Loading...
HomeMy WebLinkAboutMIN FC 2024/01/23 (2022-2024)Committee on Finance 27'11 Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii January 23, 2024 CALL TO The regular meeting of the Committee on Finance was called to ORDER: order at 9:00 a.m., in the Council Chambers, Kailua-Kona, by Ms. Cindy Evans, Acting Chair. ROLL CALL: Present: Ms. Cindy Evans, Vice Chair Ms. Michelle M. Galimba, Member (came in later) 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 Absent & Excused: Mr. Matt Kaneali`i- Kleinfelder, Chair STATEMENTS FROM THE PUBLIC ON AGENDA ITEMS: ORDER OF RESOLUTIONS: The Acting Chair directed the Committee to proceed to the next order of business, Statements from the Public on Agenda Items. The following individual registered to speak and came forward when called by the Acting Chair: Daniel Robert Bona: Bill 104, Dr. 3 (Comm. 600.24), comment. ACTING CHR. EVANS: Thank you. With that Mr. Clerk, please read in Resolution 415-24. The Acting Chair directed the Committee to proceed to the next order of business, Order of Resolutions. FC-27 January 23, 2024 Res. 415-24: AUTHORIZES THE PAYMENT OF FUNDS OF A LATER FISCAL YEAR AND OF MORE THAN ONE FISCAL YEAR FOR MULTI -YEAR LEASES FOR ONE FORKLIFT, ONE 3-TON DUMP TRUCK, AND ONE SUPER DUTY TRUCK WITH UTILITY BODY AND CRANE FOR THE DEPARTMENT OF ENVIRONMENTAL MANAGEMENT Authorizes the Mayor to enter into five-year lease agreements with an approximate monthly cost of $1,600 for the forklift, $2,200 for the 3-ton dump truck, and $5,100 for the super duty truck, to be used by the Wastewater Division. Reference: Comm.689 Intr. by: Mr. Kaneali `i-Kleinfelder (B/R) Motion to Approve: Ms. Lee Loy moved to recommend adoption of Res. 415-24, Seconded by Ms. Kimball. ACTING CHR. EVANS: Any discussion? Is the department here? Yes, please. (Note: At this time, Department of Environmental Management Deputy Director Brenda Iokepa-Moses and Business Manager Robin Bauman came forward to address the members of the Committee.) MS. IOKEPA-MOSES: Good morning, we have two representatives here in Hilo, but we also have our workers over there on the Kona side, and they'll be leading the charge today. So, me and Robin will be here for any alibi questions. But we have our hard-working employees there, Francisco Villa and Chris Sparber. So I'll let them lead the charge, and if you guys have any questions, we'll be here. (Note: At this time, Wastewater Acting Deputy Division Chief Christopher Sparber and Maintenance Mechanic Francisco "Cisco" Villa came forward to address the members of the Committee,) MR. SPARBER: First of all, Council, thank you for being willing to hear our resolution. My name is Christopher Sparber, I'm Acting Deputy Division Chief for the Wastewater Division. I'm here with Francisco Villa. He's our island - wide Maintenance Manager, which is part of the newly formed maintenance branch within our division. We are humbly requesting three waste vehicles that are on budget this year. We're requesting a dump truck, crane truck, as well as a forklift. So, we're open to any questions that you may have regarding this lease finance. ACTING CHR. EVANS: Okay, Member Villegas. Page 2 FC-27 January 23, 2024 MS. VILLEGAS: Aloha and thank you for being here. And thank you for everything that you do to keep our machinery operating, and it's great to see those that are in the field and utilizing the things that you're here to ask for; budgetary resources for here with us today. So, if I understood correctly, you stated that this was already budgeted for? MR. SPARBER: Correct. MS. VILLEGAS: Okay, so this is just kind of the formality for the release of the funds, the vehicles, and things that are extremely necessary to the Department of Environmental Management? MR. SPARBER: Yes, absolutely. You know, we use these as part of our daily operational functions and is also part of our emergency response functions. So, yeah, they're critical assets. They've aged, they're becoming unsafe, and we're trying to get ahead of any potential or major failures or breakdowns that cost the County valuable time. MS. VILLEGAS: Thank you. Those words actually comfort my heart because unfortunately, while navigating a time the consequences of not taking care of our resources associated with our wastewater facilities and the equipment that supports them. So, I will be wholeheartedly supporting this today, and thank you for your work and encourage you to continue getting us in alignment with the best equipment and materials for infrastructure improvements with wastewater to get us where we need to go. So, thank you for being here today. I yield. MR. SPARBER: Thank you very much for your support ACTING CHR. EVANS: Okay, thank you. Yes, Member Lee Loy. MS. LEE LOY: Thank you. Thank you, gentlemen, for being here. I'm not sure if it's for you or maybe for Brenda. Brenda, thanks for being here. Happy New Year. You know, I see this all the time. Especially, when we get to the end of our fiscal, all these contracts get awarded. Things get ordered. They want to spend down the money. I'm more curious as to what a long-range maintenance plan looks like, and if that's being built into some of the funding that we received for this new equipment? I also acknowledge that some of these things don't come online until third quarter of 2025. So, what are we doing in the meantime, but also planning for repair and maintenance over the five-year lease? MR. SPARBER: So, as far as the repair and maintenance with these specific vehicles, Council has graciously helped us get an Asset Management Program which these vehicles would be entered into. So, with respect to that, that system Page 3 FG27 January 23, 2024 will help us manage the routine maintenance and also manage our Safety Program with respect to operation of these vehicles. So once received, we have a process that receives the vehicles and also within the Asset Management, creates you know, the specific tasks that need to be done for the continued maintenance and operation of the vehicles. MS, IOKEPA-MOSES: Council Member Sue Lee Loy, this is Deputy Director Brenda Iokepa-Moses. Just to add to that, we're really blessed to have "Cisco," he's recently got a promotion, and he is really enforcing this Asset Management that we have a grant -funding from EPA (Environmental Protection Agency) that put us online with this Asset Management. It really regulates the maintenance and not deferring of maintenance. So, it's going to help us extend the life of a lot of our pieces of equipment. It also will help us in this kind of requisition where we're not waiting until it's an emergency, We're planning for it. These vehicles if you looked at the age of them, 1992, I believe; 2003, They're definitely ending their life of usefulness. So, we want to be proactive knowing that it takes a while for things to come in to this island. So, this equipment is still working, Right now, presently, they need some maintenance and repairs. So, we're trying to be forethinking and say, get this equipment online so when we have failures, we can put the old equipment offline and utilize the new ones. Thank you. MS. LEE LOY: Thanks for the information. Something that we're trying tc work towards for a while now is our overall Asset Management Program, so that these things can be built into future budgets. Thanks Brenda, thanks gentlemen. I yield. ACTING CHR. EVANS: Any other discussion? Seeing none, I'm going to just comment. I'm also very supportive of the Asset Management that I'm seeing. But what I've noticed is that almost every month or every other month, we're getting these requests coming in from the department. Brenda, are we going to have —are you expecting to roll out more, like next month, the following months? Are we going to see more of these requests come in? MS. IOKEPA-MOSES: I'll have Robin here; she will let us know the strategic planning on these. These are all budgeted items, so I think they're rolling out as they come up in front of Council, but Robin? MS. BAUMAN: I'm Robin Bauman, Business Manager for Environmental Management. Yes, we do have more equipment that we'll be coming before Page 4 FC-27 January 23, 2024 you for our Solid Waste Division. I think this is the last of the wastewater leases for this fiscal year. ACTING CHR, EVANS: Okay, thank you. Seeing no more discussion, thank you for being here. We'll take the vote, all in favor. Any opposed? Vote on Res. 415-24: The motion to recommend adoption of Res. 415-24 was A roved carried by the following voice vote: Ayes: Committee Members Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans — 7. Noes: None. Absent: Committee Members Galimba and Kaneali `i-Kleinfelder — 2. Excused: None. BILLS FOR The Acting Chair directed the Committee to proceed to the next order of ORDINANCES: business, Bills for Ordinances. Bill 104: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19-2; CHAPTER 19, (Draft 3) ARTICLE 7, SECTION 19-53; AND CHAPTER 19, ARTICLE 11, SECTION 19-90, OF THE HAWAI`I 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. Reference: Comm.600.24 Intr, by: Ms. Kagiwada and Ms. Galimba Postponed: December 5 and 19, 2023 (Note: There is a motion by Ms. Kagiwada, seconded by Ms. Galimba to recommend passage of Bill 104, Draft 3, on first reading.) (Note: Comm. 600.25 dated January 22, 2024, from Council Member Heather Kimball transmitting proposed amendments to Bill 104, Draft 3, were circulated.) ACTING CHR. EVANS: Member Kagiwada. MS. KAGIWADA: Yeah, I'm going to introduce an amendment, if that's okay? Motion to Amend: Ms. Kagiwada moved to amend Bill 104, Draft 3, with the contents of Comm. 600.25. Seconded by Mr. Inaba. Page 5 FC-27 January 23, 2024 ACTING CHR. EVANS: Any discussion? Member Kagiwada. MS. KAGIWADA: Thank you, Chair. So, taking into account, a lot of what we discussed over the last few meetings, trying to make some amendments here of what we think will improve the bill and I'll just go through them. The first one is that we are adding a purpose. We felt like we wanted to add a short purpose to just make very clear what we're doing here. So, "The purpose of this ordinance is to provide a voluntary tax incentive to increase available housing stock in the rental market through the creation of a new long-term rental real property tax classification." So, we added that. We also took into account, the discussion that we had with some of the realtors, as well as discussions here with you; talking about trying to make sure, you know, alignment with what our other programs and other ways that we look at things. So, we changed from the ten consecutive months to a six-month lease. So, basically, we still intend for people to rent long-term for the full year, but they may use a six-month lease, because that's an industry standard that we wanted to align with. It's also the same language that is used for affordable housing programs. So, Real Property Tax likes that we're keeping it in alignment with the other programs whenever possible to make it easier on staff as well as the public for understanding. Another one that we changed, we heard that people maybe wanted some guardrails or little more limitations on the program as well as I remember Council Members talking about some concerns about the higher end properties. So, if you look, it's Section 3, item (k)(4). We've added that we are really using this new program for homes that are under $2 million. That way we are not really touching the properties that are over $2 million and the complications that that would entail. So, since this is really a program to try to get more housing for our residents, we feel that the properties that are under $2 million are probably the ones we want to target anyway. Then finally, the last substantive change we made was just making sure that it's very clear. Actually, there's two changes but we added in Section 3, item (m)(2), which is "Any use of the property for vacation rental use shall breach the classification." This is not a program for people renting to vacationers, it's really meant to be for residents. In Section 4, the tax rate. We heard that people were concerned about setting the tax rate and tying it to other rates, and maybe just tying the hands of the Council going forward. So, what we're proposing now is that we just set the tax rate at this 130 percent for the first program year. But don't tie it to anything after that. And just allow that first year to play out and then the Council will have the ability to adjust that if it so wishes. Page 6 FC-27 January 23, 2024 So, those are the changes we made, and I'd love to hear my colleagues' feedback on those changes. Thank you. ACTING CHR. EVANS: Okay, Member, any discussion? Member Lee Loy, MS. LEE LOY: Thank you, and to my colleague, thank you. Especially, guardrails around the million -dollar properties. You know, I did raise that issue, because we did hear from a number of realtors who saw that as a big loophole for them to get to the taxing symptoms on their muti-million-dollar homes. I also kind of love the alignment of the six-month and then the twelve-month. I think I can support this amendment. I really want to hear from RPT (Real Property Tax) later, because I think that's really where the knots and bolts of all of this are on top of which, like how does that really begin to impact our budget? Also look forward to other conversations from the Realtors Association, because we know that these million -dollar properties really affect the West side and the Kohala Coast, more than our East Hawaii. So, thank you, I yield. ACTING CHR. EVANS: Member Inaba. MR. INABA: Thank you. Reaching out to Hilo if Administrator Miura or Assistant Administrator Jo could chime in. Just give your thoughts on the amendment. I'll just make a comment that it is good that we have that $2 million exemption, so that those properties can since we have a property tax class for properties at $2 million or higher. And that might just make things more confusing if we allow those types of properties a program like this. I'm just not sure whether it addresses my concern about those properties less than $2 million on this side who could still be getting way more money by jumping over to this class. It ought to be affordable tax class. So, Assistant Administrator Jo. (Note: At this time, Real Property Tax Assistant Administrator Keita Jo came forward to address the members of the Committee.) MR. JO: Keita Jo, Assistant Administrator for Real Property Tax Division. Definitely, the six consecutive months does align with our other programs and our processes internally as we handle our Affordable Rental Housing Program. So, it's a nice change to see. The only question that I would have is with regards to the language around the properties valued over $2 million. So, the way that the amendment reads is it's specific to residential class, and so, the division's interpretation is that if a property that is currently within an agricultural classification or a multi -family classification that is over $2 million would still have the ability to be eligible Page 7 FC-27 January 23, 2024 for this longterm rental classification. So, we just wanted to get some clarity whether that was the intent or whether there might be some entertainment of some adjustments to remove that residential class. That's all I have. MR. INABA: Thank you. Then, for properties on this side in the residential class right now, are there a lot of properties that are valued over $2 million that are not considered luxury homes as, you know, one might expect? MR. JO: So, with respect to the residential class, specifically, I would go and think about the Tier 2, which impacts residentially class properties over $2 million. If I recall correctly, there's probably about two or three properties in East Hawaii that fit that mold. Otherwise, the large majority of somewhere around 1,100 to 1,200 properties that are subject to that Tier 2 tax rate are located in West Hawaii. MR. INABA: Okay, thank you. I would like to hear as well, the intention for the residential class specifically. Thank you, Chair, I yield. ACTING CHR. EVANS: Thank you. Member Kagiwada, MS. KAGIWADA: Thank you. Thanks for raising that issue. I was actually mulling that over; the wording and how we presented this as well. We do intend that people who have multi -family or apartment buildings, things like that, could participate still. So we don't want to say, because their whole compartment complex is valued at over $2 "Ilion that they can't participate renting, you know, smaller units obviously. So, we can work with Corporation Counsel to make sure that the language does show that intent. Was that answering your question, Keita? MR. JO: Yeah, it would. That clarity would definitely be helpful. MS. KAGIWADA; Okay. So, that's the intent. ACTING CHR. EVANS: Okay, any other discussion? Member Kimball. MS. KIMBALL: Thank you, Chair. Happy to support the amendments. I'm in agreement with Council Member Lee Loy. I like the alignment with the twelve months and six months for some of our other programs. We'll be supporting this amendment as is, but I do think we need a little more clarity on this eligibility list with the wording, and I'm sorry I can't provide for you some concrete examples right now, but you know, I like this addition of this taxable value to kind of cap that concern. But I also can see how this might inadvertently exclude some people that we want to include. So, it still needs a little work in my mind, but I'm happy to support this motion today with the amendment. Thank you, Chair. Page 8 FC-27 January 23, 2024 ACTING CHR. EVANS: Thank you. Member Inaba. MR. INABA: Yes, just to clarify. So, when we say residential class, are we talking about residential tax class as it currently stands, is that correct, or are we talking about residential zoned properties? I think it's the first, but I just want to make sure. MS. KAGIWADA: Yes. So, the way it says residential class here, I think we were specifically talking about those in the residential tax class. That's what we were trying to make, and that's where I think we're covering ourselves without still allowing multi -family and apartments that have multiple units, that maybe the whole property is valued over $2 million, but the units themselves are not. But we have to check to make sure because I don't think I pointedly asked Corporation Counsel to give us the feedback on that. I don't know if she's ready to give us feedback on that. We can ask when she comes back. ACTING CHR. EVANS: Just you know, we have someone here to represent her because she did have to step out. I believe J is in Hilo, if you wish to ask Corporation Counsel, she has someone for us. Thank you. (Note: At this time, Assistant Corporation Counsel J Yoshimoto came forward to address the members of the Committee.) MR. YOSHIMOTO: Good morning, Council Members, J Yoshimoto, Assistant Corporation Counsel. MR. INABA: Okay, so I'm just going to make sure. The intention is any property that's currently in the Residential Tax Class. Keita Jo, sorry Corporation Counsel, I'm not sure. I think Keita Jo can answer this question. The language as it currently reads in the amendment lines up with that intention. Is that right? MR. JO: No. So, if I were to read the language in the amendment, if I had, for example a condo unit that was within a multi -family classification that was worth over $2 million, that property would be eligible to participate in this program if there was a six-month lease and intent to rent for the whole year. So, it would be inclusive of properties such as that, or if we have a property that's agriculturally classed with a single-family home on it that was worth more than $2 million, that single-family home, if it was rented out under that six-month criteria would also be eligible to receive the long-term rental classification. MR. INABA: So, Residential Class as it's listed here means who are currently in the Residential Class? MR. JO: Correct, that's how I interpret it. Page 9 FC-27 January 23, 2024 MR. INABA: Okay, got it. Alright, thank you, I yield. ACTING CHR. EVANS: Member Villegas. MS. VILLEGAS: Yes, and correct me if you've already explained this substantially, but I'm still a little confused. And I guess my concern comes from the potential of someone to do a six-month long-term rental, and then go to a vacation rental. Are there any stop -gaps or barriers in that? MS. KAGIWADA: Sure, Keita Jo, do you want to answer this, because this is very similar to the Affordable Rental Program, right? MR. JO: Correct. So within the legislation, there's a clause that covers that specifically. So if there's any other use, aside from that long-term rental, specifically if it's rented for six months or less to another individual, it would be a breach of this classification, and we would roll back the taxes along with the 10 percent penalty. MS. VILLEGAS: And with that, I guess because I hear so much from County departments about the challenges with enforcement, and how would that be tracked? You know, I also know in the world there will always be people that find loopholes, and it may be impossible to stop that. But in general, how do we set up a system that most efficiently inspires people to honestly participate in this program and this generous opportunity —thank you guys for this heavy lift. But just wanting to ensure that we aren't accidentally setting ourselves up for manipulation or those that find that work around. And also, supporting your guys' office, you know, with this have to be based on reports or complaints from other people or just how would that be tracked? MR. JO: So generally, when it comes to transient accommodations, it's complaints; it's our Compliance Officer scrubbing records to identify these properties, along with the information that's provided by the Planning Department. But enforcement is a challenge for us to put it bluntly. MS. VILLAGES: Thank you. I appreciate that honest and solid answer, and I also appreciate the opportunity for the technology that is being utilized to support and become the framework for these businesses; also, becomes the check and balance, and that you guys have somebody that does look through all those records and whatnot. So, I think that takes care of my question, and I appreciate your honest answers of, you know, humble recognition of the parameters for RPT to enforce and track. I yield. ACTING CHR, EVANS: Thank you. Member Lee Loy. Page 10 FC-27 January 23, 2024 MS. LEE LOY: Thanks, Chair. Keita, thanks for being here. I wanted to follow-up on that long-term lease. I'm specifically looking at Section 3(k)(2); it says, "All dwelling units on long-term rental properties must be leased." So walk out what that would look like, is that an apartment, is that multi -family? And then what if not all units are leased, does that mean they don't fit in this category? MR. JO: That would be correct. So, I look to the language of our Affordable Rental Housing Program, and the current procedures and processes that are in place, and it's an all or nothing proposition. Because this is a tax classification, all of the units within the property need to be rented out. We don't have the capability of parsing out and saying, okay, units 1 through 3 can get this rental classification, while units 4 through b will get the standard base classification. So, there's really no mechanism. So, it's an all or nothing. So, if you have a six -unit apartment complex and two units are vacant. Then that particular TMK (Tax Map Key) as a whole would not be eligible for this rental classification. MS. LEE LOY: Yeah, I'm not trying to break it, but just trying to think how people use tax incentives. In that case, is it possible, Kcita, for them to have a six -unit asset; have four in this category while doing a Short -Term Vacation Rental in other two. Or, you know, kind of mixing up all the different rental opportunities. MR. JO: Yeah, so it's an all or nothing. So, if they utilized two units for Short - Term Vacation Rental, then that would preclude from getting this benefit. MS. LEE LOY: Okay, thanks Keita. Is it possible for you, and I'll rip the band -aid off. I am very protective, I guess of the Two -Tier Tax that we passed for our Housing and Homeless Program. And we launched that to have a five-year kind of measure to see how helpful that is. Maybe Keita, you can help, maybe provide us offline some of that information and if this bill kind of impacts that, because I really want to see the success and measure that program. I'm not opposed to offering other tax incentives and/or dialing in opportunities. I just want to make sure that something that this body passed during our last legislative sessions doesn't get short-circuited or derailed. I think we've seen some great programs come before this body that is going to get a lot of that money. But, Keita, could you provide that to us; kind of offline on how this bill might impact that Two -Tier Tax Program that we have that's going to Housing and Homeless? MR. JO: Well, we can definitely take it offline to clarify exactly what you're looking for. But this is a stand-alone program which is separate and apart from that Tier -Two rental tax. Page 11 PC-27 January 23, 2024 So the use of those funds for homelessness, I think the Director of Finance would probably be better at discussing the use of those funds, and whatnot. But from our perspective, they're two separate items that don't impact each other. MS. LEE LOY: Great. That's reassuring. Thanks Keita, I yield. ACTING CHR. EVANS: Member Villegas. MS. VILLEGAS: Sure. It's just crossing my mind, and if I remember correctly, the reasons for the six months and the lower timeframe related to traveling nurses and some of the others. So, then my question would be, I mean this would be a sizable carrot, a whole another tax class for having a long-term rental. I guess it seems a little counterintuitive to me why it wouldn't be like two years, or at least one year or 18 months for why we wouldn't be looking for a longer extended period of time, which actually is more validly a long-term rental. So, I know you're going to have a reason for that, but that's just something I'm mulling over in the challenges of all the nuances of all of this. It doesn't mean I don't support it. I'm just trying to get a better grasp on why it wouldn't be, actually, a longer period of time. ACTING CHR. EVANS: Member Kagiwada. MS. KAGIWADA: Thank you. As I said before, it's industry standard to do a six-month lease and go to month -to -month. I've been a renter on this island. Three different homes, and that was pretty much always what's offered to people. It doesn't mean the intention isn't that you are a two or three or five or ten-year tenant. It just means that people generally start with a six-month lease. They want to have some assurances that they are kind of getting in this together for some amount of time before they then go to a month -to -month. That's just the norm I think, and it's what other programs use and it's what the realtors use across the island, which is generally a six-month lease then you go month -to -month. But what is says, is you still need to rent long-term for the whole 12 months. Also, just remember that the amendment here was also that any use of the property for vacation rental use shall breach the classification. So, you can't sneak in a couple of extra months to do short-term vacation rentals, something like that, after you've done the six-month contract. The intent is that you are renting this a long-term rental all the time. It's just that most rental agreements start with six months and go month -to -month. I hope that clarifies that. MS. VILLEGAS: That does. Thank you, Council Member Kagiwada. Real estate, property management, and that industry has a lot of longstanding norms Page 12 F'C-27 January 23, 2024 for how and why they do things. So, I appreciate you taking that into consideration and respect for their processes. And I am hopeful that the County will be able to have the tracking to ensure that that remains the case. MS. KAGIWADA: I mean, and I've heard from tenants as well that this is kind of a six-month commitment. It's a good commitment when you're trying a new place with a new landlord as well. You don't necessarily want to lock in for a really long-term before you started, you know, to build that relationship. So, I think on both sides, six months is fair. It's landed there for a reason, so anyway, thank you and thank you for the comments. MS. VILLEGAS: Just one more comment, if I could. I suppose the one thing that's just tickling in my mind, even if it's industry standard and norm, it seems it might be wise to have, like the need for continuous six-month leases going month -to -month, I'm just afraid that that might be a pitfall for this in some way, and perhaps there's an opportunity for this to remain the need. Somehow, we tie in there that these properties have to operate on six-month leases instead of month -to -month following. Just a thought. MS. KAGIWADA: We worked with RPT on this. This is similar to how the Affordable Rental Program works as well. So, everybody felt comfortable with going with this. Thank you, though, for your input. ACTING CHR. EVANS: Thank you. Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair, and thank you so much for these refinements to the proposed measure. Deputy Administrator Jo, you know, when this bill was initially brought forward, I have circled here on the original proposal, that we could potentially see budget shortfall of $7 to $15 million if this ordinance were to pass. With these proposed changes today, are we still looking at that original estimate for the budget shortfall? MR. JO: Yes, in the original year, because the language in the amendment clarifies that 130 percent level. That would equate to if tax rates did not change for the next fiscal, that would equate to $8 per thousand of value in terms of tax rate for this particular classification. So, we're still hovering around that $7 to $15 million. We won't know the actual number of people entering this program until certifications are provided, and that would be in March of 2025. It would be when we would know how many individuals entered into this program, should the legislation pass and be enacted. MS. KIERKIEWICZ: Is there any way we could get a pulse on our community as to the appetite for taking advantage of this program. I know that Page 13 FC-27 January 23, 2024 in March, assessments go out and I just wonder if there's any way to survey the community to just understand again, what is the appetite for this type of program? MR. JO: I think when it comes down to surveying and reaching out to the community, that's certainly an option. We would need to talk about resources and timing to get that data in. But we really don't have a solid idea in terms of the number of available units out there. It's just not data that Real Property Tax manages on a day-to-day basis. So, it was a big question mark. In earlier testimony we provided information. We kind of looked towards Maui, which good or bad, or neither. It was a number and that's the number that we used to produce that $7 million amount. So, if we had the same adoption as Maui, that's what that would look like. But you're right, we really don't know. MS. KIERKIEWICZ: I keep going back to who would ultimately benefit from this type of program. And what's really hard for me to square is, this might be really appetizing for folks to move out of the Affordable Rental Housing Program, which guarantees an affordable rate in which they rent to community. And I don't necessarily think, unless I've missed it here, that moving into this long-term rental class guarantees an affordable rental rate. Is my assumption correct here? MS. KAGIWADA: That's correct. It's a market rate and people can charge what they want to charge for their available properties, We did have good conversations with Susan Kunz and Chelsea (Jensen), who is in charge of trying to entice more landlords to do the Section 8 Program. So, we had some good conversations with them. I don't know, is anybody from the Office of Housing there over in Hilo? No? ACTING CHR. EVANS: Member Kagiwada, can I turn it back to Member Merkiewicz? MS, KIERKIEWICZ: Thank you. And the other thing I'm trying to square here, in (k) Eligibility ... (2) and (3), right? It was mentioned earlier, "All dwelling units must be leased." It's all or nothing. And then it also talks about the owner's principal residence being located on the same property. MS. KAGIWADA: That's correct. The only exception to that, all units must be leased, is if it's your own principal home. You may live in your principal home and lease, say an ADU (Accessory Dwelling Unit) or a unit or something like that for this program. MS. KiERKIEWICZ: Okay, thank you for the clarification. Let's say you have six units; four are being leased, you have the other two actively on the market, Page 14 FC-27 January 23, 2024 you're looking for renters but for long-term rentals, they go vacant. How is that impacting this ability to access the tax incentive? ACTING CHR. EVANS: I think this goes to Keita? MR. JO: So, similar to the Affordable Rental Housing Program, if the property is leased out, it has a tenant; the tenant moves out, we will still maintain that preferential classification. So long as the owner demonstrates that they're actively soliciting individuals to come and rent the property. Because we have to recognize the fluidity of the rental market. These things happen. Same thing, if there were renovations, we generally provide some protection in terms of properties that are then being rented or renovated. So, there's some considerations for that as well. Does that answer your question? MS, KIERKIEWICZ: It does. So, that is something that would be clarified in your rules? It doesn't need to live in the Code. MR. JO: Correct, MS. KIERKIEWICZ: Okay. I'll be supporting the amendments that are put forward. But when it comes to this new iteration of the bill, I'm going to suggest to continue to keep it in Committees, so that our community can continue to vet it. I still, again, have issues with who is actually going to be benefiting from this program, and do think there arc other strategies. Again, looking at lowering Affordable Housing Rental Class and Homeowner's Class that might actually get us in a place of having more affordable units available to members of our community. Thank you, Chair. ACTING CHR. EVANS: Thank you. Without seeing any other lights, I want to ask some questions, and this was for Corporation Counsel. The amendment, I'm looking at Page 2, it's 4, Section 3 (k)(1), and I'm looking at the way it was written, "Real Property occupied for twelve consecutive months and under a signed lease for six consecutive months or more to the same tenant(s) shall be eligible." I'm having a little problem with the "and" and how the two are connected. So, is the way it's written clear enough because I'm kind of struggling a little bit with it has to be "occupied for twelve and under a signed lease for six"? So, this is for J. MR. YOSHIMOTO: So, I'm not understanding your concern, Council Member. ACTING CHR. EVANS: So, if you're reading it and interpreting it, what does it mean to you? Page 15 FC-27 January 23, 2024 MR. YOSHIMOTO: That the "property is occupied for twelve consecutive months and under a signed lease for six consecutive months or more to the same tenant(s) shall be eligible." So, that in (k) tracks the definition, right, under Section 1 on Page 1. So, I'm not understanding what your concern is. Is your concern that, that could be construed differently other than its plain meaning? ACTING CHR. EVANS: Well, it's just construed that it has to be occupied. I was looking at it from a point of do you have two six-month leases for twelve consecutive months with the same tenant, or are we really moving towards encouraging six-month leases and month -to -month? Because if you go month -to -month, you may never reach the twelve consecutive months. You'll be at, six months, seven months, eight months, nine months, or ten months. But you'll not get to the twelve months. So does that mean, if you interpret it that way, then they would just disqualify? MR. YOSHIMOTO: I think if they don't reach the twelve consecutive months threshold, then I can defer to Keita Jo on this, but then they would not qualify. Because I think what we're hearing is that, you know, the industry standard is six months, but allowing tenants to have that flexibility and landlords to go. month -to -month. And once they reach that threshold of twelve months, then they do qualify. So, if your question is if they go six months then go month -to - month, then they stop at the eleventh month, then they would not qualify under — and I think that's the intent, but I could be wrong. ACTING CHR. EVANS: So, I wanted to ask Keita, how would you enforce it, because it's on a month -to -month? I'm just seeing the logistics here for you. When would you give them —at what point would they get the preferential tax treatment? When would that start for them, and how would it stop for them? Especially, when it's again, month -to -month? MR. JO: So, the reality is, we would accept the application on December 31"; we would vet it. If there is a six-month lease or a month -to -month lease that's enforced at that time, we would grant the long-term rental classification. We would not, unless we have received the information to the contrary, we would not be reaching out to the owner at the eleventh month to validate or verify that they're still renting the unit out or the home out. The mechanism for us would be the annual reapplication. So, every year, they have to anti -up another application. Whether it be a six-month lease or an acknowledgment from the renter that they're still renting month -to -month. That would be the mechanism of enforcement for us. Page 16 FC-27 January 23, 2024 ACTING CHR, EVANS: Okay, alright, that's good to know. I'm supporting the amendment because I think we need more clarity, but I do hope that we see more discussion and potentially some more amendments. I also have concerns about knowing that there are multi -family buildings where the units may be worth more than $2 to $4 million, out in my district. They can run up over $2 million per unit. So, I'd like to look more at what was brought up about the Agriculture and Multi -Family Class. And we have properties way over $2 million, and maybe that should be looked at, but that could be for another day. But if there's no further discussion, we'll take the vote. All in favor of amending Bill 104, Draft 3, with Comm. 600.25? Any opposed? Vote on Motion The motion to amend Bill 104, Draft 3, with the contents to Amend: of Comm. 600.25 was carried by the following voice vote: A roved Ayes: Committee Members Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans — 7. Noes: None. Absent: Committee Members Galimba and Kaneali`i-Kleinfelder — 2. Excused: None. ACTING CHR. EVANS: Okay, we're going to go back to the main motion. Member Kagiwada. MS. KAGIWADA: Thank you, Chair. So, I just want to go back to this, who will ultimately benefit question. The whole reason that we put this into play is who will ultimately benefit is people, renters; people who need housing. That is who we are trying to benefit. We're trying to mitigate issues around property owners and people who, you know, trying to reduce any chance of people taking advantage of the system. But of course, there will be probably a couple, there always are. But we're trying to reduce that very much with some of these issues. But who will ultimately benefit? What we want to see is more properties on the rental market. People putting their vacant homes or possibly transitioning from doing vacation rentals to renting long term. That's our main goal and that's who we want to benefit. The encouragement to get property owners to participate in this is, I think, where the details lie. You know, it is possible that we maybe don't have enough encouragement and maybe there won't be a huge uptake in this program, if we pass it. And I think that's okay, we can learn from that, and I don't think it hurts us in any way if that happens. Page 17 FC-27 January 23, 2024 I do think that, you know, we've tried to be really thoughtful about not getting people to jump from the Affordable Rental Program into this one, and that's for me, and I think for Council Member Galimba, we've talked about this quite a bit. We've talked with Office of Housing and their folks who work with the affordable rentals and the Section 8 folks. I will ask them if they can come next time to talk about their views on this. But I think we've come to a place where, you know, there's some thoughts that, people that do affordable rentals have properties that fit affordable rentals, and that they might not be able --they're not necessarily places that can get a whole lot more money than what they're charging now. I also want to emphasize that this program does not provide the three percent cap that the affordable rentals do, and although that might not seem a big deal when you're entering a program over time. And especially on the Kona side, it can be huge difference. So, the ability to keep your property with that three percent cap, I think, if people do the math, really holds people who are currently doing affordable rentals in that category. Because over time, their property rates could go up quite a bit if they get out of anything with a three percent cap. So, that's my feeling on that. .lust to lay some groundwork. I see my colleague, Council Member Galimba has joined us, and I would love for her to jump in with anything on this before taking other comments, if that's okay? ACTING CHR, EVANS: Thank you. Everybody okay? Member Galimba. MS. GALIMBA: Thank you. Yeah, so just got here, and so, a little bit out of the loop on the discussion today. But I just want to reiterate some of the points that I'm sure Council Member Kagiwada made. I think there's two main points. I think this is a really important tool that we need to put into our box of RPT incentives for creating more housing for our local people. I also worry about the affordable housing. That's the part I worry about the most, is the affordable long-term housing interaction. However, I also agree, I'm sure a good percentage of the affordable housing stock is there for a reason. So, I don't particularly see that there's going to be that big of a jump from the affordable into the long-term housing. On top of that, there is that three percent incentive, that three percent cap on increasing incentives. And I think that is a really, really important incentive for the affordable housing, as it is for the Homeowners' Class. We get a lot of people that get very upset if they lose their homeowner three percent cap. I'm sure everyone has had that. So, I think it is something that taxpayers really care about, and I think it is a significant incentive to stay in the Affordable Housing Class if you're already there. Page 18 FC-27 January 23, 2024 Again, we are not looking to get people out of the Affordable Housing. We are looking at the other end of things to get folks that have houses that are sitting vacant, just to give them that little bump, or push, or carrot to help us with our housing problem and rent their houses out. Give it a try. I think this is a program that we give it a try, and if it doesn't work the way we want it to then we make some more tweaks. But we've made some tweaks, I think, to try and get it into a range so that we're not hurting our housing fund, funding, and we are hopefully not going to be hurting anything that's already good that's going on. So, just another attempt to give us more tools in our toolbox to get the housing that we need in a way that could be very cost-efficient. And that's all. Thank you. ACTING CHR. EVANS: Member Lee Loy. MS. LEE LOY: Thanks, Chair. Thanks, Ms. Galimba for sharing that. On the main motion, since we still have a lot more clarifying questions and information I would support keeping it here in Committee. Like Ms. Kierkiewicz, I wrote in my notes was, we take from one pocket for the other which is that gap. And I really haven't been able to get my arms around what kind of gap we're looking at. Again, the appetite on who's going to take on this incentive. If the maker could request Housing to be here, because I've heard many reports from them about the number of housing units that they have in the pipe that should be coming online, and absolutely, want to give people that gap opportunity to get into affordable rentals. But in the same breath, you know, if those housing units are going to be coming online, the timing of this bill, we might just want to wait for those housing units to become affordable. Because for me, it's a supply and demand issue. If we flood the market with housing, which is a lot of the decisions that we have to make here. The quicker those things go vertical, the quicker we have housing stock, which then, the market starts to adjust the rental rates, right? Because the more you have, the more competition you have. It's just business, right? You're going to lower it to get it rented. So, I would love to have Housing here to help, you know, bring a lot of color around what the forecast of housing looks like over the course of the next 24, 36 months. But again, I would love to hold it here. If not, I'm going to be voting "no" to move it on to Council. ACTING CHR. EVANS: Member Kimball. Page 19 FC-27 January 23, 2024 MS. KIMBALL: Thank you, Chair. I'm going to agree with Council Member Lee Loy in holding it. Only because the eligibility section, I think, is still in need of a little bit of tweaking. And I think with this kind of legislation, I mean, it's so important to get right off the bat. So what I would recommend to Council Members Galimba and Kagiwada, is you know, really step back, and say, okay, which properties specifically, do we want this to apply to. And then, make the wording to fit that, I think because we've come back and adjusted it, it's not as clear as it would be if you just started fresh from that perspective and said, what do we want it to apply to and then make the language match that, You know, I share the concerns of my colleagues, talking about people shifting from affordable to this and losing affordable inventory. But then at the same time, I'm thinking, you know a lot of the Federal funding that we have to create the housing supply that Council Member Lee Loy is talking about, it is that lower AMI (Area Median Income). The bigger gap has always been that missing middle, right, the folks that are at the higher AMI. So, I know it's probably complicated to sus out, but one of the data points that might be really useful between RPT and Housing for the next conversation would be, how many properties do we have in the Affordable Class right now? And of those, how many are restricted to stay in that Affordable Class, either because they were publicly subsidized, or they were part of a nonprofit's project, I'm going to guess that that number is probably pretty high, but I wouldn't want to guess and assume, I'd want to actually see those numbers if we can have them. Because we may have some protection that exist from things sliding out of the affordable into this long term from other mechanisms, then anything that needs to be in this bill. But I'd like to see the numbers on that for the next conversation. Thank you, Chair, I yield. ACTING CHR. EVANS: Okay, Member Villegas. MS. VILLEGAS: Yes. Thank you, Members Galimba and Kagiwada, with your patience and determination with this fickle and feisty piece of legislation. So, I commend you on all the nuances. Myself operating very often off of what the intent is and then being frustrated because I can know my intent, but the terminology and the "and," or the "shall," or all the words that are there really eliminating and creating. I don't know if it's even possible, but the best clarity possible. So, you know, something that I'm recognizing and hearing through the coconut wireless, is there are a number of people who had short-term vacation rentals, whether or not, within their own homes, or it was a separate home that as the realignment and readjustment to more equitable taxing of the incomes and Page 20 FC-27 January 23, 2024 whatnot that's happening there. People are moving out of the short-term vacation rental or transient accommodation rental market because of the opportunity to make tremendous amount of money with very little oversight. It's kind of like that ship has sailed, as it's had to, because we've gone too far in that direction to the demise of our community. So, thank you for your creativity in trying to find this mechanism with the carrot, because people —you know, I've heard a number of conversations, people being astounded by the tax increase to equitably align with the amount of money they're making. So, this is a carrot in the other direction for those experiences. My one request, and it sounds like I would be in support. I know how frustrating this can be, but to keep this in Committee. And in that interim, something I would like to throw out there is to make the effective date not until January 2026. I think that would allow us to, you know, navigate this further. And I do think that it would allow for Real Property Tax to have more time to put this together. So, that's a request and a suggestion that I would put in for that. Otherwise, I'll be supporting keeping this in Committee, and that's my recommendation. Then wondering then if RPT could provide any information, if by pushing back the effective date of this, how that impacts our budget, and our earnings and income; and how that will just affect things moving forward in our fiscal year. So, with that, I yield. ACTING CHR. EVANS: So, for your question, did you want Keita to answer that? MR. JO: I'll answer it. We can certainly work to get an estimate based off of — well, the assumptions on that $7 million were based off of the current assessments; so the 2023 assessments. We won't get the 2024 assessments and values until a few months from now. So, the estimates for 2026 are likely to be close to that $7 million assumption, if we're assuming the number of individuals who enter into this program is the same as we would see in 2026. ACTING CHR. EVANS: Okay, thank you. Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. I know that the introducers worked incredibly hard on this bill. I'm going to maintain my original suggestion that was made when we were deliberating the amendment, to keep it in Committee, and I think that is the will of this body. One of the testifiers was the Japanese Chamber of Commerce, and one of the things they asked was to provide for opportunities for stakeholders to connect with you; to just go over bill intention, but also impacts. Because I think that they, as members of our community, really want to be helpful. So, I'm going to suggest that some sort of meeting be scheduled in the interim just to get more Page 21 FC-27 January 23, 2024 community feedback. I don't believe that everybody's able to make our meetings at 9:00 or 10:00 in the morning. So, meeting with them when it's convenient, I think, would be really helpful to rounding out this bill. I know there's a lot of desire to implement this program and see what happens. But I think we have to be really, really thoughtful around what exactly we are passing. Because every ordinance we pass requires resources, time, money, and staff. This is not like a science experiment. This becomes the law of the land. I just want to make sure that anything we pass is right and feasible. So, again, I want to ask. I don't know if I asked. I want to ask again, Deputy Administrator Jo, feasibility of implementing a program like this. MR. JO: How do I answer this? MS. KIERKIEWICZ: Honestly. MR. JO: Certainly, the 2026 effective date is more appealing, because it allows us the time and the resources needed to stand up a program such as this. Currently, with the timing assuming that the legislation passes today, we wouldn't have a finalized bill until the latter part of February, the beginning of March. That allows us three months to get our applications out as of July V of this year. So, it's a heavy lift from our perspective, and so, I leave it at that. MS. KIl RKIEWICZ: Thank you for your honest feedback. Chair, I yield. ACTING CHR. EVANS: Thank you. Member Kagiwada. MS, KAGIWADA: Thank you. Deputy Administrator, I just want to clarify, that's for the timing, but the actual lift on the program itself, as we've been discussing it, is it something that you feel like your department can manage? MR. JO: If it's the will of Council, we will figure out a way. It might not be the ideal way; it might be a little rough on the -edges. But Real Property Tax Division is enforcement, right? So, we enforce the will of Council and the legislation that it passes. Again, ideally, we'd like to see this effective date pushed out. MS. KAGIWADA: Okay. Thank you for your comments. ACTING CHR. EVANS: Thank you. I have one question. Any for these tax bills that have come before you, have we ever put on a sunset date or a date to revisit it? Because we talked today about potentially not really knowing the impact on this type of legislation that we're considering on the affordable tax that we currently have. Have we ever looked at the sunset date that really automatically brings it back in front of the Council through a reconsideration, has that been done on any of the tax bills? Page 22 FC-27 January 23, 2024 MR. JO: To my knowledge, no. There hasn't been a sunset date established on the front end of legislation. ACTING CHR. EVANS: Okay. Also, has there ever been any kind of report on the effectiveness of something like the Affordable Tax Rate? Do we report how many, did it meet our expectations? Do you report to the Council on that? MR. JO: I would imagine throughout the years. I mean, there's nothing formally in place to report. You know, the effectiveness of a program or whatnot. Sometimes there are metrics that are more absolute black and white, and it would be up to the individual to ascertain whether it was the intent of the legislation. But we certainly could circle back. I would say, probably in the past, it's been done informally with Council. ACTING CHR, EVANS: Okay, thank you. So, Member Kagiwada, what would you like to entertain now? Motion to Post one: Ms. Galimba moved to postpone Bill 104, as amended to Draft 4, to February 6, 2024. Seconded by Ms. Kagiwada. ACTING CHR. EVANS: All in favor? Any opposed? Vote on Motion to: The motion to postpone Bill 104, as amended to Draft 4, Postpone: to February 6, 2024, was carried by the following (Approved) voice vote: Ayes: Committee Members Galimba, Inaba, Kagiwada, Kierkiewicz, Kimball, Lee Loy, Villegas, and Acting Chair Evans — 8. Noes: None. Absent: Committee Member Kaneali`i-Kleinfelder — 1. Excused: None. Bill 120: AMENDS CHAPTER 19 OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED) BY ADDING A NEW ARTICLE RELATING TO A REAL PROPERTY TAX STABILIZATION PROGRAM Establishes a fixed-rate property tax stabilization program for property owners who are at least 85 years old that utilize the property as their principal residence. Reference: Comm.674 Intr. by: Ms. Evans ACTING CHR. EVANS: Thank you, since I'm Chairing the Committee, and it's my bill, I'd like to move this over to Member Kierkiewicz, please. Relinquish Chair: At this time, the Acting Chair relinquished the chair to Member Kierkiewiez. Page 23 FC-27 January 23, 2024 ACTING CHR. KIERKIEWICZ: Thank you. Let the record reflect that I have assumed the Chairmanship of the Committee, at 10:17 a.m. May I have a motion. Motion to A Ms. Evans moved to recommend passage of Bill 120 rove: on first reading. Seconded by Mr. Inaba. ACTING CHR. KIERKIEWICZ: Council Member Evans. MS, EVANS: Thank you very much. Well, this is a new one that no one has seen before. So, it's something that I've been aware of over the years. I've seen it happen in many places. But what this would do, in simple words, when you turn the age of 85, and you own the property as a principal residence and you're in the Homeowners' Class, which qualifies you, then your taxes would get frozen. And they would stay frozen until such a time, the title of the property transfers to someone else, at which time, the tax rate would be reset at whatever the current rate is. So, that's it in a nutshell. ACTING CHR, KIERKIEWICZ: Thank you, Council Member. Any questions or comments? Council Member Galimba. MS. GALIMBA: Well, I left my light on, but I do have questions anyway. So, you said tax rate, but you probably meant tax assessment. MS. EVANS: Well, it's not the property tax assessment on the property. What it is, is what you pay for taxes, right? So, that gets fixed. But probably your assessment will continue to go up. MS. GALIMBA: I see. MS. EVANS: So, if you change title, then what happens is everybody's assessment on the property continues to go up. So, then all bets are off because it's a reset, and then they'll pay the tax on whatever the current property tax assessment. Thank you for the question. MS. GALIMBA: Got it. And I guess the other question that I had is sort of in relation to qualifying taxpayer, which I'm assuming that there are a number of properties that are owned by, sort of not individuals, but Trusts, LLC's (Limited Liability Company), etcetera, etcetera. So, I'm just wondering if you had thought about that, and if it was addressed in here. MS. EVANS: So, Deputy Keita Jo, are you there? Because the intent was, they have to be a homeowner. It has to be their residence. They have to qualify currently for the Homeowner Class with the class exemption. So, it's meant for residents. If the resident happens to have it in trust or whatever, there is I think, proof that you are still the resident even though it might be in the LLC or trust. Page 24 FC-27 January 23, 2024 You still have to file paperwork to show that you are a principal resident. So, am I correct, Keita, on that, please? MR. JO: Keita Jo, Assistant Real Property Tax Administrator. You would be correct. The way that the division identifies an owner, de facto owner, is if the property is held by even an LLC, if there is a lease to an individual for a term of ten years or more, that individual is considered the de facto owner for the purpose of exemptions. Alternatively, if the property is held in trust, a beneficiary applies. That beneficiary is identified as the de facto owner. So, in that respect, they would be eligible to receive this benefit. MS. GALIMBA: So, just a follow-up question to that. So, if the property was leased to an individual, who is the homeowner and enters into this program., and then passes away but it's the same LLC, just potentially with other members taking it over, what would be the mechanism to take this out of the stabilization program? MR. JO. So, I would look to our current Homeowner's Program in those situations. We highly advise individuals to make sure that all owners who are taking residence on property apply for that homeowner's exemption. So, in this scenario, if you had an individual who was, let's say 85 years old, they would be the primary applicant receiving this benefit. But we would also have a secondary applicant on file. Let's say that individual was 79, they would be precluded from receiving this benefit, the stabilization. However, they would still receive the homeowner's benefit. They would still receive a three percent cap along with, you know - which is an item that the Homeowner's Program provides, is that three percent cap. They would continue that cap. I hope that answers your question. MS. GALIMBA: Yes, thank you very much. I will yield. ACTING CHR. KIERKIEWICZ; Thank you, Council Member Galimba. Council Member Kimball. MS. KIMBALL: Thank you, Chair. Thank you, Council Member Evans, you know, for putting something forward. Definitely appreciate the desire to protect our seniors, our kupuna. But I have a lot of issues with this particular approach. First and foremost, I would say that we've done a lot around property taxes in the last year -and -a -half. Increasing the exemptions, increasing the number of types of exemptions; adding additional age -group exemption. I think we need to, at the very least, see how all of that plays out before we tweak any more. The homeowner's exemption exists because there was a desire for the folks that were in the kind of plantation camps to be able to stay in their homes where the Page 25 FC-27 January 23, 2024 markets were going up. And the way the exemptions work is that it really benefits the lower moderate -income folks more than your very high -income folks. What I worry about a little bit with this is that there's no kind of check and balance there. And we know that our island has become a haven for retirees with a lot of wealth. So, what I worry about with the stabilization application that's across the board, is we don't necessarily advantage everyone equally. That's why I like the exemption model and using that because the more value your property has, the less and less that exemption means. But the lower value properties get a bigger benefit. So, that's why I like that approach. And anything like this, I'd want to see some sort of income component. Council Member Lee Loy will remember that I voted against something that she had put forward for the very same reason. Sorry, but you know, we have to think about equity with our property taxes. And it's one of those mechanisms we have to ensure that greater income equity. The other concern I have is just the revenue piece. I don't know if we had any kind of estimate from RPT about what sort of fiscal impact this would have. But again, we've made a lot of tweaks. I kind of want to see how those all play out for our main revenue source. Then maybe we can look at something later on. But if we have a rapidly aging population, it is only forecast to continue to do so, and we cannot get into a situation. We are hamstrung in being able to generate revenue. Real property tax rates should be the main lever that we use. That's where I am on this. I don't particularly have an appetite for it in this current form, and those are my concerns. Sorry, Deputy Administrator Jo, do we have any kind of fiscal impact estimate on this proposal? MR. JO: We do. We did an initial analysis; it amounted to $170,000 in loss revenue. But as you had mentioned, you look at these changes on a long-term basis. It has the effect of compounding on itself because we do have that three percent cap provision currently, right? So, rather than the revenue stream increasing for this particular category by three percent every year, we've stagnated that. So, even though the loss in revenue might be $170,000 in year one. In year two, you would want to double that; in year three, in year four and so forth. So, within you know, a period of three to four years, you're already hitting that million -dollar loss in revenue threshold for that particular fiscal year. ACTING CHR. KIERKIEWICZ: Council Member Lee Loy. Page 26 PC-27 January 23, 2024 MS. LEE LOY: Thanks, Chair. Like my colleagues, I was thinking through the exact same things. You know, I have a parent who at 75 we were walking her out of all the assets because we wanted her to be able to qualify for so many other things. And having such an asset, like a home, actually disqualified her from senior housing programs and all the other kinds of opportunities that would be made available to her if she doesn't have such a valuable asset. So to the point Ms. Galimba made about how these things are held in trust, to me just gets more and more muddy when we're trying to basically freeze that tax. I think they already have a shelter with the three percent. I also have concerns like Ms. Kimball about how many other real property tax bills we've passed over the course of the last year -and -a -half and want to see how those set. And I think, finally, maybe this is a call to action to others out there and just us as a whole, we have not approved any type of senior housing programs for the better part of 35 years. So, when we're looking at approving housing products, we can't only look at the low 60 to 80 percent AMI, we also have to look at the other end of that spectrum to senior housing and that type of offerings that we're not offering our seniors that other communities are. So, for me, I really want to put this particular bill down, and I would have taken the approach like our other bills is to basically give huge tax cuts like we did with the other bill rather than freezing it. But that's where I am on this bill. I yield. ACTING CHR. KIERKIEWICZ: Council Member Evans, MS. EVANS: Thank you. I just want to point out a couple things Member Galimba brought up. You know, maybe there's some people that would benefit from this and they don't need to have the benefit. But the way I wrote it, it's an opt in. It's not automatic. So, you can opt in and sign up for the program to address that. But here's my passion on this. When you get old you go on fixed income, and right now, we don't seem to be controlling the cost of energy, gasoline, food. All the things that are impacting our senior citizens that go into a fixed income. know, personally, for me I'm corning off knowing that my family members who lived in a community that had this type of program where it froze their taxes at a certain age. They believe it made all the difference in the world for them to be able to stay in their home. Because, you know, maybe you don't fix a leaky roof; maybe you don't fix the toilet; maybe you let things start to fall apart, but the reality is you can still afford to be in your home. Page 27 FC-27 January 23, 2024 I just think we need to have legislation on this island that takes care of the families that have been here for generations that want to stay in their home. I think we have to be sensitive to our seniors that are on fixed income. I feel really passionate about this. But you know, it's the will of the body. Thank you, I yield. ACTING CHR. KIERKIEWICZ: Council Member Villegas. MS. VILLEGAS: Yes. Thank you for that, Council Member Evans, because that was one of my questions about, does this exist somewhere else? And where and has it been effective in the other municipality that may have adopted this legislation. Thank you to Real Property Tax for answering the question about potential loss of revenue and budget shortfall, which I feel like that number of $170,000 makes me think that it's not a huge amount of homes. But there is the opportunity for compounding to change that. My concern is in alignment with some of the comments made by some of my other colleagues about accidentally. I mean, I hear; and I trust; and I believe wholeheartedly your intention behind this legislation, and the need to support our kupuna and the need to ensure that they are not being priced out of their homes by a tax burden, like totally viable. I just have some concerns about this being the most equitable way of doing it. And I suppose kind of one of the little tickles in my mind is the irony of the kind of reverse ageism. Because we have young people who can't afford to get in a home, and then we have older people we want to keep in our homes. So, how do we manage that? But I'm not sure that this is the ideal way to do that based on the nuanced economic circumstances here in the County of Hawaii. So, I am leaning towards, and I think there could be wisdom in taking something like this. And perhaps there's opportunity, Council Member Evans, for some edits to, instead of do a freeze, instead there's opportunities for a higher exemption for people in this certain circumstance. Wow, we are in a time of some legislation about taxes for our County, and we have a lot of pieces of legislation coming before us in the pipeline. And so, I do also feel a little bit of uncertainty of doing too much at once, not just for the sake of the Administration who has to execute it, but for the sake of our community who you know, we're going into an election year and there are a lot of heightened concerns within our community and trust issues with government. So, as we navigate that process as public servants who make decisions based on our responsibility to our community and their desires and wishes, I would agree that I feel a little tentative about rocking the hornet's nest or extra great, extra Page 28 FC-27 January 23, 2024 cautious as we move forward with the intentions of legislation like this, Council Member Evans, and that the intention is there; the intention is seen, the desire is shared to find solutions for this. So, you know, the irony with the Sunshine Law, is we can't have these conversations and provide these kinds of inputs with one another outside of this format. So we get to be vulnerable, and fallible, and bring things forward amongst one another; and you know, get to see the things we may not have seen or be exposed to potential other options. I myself continue to learn in that capacity. So, where this is concerned, I don't think I can be supporting this moving forward out of Council today. But I do see that perhaps there's opportunities, either for another bill that hits the target on what you're trying to accomplish but utilizing perhaps higher exemptions as opposed to fixed taxes on that. So, that's just my humble input. And with that, I yield with gratitude. ACTING CHR. KIERKIEWICZ: Thank you. Council Member Inaba. MR. INABA: Thank you. Just a quick question. For property tax, do we have an idea of like the lowest assessment and the highest assessment for those over the age of 85? MR. JO: Yes, we do. So, the current market value range for these homes that we're discussing today ranges from $43,100 all the way up to $27.8 million. MR. INABA: So, that hundred something thousand dollars of potential tax shortfall is primarily in those higher range homes. Those would be the ones that cause that tax shortage? MR. JO: Those are the properties that would see the largest benefit from this legislation. MR. INABA: Okay. To the maker, I feel like the body is kind of on the same page when it comes to providing benefit but recognizing that we've been pulling all kinds of levers lately. And I think I kind of feel the same way right now, especially with that number. I think I'd want a little bit more information from Real Property Tax just to better understand how this would play out. But that's kind of where I'm standing right now. Thank you. ACTING CHR, KIERKIEWICZ: Thank you. Council Member Kagiwada. MS, KAGIWADA: Thank you, Chair. So, to the maker, yes, understand kind of what you're getting at here. But I feel like we have the lowest property tax rates for homeowners. Like I think it might be one of the lowest in the country. We Page 29 FC-27 January 23, 2024 have the exemptions that go up as you get older. We've got the three percent cap. I think your point that you made earlier is really relevant that issues around the cost of energy, food, medications; those are the places that our colleagues and friends at the State level should be at looking at to address so that people that are struggling to stay in their homes at that lower level can do so. I feel like, as the County, we've done our part, in a lot of ways, of keeping things affordable for this range of homeowners who would really need this benefit. So, I can't support this at this time. But thank you for bringing up a good discussion. ACTING CHR. KIERKIEWICZ: Thank you, Council Member. Anyone else? Council Member Evans. MS. EVANS: Thank you. So, I know when we hear the $27 million, it always just blows people's minds that somebody over the age of 85 is living on our island and has that kind of money. It's kind of interesting because I do think the people that live over 85-years-of-age on our island are people who probably lived their whole life here. I'm trying to take care of the people that, this is their home, and this is an opt in. I kind of like to think the $27 million guy wouldn't apply for it, but I guess he could show up at the tax office and apply it. But there is a way, just like we did with the last bill on long-term rental. We don't want to give it to someone whose property is valued over $2 million. There may be a way to write it to put some cap or exemption or who it would apply to. I'd be willing to try that. So, ok I got the support, I'd be willing to offer a motion to postpone and offer an amendment at the Committee level next time. ACTING CHR KIERKIEWICZ: Are you making a motion to postpone? MS. EVANS: I'm offering that. I'm not sure if anybody wants to comment on that, but otherwise, I can offer it. No comment? Okay, I'll offer a motion to postpone it to February 6, with the intent to bring back an amendment to address the concern of who might get this benefit. Motion to Postpone: Ms. Evans moved to postpone Bill 120 to February 6, 2024. Seconded by Ms. Villegas. Page 30 FC-27 January 23, 2024 Vote on Motion to: Postpone: (Approved ADJOURN- MENT: Approved: Mr. Mat Kaneali`i- Finance mmittee MK/dt ACTING CHR. KIERKIEWICZ: Any discussion on the motion to postpone? Seeing no discussion, all in favor please say "aye." Any opposed? The motion to postpone Bill 120 to February 6, 2024, was carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy, Villegas, and Acting Chair Kierkiewicz — 8, Noes: None. Absent: Committee Member Kaneali`i-Kleinfelder — 1. Excused: None. There being no further business, at 10:42 a.m., Ms. Kimball moved to adjourn the meeting. Seconded by Ms. Lee Loy and carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy, Villegas, and Acting Chair Kierkiewicz — 8. Noes: None. Absent: Committee Member Kaneah'i-Kleinfelder — 1. Excused: None. ACTING CHR. KIERKIEWICZ: We are adjourned 10:42 a.m., thank you. , Chair �/ 1(9q (Dat ) Page 31