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HomeMy WebLinkAboutMIN FC 2025/04/15 (2024-2026) DRAFT Committee on Finance 9th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii April 15, 2025 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 1:00 p.m., in the Council Chambers, Kailua-Kona,by,Mr. Matt Kaneali`i- Kleinfelder, Chair. ROLL CALL: Present: Mr. Matt Kaneali`i-Kleinfelder, Chair Mr. James E. Hustace, Vice Chair Ms. Michelle M. Galimba, Member Mr. Holeka Goro Inaba, Member .............. Ms. Jenn Kagiwada, Member Ms. Ashley L. Kierkiewicz},Member Ms. Heather L. Kimball, Member Mr. Dennis "Fresh" Onish , Member Ms. Rebecca Villegas, Member (came in'later) 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. 23,10: REPORT OF FUND TRANSFERS AUTHORIZED: MARCH 1 — 15, 2025 From Acting Controller Wilson Crider, dated March 24, 2025. Vote on Comm. 23.10,: Mr. Inaba moved to close file on Comm. 23.10. Seconded Filed by Mr. Hustace and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Villegas — 1. Excused: None. CHR. KANEALI`I-KLEINFELDER: Next item,please. FC-9 April 15,2025 Comm. 24.7: REPORT OF CHANGE ORDERS AUTHORIZED: FEBRUARY 1 — 15, 2025 From Finance Director Diane Nakagawa, dated March 25, 2025, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Motion to Close File: Mr. Inaba moved to close file on Comm. 24.7. Seconded by Mr. Hustace. CHR. KANEALI`I-KLEINFELDER: Council Member Kimball. MS. KIMBALL: Yeah. I just wanted to note for the record for Communication 24.7 and 24.8, there's a change order directed to Fleming and Associates, LLC, which is my husband's architectural firm. However, I feel comfortable making a decision on this matter since we are just receiving the report. Thank you. CHR KANEALI`I-KLEINFELDER: Thank you for the disclosure,Council Member Kimball. Any other comments? Hearing and seeing none, motion is on the floor. All in favor? Vote on Comm. 24.7: The motion to close file on Comm. 24.7 was carried by the Filed following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwda, Kierkiewicz, Kimball, Onishi, and.Chair Kaneali"i-Kleinfelder—8. Noes: None. Absent: Committee Member Villegas — 1. Excused: None. Comm. 24.8: REPORT OF CHANGE ORDERS AUTHORIZED: FEBRUARY 16 —28, 2025 From Finance Director Diane Nakagawa, dated March 26, 2025, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Motion to Close File: Mr. Inaba moved to close file on Comm. 24.8. Seconded by' Mr. Hustace. CHR KANEALI`I-KLEINFELDER: Any discussion? Just noting here, looking at the special counsel services for Hui Malama Honokohau vs. County of Hawaii that we have change order up to a total of$300,000, and I believe that was the budgeted total in our fiscal year 2025-2026 for that amount. No questions,just making that note as we've talked about it in our budget hearing with Corporation Counsel. Thank you, Ms. Schoen. Seeing no lights on, motion is on the floor to close file on Communication 24.8. All in favor? Page 2 FC-9 April 15,2025 Vote on Comm. 24.8: The motion to close file on Comm. 24.8 was carried by the Filed following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Villegas — 1. Excused: None. Comm. 24.9: REPORT OF CHANGE ORDERS AUTHORIZED- MARCH 1 — 15, 2025 From Finance Director Diane Nakagawa, dated March 27,2025, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Vote on Comm. 24.9: Mr. Inaba moved to close file on Comm. 24.9. Seconded: Filed by Mr. Hustace and carriedby the following voice vote: Ayes: Committee Members Galifnba, Hustace, Inaba, Kagiwada, Kierkiewicz,, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None, Absent: None. Excused: None. Comm. 73.3: MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED SEPTEMBER 30, 2024 From Finance Director Diane Nakagawa, dated March 17, 2025, transmitting the above report pursuant to Section 6-6.3(h) of the Hawaii County Charter. Vote on Comm: 73.3: Mr, Inaba moved to close file on Comm. 73.3. Seconded Filed by 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. Comm. 73.4: MONTHLY BUDGET STATUS REPORT FOR THE MONTHS ENDED OCTOBER 31, 2024, AND NOVEMBER 30, 2024 From Finance Director Diane Nakagawa, dated March 18, 2025, transmitting the above reports pursuant to Section 6-6.3(h) of the Hawaii County Charter. Page 3 FC-9 April 15,2025 Vote on Comm. 73.4: Mr. Inaba moved to close file on Comm. 73.4. Seconded Filed by 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. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 122-25: AUTHORIZES THE PAYMENT OF f UNDS OF A LATER.FISCAL YEAR AND OF MORE THAN ONE FISCAL YEAR FOR A MULTI-YEAR AGREEMENT FOR FIXED ROUTE TRANSIT OPERATIONS'FOR THE MASS TRANSIT AGENCY Authorizes the Mayor to enter into a three-year agreement with two renewal option years for a selected contractor to provide vehicles, drivers, management, personnel, dispatching, maintenance, and other ancillary services to operate an island wide public transportation system. Reference: Comm. 209 Intr.by: Council Member Kaneali`i-Kleinfelder (B/R) Vote on Res. 122-25: Mr. Inaba moved to recommend adoption of Res. 122-25. (Approved) Seconded by Mr. Hustace and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Iagiwada, Kierkiewicz, Kimball, Onishi, illegas, and Chair Kaneali`i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. Page 4 FC-9 April 15,2025 Bill 38: AMENDS CHAPTER 19, ARTICLE 13, OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO REAL PROPERTY TAX CREDITS Establishes a Private Road Tax Credit in the amount of at least$500 to be applied towards a homeowner's real property tax bill when the homeowner expends at least$100 annually to maintain, repair, or improve a private roadway that is not restricted by a gate and is managed by a road maintenance organization. Reference: Comm. 203 Intr. by: Council Member Kaneali`i-Kleinfelder Relinquish Chair: At this time, the Chair relinquished the chair to Vice Chair Hustace. ACTING CHR. HUSTACE: Thank you, Mr. Kaneali`i-Kleinfelder. I will now act as presiding officer for the duration of this piece. Council'Member Kaneali`i- Kleinfelder, the floor is yours if you'd like to speak to the bill here. MR. KANEALI`I-KLEINFELDER: Thank you very much. I appreciate that, Acting Chair. ACTING CHR. HUSTACE: We need a motion first, if you want to give the motion on the bill so we can have discussion. Motion to Approve: Mr. Kaneali`i-Kleinfelder moved to recommend passage of gill 38 on first reading. Seconded by Ms. Galimba. ACTING CHR, IUSTACE: Mr. Kaneali`i-Kleinfelder, the floor is yours. MR. KANEALI'l LEINFELDER: Thank you, Chair. To the Council, this bill was modeled after the idea of what the solar hot water tax credit does, and a number of credits do for the residents of our County in providing a credit towards their property taxes for doing something. In this case that something is helping the upkeep of private roadways. To that end this bill is very specific in what sector or our community we're guiding the credit to be applied towards. So I'm looking under Section 19, Section A; this is for homeowner exemption category properties, which really limits down the pool in our private subdivisions. You cannot have a gate on the private subdivision, so it's just the communities that are open to public use. Many of us have these in our district. And we have a minimum credit being no great than $500 and then a number of other things we've included in the bill as well. At the top, you're looking at Section 19-104, this was a housekeeping measure asked for by LRB (Legislative Research Branch) for the solar water heater tax credit that was established some time ago. Just doing some housekeeping there. And then the last part is Section 19-105, is more the administrative end. I did ask and work with the departments on this. I'm sure this will come up so let's just get Page 5 FC-9 April 15,2025 it out of the way; Ms. (Diane)Nakagawa is not in love with this bill. And I did ask Ms. (Lisa) Miura to help me walk through the bill and make sure that it's lined up with what would be good for the department as well. So maybe if you two want to come up, we'll just do a quick back and forth, and then we'll open it up to the body and if they have questions. And I do appreciate everyone's input into this at this point. For the Council, this really is a step, you know, I'm kind ofI don't want to say a one trick pony, but I've really taken on how we provide more equity in our communities that weren't created equitably in the beginning. And that really just touched on all the subdivisions that were created pre subdivision code. Many of you have them from Ocean View to HPP (Hawaiian Paradise Park), Black Sands, to my district. I mean, they're everywhere. So let's start with Ms. Miura. So basics, there will be a revenue reduction from this bill obviously if we provide a credit. In your estimations what kind of revenue reduction will we be looking at? (Note: At this time, Real Property Tax Administrator Lisa Miura and Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. MIURA: Real Property Tax (RPT) Administrator Lisa Miura. Just for the record, Keita Jo is in Hilo as the Assistant Administrator. Sorry I'm trying to put this in the right spot so it's not loud,for everybody in Hilo. I just wanted to clarify one thing before going onto that.-The way we read the Code was that the maximum amount given to anybody would be $500; not the minimum. MR. KANEALI`I-KLEINFELDER: Okay. Thank you for clarifying. Yes. MS. MIt.TRA: Or the amount paid. And so if it's less than $500, they're going to get the amount paid versus the up to $500. There is a total of all the subdivisions we looked at with private roads that were not gated that had homeowners and that came,out to a total cif 9,271 parcels. So again, that's properties paying private road maintenance that aren't getting a homeowner exemption. The total loss if all of them claimed it, and you've got to remember some of these are already at the $200 minimum tax, so we can't go below the $200 minimum tax even with the credit. Arid that's how the solar water heater credit works as well. The maximum loss based on 2024 values was $2.1 million. We estimate that not everybody is paying their private road maintenance association dues, and we know this because at tax sales we see a lot of liens come out from non-payment of those monthly association or yearly association dues for private roads. So if 40 percent of those apply then that would be approximately 3,700 parcels or $842,000 per year. MR. KANEALI`I-KLEINFELDER: Beautiful. So that's the potential we're looking at is a window, I mean, really from zero if no one utilized the program if Page 6 FC-9 April 15,2025 it was created to $2.1 million maximum if everyone took advantage of the program. MS. MIURA: Correct. MR. KANEALI`I-KLEINFELDER: Thank you. I appreciate that. And thank you for doing the homework with me. I mean, we have a range of fees collected in the community anywhere from zero dollars per month for private road maintenance to, you know, $20-$50 a month for different communities depending on where they live. Okay. And then for impact on'your staff, what kind of an impact on your staff would there be if this bilk were,to go into effect and beyond the impact, could your department take this on? MS. MIURA: Honestly, at this moment we'couldn't take icon. We're drowning a little bit from all the other changes made and we did put in for additional staff. I just want to share that it's not just a matter of getting bodies. I think we are having an issue with infrastructure and,where to sit all the bodies that certain departments get. And this is a problem,iri both sides, but East Hawaii in particular. There's not even enough parking for the County employees. So they're parking on roads, they're parking don'the hill at the park. And I know some other departments, not'to pick on them, don't think about where their staff are going to sit or where they're going to park, but it bothers me because we have staff that have been here since May that'don't have parking yet and the road is getting more cluttered. So it's a tag and pull,you know, everybody wants more space,aiid,,you know, they're trying to get Real Property Tax because we look open, but the reality is we tried,to stay within the limits of what we were given. MR. KANEALI`I-KLEINFELDER: Okay. Okay. I appreciate the overview and what you're facing as a department infrastructure wise for your staff, so they have a place to park and get into work just like we all want to do in a nice way. What kind of staffirg level would you say would be helpful? And I'm thinking about the budget discussions that we had. I think I even brought up your staffing levels in that,discussion and you have some supplementals that are floating around in the budget preview land as well. MS. MICTRA: There are supplementals, but we understand, especially with my director sitting right next to me MR'. KANEALI`I-KLEINFELDER: No pressure. MS. MIURA: No pressure. Thank you, Council Member, for this. Love that for me right now. It's that every department I'm sure is asking for positions. And my comeback is always like, but our positions make money. So if we get it we're making more money. At the same time, fire and police save lives. Not many people think we save lives; we probably give more heartburn than anything else. So we are cognizant of that when asking. Page 7 FC-9 April 15,2025 As far as this goes, I can share we have nine clerical positions now including the head clerk, the supervisor, and they process approximately 5,000 applications each year, plus the phone calls and the counter and other things that they do for the office; the disallowance letters and so forth. If we got approximately 3,700 new applications every year just for that, that would be four clerks alone to process because it's not just looking at the application, it's walking, take people through the process. They have to vet and make sure that they actually paid their private road maintenance and that would be every single year. MR. KANEALI`I-KLEINFELDER: How do you folks handle the solar hot water credits right now? MS. MIURA: So the clerks are handling:those. And we don't get a whole lot because that's for a very limited—any new house going up doesn't qualify for solar water heater credit because it's part of the Building Code now. So it has to be prior homes that were built that are either never were part of the code that they had to get it and they're putting a new one in, or they've already gotten the credit. But the clerks are doing that as well MR. KANEALI`I-KLEINFELDER: Okay. So this would be more comfortable is you had more staffing. Understood. And then I slid kind of put you on the spot because you're sitting next to your boss in a sense., And I do appreciate that comment though, your positions that you bring in are actually the backbone of our revenue for our County. Our real property taxes is more than half of our budget for the County of Hawaii. Sounderstood. Thank you. Okay. Ms. Nakagawa, when we met we discussed the bill. I mean,just besides your overall view and what's been taped about today, what are your thoughts? MS. NAKAGAWA: Good afternoon, Council Members. Diane Nakagawa, Finance Department. You know, Administrator Miura did a great job with explaining all of the concerns of finance. You know, in addition to the loss of revenue we have serious concerns over our resources and our ability to get a good handy on the changes that were already made. As Administrator Miura mentioned,,.we're still working through that and struggling a bit. Yes, we are looking at�additional resources for this particular division, but to add this on would be a lot to ask of this division. MR'. KANEALI`I-KLEINFELDER: Okay. Is any part of this able to be incorporated into your digital platform as we move in that manner either in vehicle licensing, taxes payments, credit card processing; are we able to incorporate something like this into a digital platform? MS. NAKAGAWA: Are you speaking about our new ERP (Enterprise Resource Planning) system or just another system? Page 8 FC-9 April 15,2025 MR. KANEALI`I-KLEINFELDER: No, no. The ERP system. MS. NAKAGAWA: I don't believe so. But we can, you know, we're right in the middle of implementation and actually building the system. Specific requests are being made but this is not one of them at the time. MR. KANEALI`I-KLEINFELDER: Okay. Okay. Well, I knew that walking in you didn't love it, but I'll put it to the body. I mean, we have a billion dollar budget. Well, we're right on the edge of being a billion dollars. I would estimate this impact; it's a little bit higher than what Administrator Miura's estimate is, which is $850,000. Let's just say it's a million'dollAr revenue. What I look at it is our communities who maintain their own roadways,pay a lot of money to do so. We as a County, we don't touch it because they're private. We may have some funding, we may not. We have a bill in place that could help; It's all been done but ultimately the folks who live in,these communities in our rural underserved areas, pay for it already and this is a chance for us to provide a little bit of a break for them towards their property taxes,ire my eyes,without breaking the bank. At a million dollars it's, I mean, that's not-even"that's a drop in the bucket for a billion dollar budget. So that's my thought, Just to the body, looking for some input today, looking for the Council Members to weigh in as I make my way through this before really putting it into the community,and working with the administration to see if there's away forward. Thank you. ACTING CHR. HUSTACE: Thank you, Council Member. Council Member Kimball;,please. The floor is yours. l S: KIMBALL: Yeah, thank you. Thanks for putting this forward for consideration. Just one editorial'comment. I think that you can read this one of two ways with respectto Item B. Without making it clear that that is a yearly $500 versus,a total $560 as the limit. I know you talked about the annual tax, the counter tax year but I think that can be interpreted either way without that language. But the large question of the matter, I'm hesitant right now just because of what Administrator Miura said about the number of rewrites we have done over the last couple of years. You're welcome. That's one thing is to get that all settled out, but then the other thing is some real concerns about our income, our revenue streams whether it's intergovernmental funds, you know, another housing crisis, recession, cost inflations. I think we're in a tenuous time to reduce our revenue even by a million dollars. I think we do that here, you do that there, we're going to be in a hot spot later on. I would like to ask you, Administrator Miura, with respect to the private roadways, properties on private roadways, is there any component of that that gets calculated in, in terms of the market value of the property; whether or not they're on a private roadway and the quality of that private roadway? Page 9 FC-9 April 15,2025 MS. MIURA: It's really more tied to what the market is willing to pay. So if the market is paying less for properties on unpaved roads or maybe even derelict roads, then it will show up in the market value when we do our annual assessment, which is every year on January 1st for the homeowners. Then there's the three percent cap, but that's a little bit separate from it. So in that regard, it's tied to the market values based on the sales in that neighborhood. And we don't compare paved roads to nonpaved. Usually, especially with the subdivisions we looked that have required road maintenance and these are the larger ones, which are mostly in the Puna through Ka`u areas, there's more than enough sales within their subdivisions to compare within. MS. KIMBALL: Okay. So I think that, you know, when we talk about private roads that are substandard, roads in limbo,that we also have to think about the flipside of that which is that there is an impact on that market,values on these properties because they have this substandard infrastructure. Nov,I'm not saying that's good. Nobody should have substandard infrastructure, but I think an unintended consequence if any efforts that we have to improve these infrastructures is that those values now increase. And so when we look at areas that are still affordable for local families, We have to be sensitive to how any of these levers could impact that lever. So I'm supportive of having discussions about this. I mean, I get,the concept of but I'm not quite ready to support it right now. ACTING CHR. HUSTACE: Any further discussion? Council Member Galimba, please. 1 5: GALIMBA; Thanks. So yes, I think this is really creative and I like the idea. Lam very sensitive to the resource constraints of the tax office because we have put a lot onto them recently: But then just B, the amount of credit shall be equal to the greater of$500 or the amount paid under subsection (a)(4). And then subsection (a)(4) is they have to pay no less than $100. So if they pay $100 then they automatically,get$500 tax credit, which is how I'm reading it or is that not what you mean by this? ACTING CHR. HUSTACE: Council Member, if you want to respond to that? MR. KANEALI`I-KLEINFELDER: Thank you. Yes, so most of the communities that we looked at pay in the range of$100 to $200. So this is saying thatyou have pay, basically we have to qualify they paid their road dues and that they paid more than X amount. But then I'm looking at this language in (b) that was pointed out and it's just not supposed to be more than $500. It's supposed to be basically between $100 and $500 depending on the road dues that are being collected each year by the HOA (Homeowners Association). And so the intentionality is this is the amount of road dues we're seeing that are being imposed on our community. This is what and how much we as the County are choosing to help subsidize through this property tax credit. This is a great area to Page 10 FC-9 April 15,2025 look at as well, I mean, if we say this is too much money we could provide an amendment to this and decrease the amount we're willing to provide back as a tax credit, which would help I think both of where our Director and the Administrator in front of us. So there may be a needed language clarification here to really guide that discussion in the right area, but that's exactly why it's in front of us today. So good point. Thank you. MS. GALIMBA: Okay. So it probably should be lesser of$500, or amount paid under subsection. MR. KANEALI`I-KLEINFELDER: I think that term:great would be, I mean, unless I'm misreading this, but it should be'lesser than 500, or less than $500. But if we brought that down, less than $300; less than MO, we could then decrease the revenue reduction that is worrying our Director of Finance. MS. GALIMBA: Okay. Thanks., MR. KANEALI`I-KLEINFELDER: Yeah. Thank you. ACTING CHR. HUSTACE: Council Member Inaba. MR. INABA: Thank you. On the same section, maybe on the intention first. I support the intention because I think there's communities like this around the island like you pointed out. I just, in hearing from the administration, how to make it feasible and make it work I think is a different animal that we're talking about here. But regarding section (b), I don't know if we just say the amount equal to the amount or it can be the amount paid not to exceed $500, that way we have the cap, and I think that's just a clearer way of saying it. But look to Administrator and,Corporation Counsel on that one. Thank you. I yield. ACTING CHIC. HUSTACE: Council Member Kagiwada, please. MS. KAGIWADA: Thank you. Yeah. I get it. These folks are struggling to get their roads paved and a lot of folks that are in this situation struggle with paying an extra $100 or $200 a year for this purpose so I understand the intent completer. I am very much hearing what our Finance Department and our Real Property Tax Administrator are saying though, you know, so we're not talking about 000,000 to a million dollars here. We're talking about that less potentially for clerks or not getting business done that needs to get done. So it seems like right now is not the best time for this. So that's how I'm feeling about it. But maybe at a later date when we're a little more solid would be a good time to bring this up again. That's my thoughts. Thank you. I yield, Chair. ACTING CHR. HUSTACE: Any further discussion? Going back to yes. Ms. Villegas, please. Page 11 FC-9 April 15,2025 MS. VILLEGAS: Yeah. I apologize if it's something that you already explained. But so there are subdivisions in my district that are private subdivisions with private roads, and they maintain the road. Do they also qualify for this? Mind you, these are not let's call them workforce housing subdivisions. These are more affluent subdivisions, right, and they have to pay to maintain their roads. So my concern would be do they have the option for a tax credit? MS. MIURA: Yes. If they're not gated. So if they're gated they're excluded from this. But they do need to have either a road maintenance organization, which he has in here means a homeowners association road maintenance corporation or other not for profit entity that is organized and responsible for the maintenance repair or improvement of a private roadway, rBut they would be eligible. MS. VILLEGAS: Okay. Unless it's gated. So it removes that. But other high- end subdivisions that have their,own road— MS. MIURA: Yes. MS. VILLEGAS: Okay; The differences in our districts are so profound. Okay. Thank you. You know,I see this, and I see the intention and I see the moving forward and the creativity. Wow. To find a way to support your constituents and the communities that were honestly neighborhoods built in places that it's been questioned whether or not they ever should have been based on lava inundation potential-But I am, you know, from a principle and value standpoint, in full support of this creative way to provide support to these communities. From a logistical execution standpoint and the precariousness of the rest of the world in this dystopian episode, I find myself a little more cautious about this. But I also want to honor thatthe maker is, as are mine, our final terms, so there's a time constraint for what can be done while we're here in these seats. So I'm kind of on the fence on this. But from a principle standpoint in full support, Council Member. Yeah: I yield. ACTINGCHR. HUSTACE: Thank you, Council Member. Back to Council Member Kimball. MS. KIMBALL: Yeah. Thank you. I have a question for the maker. Have any of your state legislative partners looked at some sort of tax credit that would occur that the income tax level at the state level with respect to the HOA fees or the road maintenance fees? MR. KANEALI`I-KLEINFELDER: To my knowledge, no. MS. KIMBALL: Okay. Page 12 FC-9 April 15,2025 MR. KANEALI`I-KLEINFELDER: And I may not have tracked them. I may have missed one. But to my knowledge, no, not at this time. MS. KIMBALL: Yeah. Okay. And Director Nakagawa, with respect to the fuel tax, that's collected by the state and then our portion is distributed to us from the state. How does that mechanically work? MS. NAKAGAWA: Yeah. I believe so. MS. KIMBALL: What's that? MS. NAKAGAWA: Yes. MS. KIMBALL: Okay. I want to maybe take a little time to think about where this comes from and whether or not it makes sense as a real property tax credit and shouldn't either be an income tax:.credit or somehow tied in with the fuel tax because the County paving would happen with the fuel tax revenue. And so I can see where you would say these people are paying their fair share towards road maintenance but they're not getting the benefit of the maintenance on their roads. So I think there's some things to think about there with the reduction that we will potentially see in fuel tax overtime due to the increase of electric vehicles and hybrid vehicles, like we're already starting to see the fuel tax decline. So I don't have an easy answer right now, butthrking about perhaps RPT not being the right place to offer this credit from I think is worthy of conversation. ACTING CHR. HUSTACE: Thank you, Ms. Kimball. Any further discussion? lr. Kaneali`i-Kleinfelder,please. MR. KANEALI'L LEINFELDER: Thank you. Thank you for the discussion today. I appreciate the Director and Administrator's input. I think from my point of view and III just kind of keep it simple, it's an equity issue. And I think you touched on it, Ms. Kimball, it's everyone in Hawaii County pays fuel tax, we all pay property taxes. But people who live in the subdivisions, and I don't, you know, I ra just going to say that. I don't live in any of the subdivisions this would actually help. Like we touched on in Bill 82, they don't have access to police and fire in some cases because they can't get to them; they just can't access those properties with the private roads in place. And the homeowners associations can't keep up with the roadwork and what I've heard a lot from the community is or the community associations actually is they don't get a lot of the dues, and they have no ability to force collect except for a lien and that process becomes incredibly difficult. And so, this does a few things at once. It provides the equity, it doesn't really decrease the revenues in a hard way for the County in my opinion; that's my opinion. But it also does something else which is interesting. If we provide a property tax credit, that's where we get the most complaints. The County raises Page 13 FC-9 April 15,2025 property taxes. They're charging us a fortune and for what. If we offer the credit for the property taxes and we provide individuals with a homeowner exemption for their payment to their HOA, we actually will begin to force the HOA to bookkeep better, because they have to provide records back to real property and because there's now a benefit to the individual, I think we'll start to see more people pay their road dues because they get a property tax credit for paying it. A lot of them just don't pay the road dues right now. Some communities are mandatory; some are voluntary. If you lived in a voluntary homeowners association where your road�dues were voluntary there's no recourse if you don't pay your road dues, you're not going to pay them. There's at least three major subdivisions in our area that don't have mandatory road dues. This bill would actually enable people to get a credit back for what they've paid for fixing their own roads'that are not the County's prevue and get a little bit of equity back without breaking the County's back. That's how I see it. I yield, Chair. ACTING CHR. HUSTACE: Thank you.-Mr. Onishi, please. MR. ONISHL Thank you,, Chair. Question to the author of the bill. ACTING CHR. HUSTACE: Absolutely. MR. ONISHL So what is the average fee,these private owners are paying to the association? MR. KANEALI`I-KLEINFELDER: I've seen anywhere from voluntary, which means zero to I think Paradise Park per year is about$485. MR. ONISHI: And whatis the lowest? MR.,KANEALI`I-KLEINFELDER: So lowest for a mandatory that I've seen is I want to say about$185 to $215 per year. MR. ONISHI: Okay. MR. KANEALI`I-KLEINFELDER: Does that help? So average about$215, �204. MR. ONISHL Okay. Thank you. Great discussion. In the past on the Council this was mentioned before about the County helping to offset those unpaved roadways, and they mentioned always about fuel tax that everybody's paying their share of the fuel tax, right, and they're not benefiting. But the argument was also that they do travel on the paved roads as they exit their properties, right, onto the main highways and so forth. Page 14 FC-9 April 15,2025 Another thing was also discussed back then was the cost of the properties, right. Some people when they bought their properties down in Paradise Park could've cost them like $5,000 for an acre knowing that there was no infrastructure. Others, like in Hilo with the new subdivisions like Hilo Hillside, you're going to be paying maybe about$200,000 to $300,000 for getting all that infrastructure. So that's the difference in balance, right, of purchasing your properties. And I understand about affordability and that's where for us present Council, it's hard for us because way back the Council back then looked at that as affordable for local people, but without having the proper infrastructure for them. And now we're the ones that gotta look at how we can make it better for them. You mentioned about budgeting; out of our entire like over$, 900 million of our budget that we're looking at, Finance Director,what is the percentage of that budget that goes towards our employees like with salaries and also with all their benefits? What would be the percentage of that? MS. NAKAGAWA: When we recently looked at that it was over 50 percent. MR. ONISHI: 80 percent? MS. NAKAGAWA: 50 percent. MR. ONISHL 50 percent: Okay. And so, you know, as this is going to be targeting island wide, right, we cannot specify, So I don't know if Property Tax Administrator Lisa has like crunched in all the numbers like estimated the whole cost for all the different private landowners, right, in this kind of situation. But also adding the cost of having the more manpower, having all coming like with their salaries and benefits, right. 'And also whatever any other expenses that it's going to cost to get'I guess what is that, it to operate to have these refunds. Have you done that? MS. MIURA: So I'm seeing two questions. One, if we reviewed all the private roads with mandatory road dues. MR. ONISHI: Right. MS. MIURA: That we didn't. I will say Council Member Kaneali`i-Kleinfelder did,provide us with all those that his staff in Hilo catted on the island. So we based it on that, which was about 24,000 parcels. It doesn't take into account all the smaller subdivisions that don't have public notices or information we don't know about. When it comes to staff I know what our County clerical staff make and we do have the estimates for what that would cost in addition for their benefits if we get to that next level, then we could prepare spreadsheets. MR. ONISHL Okay. Okay. So right now for me it's a little bit hard because it's like I mentioned before about how, I guess, the way these subdivisions are set up Page 15 FC-9 April 15,2025 and how now we're trying to see how we can compensate. I could see if like it was mentioned before about certain private roads where public or other I guess households are using certain roads to bypass the traffic on the main road and that's affecting those people on those certain roads, right. So to me, I think we should look at maybe trying to help them first and improving their roadways to make sure that it's safe for their community and for their families and also for the people who are using that certain roads. And I think that's where I would support something like that. Like they mentioned before the emergency road from I guess from Volcano Road coming down to that Highway 19 is the lower road, the Puna Road, or something like that. But they had that emergency road like that connector. So something likeI don't know ifthatis in existence or was that ever funded to the road? ACTING CHR. HUSTACE: Please, Mr. Kaneali`i-Kleinfelder, if you want to reply? MR. KANEALI`I-KLEINFELDER: Thank you: There's been a number of projects brought forward over the years, I,cd 't think of specifically. Highway 19, there's Highway 11, which is'the state highway for Volcano between—is that what you're talking about? MR. ONISHL Yeah. Had that,main, like that emergency road that they wanted to connect, right, from the two highways. MR. KANEALI`I-KLEINFELDER: There have been some projects brought forward. I think that's part of the Puna roads alternate route discussion. A little bit different but same idea. MR. OISHI; Yeah. MR. KANEALI`I-KLEINFELDER: I think just to your comment I would say Bill 92 which the Council passed last year, which we're still waiting for an application from our Corporation Counsel as well as funding, would enable the DPW (Department of Public Works) and the administration to really focus in on certain roads they want to help provide maintenance for. This goes the other way. This is more providing a credit back to the public to help them with the cost of maintaining their own roadways that we don't. MR,. ONISHL Yeah, and I understand that. But then like I said, also, it comes down to purchasing of the property and deciding where you wanted to live. Like I said, if it's for other uses like emergency and so forth, I would support this. But thank you. I yield. ACTING CHR. HUSTACE: Thank you, Mr. Onishi. Council Member Kierkiewicz, floor is yours. Page 16 FC-9 April 15,2025 MS. KIERKIEWICZ: Thank you, Chair. Thank you, Administrator Miura, Director Nakagawa, for being willing to have the conversation, but also being honest about what the impact will be on County personnel and just the voluminous amount of work that you are currently trying to get through. You know, I'm curious; should something like this pass how would you go about knowing where to make the cut? So if there's a $2.1 million payout, will the communities that are receiving the payout see a reduction is County services to make up for that gap? I just curious how we would go about filling that revenue that we will find ourselves in should something like this pass? You know, I appreciate the creativity, and it would be interesting to pursue the idea that Council Member Kimball brought up regarding the fuel tax because that is something we all pay into when we fuel up at the pump. But I don't know like where would the reduction in services be felt, Director? MS. NAKAGAWA: Yes. Thank�you, Council Member Kierkiewicz. So, you know, exactly where; I don't have that answer. But as you know;We have to budget for the revenues we receive. So cuts, if we don't have this revenue then we'll have to make a reduction in the budget.' And so we would do that, you know, depending on the timing. If it was through the budget process today then we'd have to go through and look at all of the general fund programs and services and see where reductions could,be made just as if we were in any revenue shortfall. MS. KIERKIEWICZ: Okay. Thank you. Just hard conversations that we'll need to have at some point. And Council Member Kaneali`i-Kleinfelder, I know you have a great relationship with our state legislators, I really think that we need to continue to work with them to ensure accountability of the private associations who are in charge of maintaining roads in private subdivisions. So I'm going to continue to urge you to work in that space because they're writing the statute that governs these private subdivisions and the answer is not for the County to provide more relief, but I think there's a lot more wiggle room for the state to provide relief as Council Member Kimball suggested maybe through income tax. But I definitely think there can be more accountability that the state is requiring of these private associations. Thank you, Chair. ACTING"CHR. HUSTACE: Thank you, Ms. Kierkiewicz. Any further discussion? Back to you, Mr. Kaneali`i-Kleinfelder. MR'. KANEALI`I-KLEINFELDER: Thank you. Interesting discussion. I'll say that. So in reviewing our budget this year, I mean, I saw millions going into different areas of the budget and some of those things I question, some I don't. Also, in passing Bill 82 and hoping for funding year over year and seeing none, even having it being promoted as not accessible because we should be doing more, which is interestingly logical conundrum of not being enough so let's do more but let's not do anything at all, to being here now and looking at again, Page 17 FC-9 April 15,2025 $942 million budget addressing an age old equity problem. Regardless of property values what happened, we allowed for these things to be build; subdivisions substandard and have basically held our hands up and said we won't touch it, and that's fair. So Bill 82 was our first step towards rectifying that age old problem. This would be a good step, I believe, and I guess let me put it this way, Director. If we were to decrease the reduction and we looked at staffing RPT more, which Ms. Miura said she needs anyway, would there be wiggle room in there to find a middle ground? MS. NAKAGAWA: So just to clarify the need,there's an existing need for staff regardless of this, so we're looking into that. So there's already a need for additional resources. This would just be adding to that as well. MR. KANEALI`I-KLEINFELDER: I think,,if what I remember, Administrator said four more positions would allow her to do this. That's what I heard. MS. NAKAGAWA: Four more positions but there's already a request in that we're evaluating and looking into with�ekisting conditions as they are today. So just to clarify. MR. KANEALI`I-KLEINpELDER: To increase RPTs staffing? MS. NAKAGAWA: Correct. So we talked about that need that we're looking into for this division and their staffing levels are being evaluated just due to changes d,,,you know, increased administrative workload that they're looking at on top of this.. MR.'KANEALI`I-KLEINFELDER: Okay. So if I put those two together then, RPT is saying I could do it if I had four more people and you're saying we are actually in,process of reviewing adding more staff to the department. That's at a status quo right now. MS. NAKAGAWA: So as we're going through the budget process with every department we evaluate their staffing levels, and some have identified the need for additional resources. Our Real Property Division is one of those that as we've talked about, has some additional needs. And as we move forward with the next reiteration of the budget, I'd mention that this is an area that we are looking into and this is prior to this kind of evaluation of what resources would be needed to do this. MR. KANEALI`I-KLEINFELDER: Okay. Administrator, sorry. Right now you have nine clerical positions that are doing the work. MS. MIURA: Correct. Two are vacant. Page 18 FC-9 April 15,2025 MR. KANEALI`I-KLEINFELDER: Two are vacant. And then when I asked how many more positions, the answer was four. MS. MIURA: For this bill. MR. KANEALI`I-KLEINFELDER: Just for this bill specifically? MS. MIURA: Correct. So we've had supplemental requests year after year that have been not funded for positions. MR. KANEALI`I-KLEINFELDER: Okay. So 13 positions, clerical, would allow you to do this bill and what you're doing now? MS. MIURA: Correct. MR. KANEALI`I-KLEINFELDER: Correct. Okay, thank you.`Arid then, Director Nakagawa, we are saying we actually sire in process of reviewing adding more positions to the budget in this next'iteration of the budget coming up in May? MS. NAKAGAWA: So wejust finished our budget review. We'll be heading into our next submittal in May, and this is a time when we revisit our revenue projections and then take a look at any other supplementals or additions to the budget. MR. KANEALI"I-KLEINFELDER: Okay. So what I just heard is there's possibly more positions being added and funded for RPT. And so this discussion, sorry,from what I'm catching from all of that is it's in the works? Correct me if I'm wrong, MS:NAKAGAWA: So you're making it very specific to RPT, but this is a budget process as a whole. MR. KAEALI`I-KLEINFELDER: Understood. MS. NAKAGAWA: Everything will be evaluated based on the revised revenue projections that we have, the entire County budget, not just one division or one department. But everything will be evaluated. And of course, as we've discussed, these are critical positions. So, yes, they will be evaluated as a whole like all the other department requests. MR. KANEALI`I-KLEINFELDER: Okay. So I'm hearing different things, but I'm hearing yes. I'm just going to say it. So it's yes. There's possibly more positions coming to RPT regardless of reviewing it as a whole. That's what we're discussing. And we're discussing the impact on a department and I'm hearing I need four more positions to handle this, which might be a little bit over because Page 19 FC-9 April 15,2025 you're handling a lot with your nine and you're two shorthanded. Then this is possible. So I'm just trying to help alleviate the conversation as to being so heavy as if this comes in it's going to kill the department. MS. MIURA: I will say I will lose more staff. Clerks have looked at this and said they will quit if I don't get more people. So I just want to be on record for that. We're drowning. Our overtime budget, you guys, is blown way out of the water and staff don't want to do overtime. They're sick; they're tired. The do more with less, we've been hearing it since Mayor Kenoi. They're done. They're burnt out and I'm burnt out. So I can't pretend. Four might be overkill but you also said I underestimated how much revenue loss I'd get. And so I don't know. I'd love for people to have it. I'll be honest; Lthink it's' agreat idea. I can't go back to my office and say I didn't try and,explain how hard this would be. So that's all. MR. KANEALI`I-KLEINFELDER: Okay. That's fair. My point is not to kill any County workers in the process of passing,a bill. But it is to protect the communities and provide the equity. You know, that really is my role and all of our roles. Tempted to put this towards a vote,today just to see where people sit because regardless it moves forward to Council. In respect to the organizations in front of me, Finance and RRT, I'm going to postpone this, and I'll put it to a vote of the Council to do so to a later date so that we can'sit down and go through some of the things that were brought,tip today. I'm not in love with the state side because I think the state will just kick it back to us and say take care of it yourself; it's your problem, which they've been doing for years regarding private roads. BufI�like that idea. Whether it has merit, we'll see. So for today, Mr. Clerk, what is the next meeting in a month? And I do want to give you time, Mr. Hustace,,to speak to the bill if you'dlike to. ACTING CHR. HUSTACE: Thank you. I appreciate that. I'll have the Clerk answer your question first if that's okay. MR. HENRICKS: If you mean roughly a month from now. MR. KAEALI`I-KLEINFELDER: Correct. MR. HENRICKS: May 20t'. MR'. KANEALI`I-KLEINFELDER: Is that a Committee Meeting? MR. HENRICKS: Yes, sir. MR. KANEALI`I-KLEINFELDER: Thank you. ACTING CHR. HUSTACE: Any further discussion on the bill as it currently stands? Ms. Villegas, please. Page 20 FC-9 April 15,2025 MS. VILLEGAS: Sure. I just want to thank Ms. Miura for your honesty. You always do an amazing job here by not trying to share opinions that might sway something, but I hear you in your plea and I respect your leadership and management skills for speaking up for your staff. So thank you for your honesty today, which allows us to make decisions and to continue conversations without negatively impacting employees or like reducing the number you have. So I just wanted to say that personally and professionally. I appreciate your candor today. I yield. ACTING CHR. HUSTACE: Thank you, Council Member. Okay. So just my thoughts on this if you don't mind. I just want'to mahalo Assistant Administrator Keita Jo in Hilo for sitting with us here, and then of course Administrator and Director Nakagawa for your insight, your feedback, and'the details on some of these figures and numbers and then working with the maker on kind of understanding the impacts and so forth. And of course thank you, Council Member Kaneali`i-Kleinfelder for bringing this forward for the discussion. It's been a very good conversation across the board on different thoughts and different ideas. My question to you and kind of looking forward and moving this forward, and thoughts about it is really identifying the geographic distribution of the communities that could benefit"from this and then those that will definitely probably take action on it knowing thatthey may find a break and may take that break. So I'm just curious when you dive inter the numbers and the figures and see where the distribution is across the entire County because yes, in the district that'you represent, you know, there could be more benefit for the community members there for sure and they'll take heart to that and realize that benefit and impact I'm thinking about other,communities that already have the means, and they will take advantage; maybe advantage is not the right term but will utilize this for that purpose beyond the means that they already have. So I do see kind of especially in the areas where you have more wealth and more influence that they're going to kind of take advantage of this process and procedure. So I do have some concerns on that side for sure. But I do want to find that mechanism that impacts and can benefit our community members that have those substandard roads that you so experience and share with us. So thank you for that. So with that if you will have a motion for postponement, we'll take that now. MR. KANEALI`I-KLEINFELDER: Beautiful. Thank you, Chair. So to the Council, when is the next iteration of the budget due? ACTING CHR. HUSTACE: So May 5t', the draft comes in from the Mayor's Office; the second draft. Is that correct, Director? MS. NAKAGAWA: May 5t' is our next submittal. That's correct. Page 21 FC-9 April 15,2025 MR. KANEALI`I-KLEINFELDER: And we'll hear it at Council on May 5 h?. MS. NAKAGAWA: I don't have that schedule in front of me. MR. HENRICKS: No. ACTING CHR. HUSTACE: So the first reading of the budget for our special Council Finance Committee is May 22nd MR. KANEALI`I-KLEINFELDER: Okay. Mr. Clerk, when is the first meeting in June for Committees? MR. HENRICKS: June 3. MR. KANEALI`I-KLEINFELDER: Okay. Motion to Postpone: Mr. Kaneali`i-Kleinfelder moved to postpone Bill 38 to June 3, 2025. Seconded by Mr.'C7nishi. ACTING CHR. HUSTACE: Any discussion on the postponement? Mr. Kaneali`i-Kleinfelder: MR. KANEALI`I-KLEINFELDER: Yeah,thank you. Just appreciate everyone's time and then, Ms. Nakagawa, thank you very much for your input and helping me get to where we are today. I know it's not comfortable, but I mean we oppose ideas, but that's fine. At least we had a good conversation about it. I appreciate that: And Ms. Miura, thank you for being so honest and let's see what happens with your staffing levels between Here and the next iteration of the budget. Okay. Thank you. L yield., ACTING CHIC. HUSTACE: Any further discussion on the postponement? Okay, seeing none. All those in favor of postponing Bill 38 to the June 3rd meeting,,please say'"aye." Vote on Motion" The motion to postpone Bill 38 to June 3, 2025 was carried to Postpone: by the following voice vote: (Approved) Ayes: Committee Members Galimba, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Hustace—9. Noes: None. Absent: None. Excused: None. Relinquish Chair: At this time, the Acting Chair Hustace relinquished the chair to Chair Kaneali`i-Kleinfelder. Page 22 FC-9 April 15,2025 CHR. KANEALI`I-KLEINFELDER: Thank you, Acting Chair Hustace. Thank you for taking over. You did well. Appreciate it. Mr. Clerk,please let the record reflect that I have taken over the chair at 2:03 p.m. Our next item is Bill 39, please. MR. HENRICKS: Prior proceeding to Bill 39 I would note that the wording on the agenda for Bill 38 is incorrect. It lists $500 as the minimal amount as opposed to the maximum. That will be corrected for the June P agenda. CHR KANEALI`I-KLEINFELDER: Thank you for that clarification, sir. Bill 39: AMENDS CHAPTER 19, ARTICLE 1, SECTION 19.2, AND ARTICLE 7, SECTION 19-53, OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO THE AFFORDABLE RENTAL HOUSING REAL PROPERTY TAX CLASSIFICATION Repeals the definition of"affordable rental housing," amends the definition of "affordable rental rate," and amends subsection,(h)„Eligibility for Affordable rental housing class. Reference: Comm. 206 Intr. by: Council Member Inaba Motion to Approve: Mr. Inaba moved to recommend passage of Bill 39 on first reading. Seconded'by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: Council Member Inaba, go ahead. MR. INABA: Thank you, Chair. For our new members, this is a bill that we kind of dabbled in in the previous terra in a slightly different version. I introduced a bill to replace the currentpayment standard with 100 percent of the area median income (AMI)"as the qualifier for the real property affordable rental class. Currently the affordable rental class and the homeowner class have the same rate and the attempt here is to try and broaden the scope of those who can be in this program, and it provides also the three percent assessment cap that the homeowner class provides. There was some feedback in the previous bill with some concern that the 100 percent AMI was too big a jump and that current renters in,the program might experience hardship if their landlords chose to jump up to 100 percent. There was also discussion about setting the affordable rental rate by resolution and I think that's what I was supposed to bring back. But in the meantime, there was discussion with Real Property Tax and OHCD (Office of Housing and Community Development)with concern about having a set of via resolution first of all that all of us here have a good idea, but as we do term out and other folks come and serve on the Council we might get into some trouble with setting rates and making sure that we're keeping up to date. So what's being proposed here instead is rolling over from the payment standard to Page 23 FC-9 April 15,2025 80 percent of the area median income, and I'm provided to all of you today, Communication 1109.1, from the previous Council term. So on the first page of that document you can see a comparison between the current payment standards for studios up to four bedrooms against 60, 80, and 100 percent of the area median income. Again, the bill before us today is proposing to go to the 80 percent AMI level. So ultimately asking for your folks support. You can see where the rental prices are changing on the, let's see, the last page of the document. Sorry. No. It's not the last page. On the fourth page of the document is the current payment standard versus the 80 percent AMI. So I ask for your support. And I do have an amendment today that I also want to take up, so understanding the point of the bill as a whole, I'll like,to make a motion,to amend Bill 39 with the contents of Communication 206.1. Motion to Amend: Mr. Inaba moved to amend Bill 39 with the contents of Comm. 206.1. Seconded by Ms. Galmba, CHR. KANEALI`I-KLEINFELDER: Council Member Inaba, go ahead on the amendment. MR. INABA: Thank you. So the main difference Here and credit for this one to Administrator (Kehaulani)Costa. It's really to try and expand the scope of really trying to serve and ultimately that's theirs'and in the affordable rental, you know, AMI category., So what this amendment does is it expands the scope of Bill 39, which is specifically just to the 80 percent AMI to also include properties who are certified by OHCD as Section 8 rental units, and essentially it's trying to reward folks either for renting at the 80 percent or engaging in a program that ensures folks are ire an,affordable rental So it'd like to call on Administrator Costa if she'd like to chime in on'ths'specific amendment and then Administrator Miura lifter that. (Note: At this time, Housing Administrator Kehaulani Costa came forward to address the members of the Committee.) MS. COSTA: Good afternoon, Council Members. CHR. KANEALI`I-KLEINFELDER: Please introduce yourself. NfS. COSTA: Housing Administrator Kehau Costa. MR. INABA: Thank you, Administrator. If you can just give your feedback on this specific amendment here. MS. COSTA: So the current bill exempting landlords or giving the exemption to landlords who are renting at 80 percent AMI is a good bill. I appreciate it. It Page 24 FC-9 April 15,2025 incentivizes setting the rent rates at 80 percent or below AML However, Real Property Tax doesn't have the capacity and nor is it the intention of that aspect of the program to actually certify the tenants in those units. So that aspect of the bill keeps the rents low for whomever is living in the unit. The amendment is to encourage participation in the Section 8 program because we certify that the tenants in the programs are 80 percent or below AMI and that their rent burden or the amount that they're paying in rent is not more, initially not more than 40 percent of their income. So they are paying rent, 40 percent of their adjusted income and we subsidize the rest. So through the Section 8>program, we're ensuring that we are also capturing the renters who need the affordable rent. So two parts. MR. INABA: Thank you, Administrator_ And Administrator Miura, any comment at this time on the amendment? (Note: At this time, Real Property Tax Administrator Lisa Miura came forward to address the members of the Committee.) MS. MIURA: Good afternoon. Lisa Miura;Real Property Tax Administrator. We actually do appreciate the fact that some,of the heat might get taken off of us by including in there or are certified by the Office of Housing and Community Development as Section 8 rental units because as Administrator Costa said, it puts it more on Housing and we have had concerns from the public that felt like our affordable housing program should be tied to what the tenant income is making so that there's a,;difference or differential for that. And I believe at the end of the day, moving away from the payment standard also helps Housing so they can use that for what it's intended for without having to worry about what Real Property TaxOffice needs. MR. INABA: Thank ytou so much, Administrator. With that, I'm happy to take any questions on the amendment. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Members, on the amendment? Council Member Kagiwada. MS. KAGIWADA: On the amendment, so I guess this is a question for Administrator Costa; for either of you I guess. Will you be certifying all clients in the affordable housing or only those getting Section 8 vouchers? Do you need clarification? MS. COSTA: I do. Yes. MS. KAGIWADA: Okay. So one thing that was just brought up is that this could help relieve RPT with some of their burden because you'll be certifying the AMI levels of those receiving Section 8 vouchers. Page 25 FC-9 April 15,2025 MS. COSTA: Only for Section 8. MS. KAGIWADA: Okay. But you will not be doing that. So it'll be together, but you'll still just be doing your folks not— MS. COSTA: Yes. Yes. MS. KAGIWADA: Okay. Just wanted that clarified. Sorry, I'm just trying to make sure I'm staying on the amendment. The amendment doesn't deal with the AMI change, right, that's the main body? MS. COSTA: Correct. MS. KAGIWADA: Okay. I think that was my main question:on the amendment itself. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you, Council Member. Council Member Galimba. MS. GALIMBA: Thanks. I just wanted to ask, sorry for my ignorance, but are there affordable rental limitations for the properties that you certify as Section 8? MS. COSTA: What type of limitations are you talking about? MS. GALIMBA: Yeah. So I'm sorry. I don't know Section 8 too well. So someone qualifies for Section 8, right, and then they get a voucher. So they are qualified based,ern their income. MS. COSTA: Yeah. MS:GALIMBA., And so then they go out to look for a place that; does it have to be previously certified? MS. COSTA: Okay. Yup. So yeah, landlords can participate at any time. They can participate in advance of having a tenant; they can participate a the time they have a tenant; they can participate at the time that their existing tenant receives a voucher coming off the waitlist. When landlords participate in Section 8, we do a couple,of things. We do a home inspection; make sure that it passes HUDs (Housing and Urban Development) housing quality standards. We check to make sure that the property is for the most part permitted. I do allow some unpermitted, but it's on a case by case and that's usually for non-living space like a covered lanai and they put a cover on the lanai. So living space needs to be permitted. We do a rent comparison so a landlord can say I want to charge $4,000 a month and we will go in and do comps and say sorry but in your area for a unit this size, this type of construction, this age, the going rent is $1,200 a month. So you need Page 26 FC-9 April 15,2025 to bring the rent down to what is comparable to the area if you want to participate. So there's a number of things that the landlords have to participate in along with, you know,just a lot of compliance with program rules and guidelines. So as long as the landlords willing to do all of those things then, yup, we'll bring them on to our program. MS. GALIMBA: Thank you. That's helpful, I mean, and interesting because there'd be potentially two different rates. Like there'd be this affordable rental cap and then there'd be the Section 8 comparable rental, and you folks be would kind of, yeah. MS. COSTA: Yes. MS. GALIMBA: Or it'd be two completely'different things.but it's in the same program. I guess, let's see, what was my question around that., L think I'm okay, okay. But then the other p"art of it is the permitting part, which'I heard some landlords saying that that's like the major reasoh'that they don't; there's the rental amount limits but then there's also the permitting part of it. And, you know, usually it's an older place that you're potentially going to be doing affordable rentals. So the current code says it has to be all,I forget the exact words, but like all permits or something. Ithas to be completely up to date. And you have a little more wiggle room to have mostly but then accessory space maybe be, yeah. MS. COSTA: Yeah, a very little wiggle'room. MS. GALIMBA: Yeah, okay. Alright. And I'm not sure if this is for you or for Corporation Counsel, but I guess for you, would you have any heartburn or see any problems with removing thatlanguage around like all permitting completely up to date permitting for affordable rentals. MS:COSTA: Yeah. So I can speak to that when we're off the amendment. MS. GALIMBA: Okay. Right. MS. COSTA: It's not in the amendment. MS. GALIMBA: Right, right, right. Okay. Thanks. That's all for me for now. CR. KANEALI`I-KLEINFELDER: Thank you. Any other input on the amendment? Council Member Kimball. MS. KIMBALL: Yes, thank you. Just to the maker, the last clause there on Number 1, with an initial lease term of one year; is that meant to apply only to the Section 8 rental units or both to the affordable rental rate, the other units? So you have two put to possible units, the certified ones or the ones that are rented at the affordable rate, and I think without a coma it looks like year lease applies to both. Page 27 FC-9 April 15,2025 MR. INABA: In this amendment it applies to the second, but the rules of the affordable rental program require anyway. So it does require for both, but specifically this Section 8 language was brought by Housing. Administrator can provide a detailed response for the reason for that. MS. KIMBALL: I don't need an explanation. This is just a clerical thing. I would think there might be an oxford coma needed after the rate, before the or, to distinguish those as two separate clauses. Thanks. CHR. KANEALI`I-KLEINFELDER: Okay. Anyone else? Okay. My only question is certification; who does the certification?;Office of Housing? MS. COSTA: Yeah. Office of Housing; CHR KANEALI`I-KLEINFELDER: Okay. MS. COSTA: And we would just do annual consent by landlord and then provide the TMKs (Tax Map Key) over to Real Property Tax. So less burden on them in that respect. CHR KANEALI`I-KLEINFELDER: Thank you.-Okay. Council Members, on the amendment, anything further? To the maker, good to go? Okay. The motion on the floor right now is to amend Bill 39 with the contents of Communication 206.1. All in favor? Vote on Motion The m6ti;on to amend Bill 39 with the contents of to Amend: Comm. 206.1 was carried by the following voice vote: (Approved) Ayes. Committee Members Galimba, Hustace, Inaba, Kagiwdda', Kierkiewicz, Kimball, Villegas, and ChairKaneali`i-Kleinfelder-8. 'Noes: None. Absent: Committee Member Onishi - 1. Excused: None. CHR KANEALI`I-KLEINFELDER: Back to the main motion, Council Members? Council Member Inaba. MR. INABA: Yeah, thank you. I'm just pointing out there is one significant difference between what we had discussed last term and Bill 39, and that is on Page 2, the removal of Number 2 saying that all rental units must be—sorry. No. I'm going to yield for now. CHR KANEALI`I-KLEINFELDER: Okay. Thank you. On the main motion, Council Members? Council Member Kagiwada. Page 28 FC-9 April 15,2025 MS. KAGIWADA: Thank you, Chair. So to either or both administrators. When I'm looking at the proposed changes, especially for rentals in East Hawaii, I'm seeing up to an additional almost$400 a month; $387 a month with the proposed 75 percent payment standard for a one bedroom. To me that seems a little scary for somebody renting an affordable property in East Hawaii to jump up that much. Any feedback on those numbers there? Administrator Costa, Administrator Miura, either or both. Whoever wants to go first. MS. COSTA: So I'm not sure what your question is but I know what your statement is. You know, what we're really trying tee do is decouple the real property tax rate from our payment standard., Our payment standard is so the Section 8 payment standard is set by fair market rents which HUD does a fair market rent study and we by federal code can set our payment standards between 90 and 110 percent of the fair market rent. So our payment standard right now is 110 percent of the fair market rent; We can do exception payments in areas that have a higher rent. We backed that amount dawn to 75 percent for the'affordable rental rate program. I payment standard is affected by our budget. So when we have inflationary spending given to us by congress and we have more money, we go up to the top. And so this program will go'up higher when we have to manage our budget. There could potentially be a time where we reduce our payment standard so then this program's affected as well, right: So it does fluctuate and can fluctuate based on the Section 8 budget. So it's not set. So we have thought, if we're really going to do this and separate it out from the payment standard and we're going to follow a program that real property tax can easily access and not have to do complicated calculations with, not have to wait for our office to create the schedule, we're looking at HHFDC (Hawai`i Housing Finance and Development Corporation);HUD rents, original bill was for 100 percent, way too high. Sixty percent is a little too low. We will lose participation in the program. So 80 percent, although there are increase; it is an increase, I think it's a safe place to land and,you know, I'd like to hope that our landlords that are out there providing affordable rentals to our families in the community are not going to look at this and say, "I can raise rent by $300 on a one-bedroom." I think that they're and really truly even the ones that we work with within our Section 8 program,they're looking at the families and they may raise some rent over time, but I don't think that they will initially jump that high, change that much because it's not a huge—it's a big increase, but I think I'll be hopeful. MS. KAGIWADA: Okay. So for Section 8 it shouldn't matter that much—well, it will matter in our budget because we make up, I mean, using the vouchers, you make up the difference between the 40 percent of what people can pay. MS. COSTA: Yes. Page 29 FC-9 April 15,2025 MS. KAGIWADA: But for our affordable housing program of our County we don't make up that difference, right? MS. COSTA: No. MS. KAGIWADA: So the renter will be expected to pay that difference, correct? MS. COSTA: If the landlord raises the rent. MS. KAGIWADA: Okay. So I guess my question maybe is to the maker or to you. Is there a way to do a differential like there is with the 75 percent payment standard for the higher income zip codes and,the lower income zip codes? MR. INABA: That would be up to this body to choose a different AMI for certain zip codes. It can get tricky being that HUD and HHFDCpublished 60, 80, 100, 120, and 140 so there would be and what we're trying to getaway from is all this calculations. So what 80 percent represents is also an opportunity to encourage some folks who are not willing,tb rent at current 75 percent standard and to get them into the program as well. MS. KAGIWADA: Yeah. Understood. And really see the need on the west side to do this and to raise those maximum rent levels,but I also have a real fear for the east side of people getting priced but because if we go to one standard, I mean, that was the thing I kept hearing when we discuss these is it was very important to have this differential between the east and west sides generally, but between the higher income areas and the lower income areas. So I guess that's what we're losing here if we go this way and-that would be a big concern I would have. So that's just a statement on that. And my other question has to do with having HHFDC set the standard or set the payment rates. That is a state organization, and we are asking them to do this. Cart we assign this to them? As a County can we just say you're going to do this for us?- MS. MIURA: Yes. So the Hawaii Housing Finance and Development Corporation was created in 2006 under the Department of Business and Economic and Tourism. So it's something they do every year in July anyway. So I don't think we're asking them to do anything, we're just going to it. Housing is using their numbers now and then they do all their formulations to come up with what they do, which is why we usually get it in late September. This would allow Real Property Tax to actually put those applications out sooner in the year. MS. KAGIWADA: Okay. So we're just adopting what they put out, correct? MS. MIURA: We're not having them set our rates. Page 30 FC-9 April 15,2025 MS. KAGIWADA: We're just adopting their standards. MS. MIURA: Correct. Yes. Their AMI, which goes to County. MS. KAGIWADA: Alright. Okay. That's different than the way I read it I guess. Alright. I yield for now. Thank you, Chair. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Thank you. I found what I was trying to find earlier. The other main difference here in Section 3 of the bill, subsection (h), the language being stricken, currently the affordable rental program requires that all units that are part of the program be legally permitted by all codes and that's really been a struggle for our landlords trying to get in and limits who can participate in the program. So working with this on, I credit Administrator Miura on really trying to expand that pool to include pretty much all units. And again, especially on'the Section 8 side, certain health standards are verified to be in Section 8 program but in general opening the pool a little bit more fot folks to get into the program. So I just wanted to point out that difference here in Bill 39 as opposed to the current rules of the program. CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball. MS. KIMBALL: Yeah, thank you. Council Member Inaba, I'm going to ask you to remind me;again why we're even considering moving away from the payment standards to the AMI? I mean we got a little bit of explanation from Administrator Costa. But the two,things about the payment standard, well, one thing that I like is that there's different rates for east side and west side and we lose thatby switching to the AMI. But I remember you had a really good reason for wanting,to switch and so I'd like to be refreshed on what that is. But the second thing is looking at the difference between what would be paid through the payment standard`versus the AMI or how the rent would be set in those last two columns on all these pages. It's really interesting from the standpoint of I can't quite figure out what the calculations are but it's very different. In one case you're paying a lot more for the smaller units and change is less significant for the big ones. That's not the case across the board. So I don't know how they're calculated differently but they're clearly calculated very differently based on the size of the unit. Do you know anything about how that difference can be explained. MR. INABA: Sure. So the first question, why away from AML We need to be simple. Again, AMI is published earlier. The payment standard is an internal formula that Office of Housing and Community Development works through that Real Property Tax has to weigh on. So we're trying to simplify it because HHFDC and HUD always publish so we're going to that standard. And on the landlord side, it also makes it easier for them because nowhere else do we Page 31 FC-9 April 15,2025 typically use payment standards. It's kind of an internal related to Section 8 kind of deal where AMI is published everywhere, so the intent is to go with a system that is used pretty much universally whether it's through our rental program like this or if we're talking about affordable housing agreements. It's always as it relates to AMI not payment standard. So that was the reason to get away from the payment standard and then it terms at the difference depending on the number of units that goes to how payment standard works with market rental rates and what the housing office ultimately chooses in terms of whether it's 110 percent or 90 percent. So it depends on the market rate of those different units and what Hbusing,$elects as the payment standard. And that's why you'll see, you know, in some cases a big difference of up $387 at the greatest or for a three-bedroom, the greatest change would be $171. Those are the differences and if you want Administrator Costa to explain a little bit further on how they work the payment standards and how that exactly calculates out. I'm going to defer to her. MS. COSTA: I guess the best thing is for me to give you an example of that and I hope I'm saying this correctly or my staff will correct my later. But a few years ago, a couple years ago during COVID (Coronavirus Disease) we got a big boost from HUD, $5 million inflationary spending and'they said spend it. Pull every lever that you can to spend this money down. And,one of the waivers that we got from HUD was to go to 120 percent. Okay, that's the part they're going to correct me on, but I believe we were able to go to 120 percent, so we went higher than fair marketbecause we had a one-year waiver to do that. That affected the Real Property Tax Program. A year later, no more waiver; we were out of COVID; we didn't have that inflationary money anymore; back down to 110 percent. Real Property Tax now had to drop their rents and landlords are like in the middle of what is happening at 14UD and what is happening at our Section 8 program is affecting this program. So I think it is a ready good idea to take it away from the payment standard and just follow AML I think it's just cleaner and HUD sets the rental rates for our County based on housing studies. We can participate in a housing study. We can actually conduct our own housing study as long as we follow HUDs methodology and we can petition HUD to update their fair market rent based on our ability to provide that consultation. So we have some ways to really look at the rental rates for our payment standards. So I just think it's a good idea to separate it. It gets a little muddled. I think this program was initially intended to support Section 8 and to encourage Section 8 participation, but over the years we've seen it really not be a Section 8 program. There's not a lot of Section 8 landlords that are able to participate in this program because the rates are set low. If I could just have a moment too? I would like to say that the part of the amendment that I really think for me is encouraging is to encourage Section 8 participation in our high-rent areas, and I Page 32 FC-9 April 15,2025 believe that Chair Inaba, this was why he was going to 100 percent initially because he's really trying to address our west side, Waimea, where rents are really high. So for example, my oldest son just rented in Waimea with two of his friends a three-bedroom. I believe their rent is $3,200 or $3,400 a month for three young men to split. Our payment standard for Waimea; three-bedroom, the highest that a landlord could charge in the Section 8 program is $2,973. That landlord will not participate in Section 8 because they can charge more on the market. However, if we're coupling Section 8 with the exemption, thatlandlord may decide to reduce their rent from $3,200 to $2,900. Not a big difference in rent for that landlord, but over time could be a significant difference iii'their real property tax bill. So that's why I put the amendment forward is because I'd like to try to address not only the appropriateness of the tenants living in those>units, but to start to address who we can create exception rents within our payment standard program1 within our payment standard to address small areas of our island where rents are higher and to encourage adoption to Section 8 through this program. So just trying to bring these two aspects together to have more landlords on our island be incentivized to provide affordable rentals to tenants who need it. So that's the point of the amendment. MS. KIMBALL: So, da I still have the floor? Okay. Thank you for that. Thank you to the maker for that explanation: I think I would like to consider this with an east side and a west side rate or maybe even perhaps by census block, which might be the easiest way to pull it out rather than districts or things like that because we have some districts that have two different sets of spots right next to each other that have very different AMIs. So I'm going to spend a little time digging into that with the census bureau data. But I think it's important to have that difference between east side and west side with this given what you just said. And if we're going to go to the 80 percent, I think we might want to put a little staggering in there. As much as you're hopeful that landlords wouldn't immediately go up to the higher rate,perhaps we would limit the increment that they could go up in the legislation per year until they get to that highest AMI, so it's not an,immediate $350 hit, but maybe it's limited to a $100 a month for the first year and then it can go up after that. That's just some thoughts I have right now. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Galimba. NfS. GALIMBA: Thank you. So yes. That whole thing about the permitting, I see, it's crossed out so don't have to talk about that. But I guess the east side, west side is a really important distinction even though I know it's going to make it more complicated. There's still like if I just look at Zillow, like even at the 80 percent there aren't even any properties really except for a couple of studios that would fit under the 80 percent. And I know Zillow might not be the entire market, but just to look at quickly. Whereas on the east side like plenty, and so Page 33 FC-9 April 15,2025 there is that worry about allowing for higher rental rates. So I do see the complication, maybe the necessary complication around wanting to take care of this many people on this island and get as many landlords to do affordable rentals if possible. But in general I like this approach. So that's just my thoughts for right now. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. Alright. You said'that with Section 8 I believe our County can service about 2,300 households per month. With these changes and needing to put more money per household because the numbers go up, but the people's income don't necessarily. They're still paying their 40 percent and now the top rate is greater, we have a bigger portion to pay per household. Is that correct? MS. COSTA: So I think you're implying that the increase on the rate of the real property tax as it's being presented 80 percent would affect the subsidy amount in Section 8; is that what you're asking? MS. KAGIWADA: They would remain the same for the renter, but the amount the landlord is getting paid would be greater, correct? Would be great up to this amount. And therefore,the Section 8 voucher or money has to pay that difference, no? MS. COSTA: Changing the real property tax rent amount and increasing that won't affect Section 8 rents. MS.'KAGIWADA: Only the affordable housing? MS. COSTA: Only the affordable housing rents. It won't affect Section 8, and it won't affect the subsidized amount that we pay. It's just two different schedules. MS. KAGIWADA: Okay. And the other question I had is do we not use our Section 8; we do not find enough landlords, do we give back or we don't utilize our Section i 8 every year? MS. COSTA: We're fully utilized both in voucher and in budget, but don't have enough landlords in our, you know, Waimea through West Hawaii. We don't have enough landlords participating simply because the payment standard, the Section 8 payment standard, is just too far away from what can be market rents. So we need to find ways to incentivize participation in Section 8 on the west side. MS. KAGIWADA: Okay. Understood. So just to be clear though, that will mean taking away Section 8 vouchers from the east side in order to be more equitable around the island. Page 34 FC-9 April 15,2025 MS. COSTA: I wouldn't say taking away. When there's attrition and vouchers open up and then we pull somebody from the wait list, they can choose wherever on the island that they want to live. So they could be currently living in West Hawaii but may not be able to find a suitable rental in their geographic area. So we wouldn't take away vouchers. It's just there is natural attrition and then we pull from the wait list and that participant gets their voucher and they go house hunting. And it's just often that the most affordable or where they can apply their voucher is on the east side. But that does not mean that's where they want to reside. And that's also why so many of our project based vouchers are being assigned to West Hawaii, to subsidize rent in West Hawaii so that families can live, participants, households, can live on west side. - MS. KAGIWADA: Okay. That makes a lot of sense. So it's just going to give more options to renters of where they can live. MS. COSTA: Yes. MS. KAGIWADA: Okay. Great. That's wonderful. Okay. I would just love to figure out this differential between, you know,,the less affluent communities and the higher affluent communities, if you can der that? It sounds like you guys are supportive of this and so I'd,be very supportive however we can figure that out. CHR. KANEALI`I-KLEI TFELDER: Okay. Further discussion? Okay. I have a question. I have a few actually. 'Okay. S6 listening to the conversation today, this really is addressing the affordable rental rate, so your hope then is that more people utilize the affordable rental rate class. MS.'MIURA: Not necessarily. I believe the hope is more people on the west side are willing to go'in"that are in the Section 8 housing, that they get more people into the program. So they will apply for it. CHR. KANEALI`I-KLEINFELDER: The affordable housing program or the affordable:rental class? MS. MIURA: Okay. So the affordable rental class would be utilized as a way for them to get into the Section 8 program or as an incentive. CHR. KANEALI`I-KLEINFELDER: Got it. Okay. Do we have an idea of what we're hoping to achieve by doing this; what kind of percentage or increase we'll get? MS. COSTA: What program are you asking about? CHR KANEALI`I-KLEINFELDER: The affordable rental class. MS. MIURA: Section 8? Page 35 FC-9 April 15,2025 MS. COSTA: Section 8 or affordable rental? CHR. KANEALI`I-KLEINFELDER: This didn't apply to Section 8 vouchers per the question from Council Member Kagiwada. MS. MIURA: I think I'll maybe clarify real quick. So in our old program or the way it's currently written it's 75 percent of the payment standard. Nothing to do with Section 8. It's not tied to Section 8 at all. In this..amendment that was passed plus what is here it would go to 80 percent of AMI,which is the whole affordable rental housing program. You can qualify by being 80 percent AMI monthly rental, which I believe is what Council Member Inaba provided or you're in Section 8, and Section 8 can be 100 percent of what'they pay. So it's not tied to 80 percent AMI anymore. So that's,where I think I wanted to clarify which one it is so then we don't even look at—we'll still get the applications, but they look at the certifying it to us. We're not even collecting contracts anymore; we're not reviewing at all per this new one whether`it's permitted or not,which I would just like to share mahalo for that because I know that was a big step. But legally permitted by all codes also includes building;planning, lanai's, every little single thing in there and I won't say what I think about how different departments look at that, but it's been difficult for the public and us. So we anticipate the Section 8, or we hope the Section 8 housing pool of West Hawaii»properties to increase by having this "or" in there that allows them to go to higher than what even AMI has for West Hawaii. CHR,KANEALI`I-KLEINFELDER: Have you done any estimations on how much this will increase use of the voucher program, Section 8 program or participation in'the affordable rental property tax class? MS. COSTA, We have not done any studies to determine whether this bill will directly increase participation in Section 8. It is my assumption that it will based on,my experience and my knowledge of why landlords choose not to participate in Section 8. I don't think this is a short term, like we're going to see landlords jumping on this immediately. This is a long term plan to address housing affordability, rental affordability, over time. And over time as we adjust the payment standard to include the exception rents of geographic areas and increase the payment standard slowly, we have to do it slowly over time because of our budget. But as we slowly increase the payment standards in our geographic areas that have high rent, exception rent, then we will start to see better adoption because it will be combines with a real property tax exemption and it will encourage participation in Section 8. CHR KANEALI`I-KLEINFELDER: Okay. MS. COSTA: But have we gone out and done surveys and studies around this, we have not. Page 36 FC-9 April 15,2025 CHR. KANEALI`I-KLEINFELDER: I was getting that vibe, that's why I asked the question. And then a lot of what we do is data driven so what's going to back up why we do a decision, similar to what we just talked about on the last bill. And you led me into my next question, which is if we're increasing the rents looks like in every zip code and you have a set dollar amount, does that then decrease the amount of vouchers you can then provide because things cost more so the voucher doesn't go as far? MS. COSTA: Yes. So it's a complex. It's a complex housing policy that we need to look at over time. So we can't make broad changes in one year, but you can make small incremental adjustments year over year in a long range strategy to address appropriate rents. CHR KANEALI`I-KLEINFELDER; Similar to how we provide free fares for mass transit to build ridership to get more federal money in to provide more mass transit. MS. COSTA: That's not my department; Fm not sure. CHR KANEALI`I-KLEINFELDER: Same idea. A long term look at how to get from Point A to Point B utilizing both property tax class and Section 8 vouchers and other vouchers. MS. COSTA: Yes. Yes. CHR. KANEALI`I-KLEINFELDER: Okay. Okay. Interesting. I really do agree with'what I've heard two times now from my Council Members, which is I remember a Housing Agency meeting last week Monday and discussing the west side resits being higher, but they can ask for more money on the west side and you're completing with the vacation rental industry and tourism. But your want was to be able to offer better rents or more vouchers in the west side. East side is pretty well taken care of. I think most of your vouchers came from the east or are being utilized in EasfHawai`i, correct? When I'm looking at this rent comparison sheet, which is the current 75 percent of payment standards versus the 80 percent AMI, the rent is being increased more substantially in all other zip codes besides West Hawaii, which I find concerning if you already know your vouchers are heavily utilized unless your goal is we're so utilized in East Hawaii that we're geeing to bump the rent up and hope we can take the market. Is that where we're headed? Am I reading it wrong? MS. COSTA: I think it's a bigger discussion. It's really complex for me to explain what the payment standard does to existing rents in an area, right? So if the majority of your vouchers are in East Hawaii and the payment standard is high you start to see that the payment standard is driving the market because of the concentration of vouchers in a particular area. So it's just something that I've been observing in Section 8 it would be better if the distribution of vouchers was Page 37 FC-9 April 15,2025 more geographically distributed. I think it is why we are seeing rents so high in East Hawaii is because there's a lot of vouchers and the payment standard is based on one data point, which is the entire island. So finding a way to start to do a better distribution of the voucher program across the entire island will help to stabilize rents. And I'm not an economist. This is just my observation. And this is what this bill does. I think this bill is a step in the right direction. I really understand that you'd like us to go into small area rents for the real property tax program. It's pretty complex. I don't think that that's something that'Real Property Tax should take on right now, but I think it's something that we can,get to over time as Section 8 starts to look at small area rents a little bit deeper. ButI do think this is a step in the right direction to get us a little further along in that way,of thinking about our rents. CHR. KANEALI`I-KLEINFELDER:I I think there's some merit to looking at the way we utilize vouchers and looking,at how to do that geographically, which I believe I heard is a possibility through Office of Housing in your Housing Agency discussion. Is that right? Okay. MS. COSTA: Yes. CHR KANEALI`I-KLEIIFELDER: Yeah. I think having Lisa look in doing affordable rental class per zip code would get;psychotic for the department. I'm not going to do that and then try do other bills at the same time. 1 5: COSTA: She just told you that on the previous bill. CHR IANEALI`I-KLEINFELDER: Okay. We're not trying to kill any County employees in,doing these bills. The last question, I mean, the permitting one this is to the maker. If you remove all permitting requirements, your intention is justto let anyone,rent anything to anybody as long as they have a sink and a toilet? MR. INABA: I think everyone has, you know, their own standards for their living conditions. Right now the problem we're facing is that people can't j oin this program and if we also talk about land ownership and retention here, when We're providing a benefit via affordable rentals the point of this program is that we're going to provide a benefit with a reduced property tax bill. So by limiting us to having to follow all codes in the County, we're restricting a lot of properties from entering the program and ultimately being rented for affordable housing purposes. This tries to address that. So I don't want to say that I'll agree with the statement that you provided. I'll simply say that everyone has a standard of living that they are ultimately comfortable with and this provides them the opportunity to go out and look at different properties that are currently not in the program who might be joining the program. Page 38 FC-9 April 15,2025 CHR. KANEALI`I-KLEINFELDER: Okay. Lastly, Renee, are you here? Where'd she go? I have one last question. I'm thinking on the Housing Agency meeting and a form I had to sign. MS. MIURA: Real Property's Corporation Counsel is here. CHR KANEALI`I-KLEINFELDER: Yeah. Maybe you can help me. Thank you. Sorry. (Note: At this time, Deputy Corporation Counsel Keyra Wong came forward to address the members of the,Committee.) MS. WONG: Good afternoon. Keyra Wong, Deputy Corporation Counsel. CHR KANEALI`I-KLEINFELDER: Thank you, Ms. Wong. At Housing Agency we had to sign a form disclosing whether or not we have a rental. In looking at this bill and what it chooses to do, do' we need to be disclosing whether we have an affordable rental property as Council Members deciding on this bill? MS. WONG: No. I don't believe that it would,trigger you to disclose that. I would think that this program is available to everybody in general. And so, are you asking if there's a conflict,bf interest if you don't disclose it? CHR KANEALI`I-KLEINFELEiER: I'm asking if there's a conflict of interest if any of the Council Members have a house in the affordable renting class that would be able to benefit from this decision that's about to be made if we pass the bill? MS. WONG; I don't believe so. No. I don't believe it would trigger that. CHR, KANEALI`I-KLEINFELDER: Okay. Good. Because we had to sign a form iri°the Housing Agency meeting but I'm just making sure so we're good. MS. WONG: The Housing Agency meeting to disclose? CHR KANEALI`I-KLEINFELDER: Whether you have a rental or not. There e go. Ms. Wan, go ahead. (Note: At this time, Deputy Corporation Counsel Sylvia Wan came forward to address the members of the Committee.) MS. WAN: Hi. Deputy Corporation Counsel Sylvia Wan. I'm assigned to OHCD. I was at that meeting for the Housing Agency. My understanding is you're signing that there's no conflicts of interest relating to the Public Housing Authority purpose of the Housing Agency. So in this instance, you are not operating as the public housing authority. This is a tax incentive so this would be Page 39 FC-9 April 15,2025 available to everyone. So no, you would not be how do I say this? I think the question is if a County employee owns a home that's going to get a tax incentive by utilizing this program, if they would otherwise have to disclose that, is that correct? CHR. KANEALI`I-KLEINFELDER: Well I think for me, in our position, if we as elected officials enact legislation that benefits any one of us that have a rental that's going to be utilizing this class, does that potentially be a conflict of interest? MS. WAN: That seems rather attenuated. And also it, how do I say this? That sounds to be more a question specific for the Board of Ethics rather than for these members here. But because I also provide Counsel to the Board of Ethics, that does not seem like it would be something you would otherwise have to disclose if you're literally getting a benefit that is provided to everyone that is similarly situated. CHR KANEALI`I-KLEINFELDM Beautiful. That's what I wanted to hear. Thank you. Thank you, Ms. Wan. Okay., ,Ms. Costa, if you could come back with a little bit more substance at the next hearing as far as the geographic distribution, the equity that was being discussed. And then maybe,just maybe, some idea of how we look to improve the situation with this bill and what it will do. Just some estimations would be nice. Okay. MS. KAGIWADA: Chair? MS. COSTA Can do. CHR. I ANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: I have one additional request. If we could get the market rate for the east and west sides for these studio one, two, three, four bedrooms so that we can look at those when we're looking at this because I want to see how close we are to the market rate some of these numbers are getting. MS. COSTA: Yup. Can do. CHR KANEALI`I-KLEINFELDER: Thank you. Okay. Seeing no further discussion, we do have the motion on the floor, which is to approve Bill 39, as amended, and provide it Council with a favorable recommendation. All in favor, Council Members? Page 40 FC-9 April 15,2025 Vote on Bill 39: The motion to recommend passage of Bill 39, as amended (Approved) to Draft 2, was carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: Committee Member Kagiwada— 1. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: Thank you very much, Administrator and Administrator. Bill 41: AMENDS ORDINANCE NO. 24-32, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUNE 30, 2025 Decreases the appropriation in the Transfer to Housing Fund account($451,221); and appropriates the same to the HOME Program Income Repayment account. Reference: Comm. 210. Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Motion to Approve: Mr. Inaba moved to recommend passage of Bill 41 on first reading. Seconded'by Mr. Hustace.. CHR. KANEALI`I-KLEINFELDER: Discussion on the bill. Council Member Iagiwada. MS. KAGIWADA: Sorry. CHR.,KANEALI`I-KLEINFELDER: None? Ms. Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. I see Mr. Shiroma in Hilo. Chair, I recall us reviewing a similar measure. This is regarding the Habitat for Humanity project that^received federal funding. It was completed after the deadline. Didn't we do a similar transfer of funding in the past? (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 from the Office of Housing. Yes we did. And what this bill will be doing is actually putting it in the proper account. I think we just had set aside "x" amount from general funding, calling it that we're going to use the money fronting it from affordable housing production and then what this bill is, is actually putting it into an actual proper account. Page 41 FC-9 April 15,2025 MS. KIERKIEWICZ: Okay. So it's purely a housekeeping measure, but it's not additional funding for this reimbursement? MR. SHIROMA: Yeah. Nothing changed and nothing new. MS. KIERKIEWICZ: Great. Thank you for the clarification. I appreciate it. Chair, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Anything further? Seeing no further discussion. Motion is on the floor to approve Bill 41 and forward it to Council with a favorable recommendation. All in favor? Vote on Bill 41: The motion to recommend passage of Bill 41 was carried (Approved) by the following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, and Chair Kaneali`i- leirifelder 8. Noes: None. Absent: Committee Member Villegas— 1. Excused: None. CHR KANEALI`I-KLEINFELDER: Bill 42 please. Bill 42: AMEN ORDINANCE NO. 24-32, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUKE 30, 2025 Increases revenues in the Interest— Federal account($660,000); and appropriates the same.to the Emergency Rent Assistance 2 COVID-19 account ($600,000),'Hawai`i Island Landlord/Tenant Mediation account($10,000), and 2021 Hawaii Island Homeowner Assistance Program-Administration account ($50,004). Reference: Comm. 211 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Motion to Approve: Mr. Inaba moved to recommend passage of Bill 42 on first reading. Seconded by Mr. Hustace. CHR KANEALI`I-KLEINFELDER: Any discussion? Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. Administrator Costa, $660,000 is quite a bit of interest generated. Is this something that the office typically sees on an annual basis? Page 42 FC-9 April 15,2025 MS. COSTA: No. This was ERA (Emergency Rent Assistance) federal COVID money. We got a lot of money. MS. KIERKIEWICZ: So the interest from the COVID money we are now able to use to reinvest back into programs, emergency rental assistance, landlord/tenant mediation program and Hawaii Island homeowner assistance program administration? MS. COSTA: Yes. MS. KIERKIEWICZ: Okay. That's fantastic. MS. COSTA: Yes. MS. KIERKIEWICZ: Wonderful. Thank you. Do you know about how many folks you're going to be able to serve with this additional funding and What their time period will be? If you don't know today,maybe at Council. MS. COSTA: I'll bring it to Council. MS. KIERKIEWICZ: Fantastic. Thank you. 1,yield. CHR KANEALI`I-KLEIIFELDER: Thank you. Council Member Galimba. MS. GALIMBA: Just a quick question about that first emergency rent assistance 2 COVID-19. ,So is that always going to be around or is that temporary that you're just kind of closing down? MS. COSTA: Yes. That was an,emergency rental assistance program. I think we got$15 million for that,program; at least OHCD did. We're winding it down. We're spending it by end of September this year. MS. GALIMBA: Okay. Thanks. And do you have another emergency rent assistance? So that's the only one that you have and that's going to go away? MS. COSTA: Yes. MS. GALIMBA: Okay. Thank you. CHR KANEALI`I-KLEINFELDER: Thank you. Okay. Seeing no further discussion. Thank you, Administrator Costa. Motion is on the floor to approve Bill 42 and send it to Council with a favorable recommendation. All in favor? Page 43 FC-9 April 15,2025 Vote on Bill 42: The motion to recommend passage of Bill 42 was carried (Approved) 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: 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 3:08 p.m. Thank you very much. Approved: Mr. Matt Kaneali`i-Kleinfelder, Chair (Date) Finance Committee MK/tk Page 44