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HomeMy WebLinkAboutBIL 176 Draft 01 2022-2024AN ORDINANCE AMENDING CHAPTER 2, ARTICLE 25 OF THE HAWAI‘I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO APPROPRIATION OF FUNDS TO NONPROFIT ORGANIZATIONS. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAI‘I: SECTION 1. Chapter 2, article 25, section 2-136, of the Hawai‘i County Code 1983 (2016 Edition, as amended) is amended to read as follows: “Section 2-136. Definitions. As used in this article, unless the context otherwise requires: [(1)] “Conflict of interest” means a substantial probability that action taken by an individual will result in measurable direct benefits accruing to the individual as opposed to benefits accruing in general to an industry. “Council” means the County council of the County of Hawai‘i. “Department” means the County agency reponsible for administering a grant. [(2)] “Director” means the [director of finance of the County.] head of the County agency reponsible for administering a grant. [(3)] “Grant” means an appropriation of public funds to a nonprofit organization for a public purpose. [(4)] “Nepotism” means appointing persons to positions on the basis of their blood or marital relationship to the appointing authority, rather than on merit or ability. [(5)] “Nonprofit organization” means an organization [organized for other than profit-making purposes and which has a current 501(c)3 tax-exemption from the Internal Revenue Code.] that is registered and in good standing in the State of Hawai‘i as a nonprofit organization and maintains a 501(c)(3) charitable designation from the Internal Revenue Service. [(6)] “Perquisite” means a privilege furnished or a service rendered by an organization to an employee, officer, director, or member of that organization to reduce the individual’s personal expenses. “Public purpose” means a benefit to, improvement of, or promotion of the interests of educational concerns, culture and the arts, needs of the poor, youth, the aged, those with physical or emotional disabilities, victims of crimes, victims of health or social crises, or public health and welfare of the people and the environment, as may be determined by the County.” SECTION 2. Chapter 2, article 25, section 2-137, of the Hawai‘i County Code 1983 (2016 Edition, as amended) is amended to read as follows: “Section 2-137. Eligible organizations. All grant payments made by the County to nonprofit organizations are to be made in accordance with these standards so that the funded nonprofit programs yield direct benefits to the public and accomplish public purposes[. No grant to a nonprofit organization shall be made unless the nonprofit organization meets the following criteria:] within the County. All nonprofit organizations seeking awards of County grants shall meet the following eligibility requirements: [(1) The nonprofit organization is chartered or otherwise authorized to do business in the State for charitable purposes and exempted from the Federal income tax by the Internal Revenue Service. (2) The purposes for which the nonprofit organization is organized provide benefits to the people of the County. (3) The service or activity to be provided by the nonprofit organization, and funded by the County, shall address educational concerns, culture and the arts, the needs of the poor, youth, the aged, those with physical or emotional disabilities, victims of crimes, victims of health or social crises, or public health and welfare of the people and the environment, as may be determined by the County.] [(4)](1) The nonprofit organization has a governing board whose members serve without compensation and have no material conflict of interest [between their regular occupations and the services provided by the nonprofit organization]. [(5)](2) The nonprofit organization has bylaws or policies which describe the manner in which business is conducted, including management, audit, and fiscal policies and procedures, policies on prohibiting nepotism, and policies on management of potential conflict of interest. [(6)](3) The nonprofit organization has at least one year’s experience with the service or activity for which the appropriation is sought or can otherwise demonstrate to the satisfaction of the County sufficient expertise to successfully carry out the service or activity. [(7)](4) The nonprofit organization must be licensed and accredited in accordance with applicable requirements of Federal, State, and County laws.” SECTION 3. Chapter 2, article 25, section 2-138, of the Hawai‘i County Code 1983 (2016 Edition, as amended) is amended to read as follows: “Section 2-138. Conditions for [grants.] grant awards. (a) The County may only grant an award when the program or service proposed in the grant application yields direct benefits to the public and accomplishes public purposes within the County. (b) Nonprofit organizations to whom [a grant has been] any grant is awarded shall agree to comply with the following conditions before receiving the grant: (1) Employ and appoint persons on the basis of merit and ability; (2) Comply with applicable Federal and State laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, or [handicap;] disability; (3) Agree not to use any public funds for purposes of personal entertainment or perquisites; (4) Comply with such other requirements as the director may prescribe to ensure adherence by the nonprofit organization with Federal, State, and County laws, and established standards for fiscal and program management; (5) Allow the director, the committees of the council and their staffs, and the [legislative] County auditor access to facilities, personnel, records, reports, files, and other related documents in order that the program, management, and fiscal practices of the nonprofit organization may be monitored and evaluated to assure the proper and effective expenditure of public funds[; and] (6) [Each nonprofit organization shall submit a disclosure form along with its grant application which lists any board member, officer, director or administrator that may have a conflict of interest or potential conflict of interest, including any familial relationship with any of the following:] The nonprofit organization shall disclose any of its board members, officers, directors, or administrators who may have a familial or business relationship with any of the following: (A) A member or members of the council; [(B) Staff appointed by a member of the council;] [(C)](B) The mayor; [(D)](C) The director; [(E)](D) The managing director; [(F)](E) The corporation counsel, the assistant corporation counsel, or a deputy corporation counsel; or (F) Any County officer or employee with oversight of the grant. [The disclosure form shall specify any and all mitigation measures to avoid, in fact or appearance, any conflict of interest.] Should a disclosure be made, the County shall take steps to prevent the employee’s participation and/or influence in determining eligibility for grant consideration, award of a grant, and compliance with required grant reporting; and (7) All funds awarded shall be restricted for the purposes stated in the application, except for a maximum ten percent for administrative and overhead costs.” SECTION 4. Chapter 2, article 25, section 2-139, of the Hawai‘i County Code 1983 (2016 Edition, as amended) is amended to read as follows: “Section 2-139. Procedure for awarding grants. (a) All grant awards made to a nonprofit organization by the County shall be made in accordance with one of the following procedures: (1) [Grants-in-aid awarded annually in the operating budget:] Waiwai grants-in-aid: (A) Annually, before November 30, the finance director shall, for the purpose of soliciting applications, establish a sum of at least $2,500,000 [to be available in] for the ensuing fiscal year for [funding requests by nonprofit organizations.] Waiwai grant-in-aid awards. The finance director shall also publish a notice soliciting applications in two newspapers of general circulation within the County by November 30. (B) [All applications for grants shall be submitted to the director on or before January 31 preceding the County’s fiscal year, which begins on July 1. Applications shall be prepared on forms provided by the director. Applications not in conformance with the requirements of this Code may be rejected. All application forms shall include detailed information on specific, measurable outcomes and public benefits to be derived from the expenditure of County funds.] Applications for Waiwai grants-in-aid shall be made on forms prescribed by the finance director and shall be submitted to the finance director on or before the last day of January following publication of the notice as provided in subparagraph (A). No application shall be considered for any Waiwai grant-in-aid award unless the application: (i) Conforms with the requirements of this Code; (ii) Includes detailed information on specific, measurable outcomes and public benefits to be derived from the expenditure of County funds; and (iii) Complies with all other requirements and instructions for submission as the finance director may direct. (C) The finance director shall submit [to the council] all [qualifying] applications [as provided in sections 2-137 and 2-138] which meet the eligibility requirements established in section 2-137 to the council for its review and appropriation of funds. [Site visitations of nonprofit organizations submitting complete applications may be conducted by the council and its designated staff, as deemed necessary by the chair of the appropriate committee, after January 31 but prior to final action on the operating budget by the council. Any site visitations shall be publicly noticed and conducted in a manner that allows flexible councilmember participation and designated staff support.] (D) [Upon] The council shall review all qualifying applications, and upon favorable action by the council to appropriate funds for [the grant,] Waiwai grants-in-aid to the nonprofit organizations, the finance department shall prepare a written contract [shall be prepared] with the nonprofit organization which shall meet all legal requirements of the Federal, State, and County governments, and shall include program, fiscal, and audit reporting requirements sufficient to allow the finance director, the [legislative] County auditor, or council to effectively monitor and evaluate the use of the grant funds. [Agencies shall be notified by the director of their funding or lack thereof by August 31.] The finance director shall notify each nonprofit organization by August 31 if the council has approved or denied its application for a Waiwai grant-in-aid. (2) Grants from district contingency relief funds: (A) Requests for district contingency relief grants shall be made directly to council members on a form prescribed by the council. The council shall determine whether requests meet the eligibility conditions of this article. (B) Prior to introducing a resolution for a contingency relief grant, a council member shall identify a department to administer the contingency grant. [(A)](C) Appropriations from the district contingency relief account shall be approved by resolution and transferred to [an accepting County department/agency via resolution identifying] the identified department for administration. The resolution shall identify the nonprofit organization and the specific program, project, event, activity, service, equipment, materials, or supplies for which the grant shall be used. [(B)](D) Any equipment purchased by a nonprofit organization shall be domiciled with that nonprofit organization[, which] in the County. The nonprofit organization shall assume any and all responsibility and liability for such equipment. [(C)](E) A contract shall be prepared by the identified department and executed with the nonprofit organization which shall [meet]; (i) Comply with all legal requirements of the County; and [shall] (ii) Include program, fiscal, and audit reporting requirements sufficient to allow the [legislative] County auditor or council to effectively monitor and evaluate the use of the grant funds. (3) Other grants: (A) Grant awards in excess of $25,000 to nonprofit organizations shall specifically identify the organization receiving the grant funds and the purpose for which the grant funds shall be used in [an ordinance or] a resolution. (B) Grant awards in excess of $25,000 to organizations that do not qualify as nonprofit organizations shall specifically identify the purpose for which the funds shall be used in [an ordinance or] a resolution and be subject to competition in compliance with chapter 103D of the Hawai‘i Revised Statutes. (C) Grant awards of $25,000 or less may be authorized by the finance director for [public purpose] projects or programs that accomplish public purposes upon written request of a [funding agency or] department. Such grant awards shall not be limited to nonprofit organizations but shall specifically identify the organization and program, project or event for which the grant funds shall be used and comply with the rules and regulations of the director of finance. (b) In the event that a grantee organization is unable or unwilling to provide the public service(s) or purchase(s) for which grant funds were appropriated, the following procedures shall apply: (1) For grant awards authorized as prescribed in 2-139(a)(1), the mayor may direct the finance director to solicit applications from eligible nonprofit organizations to fulfill the specific public purpose(s) for which the funds were originally appropriated for the remainder of the fiscal year. The director shall forward recommended application(s) and appropriation measure(s) to the council for its decision. Funds appropriated to a successor nonprofit organization shall not exceed the balance of unexpended County funds awarded to the original nonprofit organization. (2) For grant awards from [the] district contingency relief[,] funds, the council may direct the return of the full appropriation or the balance of unexpended funds. (3) For other grant awards authorized as prescribed in 2-139(a)(3), the [finance] director may direct the return of the full grant amount or balance of the unexpended funds.” SECTION 5. Chapter 2, article 25, section 2-142.1, of the Hawai‘i County Code 1983 (2016 Edition, as amended) is amended to read as follows: “Section 2-142.1. Rules. (a) The finance director shall adopt rules as may be necessary to meet the requirements of this article. (b) All application forms shall include a right to audit clause. (c) All application forms shall include, “As part of this application, you acknowledge that any funds awarded will be restricted for the purposes stated in the application except for a maximum ten percent for administrative and overhead costs.” SECTION 6. Material to be repealed is bracketed and stricken. New material is underscored. In printing this ordinance, the brackets, bracketed and stricken material, and underscoring need not be included. SECTION 7. Severability. If any provision of this ordinance, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the ordinance that can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable. SECTION 8. This ordinance shall take effect upon approval. INTRODUCED BY: _______________________________________ COUNCIL MEMBER, COUNTY OF HAWAI‘I _______________, Hawai‘i Date of Introduction: Date of 1st Reading: Date of 2nd Reading: Effective Date: