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HomeMy WebLinkAboutMIN FC 2024/10/15 (2022-2024) DRAFT Committee on Finance 46th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii October 15, 2024 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 9:00 a.m., in the Council Chambers, Kailua-Kona by Mr. Kaneali`i-Kleinfelder, Chair. ROLL CALL: Present: Mr. Matt Kaneali`i-Kleinfelder, Chair Ms. Cindy Evans, Vice Chair Ms. Michelle M. Galimba, Member Mr. Holeka Goro Inaba, Member Ms. Jenn Kagiwada, Member Ms. Heather L. Kimball, Member Ms. Susan L. K. Lee Loy,Member (via videoconference from Hilo) Ms. Rebecca Villegas, Member(came in later) Absent& Excused: Ms. Ashley L. Kierkiewicz, Member STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) COMMUNI The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 13.43 REPORT OF CHANGE ORDERS AUTHORIZED: AUGUST 1 — 15, 2024 From Finance Director Diane Nakagawa, dated September 13, 2024, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Motion to Close File: Ms. Kimball moved to close file on Comm. 13.43. Seconded by Mr. Inaba CHR. KANEALI`I-KLEINFELDER: Discussion, Council Members, on the measure? Okay. Just checking in with Hilo. Do we have Director Nakagawa in the Hilo Chambers if we do have questions? MS. LEE LOY: Yes, she is. FC-46 October 15,2024 CHR. KANEALI`I-KLEINFELDER: Thank you very much, Council Member Lee Loy. Okay, hearing and seeing none. Mr. Clerk, motion is on the floor to close file on Communication 13.43, all in favor? Vote on Comm. 13.43: The motion to close file on Comm. 13.43 was carried by Filed the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy, Villegas,' and Chair Kaneali`i-Kleinfelder-r 8. Noes: None. Absent: Committee Member Kierkiewica I.— Excused: None. CHR KANEALI`I-KLEINFELDER: Please not that Council Member Villegas has joined us. Comm. 13.44: REPORT OF CHANGE ORDERS AUTHORIZED: AUGUST 16 —31, 2024 From Finance Director Diane Nakagawa, dated September 16, 2024, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Vote on Comm. 13.44: Ms. Kimball moved to close file on Comm: 13.44. Filed Seconded by Mr. Inaba and carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Kierkiewicz— 1. Excused.,, None. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 662-24: AUTHORIZES THE DEPARTMENT OF PARKS AND RECREATION TO AWARD FUNDS TO HAWAI`I HI-DIVING FRIENDS Provides $62,850 of grant funds for the Charles "Sparky" Kawamoto Swim Stadium Dive Tower New Staircase project. Reference: Comm. 1087 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Ms. Kimball moved to recommend adoption of Res. 662-24. Seconded by Ms. Kagiwada. Page 2 FC-46 October 15,2024 CHR. KANEALI`I-KLEINFELDER: Discussion on the resolution? Sir, go ahead. I know you've been waiting for this. Thank you for your patience. Please introduce yourself. (Note: At this time, Hi-Diving Friends Executive Director David Freedman came forward to address the members of the Committee.) MR. FREEDMAN: Hi. I'm David Freedman. Pleasure to be here today. Thank you all for your time. I'm the Executive Director of Hawaii Hi-Diving Friends and the Head Coach for Hilo High diving. This request for funds is actually the third and final phase of the project to replace the ancient, decrepit dive tower staircase at the Kawamoto Pool with a brand new staircase. Phase I has already been completed early this year. We took down the old staircase which was not only unusable and decrepit but actually a public hazard. The second phase of the project, which was approved and paid for, was the purchase of a brand new dive tower staircase from Duvinage in Maryland. They were actually the original manufacturers of the first staircase back in the early 70's, and that staircase is actually expected to arrive today at the Kawamoto Pool. So, this request for funds is for the third and final phase of the project to have our contractor, Scott Mead, build the staircase and install it on the base of the pool deck and connect it to the dive tower. And of course, the value proposition for getting the dive tower reopened for the first time in almost a decade is to expand the sport of platform and springboard diving on the Big Island and specifically in Hilo, and also it allows us to attract national and international diving competitions to Hilo. CHR KANEALI`I-KLEINFELDER: Thank you very much, first of all. Thank you very much. I appreciate your energy and time. We do have the Director of Parks and Recreation. Anything to add? Thank you, Director Messina. I know you just walked in the door. (Note: At this time, Parks and Recreation Director Maurice Messina came forward to address the members of the Committee.) MR. MESSINA: Good morning. Maurice Messina, Parks and Recreation Director. Yes, like Mr. Freedman was just talking about, this is the second time we've come before Council asking for funding through our operating budget as a grant. The first one was for us to buy the staircase. Now we can actually install it. Like David was saying, it'll be on island hopefully tomorrow and inhouse painters and inhouse construction guys, our Planner; we've got a Project Manager working on it as well. And after decades and decades, we'll finally be able to get the high dive open at Kawamoto Pool again. Page 3 FC-46 October 15,2024 CHR. KANEALI`I-KLEINFELDER: Awesome. Thank you very much, Director. Council Members, any discussion? Council Member Kagiwada. MS. KAGIWADA: Thank you. So, I just had a question about this. Is Hawaii Hi-Diving Friends, are they a friend of the park or are they another nonprofit that's separate? MR. MESSINA: So, Mr. Freedman, who was just testifying, that's him. Yeah, they are a—he's a friends of the pool and he's also a nonprofit that he's fixed the one-meter board. He's done a lot there. He's started our diving program and yeah, he's a friends of the pool and a friends of the park. MS. KAGIWADA: Okay. Great. I know there's a lot;a couple different organizations that worked on this, like friends of the pools park, and the Hi-Diving Friends. MR. MESSINA: Yeah, it was mostly Mr. Freedman. MS. KAGIWADA: It's mostly the single star. Okay. Thank you so much. We appreciate you. Yeah, thank you. Alright: Great. Yeah. So, alright, this is very exciting; happy to see it happening and hoping fo continue to support, you know, Kawamoto Pool. It's a gen'in our town on the east side, I think. So, thank you. Appreciate all your work on this,both of you. And look forward to seeing the platform in action. Aloha. MR. FREEDMAN: As are we. CHR. KANEALI`I-KLEINFELDER: Thank you, Council Member Kagiwada. Council Member Evans. MS. EVANS Thank your Is Finance still in the audience in Hilo? MS. LEE LOY- Yes,,they are. (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Good morning, Council Members. Diane Nakagawa, Finance Department. NfS. EVANS: Thank you. I'm looking at Form B-52, and my question is, is it possible when you point out it's a grant award taken from the operating budget that you show us exactly where you're taking it from? MS. NAKAGAWA: We can go ahead and take a look at that, Council Member Evans. Page 4 FC-46 October 15,2024 MS. EVANS: It would be nice to see that line item, what area of the operating budget you've chosen. MR. MESSINA: So, this is actually from our Maintenance and Repair budget and our Parks Maintenance. MS. EVANS: So, this is your Maintenance and Repair? MR. MESSINA: Maintenance and Repairs to facilities, yes. MS. EVANS: Okay. And then also it would be nice to get the account number or whatever so that when we're looking at the budget,you know, we see. I don't know, I just think it's good to know so.that we can kind of see where money is coming from. MR. MESSINA: I'll email you but it's either 229 or 110 account in'Parks and Maintenance. MS. EVANS: 229? MR. MESSINA: Or 110.,E MS. EVANS: Or 110. Okay. Thank you. Thank you. It'd be really nice if you don't mind adding that to B-52's. ,Thank you, MS. NAKAGAWA: We'll take a look at it. MS: EVANS: Okay. Thank you, Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Going to Hilo. MS. LEE LOY- Thank you, Chair. Diane, did you have any more to add? Chair, if I could just take a moment. I do want to thank Mr. Freedman and the Parks Department for kind of finding these creative solutions where we have this nonprofit and public private partnership to get things done. It's, as my colleague Ms. Kagiwada mentioned, the pool needs some help. And so, I'm glad this is a way forward to see some repairs in that area. So, thank you guys so much. CHR. KANEALI`I-KLEINFELDER: Thank you, Council Member Lee Loy. MR. FREEDMAN: Thank you, Council Member. CHR KANEALI`I-KLEINFELDER: Council Member Galimba. MS. GALIMBA: Thank you. I'm very excited to see this and we'd also got word from you this morning that the Volcano Skate Park is finished. So, another really Page 5 FC-46 October 15,2024 great step forward. Also, using sort of a public, I don't know if private, but public community model. So,yeah,just wanted to thank you, Director Messina, for getting these projects going forward and working with finding creative ways to get this work done. Thanks. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, seeing no further discussion. Mahalo for everyone's time on this measure. Motion on the floor is to forward Resolution 662-24 to Council with a favorable recommendation. All in favor? Vote on Res. 662-24: The motion to recommend adoption of Res. 662-24 was (Approved) carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy, Villegas, and Chair Kareali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Kierkewicz`- 1. Excused: None. CHR KANEALI`I-KLEINFELDER: Bill 216;'please. > BILLS FOR The Chair directed the Committee to proceed to thenext order of business, ORDINANCES: Bills for Ordinances. Bill 216: AMENDS ORDINANCE NO.,24-32, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUKE 30, 2025 Appropriates revenues in the Federal Grants —Emergency Solutions Grants Program account($271,806), and appropriates the same to the Emergency Solutions Grants Program account($251,421) and Emergency Solutions Grants Program —Administration account($20,385). Funds would be used for street outreach, emergency shelters, homelessness prevention, rapid re-housing assistance, and data collection through the Homeless Management Information System. Reference: Comm. 1088 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Ms. Kimball moved to recommend passage of Bill 216 on first reading. Seconded by Ms. Kagiwada. CHR KANEALI`I-KLEINFELDER: Council Members, discussion on Bill 216? MS. LEE LOY: Chair, Mr. (Royce) Shiroma's here in the Council Chambers if they have any questions. Page 6 FC-46 October 15,2024 CHR. KANEALI`I-KLEINFELDER: Okay. Thank you, Council Member Lee Loy. Council Member Kagiwada. MS. KAGIWADA: No questions. Just want to thank OHCD (Office of Housing and Community Development) for going after federal grant money; always appreciated to get more funding into our services. Thank you. CHR KANEALI`I-KLEINFELDER: Sorry, we're having a mic malfunction. Mr. Clerk, would anyone like to speak on the measure for Bill 216? Okay, hearing and seeing none, we do have the motion on the floor. All in favor? Vote on Bill 216: The motion to recommend passage of Bill 216 onfirst (Approved) reading was carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Inaba, Kagiwada, Kimball, Lee Loy,Villegas, and Chair Kanealisi-Kleinfelder.—8. Noes: None. Absent: Committee Member Kierkiewicz— 1. Excused: None. CHR KANEALI`I-KLEINFELDER: We're going to take a brief recess to get out mics back in order. MR. HENRICKS: Just checking, Ms. Lee Loy, can you hear us? 1 S: LEE LOY: We can hear you. It does cut in and out, but I can hear Mr. Kdneali`i-Kleinfelder and yourself. MR. HENRICKS: Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. We're in recess. Recess: At 9:16 am., the Chair called for a recess. Reconvene: The meeting reconvened at 9:18 a.m. CHR. KANEALI`I-KLEINFELDER: Okay. We're out of recess. We have fixed our mics. Let's take up our last bill. Mr. Clerk, Bill 218,please. Page 7 FC-46 October 15,2024 Bill 218: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19-2, OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO REAL PROPERTY TAXES Amends the definition of"Affordable rental rate"to mean a monthly rent not to exceed the most recent affordable rental guideline for 100 percent of the area median income as established by the Hawaii housing finance and development corporation. Reference: Comm. 1109 Intr. by: Mr. Inaba Motion to Approve: Mr. Inaba moved to recommend passage of Bill 218 on first reading. Seconded by Ms. Villegas. CHR. KANEALI`I-KLEINFELDER: Mr. Inaba, go ahead. MR. INABA: Thank you. As we continue to tinker with the Real Property Tax (RPT) Code, on one of our last discussions as'a result of Council Member Kagiwada and Council Member Galimba's bill was revisiting our current affordable rental program and the maximum rental guidelines that we used for that. Currently, we are using 75 percent of the payment standard. And this is something that the Real Property Tax Office has been receiving from Office of Housing, and it kind of has rent set about 75 percent of the AMI(Area Median Income). It's not necessarily set,tdepending if you compare the affordable rental program of the current Real Property Tax Program versus the for-rent guidelines provided HHFDC (Hawai`i Housing Finance and Development Corporation) every year. It just depends on the unit amount; if it's three-bedroom, two- bedroom, one-bedroom, what the AMI corresponding amount would be. But what this bill is proposing sets it at 100 percent of the area median income. o what we're trying to do here is have some people who are maybe just on the other side of being able to afford, to be in the affordable rental guideline as a property owner to be able to jump into the program to get the tax benefit of the cheapest property rate with the three percent assessment cap. And then on the renters side; we're going to hopefully have that increase number of units in the program, which is essentially more affordable rentals on the island. We do have Real Property Tax Administrator Lisa Miura here, and I want to just give her an opportunity to just chime in her general thoughts on the bill as proposed. (Note: At this time, Real Property Tax Administrator Lisa Miura and Real Property Tax Assistant Administrator Keita Jo came forward to address the members of the Committee.) MS. MIURA: Good morning. Real Property Tax Administrator Lisa Miura. Keita Jo, the Assistant Real Property Tax Administrator, is in the Hilo Chambers, as well as our Finance Director Diane Nakagawa. So, in the last few days, I have Page 8 FC-46 October 15,2024 gotten quite a bit of calls and emails from members that were on the committee that created the affordable rental as well as we reached out to Housing to see if the Council had any questions specific to them since thisI know one of the biggest questions everybody asks is, what will this change; how will it make a difference on the housing side? And I can't answer that only because I'm not the housing specialist. While we like to see and believe that people will keep their rents low and not raise it up based on the change, I couldn't tell you exactly what the markets going to do. We usually deal with the after the fact numbers, not going forward. I can share what the concerns have been from the public in regard to not being able to qualify and what our numbers currently are on the program we have now as they're stated. So, for West Hawaii, the affordable-and I shouldn't say West Hawaii. It's specific zip codes that were made the exception'for this year. We did see a little bit of a lowering in the affordable rental housing'program. So, a bit of the concern has been how come it went down? And the reason,for that, Council Member Inaba explained a little bit going off the payment standard is, that one is set by HUD (Housing and Urban Development) as a fair market rent and then housing does a calculation and can add a bit to it to be more in line as what they see as marketrents. This past year they were allowed to go up to 120 percent of that in 2024 and they were only allowed to go up to 110 percent for this year, so that's why we saw the rents come down a little biffor the program. In reality, we are not seeing market rents come dawn across the island, so that was a little concerning. So, I believe going to the AMI, he's hoping will also provide our office a little bit more time to get this information. The HUD numbers come in later. The AMI comes in a little bit earlier in the year and is ready around July instead of September, and to us in October.. . There are currently 2,057 properties not in the excluded zip codes that can have that,one rent, while there's only 112, and those zip codes are primarily Haw! through IKeauhou. So, it's west side, but it doesn't include the south side of the island, and it doesn''t go towards the Hamakua side. So, there's still a large difference in those numbers. It did come up significantly from last year but last year our total in the program was 1,866. So, we did still see more come into the program'last year. To share with the former administrator and this is two administrators prior to me as well as another committee member, when they had created the affordable rental program, the 75 percent was chosen to try and keep the rents low for the tenants, and that was based on they were thinking if you look at what our staff make, even our clerical entry and 30 percent of their income. Could they afford to be renting a place based on what we have here. And so, they shared a lot of their information with me in regard to that. While they're not here today, if the bill moves forward, they will most likely be submitting some type of testimony to Page 9 FC-46 October 15,2024 explain what the thought process was back then. And if you have any questions, I am here to answer them. We have the rents that go back to 2008 to current, when the program was created. MR. INABA: Thank you, Administrator. So, with that, I would like to open it up. Again, the attempt here is to provide a very clear understanding of what rent is when we look at the current definition of affordable rental rate. We typically don't work with payment standards as you folks know,we look at the AMI chart. So, I'm open to even changing what percentage we aetually.fall on. But I did want to bring that before us today. If 100 percent of the AMI is too much compared to what it currently is with 75 percent of the payment standard, we can definitely settle on a number that works for"eueryone. And it might be good opportunity for the previous administrators, being that they just called in to be able to chime in as well. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball, go ahead. MS. KIMBALL: Yeah,just quickly. Administrator Miura, could you repeat those numbers that you gave? I'm sorry, I missed the first one, which it ended in 57. MS. MIURA: I'm sorry. So, how the affordable rental housing program works, there's currently a total of 2,169 parcels in emir program this current tax year. Of those two thousand, 57 are for all zip codes except the accepted areas, which is parfof WesfHawai`i, which is 112. MS.'KIMBALL: Okay. And Vice Chair Inaba, do you,just as of like right now, what would be the difference if We just, between the 75 percent payment standard versus 75 percent affordable rental guidelines. I see the logic in tying to that since that's what we tie to in other places. But I'm just curious what the current difference is. MR. INABA: Chair, can I respond? CHR KANEALI`I-KLEINFELDER: Yes,please. MR. INABA: Thank you. It depends because the payment standard isn't necessarily an exact AMI percentage. So, depending on the unit type it could be different. It ranges from anywhere in the mid 60's to almost 85 percent of the AMI, depending on what you look at, like what the savings would be. And I'm happy to hold this over and provide specific numbers with Real Property Tax if we went to 100 percent AMI, 80 percent, 75 percent, what the savings or increased costs, I guess, for the renters could be. Page 10 FC-46 October 15,2024 MS. KIMBALL: Yeah. That's something I feel like I'd need to see to make a- decision on this, is just some sort of metrics about the different rates and how they would compare. But, Administrator, do you have? MS. MIURA: I'm not sure if I'm talking about the same thing. If you're wondering what, for example, the three-bedroom allowed monthly rent would be in each one, I have those numbers. So, a three-bedroom at 100 percent AMI for island-wide because it's not distinguished by zip codes is„$2,881. The three- bedroom currently, which is 75 percent of the payment standard for most of the island is $2,134. For those zip codes predominately,in most of West Hawaii is $2,230. CHR. KANEALI`I-KLEINFELDER: As point of information, Director Miura, the first number for the 100 percent AMI was $2,801 or $2,091? MS. MIURA: $2,881. CHR KANEALI`I-KLEINFELDER: 2,01? MS. MIURA: Correct. CHR KANEALI`I-KLEINFELDER: Okay. Mahalo. Council Member Kimball, you have the floor. MS. KIMBALL: Yeah, thank you. Okay. That provides some information. I think there is'kind of a concern maybe about going right to 100 percent. I'm willing to consider this part about shifting it to the AMI because I think that could make sense. I think I need to just think about that a little bit more, but I would like to maybe start at the 75 percent and see how that looks. If I'm understanding correctly, with the payment standards, so they have different rates per zip code, butthat wouldn't be true under the AMI model. Is that correct? MS. MIURA: Correct. From what I've received from Housing, I didn't see anything accepted per zip code. MS. KIMBALL: I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Going to Hilo. Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. I am absolutely in support of this and this framework. I think coupled with the work that Council Member Galimba and Kagiwada did, this is kind of the next natural step. I do have questions. And Lisa, if it's okay, I'm going to ask Keita because he's right here in front of me? Well, let me ask you this part, Lisa. You mentioned like some geographic kind of Page 11 FC-46 October 15,2024 tailoring that happens, and maybe not Hilo, Kona,but East Hawaii, West Hawaii. How did we come up with that tailoring? MS. MIURA: So, that came to us from Housing. However, from what I understand, the fair market rent does change dependent on the island. Kehau Costa with Housing also shared that there is a more in depth one that is by small area zip code that gets into every zip code on the island, and that, while it seems pretty clear to us, I think it would be very confusing to the public for every zip code to have different allowed monthly rent. But this one pertains to in years past it was eight different zip codes and what we have this year is seven zip codes that it pertains to. But when I mapped out where those is codes were, they were predominantly, as I said, Haw!through Keauhou on this side. But that goes to Housing from HUD on their fair market rent. And I believe that's derived from surveys that HUD sends out and they get information back from the public. I've never seen the survey and some of the people„I've talked to on this side have not seen the survey either. So, I'm not sure who's doing this rental survey, and that might be partly why they're getting'a low response from this side of the island. MS. LEE LOY: Okay. Great. And buildingoff of that, and either Lisa or Keita, in these HUD charts—and Mr. Inaba, absolutely,understand which chart you're looking at. We have the A.MI numbers, but we also have the Fair Market Rent numbers, right, the FMR numbers. Are they developed from the same data structure? MR. JO, III jump in. Keita Jo, Assistant Administrator for Real Property Tax. I believe my understanding is that Housing, in order to come up with the payments, will use the FMR numbers. But there's some other considerations that are made in regard to establishing what that"payment standard looks like, and Lisa touched upon it,when she talkedabout,you know, going at 110 percent getting that type of waiver from the feds, and even going up to 120 percent. But amongst one of the mechanisms to develop that payment standard was the available funding for Section 8 Housing. ,And so, there's another component at play which might conflict with the intent of affordable rental housing. So, lining with that number might create somewhat of a misnomer of conflict. MS. LEE LOY: Okay. There was a mention of like geographic areas. Can Real Property Tax kind of focus in like—and I'm more concerned about places that's riot being touched, like Lisa mentioned, right? What about Puna and Ka`u, and are we looking at a rental number that really isn't diverse and or dynamic enough, right, to address some of these other areas that aren't actually being captured? MR. JO: I would agree with that. And I think that's where Lisa was mentioning the small area, fair market rent, separated by specific zip codes. You might not want to see it that granular in terms of implementation perspective. You want to try to keep things very smooth and general in terms of specific areas, but there is an opportunity to carve out a little bit more detail in regard to those rents. Page 12 FC-46 October 15,2024 MS. LEE LOY: And what I'm hearing from Real Property Tax is this 75 percent is kind of a directive from Housing when we start adjusting for the various locations or geographic areas. MR. JO: That's established by the Code as it exists, the 75 percent of that payment standard. MS. LEE LOY: Got it. But the rental numbers is HUD, IUD? MR. JO: Come from Housing and Urban yeah. MS. LEE LOY: Okay. Okay. You know, I, Mr. Inaba, like I said, I think this is the way to go. I want to make sure that because you're addressing the definition of the chapter, and I want to be sure that the information and the numbers are actually being derived from the same sources so that in the future when we're being dynamic about it, we can say, "Well, we got the number from'HUD," and HUD is comparable to the rental rates or however we look at it. I would love a little bit more time—well, I won't have it,but I think there's some value in hearing how those numbers are derived for the rest of the body to make an informed decision and how we can tailor it best: But I would also encourage Mr. Inaba to come up with what the 80 percent would look like, what 85 percent would look like, and then RPT having some of those small geographic areas, to kind of compare to. Those are my thoughts. I think there's just a little bit more information out there to go get. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Evans. MS: E' ANS: Thank you. Wow. So, Lisa, thanks for being here. There's a lot to this one paragraph. There's a'lot going on here and what I thought was, one of the big things was you're moving it from the County Office of Housing and we're looking now at Hawaii Housing Finance and Development Corp. So, what I'm going to repeat, I believe what I heard is, HHFDC would publish this earlier in the year like in July, where Office of Housing wouldn't really get this number to you until maybe September of the year. So, that's one difference. When do you apply it? So, you would apply it to what tax year? So, if I was someone—okay, so, here's my example. I was just told, someone tend,me I met last week, that she's renting a three-bedroom house in Kona for $4,200 a month; and she's a single mother and it's just breaking her and it's like, what can I do? So, what is the incentive to that homeowner to get into this affordable rental program, lower the rent, based on what we currently have? So, what would happen is their tax rate and what their tax is for the year will not only change but because it's an investment property, we're now going to give them the three percent on what they're tax obligation would be, we would give a three percent cap a year if they sign up for it. But if they come in and sign up the form, Page 13 FC-46 October 15,2024 does the form say you have to commit to this for one year, two years? I mean, it's kind of like I'd like to know a little bit more about the program. MS. MIURA: That's a good question. For the person paying the $4,200 a month rent now, because there's a couple questions in there so I don't want to forget any of it. I couldn't tell you the savings to the owner and if they would consider lowering the rent to one of these to qualify. I'd need to know what the value of their property was to calculate what their potential savings could be for that parcel. So, that's the first, being in the program. And that one concern is the complaint, obviously, more from West Hawaii and we see it because there's a lot less properties in the program that the rent is so low for this side that it is not worth it for them to lower it this far based orf what the market rent is. The second thing is if when we get the numbers from Housing, so we got it on September 27t'this year, we try and have our forms ready online and notified to those in the program on October I", or as close to it as possible. `So, it gives them October 1 through December 31 to apply for the program. If you're applying for it right now, then the benefit you would get is in July 1 sf of next year because it applies to the applicable tax year. So, it gives our staff a very short window, even though it seems like a lot,from October to December to get the applications; they have to provide updated contracts that confirm what it is; staff have to verify that the bedroom count is permitted because affordable rental is permitted structures. And then they enter it into the system'and then we have to send our assessment notices out. We get the extra to the vendor in February, they're mailed out in March so they can appeal by April. And it would seem like a lot of the people apply early, they will wait until the last week in December, and we get the most applications for our programs between Christmas and New Years. So, it's a rough time. It would be nice if it,was longer,but I'm not sure how many more would apply earlier Because they have to—while the contract is a minimum of six months, they are attesting to renting ,t at the affordable rate or lower for the whole calendar year at minimum for the tax year it applies to. So, it's a minimum six month contract, but it's agreeing to it. We do have some exceptions that if the tenant moves out and you need to fix it up, we're not going to pull that exemption or the tax break for that year. We're geeing to give you time to repair it. We're also going to give you time readvertise and get a new tenant in. And if a tenant leaves early, we're not penalizing you for it but your commitment is based on what you attest to that you're going to rent it out again for the affordable rental rate. And they have to apply every single year by December 31 st and if they don't apply; it's a hard deadline, they don't get that lower tax rate and the three percent cap for the following year, which really adds up over time. So, hopefully I answered all the questions. I went off memory. Page 14 FC-46 October 15,2024 MS. EVANS: Yeah. Well it's good to get that framework. I guess the other thing I was thinking is the 75 percent of payment standards was just established by HUD, and I think this is going to Member Lee Loy's, like where's the data being drawn from to come up with this. So the payment standards are tied to HUD, but the area median income, is that developed by the U.S. Census. Is U.S. Census doing the median income or does HUD do the median income? MS. MIURA: Well if I could read to you directly off what the sheet says, it says, the following—and this is for the AMI, the following table presents income limits provided by Hawaii Housing Finance and Development Corporation using the rates established by the U.S. Department of Dousing and Urban Development for various family sizes. MS. EVANS: Okay. Okay. Good to know: Thank you. �I yield. CHR. KANEALI`I-KLEINFELDER; Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. ,Thank you for being here and thanks for putting this forward,,CounciI Member Inaba. I'm in support of overall of the concept and would also like a little more information. And also, I don't know if we have; do we have Housing here today? Also'think it might be good to have someone from Housing here who works on the Section 8 and that program so we can talk about how they dovetail together,or they don't. But I'd be interested to learn about that a little bit and if they think that this might affect anything that they're working on as well. I know the programs are separate, but they often deal with similar populations. And then, so just to be very simplified in this, do you think, and I guess I'm looking at Administrator Miura, do you think that this change;could increase the number of homes in this program either in the higher zip codes or the other zip codes, or is that not necessarily the point of this; this is just more of a clarification? MS. MIURA: I don't know if it will increase. I don't know if it's going to change someone's mind to go from short-term rental to long-term rental. I believe those that are already renting at this or very close to whatever number it ends up being may consider applying for the program and then qualifying for it because they just don't have their rents low enough now. But as far as who or what number, I really couldn't answer. I think it goes back to even when we discussed the long-term rental class. We just hear from people that don't want to do long-term rental for whatever reason, usually the tenancy laws in Hawaii. So, I couldn't answer that question with any real data behind me. I think more people will qualify if it goes up because they're within that area anyway, but I don't know the exact number. At this time, there's only 20 percent of our affordable rental housing program parcels are also in the Section 8 program. So, not everybody applies for this, or they might be in that other percentage that's higher than what we're allowed to charge for this program. Page 15 FC-46 October 15,2024 MS. KAGIWADA: Okay. Alright. And then I'll just ask this because I think it's been asked of all the programs and we're kind of looking at making tax changes, will this have any affect on your staffing and dealing with this program or is it just shifting one number for another and it won't necessarily make a difference and if it will make a difference, how will it make a difference? MS. MIURA: Yeah. So, I'd like to say that we can handle whatever County Council gives us and I have realized through this ag program changes, I really underestimated the nightmare of work we had. I don't want that to be the only reason Council does not approve or disapprove aerogram. If Council feels a change is good for the island and the taxpayers, then we need to deal with it on the administrative side. But I will be putting in for positions in the supplemental budget because there's been not just these changes but other changes. We are going to get more applications for it,but I believe that was kind of the hope of the program that Council Member Inaba put through. But that's notthe only reason we're putting in for positions. It's just due to all the changes and being able to notify the public timely. We're just,riot able 10 do it with our staffing. MS. KAGIWADA: Okay. Great. Alright,thank you. Like I said, I'm very supportive overall. I think if we can get more people renting at an affordable rate, but I would like to see the,numbers and make sure that we're not inadvertently making things unaffordable for people who are barely making the rent for some of these places in some of the lower rent areas. So, thank you for doing this and I think it will dovetail nicely with the long-term rental, and if that informationI see that'y6u've put in taking effect January 1, 2026, that we can get the information kind of all out and"to everybody at the same time so people have a choice and can see where they might fit in one of these programs that makes a lot of sense. So, thank you for doing this work and look forward to a little more information and for maybe having Housing here next time. What's that? Royce is here. Okay,,great. Mr.'Shiroma, I don't know if this is your area or if you can speak to this, about the Section 8, and how this would work with Section 8 housing and how it may or may not affect it? If you're able to share, that would be great. If not, we can try to get someone in from that section here for next time. (Note: At this time, Housing and Community Development Specialist Royce Shiroma came forward to address the members of the Committee.) MR. SHIROMA: Hello. Royce Shiroma, Office of Housing. Yeah, this is not my section of expertise. I'm sorry. MS. KAGIWADA: That's okay. That's what I figured. Thank you so much. MR. SHIROMA: You're welcome. Page 16 FC-46 October 15,2024 MS. KAGIWADA: Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Council Member Villegas. MS. VILLEGAS: Sure. Just really fast. I'll be in full support of this. Thank you, once again, Council Member Inaba, for having the courage to dissect some of the minutia and trying to find a positive way forward for long-term rentals. Something that just came, you know, forward in my mind is,you know, the drastic increase in housing prices. You have homeowners`who bought at the really peak of market, so a $4,000 a month rental could just be covering their mortgage. So, that's one of the challenges is you have people in this rapid inflated value, not always connected to worth but value of a lot of the homes that have sold. Then people are strapped with mortgages. I mean, if it's a usual million dollar home, that's a$5,000 a month mortgage. And so,just to cover that gives us some of these really high rental rates. But at the same side, I also know of people who just have those homes, and just because you can charge that drastically high rental rate because that's what the market will bear right now. So, the hope here is it seems to me that those that own homes that aren't enduring the burden of a$5,000 a month mortgage, might look to a broader community benefit by providing rental rates that are feasible and attainable to our local community regardless of the opportunity to make that excessive or excessive is too relative,but that bigger profit margin, that that is what I feel in my heart as a Council Member. And I believe a lot of us sitting up here, our intention is to try to provide a carrot for those that do have it in their capacity that'aren't mired by massive amounts of debt for having purchased a Home in this inflated market, that they pass some of that benefit on to some of our kama`,dina families and maka`ainana families in order for them to be able to afford to live in this'community,' Because while government can do our part to try and navigate and tinker, as Council Member said,with our tax numbers thankfully much to the patience of our Real Property Tax Office. It's everybody's responsibility in,our community to look at the resources we have; what abundance we have, and how we can share and pass on some of those benefits to one another for the greater good of our community as a whole. Having just gotten back from the mainland, I had some interesting encounters with people and really just remembered that aloha is what makes this place special and that we are remised to connect and to forego all this personal gain in order for the greater good of the whole. And so, thank you for the intentionality of this legislation and getting us there. Okay. I yield. CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Galimba. MS. GALIMBA: Super briefly. Just thank you for bringing this forward and for discussion. I look forward to getting the information that other Council Members have asked for so that we can deliberate and hopefully come up on a number that Page 17 FC-46 October 15,2024 will benefit,you know, get the most benefit and the least potential non-benefit or opposite of benefit, you know, higher rental rates potentially. So yes, I think as always with these kinds of issues, there's a lot of different things to consider, but definitely appreciate opening this up for the conversation. CHR. KANEALI`I-KLEINFELDER: Thank you. MR. INABA: Thank you, everyone. I will provide us work with Real Property Tax on a display of the two current affordable rental standards that we use for the specific West Hawaii zip codes, the rest of the island, and then provide it in comparison with 60, 80, 100 percent AMI levels and the general current market rate, so we can visually see comparisons them. Thank you, all for your feedback. With that, I'll make a motion CHR KANEALI`I-KLEINFELDER: Can I speak first? MR. INABA: Sorry. Go ahead, Mr.Kaneali`i-I,leinfelder. CHR KANEALI`I-KLEINFELDER: Thank you. I just have one or two questions for the Director. Does the Real Property Division create small area fair market rentals or does HUD designate those? I Was reading over from the HUD website, but it sounds like they're in metropolitan areas. But I was trying to navigate that in my mind with you folks. MS. MIURA Okay. Real Property Tax Administrator Lisa Miura. CHR KANEALI'l-KLEINFELDER: Thank you. MS. MIRA Instead of Director. I was thinking,you're maybe directing it at Diane, butt fgured'I would try and answer anyway. Real Property doesn't come upwith the small area zip code and the numbers. That was something that Sectiow8 Housirig,had mentioned they got. And I don't have that datasheet from them, so I can't tell you if it was from HUD or where that numbers originally came from.; And I don't know if Council Member Inaba does, but I would love to see Section 8 here next time as well. CHR KANEALI`I-KLEINFELDER: Okay. Yeah. It seems like an important piece of this. Thank you for that. And I was thinking about Cindy's question and how this kind of relates to our affordable rental class because really what we're doing is we're incentivizing affordable rentals in the property tax class, correct? MS. MIURA: Correct. So, our affordable rental housing program, by expanding the rental amount, would increase those that are entering into the class or that may enroll in it. Is that your question? Page 18 FC-46 October 15,2024 CHR. KANEALI`I-KLEINFELDER: Yeah. Changing the definition, that's one thing but how it affects the affordable rental class is really is the crux of the matter. So, I'm trying to—while I was listening today and thinking about how this would incentivize. And I know you said, I don't know. That's a good answer. But that really is what we're talking about, is how we're going to get more folks to enroll in the affordable rental class and what we're going to be offering them, in my opinion, and I may be wrong. But that's how I see this. Any comment? MS. MIURA: No comment. CHR KANEALI`I-KLEINFELDER: Am I tiff base; am I following? MS. MIURA: I'm not sure I'm following you correctly. I think changing how we get that number and figuring out how that number is, is what":Council Member Inaba had shared earlier, which was,probably`to incentivize more individuals to keep their rents lower rather than raising it. Ith nk that sweet spot everybody wants is that's the number I'm not sure:of� like exactly where you need to come down. It does depend on when they bought the property, how much the mortgage is. I'd like to believe people were good and if they have no mortgage, they would rent it out for little. Some do that. I believe a lot of the ones in here, but as you can see, for majority of this side of the island, we're not seeing that. I do hear from people a lot that they keep their rents low despite some of these going up because they have good tenants, and they know their tenants can't afford more money. But I don't know how many more would qualify because we just aren't provided that type of information. I don't think anybody at the County has what the real rents are for a lot of this area to know how much money, and not per TMK (Tax Map Key) for sure, to know how much money this program will cost us. CHR, KANEALI`I-KLEINFELDER: Okay. Another piece of this is the recent minimum wage raises too, which has affected pay across the island, which puts people into a different bracket as far as how much money they have, what's expendable and what's not. And that's an interesting component to that in my mind. So,thank you. S. EVANS: Chair? CHR. KANEALI`I-KLEINFELDER: Council Member Evans. MS. EVANS: Thank you. CHR KANEALI`I-KLEINFELDER: Sorry. We have a 10:00; our next meeting is at 10:00 a.m. Page 19 FC-46 October 15,2024 MS. EVANS: Just a quick thought for the maker. I don't see that we've done this yet, but I know the federal government, when you look at rentals for housing in Honolulu, they give a different differential because it costs more money to live in the city; in the urban areas than it does out in the rural area. Have we ever thought about giving differentials to the west side, Kona, higher rents, much higher rents than Hilo. I don't think we've ever seen it. Just for the maker to think about should we start exploring differential based on urban, you know, area cost of living. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Thank you. Thank you for being here today, Administrator. With that, I'll make a motion to postpone Bill 218 to the November 7 h Committee Meeting. Motion to Postpone: Mr. Inaba moved to postpone Bill 218 to November 7, 2024. Seconded by Ms. Galimba and carried by the following voice vote: Ayes: Committee Members Evans,(Ialimba, Inaba, Kagiwadd, Kimball, Lee Loy,,Villegas, and Chair Kaneah'i-Kleinfelder-=8. Noes: None. Absent: Committee Member'Kierklewicz— 1. Excused: None. ADJOURN- There being no further business on our agenda today, Chair Kaneali`i-Kleinfelder MENT: adjourned the meeting at 10:01 a.m. Approved: Mr. Matt Kaneali`i-Kleinfelder, Chair (Date) Finance Committee MK/tk Page 20