some continued work. But I appreciate the efforts, both from the makers as well as the RPT folks. Thanks Lisa. ACTING CHR. EVANS: Okay, we've had a lot of discussion. Member Kagiwada. MS. KAGIWADA: Yeah, I would like to, if people are amenable, to come back with another stab, given everything everybody's said. I really don't want to postpone this for say another year or something, which is what we'd be doing if we wait until Budget season. Because basically, this would be going into effect, 2025, as it is now, and that's even on a very tight schedule, I believe, and I don't want to rush our discussions, but I do want to keep having the discussions, if people are up for that? I really feel like we got great feedback today. I feel like we have enough information where we can come back and take another stab at this to get closer to what people have been talking about come with the couple options. And if you don't mind, Council Member Kimball was good enough to share the Hawaii Housing Fact Book with us, and I just want to pull one little quote out of there just to maybe keep us thinking about this. Because this is kind of where the intent was when I started looking at this and when we started talking about this. "Land or housing that is purchased by an out-of-state investor and left vacant puts upward pressure on housing prices without providing new housing hurting local affordability. Policies that penalize leaving properties vacant are currently being considered and could limit these negative effects of out-of-state investment and local affordability." That's really where I feel like I would like to do something sooner than later with that. Because I do think our community is hurting. So, if you don't mind letting us come back and take another stab at it, and you know, we can always postpone to the Call of the Chair later if people feel like we're not getting anywhere or not getting closer, that would be my ask. And I see Michelle nodding. Chair, I yield. ACTING CHR. EVANS: Okay, we have on the floor, I think a motion to postpone this? I want to say something,but I know that's where we're headed. I like the idea of us continuing the discussion because of all the effort from the staff and all the effort of the community when we're all fully engaged in this conversation. So, I'd like to keep it going. For me, personally, I'd like to look at more of the Affordable Rental Housing, and see if that's a place to incentivize. I think incentivizing, having this discussion is so critical at this point in time. Going with currently proposed, I'm not very supportive of that,but I'm supportive of us having this discussion and moving it forward. So, Member Villegas, did you want to say something? Page 39 FC-25 December 19,2023 MS. VILLEGAS: I did. I wanted to both personally and professionally, thank the makers of this legislation. This is a heavy lift. These are conversations that are happening all over the State. Even our Governor is considering changing the rules as they apply to Maui in order to open and free up more properties to Long- term Rentals. So, I commend you on it,because talk about sticking points all over the place, but you continue to tackle them. You're finding answers. Also, thank you to Property Tax Office for your support of them and continual provision of exceptional spreadsheets and data. Thank you, Keita. And putting them into palatable and understandable pieces of information that make what otherwise is a very overwhelming process that has so many nuanced numerical components to it to something that's actually understandable for cause and effect. So,I just wanted to humbly say, thank you for this. It's a big one if we can get, once again, it's ironically we have to make policy to try and get people to get to where we need to go in order for the greater good of our community. But hopefully, people are listening and those that have empty homes and residences and will be now moving on squatters. Another component of homes that sit empty in our community. So, I just fervently wanted to thank you for that and for trying to tackle this and get us where we can get to do the greatest good while ensuring we do the least harm. So, with that, I yield. MS. KAGIWADA: Thank you. I just need to check with Real Property Tax. You guys have some big think on January 10th, is that correct? Are you going to be available on the 9th or should we go to the second meeting in January? MR. JO: We have our Real Property Tax sale. So, this is our tax foreclosure auction around that time. So, the preference would be to move to another date. MS. KAGIWADA: Okay. If that's okay with everybody, I would propose that we continue this discussion, the second Finance Committee meeting in January, which is January 23m. Is that too hard because of everything else going on? Okay, yes, I propose that we do that. Motion to Postpone: Ms. Kagiwada moved to postpone Bill 104, as amended to Draft 3 to January 23, 2024. Seconded by Ms. Lee Loy. ACTING CHR. EVANS: All in favor? Any opposed? Page 40 FC-25 December 19,2023 Vote on Motion to: The motion to postpone Bill 104, as amended to Draft 3, Postpone: to January 23, 2024, was carried by the following (Approved) voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball,Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. ADJOURN- There being no further business, at 3:43 p.m.,Ms. Kimball moved to adjourn MENT: the meeting. Seconded by Mr. Inaba and carried by the following voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EVANS: At 3:43 p.m., we're adjourned. Approved: / Mr. Matt Kaneali`i- einfelder, hair (Date) Finance Committee MK/dt Page 41