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HomeMy WebLinkAboutMIN FC 2025/02/18 (2024-2026) DRAFT `Committee on Finance 4th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii February 18, 2025 CALL TO The regular meeting of the Committee on Finance Was called to order at ORDER: 1:31 p.m., in the Council Chambers, Kailua-Iona, by Mr. Matt Kdneali`i- Kleinfelder, Chair. ROLL CALL Present: Mr. Matt Kdneali`i-Kleinfelder, Chair Mr. James E. Hustace, Vice Chair Ms. Michelle M. Galimba, Member Mr. Holeka Goro Inaba, Member (came in'Liter) Ms. Jenn Kagiwada, Member Ms. Ashley L. Kierkiewicz,Member Ms. Heather L. Kimball, Member(,via videoconference from Hilo) Mr. Dennis "Fresh" Onish ,Member Ms. Rebecca Villegas, Member STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) Change Order As directed by the Chair and with no objection from the Committee Members, the of Business: following items were taken out of order: Res. 76-25: CREATES.ONE NEW CUSTODIAN/GROUNDSKEEPER I POSITION FOR THE HAWAPI POLICE DEPARTMENT Establishes one new position for the Police Department's new communications call center. Reference: Comm. 128 Intr. by: Council Member Kdneali`i-Kleinfelder (B/R) FC-4 February 18,2025 Vote on Res. 76-25: Ms. Kierkiewicz moved to recommend adoption of (Approved) Res. 76-25. Seconded by Ms. Kagiwada and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. CHR. KANEALI`I-KLEINFELDER: Please, let's take up Bill 23. Bill 23: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19-2 AND ARTICLE 8, SECTION 19-61 OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO SHORT-TERM COMMERCIAL AGRICULTURAL USE DEDICATION Increases the term length requirements for the Short-Term Commercial Agricultural Use Dedication property tax assessment program from three to five years. Reference: Comm. 96- Tntr. by: , Council Member Hustace Postponed: -February 4, 2025 (Note: There is a motion by Council Member Hustace, seconded by Council Member Kierkiewicz, to recommend passage of Bill 23 on first reading.) and. .... Comm. 96.1: From Co'uncil Member James E. Hustace, dated February 10, 2025, transmitting proposed amendments to Bill 23. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Hustace. MR. HUSTACE: Thank you, Chair. And thank you for the opportunity to hear this bill again. There is a communication in your packet if we want to talk specifically'about that, but grateful to have Administrator Miura here from Real Property Tax (RPT) in chambers if you have questions specifically about this. I think part of the question we had the last time was how this might affect—the language referred around to everything was changing from three years to five years and it's even affected the lease years that were kind of structured on there as well. And in having some conversations with Administrator Miura and of the applications that were reviewed at the time, about two weeks ago at the time of our discussion, about 69 short-term dedicated ag applications were reviewed and of those 10 had a three year lease and one had a six year lease. So, kind of some frame of reference there because I know there was, Chair, you had some concerns Page 2 FC-4 February 18,2025 about the impact on those lease holders and those lease lands. So, overall that's kind of like a smaller percentage there considering that. And as we've discussed previously, this is created to get real property tax opportunity to investigate and expand this program a little bit more and also for our agriculturalist and farmers to really work the land a little bit longer in their production efforts before having to go through the paperwork process once again. I welcome any questions or feedback on this so far. CHR. KANEALI`I-KLEINFELDER: Thank you, MR. HUSTACE: Thank you, Chair. CHR KANEALI`I-KLEINFELDER: Council Members, discussion? MS. KIMBALL: Chair? CHR KANEALI`I-KLEINFELDER: Yes_ And just to be clear, Mr. Hustace, are we on the amendment or are we on the main,motion? MR. HUSTACE: On the main motion. The communication is there if you want to have more conversation about:that.. CHR KANEALI`I-KLEINFELEiER: Okay. +Thank you. Council Member Kimball, MS: KIMBALL: Thank you, Chair. Yeah, I just wanted to weigh in, you know, since our last meeting where this was introduced I did have an opportunity to speak with the East'Hawai`i Farmers Union at their monthly meeting and offered the opportunity for them to weigh in on three years versus five years. They really didn't have any,preference one way or another. I also presented this at two additional community meetings within my district. Obviously, sample said, that's not reflective of the entire county. And again, not really any feedback other than there was some concern about just that ability to stay in an ag program for the full five years. And so,just again to refresh the memory of the Council, when this short-term dedicated program was created the three years was based on the recommendation within the Real Property Tax Ag Committee advisory report from 2019. And the idea of the short-term program is meant to be for, you know, speculative farmers that aren't quite sure that their investment is going to work out yet. Maybe they're just new to the industry or in many cases a lot of folks that are older farmers like the short-term program because it allows them a little bit more flexibility if they're not certain that anyone's going to take over the agricultural system. Page 3 FC-4 February 18,2025 I really don't feelI guess I would lean towards the three year just because that seems to be amenable. Although, I will defer to RPT in terms of the additional paperwork that they need to manage because of the three years versus five years. But just on the surface I think that I'd prefer to see it be three years, but I welcome the input from RPT. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Anyone? Administrator Miura, do you want to offer any comments to the Council? Thank you for your time today. (Note: At this time, Real Property Tax Administrator Lisa Miura and Assistant Administrator Keita Jo came forward to:address the members of the Committee.) MS. MIURA: Good afternoon. Lisa Miura, Real Property Tay Administrator. In Hilo is Keita Jo, Assistant Real Property Tax Administrator. So similarly, any calls that I have received I have brought up the three versus five years. Any parry I went to and ran into a farmer, which there's'a lot in Waimea, I brought it up and I didn't really get any responses. It was more about if they decided to come out of the program, were they going to be allowed to without having a huge penalty. And it's not like the dedicated, so they can come out of the program as long as they were doing active ag until that point. The concerns I had from last time in regard to the three-year leases, I know we're not on'the amendment, but I would encourage Council to look at that if you're going to approve this because that comes from another discussion I had with the group that does a lot of leases and I'd be happy to address that when the amendment comes up. CHR KANEALI`I-KLEI NFELDER: Okay. Thank you. Council Member Galimba. MS. GALIMBA: Thanks. I guess, Administrator Miura, going to the question of your office, I would assume that you would prefer it to be five year just because it's that much less paperwork, but I guess the question is, is that a significant concern? MS. MIURA: That's a pretty hard question to answer. NfS. GALIMBA: I know. MS. MIURA: So I'll give you my response, but I'll ask Keita to weigh in as well after. So, I think there's some concerns by some staff. Obviously, clerical would be thrilled to go to five years because they're the ones doing all the initial intakes and it's been overwhelming with the ag program changes. So, they would love to not have to see this again in just three years. However, with that said, the number Page 4 FC-4 February 18,2025 of applications to the short-term program are much less than the long-term dedicated. So, the 69 that Council Member Hustace had was our last count. While this program, they can apply up to September I", and so a lot of people have reapplied for the dedicated. The biggest complaint or comments I've heard personally is that they don't want to have to reapply in just three years. But I did not reach out to all ten of those that signed up for the three years that had a three- year lease. So, I will admit I did not get ahold of all 69 people or talk to them. Keita? MR. JO: Keita Jo, Assistant Administrator for Real Property Tax. I would echo your comments, Lisa,just adding that the timing of it'was one of the concerns that we had heard from taxpayers in office was the amount of time that would pass between applications. So, when they're irk year two of this dedication, they would then have to reapply, so the timing of it was quite quickly in terms of having to reapply over and over. MS. GALIMBA: Thanks so much. That being,said, I just wanted,to kind of give you the opportunity to weigh in on that: As I'was saying last time, I think from a landholder's perspective there is definitely some utility to having a short-term option both for newcomers, old folks, and entryism management tool. So, I think given what I've heard, I'm still supportive of the three year but, you know, if it is a five year, that's fine too. Thanks. That's my two cents on that one. CHR. KANEALI`I-KLEINFELEiER: Thank you. Council Member Hustace. MR. HUSTACE: Thank you,Chair. I think the request also was, and Council Member Kimball elaborated on a little bit more reaching out to the community. We've only had,one testifier in support as well, but did reach out to community through differentmeans and venues but not really a lot of feedback from community as Administrator has elude to specifically speaking to this and providing an opportunity to learn about this. So, it's not really seeming to be top of mind,for people,,,especially the time of length and the change there. I also want to not that Real Property Tax, on their dedicated ag forms have also put this sort of language on it that this was being discussed at Council level. So, those people interested in receiving information about the dedicated ag program, there is a mention that this is being up for discussion here. CHR. KANEALI`I-KLEINFELDER: Council Member Villegas. MS. VILLEGAS: So, if I'm understanding this correctly, it's kind of 601, half a dozen of the other from those utilizing the program. Some may be based on lack of involvement or continued participation in the conversation. But it sounds like I'm hearing from Real Property Tax that the preferred length of time is five years. And from potentially those participating, they also would like to not have to do all Page 5 FC-4 February 18,2025 the paperwork any sooner than every five years. So, I guess my question for you, Mr. Miura, is are there any downsides or red flags to this change to five years? MS. MIURA: Well, considering what happened during the last go round for the rules and regulations, I would say it's for everybody who is not really paying attention or, I mean, this wasn't in the newspaper; it's not going to catch that part of it. But for those that, let's say this passes today, anybody currently that has already applied, depending when Council makes this effective, would still have the option to remain in the three year program. So,we're not forcing everybody who applied with the understanding they were applying for a three year program to be forced into a five year program. MS. VILLEGAS: It's just that going forward, if somebody,applies, they would not have the option of a three, it would just be a five? MS. MIURA: Correct. And I guess I'd like to clarify. We're supportive. We don't know what the unintended consequences are for individuals because I haven't found anybody to provide feedback because majority filed for the long term. However, if it gets approved we would like to see it approved with the amendment for the three year leases because We did find some of those, and I can go into further discussion about that later. MS. VILLEGAS: Okay. So, do you want to move into the amendment? Because is kind of where we're headed, right. Thanks. MR. HUSTACE: Chair, if I may? MS.XIMBALL: May I make one additional point before we move into that conversation, Chair? CHR. KANEALI`I-KLEINFELDER: Yes. Council Member Kimball, go ahead. MS. KIMBALL: Thank you so much. You know,just one counter point in favor of keeping it at three years is that cycle is the cycle that gives us an opportunity to reevaluate and ensure that folks are actually doing agriculture on agricultural lands to receive these benefits. And we've given them a number of different types of documentation that they could provide and if they don't have that documentation, they could fill out a farm plan, which is a three-page plan and then you have the application to the programs, which I believe is a one page or two-page form. So basically, we've talked about folks having to fill out five pages of paperwork every couple of years to garner thousands of dollars' worth of tax benefits in some cases. So, you know,just to balance out the thoughts here and ensuringI mean, the revisions to the programs were intended to ensure that agricultural land was being used for agriculture and the folks receiving the ag benefits through the tax Page 6 FC-4 February 18,2025 program were actually engaged in agriculture. And so, the shorter interval provides us more frequent checks to ensure that, and I don't think it's overly burdensome to the farmers to the standpoint of the amount of paperwork needed to continue to remain in the program. That's just one factor responding to Council Member Villegas' point about any potential red flags. You know, if we have somebody that's not using the program appropriately, it's an additional two years before we're made aware of that. I yield, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you, Council Member Kimball. And briefly, Mr. Hustace, I'd like to ask before you go to your amendment, could I ask a question if you don't mind? Thank you. Thank you. Administrator, benefits of short-term versus the other program? Because we're changing this to two years longer, which would allow the benefits to be longer attained between being looked at by real property, so I ra wanting to know the benefits of the short- term versus the other options. MS. MIURA: Okay. So, the benefits of this Program, when you apply for an agricultural use program and we approve it,then your assessed land value is lower. So, the value is basically two times that of the ten-year program. That's the main benefit of it. You get taxed at less. We do have some where I will tell you the community food sustainability has been cheaper than or lower in taxes because the land values are lower. That tends to be in parts of Puna and Ka`u. However, in this program it is not recorded ntthe Bureau of Conveyances, the short-term three year, five year, whatever it's going to be is not recorded like the long-term is. The rollback is way less cumbersome but the big thing with all our programs including the ag is for every application, it requires a new inspection. So, Council Member Kimball is correct. By extending it two more years, they can still sell the property and not have any penalties or rollback. They can choose to come outof the program because it's not recorded or dedicated. CHR. KANEALI`I-KLEINFELDER: Okay. So, from that there is a value in three years because E'allows us to review the short-term ag dedications that are more lucrative to the property owner, correct? MS. MIC4A: Correct, if you're looking at it from that side, yes. CHR. KANEALI`I-KLEINFELDER: And to keep people honest, I mean, in my opinion, that's what it sounds like. So, by extending this to five years we actually decrease the oversight on the properties in the short-term ag dedication, which there are only 69 currently? MS. MIURA: Correct. CHR KANEALI`I-KLEINFELDER: When was your last review? Page 7 FC-4 February 18,2025 MS. MIURA: Whenever I sent that email off to Council Member Hustace. I apologize; Thursday's are tax bill deadline, so we've got other things I'm afraid that's more important, like collecting money. CHR. KANEALI`I-KLEINFELDER: More important than this? MS. MIURA: Yeah. CHR KANEALI`I-KLEINFELDER: So not like last'yeat though. This was a recent review of the program? MS. MIURA: Yeah, this was in the last two weeks since I came to Council last. CHR KANEALI`I-KLEINFELDER: Okay., So since we've enacted this legislation there are now 69 applicants in the program and of that 69, 10 actually have a three-year lease? MS. MIURA: Correct. CHR KANEALI`I-KLEINFELDER: Okay: 'My„next question is for you, Mr. Hustace. If community is not really seeming to,care which way we go and, I mean, that's coming from Council Member Kimball and yourself, and then Council Member Galimba;as well speaking to more the landholders side, what was the impotence for this bill? MR HUSTACE: The impotence was actually when this program was being rolled out and not to give credit to Real Property Tax and holding a number of community meetings across the island. In attending a couple of those meetings within District'9 about how to make this more effective in the community and how to make their agricultural program more effective and looking at those short- term bumping it up to five years was one of those mechanisms of getting people into the program and really activating our agricultural community. So, it really was, I'see it as a benefit of having a five-year and then a ten-year versus a three- year and a ten-yeat. People are being more productive on their properties, and this was some of the conversation happening at those community meetings and then not to mention some of the benefit it provides Real Property Tax. But it allows those individuals and farmers to really be focused on what they're supposed to be doing on their property. That was how I saw it and it was some of the conversations I had with community members at that time. There really hasn't been substantial conversations since then though, I would say. CHR KANEALI`I-KLEINFELDER: Okay. Okay. Thank you. Okay. Thank you for the time and if you're planning on doing your amendment, you want to go ahead at this time. MR. HUSTACE: Thank you, Chair. Page 8 FC-4 February 18,2025 Motion to Amend: Mr. Hustace moved to amend Bill 23 with the contents of Comm. 96.1. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Council Members, on the discussion? Mr. Hustace. MR. HUSTACE: Thank you, Chair. So this basically reverts the language that's proposed in Bill 23 back to the original language for the lease parcels going to three years then. And then I think Administrator Muta hasmore specifics on, I know, the role that plays for those agricultural leaseholders. Thank you. MS. MIURA: Thank you. For the record, Lisa Miura,,Real Property Tax Administrator. Since we had the last hearing about two weeks ago, I did go back through all of our agricultural review working group committee meetings and I looked at the 23 different meeting minutes and trying to determine where exactly the three years came from. From that, I reached out to Kamehameha Schools Bishop Estate Land Division to see what the deal was with the three years. And so, from what I understand is that a loaf the long-term leases they used to do, as we know we don't see them much anymore„ So when they come into a new lessee that they're not'familiar with in their program, they start off with a one year lease and if they prove themselves, they can go up to a three year lease. If they continue to do good and there's a review after each of these, then it can be a five year lease and it goes up from there up"to ten years. I have not'seen a lot of agricultural leases, not saying they don't exist, but I have notseen a lotofnew leases come through Kamehameha Schools that are long term what we used to see before ,I did ask what the reason for that was and it seems to be two-fold. One; they're doing the same thing. They want to make sure their lessee are doing what they're supposed to with agricultural lands. And second, they,were starting to notice that people were reselling their leases and monetizing it' and that's not what their program is set up for. Knowing that, the individual I spoke with really felt that it would be prudent to keep the three year lease because then their lessees don't have to wait as long to be able to apply and qualify for a program if they're just getting these short leases with Kamehameha Schools and we're doing active ag. This also follows along with their home exemptions and other things about their lessees, but I'll stick to the three lease. Iit reviewing the other three year leases we had, most of them were for pastoral lots, ranching properties. So, I think keeping it at a three year lease would only be fair. How that would work in our system is we would set the end date to the term of the lease and if a new lease was done then we could extend it to the five years if that passes. Otherwise, they just have to keep reapplying at the three-year mark. Keita, did you want to add anything to that on your side? Page 9 FC-4 February 18,2025 MR. JO: No. CHR. KANEALI`I-KLEINFELDER: Okay. That was very succinct, Mr. Jo. Thank you. Council Members, on the amendment? Okay. Ms. Miura, I have one question. It might be a multi part question. So Kamehameha Schools and Bishop Estates, from what I'm understanding, like the three year program because it helps them open leases for potential lessees, is that correct? MS. MIURA: No. They just wanted to make sure the lease period could remain at three years. CHR KANEALI`I-KLEINFELDER: Okay., MS. MIURA: And I should say I talked to one land person 4t Kamehameha Schools, so I don't think he represents all of them. CHR KANEALI`I-KLEINFELDER Okay. Fair enough. Gotcha. So, looking at the amendment, I'm kind of looking.at both. The language is the same. But under Section 2, Subsection A, I mean, the wording is, "A special land reserve is established to enable the owner of any parcel'of,land, or lessee of a recorded agricultural lease with a minimum of..." and he original language being three years, but it kind of begs the question if the minimum amount that we're setting as the floor is three years butthe language we're trying to adjust to is five. We've only set the minimum, so they could do a-five year if they wanted to already without doing any legal changes at all, correct? IDS: MIURA: Correct, you mean with the leases. Yeah, they can have longer leases., Just the minimum is three. CHR KANEALI`I-KLEI NFELDER: Okay. I just because it begs the question from three to five is the question mark now because we've already set that the minimum is three for our Code. If they want to do five or ten they could, right? MS. MIURA: Correct, for the term of the lease. Yes. CHR KANEALI`I-KLEINFELDER: Okay. And the second part of this question is if this, let's say just dealing with this amendment, with a minimum of three years for being on the lease with a time of petition, but that we're going to dedicate the land for short-term ag use and have the value of land assessed and such use for a period of five years. Do those conflict with each other? MS. MIURA: No. So just like right now your long-term ag program you all approved for a ten year dedicated program with a minimum of five year lease. So for those that would come in with a three year lease, we would do the end date at the three years and remind them that we only have a lease good through three years, which we do currently with our agricultural programs and the homeowner Page 10 FC-4 February 18,2025 program. So we have a way to mark our system to follow up and they can provide us with an updated lease, and we can continue it through the five years, or they can reapply if they just got a three-year lease, but they're renegotiating. CHR. KANEALI`I-KLEINFELDER: Okay. Sorry. I'm a little confused though. The minimum of three years remain on the lease at the time of petition, but we will dedicate the landsorry, if the land is dedicated for short-term ag use but we'll assess the value for a period of five. MS. MIURA: We would have an end date of the three years to follow up if they got an updated lease to continue it to the five years.: If they don't get a new lease or renewal then they would be done with that'program. Similar to the long-term program. So, you guys gave them ten years, but you approved a minimum of five year lease. So it's the same idea. CHR KANEALI`I-KLEINFELDER: Okay. Okay. And then there's no required changes from the five to the three anywhere else within the bill being asked for? MS. MIURA: Just in Section 19-2, which is covered in the original. CHR KANEALI`I-KLEINFELDER: Okay. Okay.. Thank you. To Council Member Inaba, thank you for joining us. We are on'the amendment, Communication 96.1 for Bill 23. Council Members, any further discussion on the amendment? Okay. All in favor? Vote on Motion The m6ti;on to amend Bill 23 with the contents of to Amend: Comm. 96.1 was carried by the following voice vote: (Approved) Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwdda', Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—9. 'Noes: None. Absent: None. Excused: None. CHR KANEALI`I-KLEINFELDER: Back to the main motion. Bill 23, as amended with the contents of Communication 96.1. MR. HENRICKS: Chair, could you announce the vote and the results? CHR KANEALI`I-KLEINFELDER: Sorry, Mr. Clerk, that was nine members in favor, zero opposed. Back to the main motion, Council Members? Council Member Galimba. MS. GALIMBA: Thanks. I definitely appreciate Council Member Hustace listening to his community and bringing this up as an option for us to consider. Page 11 FC-4 February 18,2025 Good job. We wanted to just stick with what we have for a couple of different reasons not leased, kind of, letting sleeping dogs lie. So, thanks again. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Villegas. MS. VILLEGAS: Yeah, you know, there was a lot of hullabaloo after this and I get the intentionality to hold accountable those that are not particularly authentically using property for agricultural purposes and benefiting from lower taxes, correct. So I appreciate that intentionality buf after this was passed, and correct me if I'm wrong, there was huge outcry from small local farmers saying this was really going to jeopardize them. I also then,heard in response, you know, that all their concerns were being calmed, and they were okay. It's all still clear as mud to me. And once again, you know, you hear from one person it caused'hardship, another person it didn't. You know, really trying to trust that the intentionality is, I mean I trust the intentionality was to eliminate those skirting the system finding loopholes and, you know, the gentleman farrier, subdividing for gentlemen farms and, you know, gazillion dollar houses with one mango tree kind of a thing. But we also have people that own pieces of land and may not be creating substantial income from agricultural but they're living off their;own farm. So, I don't know, I look atyou, Ms. Miura, as my seer of does it do more harm than good. And that's where 1-1 know you're in a pickle always to sit there in the public, but welcome back Just, you know, I want to let a sleeping dog lie but if that dog was full of fleas and,did more harm than good and this is an amendment that helps align that, you,know, that's tends to be my priority is if something does more harm than'goad than it needs to be adjusted or put down. If it does more,good,than harm then okay, you know, there's always going to be some percentage of air or those-you can't please everybody, right, in this role. o,I'm very Honestly confused and conflicted on all of this is kind of where I sit. CHR. KANEALI`I-KLEINFELDER: Thank you. MS. KIMBALL: Chair, may I make a comment? CHR. KANEALI`I-KLEINFELDER: Yes. Council Member Kimball. M :KIMBALL: Yeah, thank you. And, you know, I want to make clear. Council Member Villegas, in previous deliberations on a different committee today you were talking about how the general plan has been hijacked by certain percentage of the population that has some very strong views about a particular thing. The real property tax discussion around the ag tax dedication kind of fell victim to the same thing. The folks that were presenting a lot of information that was contradictory to what the bill actually said were members of antitax groups that just don't want to see any property tax or folks that were running against you Page 12 FC-4 February 18,2025 and me and others in this Council that wanted to try so division. And so, I encourage you; there was an excellent piece by Naka Nathaniel in Civil Beat that really lays out the intention and the results of the ag tax program. It really is intended to ensure viability of agriculture in our County and ensure that folks that are receiving the significant tax benefits of being part of the ag programs are doing so legitimately. Now, one of the big concerns out there was that there was this perception that the 2,000 minimum was a requirement in it of itself, and if you read the definition of commercial agriculture, it's 2,000 minimum or demonstration that you were following traditionally accepted practices in agriculture. So, folks that are in bartering systems, for example, can still qualify if they,show that they're actually doing agriculture and not just a home backyard garden. Arid so, that's what a lot of the misunderstanding was about. And, you know, I can appreciate certainly Council Member Hustace's response to community needs but I can share that after the bill's passage, I went on the Real Property Tax Road Show in'many different parts of the island and shared,what the kill language actually said, what the rules actually were, and once people understood it, they understood that they could qualify, they understood how to qualify,and it was much less scary than perhaps some of our community members led folks to believe. Thank you, Chair. I yield. CHR. KANEALI`I-KLEITFELDER: Thank you. Anyone else before I go back to Council Member Villegas? Council`Member Villegas. MS. VILLEGAS: Thank you for that, Council Member Kimball. I really appreciate the perspective and having not been personally at those meetings and I have a,great appreciation for clarification on the nature and demographic of those and their angles for'testifyng or hijacking conversations. So, thank you for clarifying that for me. And I apologize, Council Member Hustace, but I won't be supporting this at this point today. I yield. CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Hustace. MR. HUSTACE: Thank you, Chair. I appreciate the feedback from my colleagues. You know, in reviewing some of the working group information I really couldn't find the rationale for the three years because that's where I was kind of building it from and noticed is it three years, is it five years. But looking back at the working group, the three years was stated but it didn't really give any sort of background insight on why it was three years. So, that's where I think we're trying to have this conversation about this and see if five years is that better adjustment for the short-term ag program. So, thank you for having this conversation. I appreciate your feedback and mana`o on this. Thank you. CHR KANEALI`I-KLEINFELDER: Thank you. Okay. Administrator, the original bill that we had, Bill 23, is there any conflict with the short-term Page 13 FC-4 February 18,2025 commercial ag use dedication definition calling out a minimum of five years that demonstrates owners engaged in commercial ag activities with the amendment that we've now enacted to the legislation? MS. MIURA: Thank you. I didn't see any conflict with the definition change because the lease wasn't mentioned in there. CHR. KANEALI`I-KLEINFELDER: Okay. Okay. Well, thank you for being eyes on this legislation. I'm going to lean away froth this 'today, Council Member Hustace, and mainly it's the oversight portion. I like the oversight. If we're going to allow a lesser tax without oversight or with a longer period of oversight then that concerns me because the original intent was to create a program that created benefits that highlighted ag use,and in stepping to five years, we've opened up that window where the County doesn't check and,that bothers me a little. And then given that the Real Property Tax Review Board'came back with three years as preferred, that there was zero testimony, and there"can't seem to be one side or the other, I like the way that it is and I'm going to stick with the way that it is. So, I'll be voting against it today, But I do appreciate the motions, and I like that you brought a bill forward so quickly. That, to me, is impressive because it's not easy, and to go through all these steps and to deal with the discussion, so thank you. Okay. Any further discussion? Hearing and seeing none. Motion is on the floor to forward Bill 23, as amended with the contents of;Communication 96.1, to Council with a favorable recommendation. All in favor? Vote on Bill 23: The motion to recommend passage of Bill 23, as amended Draft 2 to Draft 2, on first reading was carried by the following roll Failed call vote: Ayes.' ' ' Committee Members Hustace, Inaba, Kierkiewicz, and Onishi —4. Noes: Committee Members Galimba, Kagiwada, Kimball, Villegas, and Chair Kaneali`i-Kleinfelder—5. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: Thank you, Mr. Clerk. Thank you, Ms. Miura, for your time. Thank you, Keita Jo. Let's go to the top of the agenda, Communication 118, please. Return to Order The Chair directed the Committee to return to the order of business. of Business: COMMUNI- The Chair directed the Committee to proceed to the next order of Business, CATIONS: Communications. Page 14 FC-4 February 18,2025 Comm. 118: SECOND QUARTER REALLOCATION REPORT: OCTOBER 1 — DECEMBER 31, 2024 From Human Resources Director Sommer J. Tokihiro, dated January 16, 2025. Vote on Comm. 118: Mr. Inaba moved to close file on Comm. 118. Seconded by Filed Mr. Hustace and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: Communication 127,please. Comm. 127: SECOND QUARTER REPORT OF,UNCAPITALIZED DONATIONS: OCTOBER 1 —DECEMBER 31, 2024 From Finance Director Diane Nakagawa, dated January 30, 2025, transmitting the above report pursuantto Resolution 538-24. Motion to Close File: Mr. Inaba moved'to close file on Comm. 127. Seconded by Mr. Hustace. CHR,KANEALI`I-KLEINFELDER: Any discussion on the measure, Council Members? Council Member Galimba. MS.'GALIMBA.. Just want to thank Mr. Donato Pensula for his donation to Parks and Recreation. CHR. KANEALI`I-KLEINFELDER: Thank you for that, Ms. Galimba. Any further discussion? Okay. Hearing and seeing none. Motion is on the floor to close file on Communication 127, all in favor? Vote on Comm- 127: The motion to close file on Comm. 127 was carried by the Filed following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. CHR KANEALI`I-KLEINFELDER: Bill 27,please. Page 15 FC-4 February 18,2025 ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. (Note: The item in this category was taken up previously, out of order.) BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. (Note: Items in this category was taken up previously, out,of order.) Bill 27: AMENDS CHAPTER 2, ARTICLE 45, SECTION 2-235, OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO THE GENERAL EXCISE AND USE TAX SURCHARGE Adds County-appropriated housing infrastructure costs and,the definition of "Housing infrastructure costs"to use of funds to codify the Session Laws of Hawaii 2024, Act 30, which took effect on July„1, 2024. Reference: Comm, 119 Intr. by: Council Member Kierkiewicz and Council'lember Inaba Motion to Approve: Ms. Kierkiewicz moved to recommend passage of Bill 27 on first reading. Seconded by Mr. Inaba. CHR. KANEALI`I-KLEINFELDER: Council Member Kierkiewicz,please go ahead. MS. KIERKIEWICZ: Thank you, Chair. Bill 27 is actually an action step that is coming out of the very intensive"affordable housing policy ad hoc committee that convened lAst Council terra. One of the things that we did as a body was evaluate the number of legislative items regarding affordable housing development across the state that passed,the'state legislature, and one of those items was Act 30, relating to the County surcharge on general excise tax. As you know, the counties each have an ability to leverage half a percent to utilize for very specific purposes. Right now we are using that to offset the cost for the Mass Transit Agency, so things related to transportation. But this last session, they provided some clarifications on how the counties could utilize this GET (General Excise Tax) to support housing infrastructure costs. And because enabling legislation is needed in order for our counties to move forward with accessing these taxes for this purpose, our office collaborated with Chair Inaba to advance this bill. This would create another way for our county to work with affordable housing developers to create housing recognizing that, you know, one of the major barriers to that is the cost of infrastructure. Right now no funding has been set aside or processed to leverage this kind of money for this activity. We merely are taking the first step today in establishing the enabling Page 16 FC-4 February 18,2025 legislation so that the Alameda Administration can be working with Office of Housing and Community Development(OHCD) and relevant county agencies to determine how much funding is appropriate and where they should be putting housing infrastructure as we move forward. I think it's also important to note that the authority with which the counties have been granted to utilize GET sunsets in 2030, so we have less than five years to really take advantage of leveraging these funds. We don't know what's going to happen on the federal side. What we thought was available in terms of infrastructure money, we are seeing funding either,be clawed back from counties, being taken away from different agencies and,rionprofits. So, I think it's really important for us to find ways to invest in ourselves, take care of ourselves, while we have these kinds of taxing authorities, I know that Finance Director Nakagawa is in Hilo Chambers in case anybody has questions for her. I made sure to work in partnership with the administration to craft this legislation so there are no surprises. And I do want to turn it over to my colleague, Council Member Inaba for his'comments'on this. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Thank you. Yes. Council Member Kierkiewicz laid it out pretty clearly. Again, this is opening the potential that we've not yet explored. There's a timeline so time is of the essence, and we are really giving the administration some leeway on how best to address some of these infrastructure needs for our housing and opening up, I guess,just opportunities for more housing as we continue to work with our ad hoe committee and the changes we're looking in Code in the coming years. So, ask for your support. Thank you so much. And Director,,we'd love to hear from you as well. CHR. KANEALI`I-KLEINFELDER: Thank you. Director Nakagawa, do you want'to provide any;comments to the Council before I go to the Council Members? (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Good afternoon, Council Members. Diane Nakagawa, Finance Department. I just want to say I appreciate the conversations that we've had with Council Member Kierkiewicz on the language changes in Code and just open for that flexibility, what it allows us to do. We've had conversations with Mayor Alameda about this and is supportive of this first step in opening up some of these allowances. That's it. CHR KANEALI`I-KLEINFELDER: Okay. Thank you. Council Member Galimba, go ahead. Page 17 FC-4 February 18,2025 MS. GALIMBA: Thank you so much, Chair. And thank you for Council Members Kierkiewicz and Inaba for bringing this forward. This is really great. I'm actually wondering about the last part, let's see, (a)(3), in that last sort of clause about not imposing or transferring these costs to the developer of a housing project. I'm actually thinking about it in an opposite way especially because we have a timeline, I'm wondering if it would be possible to do the opposite actually and reimburse housing developers for infrastructure costs. And perhaps given the nature of the funding and this being the County and everything and that might not be possible, but I know in some locals on the continent that is done and that does help to lower costs to expedite housing. So,just wanted to throw that out there as perhaps a way to get this done even faster and wondered what your thoughts might be on that. CHR. KANEALI`I-KLEINFELDER; Is that for the Director or for the makers? MS. GALIMBA: I guess I would start with the makers and if the,Director would like to comment on that I would of course appreciate those comments. CHR KANEALI`I-KLEINFELDER: Okay. ;To the makers, I'm not sure who wants to go. MS. KIERKIEWICZ: I'll start: We're doing a little dance here. What you see here in this bill, Council Member Galimba, is taken directly from Hawaii Revised Statutes (HRS). But I like your idea of thinking about if the developer is going to be taking on that initial debt service,does any of this language allow for reimbursemettdown the line? I think that's a legal question. I don't know if Corporation Counsel Schoen is able to advise us on that interpretation now. She's coming up to the front. But I think her legal interpretation would be really helpful to see if there's wiggle room to accommodate that strategy. Thank you. (Note: At this time, Corporation Counsel Renee Schoen came forward to address the members of the Committee.) MS. SCHOEN: Good afternoon. Renee Schoen, Corporation Counsel. So, as I read the Bill 27, it pretty much tracks the language of the HRS provision Section 46-19.8, and that particular section doesn't speak to reimbursement. But certainly willing to work with Finance to see whether or not that's an option because,you know, possibly if whatever a developer does as it relates to housing infrastructure as defined by HRS and our co-provision, certainly can look at that. MS. GALIMBA: Thank you. CHR KANEALI`I-KLEINFELDER: Okay. Thank you. Council Member Inaba. Page 18 FC-4 February 18,2025 MR. INABA: Yeah. Great idea. My only concern was thinking about we're giving funds out and we don't know who's doing the cutback, who's doing the work, and if they're paying the required wages. So,just a concern I have that maybe you can consider it when you're evaluating whether that would be an option. MS. SCHOEN: Yeah, if I may. I mean, one concern would be just the timeline, the sunset provision of 2030, and then speaking and meeting with developers and meeting out their plans and, you know, when does that reimbursement come into play; are there triggers? I mean, so those are all of the things that you all would consider. MR. INABA: Thank you, Corporation,Counsel. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHL Thanks, Chair. I would like to see if there is a way to put in a percentage because this is from that half percent, right, we're going to be getting and basically it was for like transportation, roadways. So, maybe 50 percent of the funding we collectcar go towards total infrastructure for roads and transportation and then the other 50 percent can go for this housing to help with the infrastructure for that: So, I would like to see that if that's possible. Thanks. CHR KANEALI`I-KLEINFELEiER: Thankyou. Council Member Kagiwada. MS. KAGIWADA: Thank you_ Yes. Thanks to my colleagues here for putting thi8 forward. I think it's good. It gives us more flexibility with funds, which coming from the state that's always really good. But kind of similar to what Council Member Onishi was saying, I'm just wondering, who makes the initial decision? Is this done in'the budget season as far as how things get allocated and how does Council weigh in on that. And yeah,just given that we've gone through some transitions with our, you know, transportation, Mass Transit Administration, things like that,just like how will things be decided, I guess, with this funding? Who's going to make those decisions? That's my only question but I do really like having more flexibility to spend these funds in different ways. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Yes. To answer that question, ultimately it would be up to the administration. I hear where there's some desire to program maybe certain percentages, but how much funds are going into the GET tax every year changes. So as we know and are aware, then Director Nakagawa and the administration are able to create a budget with expenses that may also include now these things related to housing infrastructure costs and that would happen through the regular budget if we wanted to see, you know, less money for a certain line item that Page 19 FC-4 February 18,2025 would happen through the budgeting process similar to what we do every year during our fiscal budgeting. MS. KAGIWADA: Okay. So that makes sense. We will have some input then because yeah, I just think there's so much. If the money goes down, you know, and if we need it for certain things, I mean, this is a great option. But I would hate to see our, you know, mass transit system suffering if we haven't been thoughtful about it. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball, checking in. MS. KIMBALL: Yeah. First of all, I justwant to mahalo'the makers, Council Member Kierkiewicz and Council Member Inaba, for putting this forward and catching us up with the HRS and expanding the opportunities to use these funds particularly as it was related to the work you folks did on the housing,rewrite of Chapter 11. Really important work and,very excited to see this come forward. I will take this opportunity to mention thatHouse Bill 375, which is an HSAC (Hawai`i State Association of Counties)package bill, would extend the GET to 2045. There's also a Senate Bill (SB) introduced by our friend, Senator(Tim) Richards, SB 492, which is essentially the same thing as the HSAC bill extending out to 2045. So, the both of those still have legs. I'm sorry, did I say 492? Senate Bill 492 is the senate one: That has,passed its first committee; needs a reading k WAM (Ways and Means) and then 375 is just to fend. So we are hopeful to have the discussion in the Finance Committees at the state legislature this year around'the extension. What's`more is I spoke the speaker last week and have requested that she put a working group together to talk about all of the different taxation policies and opportunities'that would include the counties moving forward. So, this has been a really,iuportant opportunity for us to generate revenue to help support important projects including Mass Transit and now Housing, and so certainly wanting to find ways for us to extend that beyond the original term. So, if you have opportunities to support these via testimony, I encourage you to do so especially with this expanded usage in our county. Mahalo. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHL Thanks, Chair. Director Nakagawa, what is the, I guess, average or what is the estimated collection of that half percent per year or per fiscal year? MS. NAKAGAWA: Councilman Onishi, we are in just fitting in our next budget of$65 million in revenue. Page 20 FC-4 February 18,2025 MR. ONISHL Okay. So why I brought up about that percentage is because, you know, we already went through a process when we increase or when we took a percentage from our property tax to help the homeless and for the housing, and we went through a lot on that. So, unless we can get a check and balance on how or who's going to be monitoring the whole process and making sure that it's really fair and it's not targeted to certain organizations or certain developers, you know, I'll be okay with that. But I just feel that we shouldn't give the whole pie to that and there should be defined in this where a percentage has to go back towards our roads and construction infrastructure and transportation. I like the idea that they can extend it to 2045. But knowing the legislature, it won't happen unless they allow Oahu to get that exemption that would've been half percent were continuing to pay for,thoseexpenses. Arid sometimes, what I've heard in the past, there's conflict between Oahu and the state legislature. So, I don't think we should base everything on this being approved till 2045. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. I really,, appreciate the comments about wanting there to be divvying up the GET pie to 'support different ways in which we can use the GET funding. I think we're premature at this point to identify exact percentages. I was having conversation with Housing Administrator Kehau Costa last week and she's;really`focused on trying to create a housing development roadmap which identifies where we need housing, which particular communities, and the kind of infrastructure that's necessary to go from idea to actual housing on the market. And so I bring that up because I would rather have something like'that guide our investment into housing year over year rather than some arbitrary percentage amount. So, I'll see if I can get more information from her about the timeline for that�particular roadmap because that can be used by the administration'to guide how much money they are investing in mass transit versus housing,,, I think it's going to be very dynamic year over year. But one of the things I am thinking about is making sure that we have guardrails for how this kind of funding is expended, especially if it's going to be something that, you know,private developers are able to take advantage of. And so, Director Nakagawa, I'm hoping it's okay for us to think about establishing rules related to the administration of these funds particularly for housing infrastructure and if you're amenable to that, Council Member Inaba and I will work on an amendment to add that particular language to this bill. MS. NAKAGAWA: Yes, Council Member. Definitely open to that. I do want to add that the conversation we're having today, comments about the budget process, that is where I envision, you know, us getting to decisions on where this funding will eventually go in these different areas. Particular, this year, you Page 21 FC-4 February 18,2025 know, one of the things that we'll be looking at is our Mass Transit as one of our departments and I think it'll be enlightening for us all to see the funding that is going in there, the programs and, you know, really how that budget has increased over the years. So, the budget process is really where these funds will be evaluated. MS. KIERKIEWICZ: Thank you for that, Director. And you look stunning in that color. Chair, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you, Okay. Seeing no further lights. Director Nakagawa, I have a few questions in'kind of listening to my fellow Council Members today. First of all, what is a county-appropriated housing infrastructure cost? MS. NAKAGAWA: Council Member, I believe there is a definition. CHR KANEALI`I-KLEINFELDER There's a definition of housing infrastructure cost. My question is how does county-appropriated tie into that? MS. NAKAGAWA: Zwould actually look for some guidance from the makers. We had a discussion about that earlier. So I would appreciate their insight on that. CHR KANEALI`I-KLEINFELEiER: Okay. +To the makers. MS. KIERKIEWICZ: This language was pulled directly from Hawaii Revised Statutes. CHR. IANEALI`I-KLEINFELDER: That's helpful, but it doesn't define county-appropriated. MR:INABA: Chair, if I may? CHR KANEALI`I-KLEINFELDER: Thank you. MR. INABA: Just saying that the county would allocate those funds and then would be responsible for having contracts to get those funds out. CHR. KANEALI`I-KLEINFELDER: Director? MS. NAKAGAWA: Just as I mentioned as we were reviewing this morning, we wondered if there needed to be that is what we thought, but we just wondered if there needed to be any further definition around it. But as Council Member Kierkiewicz spoke to, if there's further development of a process, I'm sure that will come out of that as well. Page 22 FC-4 February 18,2025 CHR. KANEALI`I-KLEINFELDER: Sorry, Director. So you're saying that the definition is elsewhere or that we need to work on a definition so that's clear? MS. NAKAGAWA: Sorry, I'm seeking some—hold on just a second. (Note: At this time, Finance Deputy Director Malia Kekai came forward to address the members of the Committee.) MS. KEKAL Hello. Malia Kekai, Deputy Finance Director. I think the definition and I think that's why Renee is sitting down; maybe I'll just defer to her, is that we would probably have to look into legislative history to find out what exactly the legislature meant when they,said county-appropriated. CHR KANEALI`I-KLEINFELDER: 'Yeah.,I agree. There's very, very specific language we use, especially budgetary language like appropriated and allocated and I'm wondering what the tie ire between housing infrastructure costversus county-appropriated infrastructure eostwould be. I think there is very specific terminology being used there. We do have Ms. Schoen here from Corporation Counsel. I don't know if you have any comments to that right now? MS. SCHOEN: No. I think you,basically discussed it with Ms. Kekai that the HRS provision does not specifically speak to whatcounty-appropriated means. Just a plain reading, you know, I'm sitting here reading it, I just viewed it as whatever the county deems appropriate as itrelates to housing infrastructure and the definitionstates, you know,pedestrian pathways, or sidewalks on a county road near or around a public school, and water drainage, sewer, water reuse, water disposal and waste treatment systems that connect to the infrastructure of the County., CHR KANEALI`I-KLEI NFELDER: Okay. That's from the HRS? MS. SCHOEN: That's in HRS Section 46-19.8, Subsection (h). CHR KANEALI`I-KLEINFELDER: Okay. Does it use that terminology, county-appropriated, or is that something different outside? MS. SCHOEN: It does not. It does not. CHR. KANEALI`I-KLEINFELDER: It does not. MS. SCHOEN: But the language in the bill itself,you know, pretty much tracks the subsection (c) that you're asking about tracks the HRS provision. There's just no specific discussion regarding what county-appropriated means. CHR KANEALI`I-KLEINFELDER: Okay. Thank you. Thank you, Corporation Counsel; thank you to our Director and Deputy Director in Hilo. I Page 23 FC-4 February 18,2025 would like to know what that means because to me that could mean different things and I'm looking for that terminology to be exact when we're looking at a fund that is approximately $65 million this year and stands to affect Mass Transit and a lot of our public transportation work that is done in the County. And to Director, under the subsection or Section 2-235, that we're addressing with this bill, Section (c), when I look at these costs that we can or that we shall expend funds towards, including pedestrian paths and sidewalks, okay; water, drainage, sewer, water reuse, waste disposal, and waste treatment systems. I would think that this will get incredibly costly. And I know we're limited to a fund amount given the GET tax and use fund, and we're not entitled to the full $65 million to apply. But, I mean, those infrastructure costs can be incredibly high, correct? MS. NAKAGAWA: Correct. Those costs can be high. This allows for that ability to use it. It doesn't at this point give any„certain percentage to these costs. It just allows the flexibility. And like all the tither things in our County budget, you know, goes through that prioritization process. But I think listing these out just gives us that ability to use it if deemed necessary and appropriate. CHR. KANEALI`I-KLEINFELDER: And we have expendable funds to apply towards it. MS. NAKAGAWA: And funds are available, correct. CHR. KANEALI`I-KLEINFELDER: Okay. And that shall be comes from the Section (a), that'pursuant to sections, blah, blah, blah, monies received from the surcharge shall be expended on. And, you know, I was taught this early on in my career, if it doesn't allow for the use and it's not explicit about what the funds can be used towards, then you can't just make it up and throw it in. That was taught to me a longtime„ago. So, the terminology that we use, the things that we put in, the definitions are extremely important, and they do have to track directly from the HR Okay. So, to the makers, I will be looking for what county-appropriated housing infrastructure costs are and different from housing infrastructure costs. I'm glad that that discussion was had before you came to Council so we can discuss it further. Director Nakagawa, thank you for your time today. I appreciate it. NfS. NAKAGAWA: You're welcome. Thank you. CHR KANEALI`I-KLEINFELDER: You know what, sorry, Director, one more question for you. That Section 3, county-appropriated housing infrastructure costs, provided that if the county utilizes surcharge revenues for such housing infrastructure costs it shall not impose or transfer those costs to the developer of a housing project. So meaning, we won't pass on what to the developer? Page 24 FC-4 February 18,2025 MS. NAKAGAWA: I believe it's the same cost that we're using to invest these funds in. So, we're not going to charge them for the, yeah, if we utilize these funds to do one of these things, we're not going to charge the developer for it. CHR. KANEALI`I-KLEINFELDER: Okay. We don't charge GE (General Excise) tax on the developer, correct, or do we? MS. NAKAGAWA: No. CHR KANEALI`I-KLEINFELDER: Okay. Soy we're not relieving them of paying GE taxes on their projects, correct? MS. NAKAGAWA: I'm sorry, Councilman. Can you explain or restate your question? I just want to make sure we're getting it correctly, CHR KANEALI`I-KLEINFELDER: Yes. I`look at the full scope of affordable housing and the County and the state'swant to'help it move ahead and all the different things we do to subsidize at the government levels both state and County. So, I'm looking at this and the various programs that we offer to housing and homelessness; I'm looking at this in two parts. Are we offering that the developer shall not pay GE tax or are we saying that we will not be imposing the cost of the development that we can do with the use of the surcharge? MS. NAKAGAWA: So, no. I don't believe this is saying and welcome the makers or Corporation Counsel to correct me, that they will not be paying, developers won't be paying tax as part of this. CHR, I ANEALI`I-KLEINFELDER: Okay. It's just our use of the funds to apply towards infrastructure costs for affordable housing projects. MS:NAKAGAWA: It is how we utilize the revenue that is generated. CHR. KANEALI`I-KLEINFELDER: Okay. Thank you. Appreciate it. Council Member Inaba. MR. INABA: Yeah. I just want to make sure because I don't know how I'm planning to try and address your concerns. Housing infrastructure cost is defined here. That's a general term with all of those things named. And then in the subsection previous, Number 3, we're adding as a permitted use that the surcharge can be expended on county-appropriated housing infrastructure costs. So meaning we are in charge; we are going to appropriate the amount or funds in our budget and expend it accordingly. It's still housing infrastructure costs but what we're saying here is we're not going to be giving it to someone who knows who to do it. It's county-appropriated. It goes through our budgeted process. So there's no definition for county-appropriated because it's self-explanatory and the Page 25 FC-4 February 18,2025 follow up wording housing infrastructure costs tell you what kind of costs that can be that we can appropriate in our County budget. So no, we are not trying to exempt anyone from paying the tax because this whole section is only about use of funds. we are trying to say though, and this is what the state didn't want the County to do was, we get this money, and we use it and then we still have developers having to pay for all of these housing infrastructure costs as we're passing it on. The state wants us to do it, and we are in charge of the funds; we get it done; we don't make it more expensive:for the developers. Chair, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay., So to Mr. Inaba then, you're saying county-appropriated in this term was a word that you folks added in to clarify that these are costs that are county-appropriated meaning the County is going to cover the costs? MR. INABA: Yes. These are things that we're going to budget and there will be an appropriation in the budget to cover those expenses. CHR KANEALI`I-KLEINFELDER: Okay. Okay. Thank you for that. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you. Just adding to the discussion. Looking at Act 30 here there is language about county-appropriated housing infrastructure, and I ddhave a chance to justtext Representative Chris Todd, who I sought clarification from. And I asked,him, does this mean that the County appropriates money for housing infrastructure? And he said, yes. That's exactly what it means and that the counties can utilize the GET surcharge to fund infrastructure. So, I don't know how much clearer we can be or what other clarification is needed, but it's pretty evident that the County appropriates this money to fund housing infrastructure. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay. Council Member Galimba. � MS. GALIMBA: Thank you. I kind of get your confusion though, as from a process point of view because the County can appropriate it, but does it actually get done and how does it get done and how fast does it get done and how does it work with a big developer to actually do the things to create housing. So, I kind of get what you're questioning here in terms of some of the just non-clarity of that little phrase. So, yeah. CHR KANEALI`I-KLEINFELDER: Thank you. MS. GALIMBA: You're welcome. Page 26 FC-4 February 18,2025 CHR. KANEALI`I-KLEINFELDER: Thank you, Council Member Galimba. Any further discussion? Checking with Hilo? MS. KIMBALL: All good, Chair. Thank you. CHR KANEALI`I-KLEINFELDER: Okay. We do have the motion on the floor to forward Bill 27 to Council with a favorable recommendation. All in favor? Vote on Bill 27: The motion to recommend passage of Bill 27 on first (Approved) reading was carried by the following voice vote: Ayes: Committee Members Galimba, Hustace„ Inaba, Kagiwada, Kierkiew cz, Kimball, Onishi, and Chair Kaneali`i kleinfelder—8. Noes: None. Absent: Committee Member Villegas — 1. Excused: None. CHR KANEALI`I-KLEINFELDER: That brings us to the end of our agenda. ADJOURN- There being no further business on our agenda today, Chair Kaneali`i-Kleinfelder MENT: adjourned the meeting at,2:49 p.m., Thank you verb much. Approved: Mr. Matt Kaneali`i-Kleinfelder, Chair (Date) Finance Committee MK/tk Page 27