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HomeMy WebLinkAboutMIN FC 2025/06/17 (2024-2026)Committee on Finance 13th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii June 17, 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 (via videoconference from Hilo) Mr. Dennis "Fresh" Onishi, Member Ms. Rebecca Villegas, Member STATEMENTS FROM THE PUBLIC ON AGENDA ITEMS: COMMUNI- CATIONS: Comm. 23.13: Motion to Close File The Chair directed the Committee to proceed to the next order of business, Statements from the Public on Agenda Items. The following individual registered to speak and came forward when called by the Chair: Timothy Rowen: (representing Black Sands Beach Property Owner Association and Malama O Puna) Bill 38 (Comm. 203), in support. The Chair directed the Committee to proceed to the next order of Business, Communications. REPORT OF FUND TRANSFERS AUTHORIZED: APRIL 16 — 30, 2025 From Acting Controller Wilson Crider, dated May 16, 2025. Mr. Inaba moved to close file on Comm. 23.13. Seconded by Mr. Hustace. CHR. KANEALI`I-KLEINFELDER: Any discussion, Council Members? Ms. Kimball, please let me know if you have anything to add. Thank you. Mr. Hustace, go ahead. FC-13 June 17, 2025 MR. HUSTACE: Thank you, Chair. I just had a question for Finance on just out of curiosity about the FranklinCovey Training module, if you could just detail that? (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Good afternoon, Council Members. Diane Nakagawa, Finance. We actually have our R&D (Research and Development) Deputy here. They had requested training for this FranklinCovey 7 Habits Training. (Note: At this time, Research and Development Deputy Director Dennis Lin came forward to address the members of the Committee.) MR. LIN: Hi. Good afternoon, Council Members. Dennis Lin, Deputy Director for Research and Development. Yeah, so the FranklinCovey 7 Habits of highly effective people is a training program that basically is trying to teach our staff members, and we hope to include some of the other departments as well, just some professional development skills in terms of balancing work, time management, some of those soft skills we like to, you know, bring in from the private sector, implement here at the public sector. So this is kind of an initiative between the Director and I to kind of bring in this training, use our department as kind of like the pilot, utilize some of the funding that Finance Department has for training to see if this is a good program to continue at the County. Thank you. MR. HUSTACE: Thank you, Deputy. So when are planning to hold the training sessions for your staff then? MR. LIN: We have some tentative dates set right now, but we're still in the final contract process of getting the contract over to FranklinCovey. So once we get that we can firm up those dates. MR. HUSTACE: Thank you, Deputy. Appreciate the insight there. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay. Seeing and hearing no further discussion. Thank you very much, Director Nakagawa. Motion is on the floor to close file on Communication 23.13. Any opposed? Page 2 FC-13 Vote on Comm. 23.13: Filed The motion to close file on Comm. 23.13 was 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. June 17, 2025 Comm. 335: SUPPLEMENTAL SUMMARY OF BONDED INDEBTEDNESS AS OF MAY 7, 2025 From Finance Director Diane Nakagawa, dated May 20, 2025, transmitting the above report pursuant to Chapter 47C of the Hawaii Revised Statutes, per the issuance of $142,140,000 General Obligation Bonds, Series 2025. Motion to Close File: Mr. Inaba moved to close file on Comm. 335. Seconded by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: Council Members, discussion? We do have our Director in the Hilo Chambers if there's any discussion or questions. Council Member Hustace. MR. HUSTACE: Thank you, Chair. Just for conversation sake and opportunity for the Finance Director to speak to this, if you could just share with us a little bit about what's being issued here and what is basically the bonds that are maturing at the end of this fiscal year; if you could just kind of close it up with us here. (Note: At this time, Finance Director Diane Nakagawa and Treasurer Chris Nakano came forward to address the members of the Committee.) MS. NAKAGAWA: Sure. Happy to provide a quick overview. Thank you, Council Member. So what you have in front of you is a summary of net funded debt. So this would come before Council one when we issue. So this is for the last issuance that we had of $142 million. And then we also come annually with the same summary of funded debt, so we'll actually be back again in a month and probably providing the same summary because we won't have any other issuance between now and then. So what this report provides, it goes over a couple of different sections. I'll just walk through it pretty quickly. Schedule A, you'll see the general obligation bonds that we've issued and the dates they're issued and their outstanding principle amounts. Schedule B is our SRF, our State Revolving Funds and you'll see the various projects and the principle amount outstanding. (Schedule) C, you'll see our community facilities district; (Schedule) D, you'll have the general Page 3 FC-13 June 17, 2025 obligation bonds that are reimbursable by the County Department of Water Supply. And Schedule E, you'll see our improvement districts. So in the summary in the front you'll see that the obligation bonds, the revolving loan bonds, and the revenue bonds, and their total, and then you'll go ahead and see the exclusions from that in Number 2 as well. So you'll get the total exclusions and then the net funded debt of $566 million. For your question about the bonds maturing, those are those that would be paid off in Fiscal Year 2025. So happy to answer any questions. I also have our Treasurer Chris Nakano here as well. MR. HUSTACE: Thank you, Director. Appreciate that overview of our Geo bonds, those maturing. Just a question on the one; we have one that's issued back in 2008 and that one's still outstanding. What is the timeline for something like that one? MS. NAKAGAWA: Just a quick second. I'm seeing if Chris has that schedule with him. If not, we'd be happy to bring that back to you. MR. HUSTACE: Thank you. It just kind of stands out one being a little bit older and just kind of curious why that one is still outstanding from that period of time. MS. NAKAGAWA: So normally they are 20 years. MR. HUSTACE: Okay. MS. NAKAGAWA: So I mean that is probably the reason. Sometimes we'll do a refinancing which you'll see a larger amount in 2016. MR. NAKANO: Good afternoon. I'm Chris Nakano, Treasurer. And to answer your questions, that 2008 series was a debt issuance for a USDA (United States Department of Agriculture) bond, with has a 35-year amortization. So, you know, it was to pay for some water improvements out in Kona. So, you know, it should be paid over a 35 period beginning in 2008. MR. HUSTACE: Very good. Appreciate that clarification. Thank you, Treasurer. Chair, thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Galimba. MS. GALEABA: Thank you. I'm just wondering if it would be possible on that Schedule A to get the original amount issued? That would be very interesting to see that sort of historical progression. Yeah. It might have to be a little smaller font, but just wondering if that would be possible? Page 4 FC-13 June 17, 2025 MS. NAKAGAWA: Yes, Council Member. That is possible. We can certainly do that. MS. GALIMBA: Thank you very much. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay. Hearing no further discussion. Thank you very much Department of Finance for helping with some of the questions for this communication. Seeing no further discussion, motion is on the floor. All in favor? Vote on Comm. 335: The motion to close file on Comm. 335 was carried by the Filed following voice vote: Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder — 9. Noes: None. Absent: None. Excused: None. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 214-25: AUTHORIZES THE PAYMENT OF FUNDS OF LATER FISCAL YEARS TO ENTER INTO A MULTI -YEAR AGREEMENT FOR ESRI SOFTWARE FOR THE DEPARTMENT OF INFORMATION TECHNOLOGY Authorizes the Mayor to enter into a three-year agreement with an approximate annual cost of $180,400 plus taxes, to provide Geographical Information Systems (GIS) server components and configurations, desktop software, and ArcGIS online capabilities for GIS, permit systems, and emergency services for various departments countywide. Reference: Comm.336 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Motion to Approve: Mr. Inaba moved to recommend adoption of Res. 214-25. Seconded by Mr. Hustace. CHR. KANEALI`I-KLEINFELDER: We have our IT (Information Technology) Director joining us today if there's any questions from this body. If not, we can proceed with the vote. Any questions? Council Member Hustace. MR. HUSTACE: Just a comment. I'm grateful for this contract that we have to provide GIS services to the County and all the different departments. Just a quick question, Director Stone. How many of our departments use our GIS software or Page 5 FC-13 June 17, 2025 are even interested and so we kind of have that capability of providing it for them? (Note: At this time, Information Technology Director Corey Stone came forward to address the members of the Committee.) MR. STONE: Good afternoon. Corey Stone, Director of Information Technology. Right now it's pretty much, we don't have a specific number., but all the departments in need of GIS support. There's a lot of departments that have their own GIS people. We have a GIS kind of like a group meeting where our department facilitated kind of a get together with the other GIS individuals in the County, tried to get them together so that we could kind of go over different things that are happening and just tried to go that side of our department with the GIS Analyst. And with the multiyear contract it helps us save 20 percent in the increases per year by doing the multiyear contract. We do have other counties; Kauai, Maui, Oahu, that we're trying to establish kind of a connection with so that we can be on the same page and help out each other. But definitely we are seeing kind of an increase in utilizing that. We also had our GIS Analyst help out the Housing Department with their dashboard. That was a big thing that we assisted with Housing and looking to kind of assist in other areas in other departments as well. MR. HUSTACE: Thank you, Director. Appreciate you working on this and providing this opportunity for our departments in the County. Thank you. Thank you, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Thank you, Director Stone. Thank you for your time. MR. STONE: Thank you. CHR. KANEALI`I-KLEINFELDER: Seeing no further discussion. Motion is on the floor to forward Resolution 214-25 to Council with a favorable recommendation. All in favor? Vote on Res. 214-25: The motion to recommend adoption of Res. 214-25 was (Approved) 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. Page 6 FC-13 June 17, 2025 Res. 215-25: AUTHORIZES THE MAYOR TO ENTER INTO A FIVE-YEAR LICENSE AGREEMENT WITH THE TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP FOR THE CONTINUED OPERATION AND MAINTENANCE OF A NON -MANNED COMMUNICATIONS FACILITY WHICH INCLUDES A THREE HUNDRED FOOT TOWER Authorizes the Mayor to enter into a five-year agreement with an approximate annual cost of $5,000 plus taxes, to operate and maintain the Kulani Cone radio tower and facility at Keauhou, Ka`u. Reference: Comm.337 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Vote on Res. 215-25: Mr. Inaba moved to recommend adoption of Res. 215-25. (Approved) Seconded 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. Res. 217-25: AUTHORIZES INDEMNIFICATION OF FORMER EMPLOYEES OF THE COUNTY WHO ARE NAMED AS INDIVIDUAL DEFENDANTS IN THE LAWSUIT KNOWN AS JOSEPHINE T. W. BISHOP, ET AL. V. COUNTY OF HAWAI`I ET AL. AGAINST ALL DAMAGES ASSESSED THEREIN AND MAKING OTHER FINDINGS IN ACCORDANCE WITH SECTION 2-188 OF THE HAWAI`I COUNTY CODE Provides indemnification for former Hawaii Police Department police officers Justin Gaspar and Chad Taniyama for an incident that occurred on or around March 10, 2023. Reference: Comm.338 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Motion to Approve: Mr. Inaba moved to recommend adoption of Res. 217-25. Seconded by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: We do have Corporation Counsel joining us today. Could you please introduce yourself? (Note: At this time, Deputy Corporation Counsel Mark Disher came forward to address the members of the Committee.) MR. DISHER: Deputy Corporation Counsel Mark Disher. Page 7 FC-13 June 17, 2025 CHR. KANEALI`I-KLEINFELDER: Thank you very much. Appreciate it. Thanks for your time this afternoon. You want to just give us a little background on this? Just a brief summary and then we'll go from there. MR. DISHER: Yes. As this is an open forum, I'm not going to go into too much detail. But basically this is an officer involved shooting. There were two fugitives that the police were seeking at the time; Ronald Kahihikolo. He was wanted to attempted murder. He was associated with (Kainoa) Kahele-Bishop and there were reports that they were armed and not wanting to surrender. Vice Officers Taniyama and Gaspar, along with others, set up an operation to try to apprehend one or both of them. They did come across Kahele-Bishop. He initially ran, and in an attempt to apprehend, there was a shooting. CHR. KANEALI`I-KLEINFELDER: Okay. Anything that we cannot, I mean, obviously we have the resolution in front of us. All this information is public. Anything that we cannot discuss or should not discuss, if there are any questions? MR. DISHER: Yeah. I have nothing at this time. I'm more than happy to discuss this further in executive session some other time if you prefer, but not now. CHR. KANEALI`I-KLEINFELDER: Okay. And then is there anything else besides just requesting or authorizing indemnification that's happening with this resolution? MR. DISHER: At this time, no. Giving you an actual update is though the trial was scheduled for July it had been moved to February 2026. CHR. KANEALI`I-KLEINFELDER: Okay. Okay. To the Council Members, any questions or discussion? Council Member Inaba. MR. INABA: Thank you, Chair. If you could just give us a little bit of background on these requests because I don't recall in the previous four years where we've gotten these requests for resolution to indemnify former or current County employees. So if you could just share a little bit as to the transition and why we're seeing these now and why we maybe weren't seeing them before? MR. DISHER: Yes. This is actually the first for me as well; probably because this was on the eve of trial. We're getting pretty close, and the indemnification needs to happen prior to trial. And that's why this one particularly is before the Council now. MR. INABA: Okay. I mean, even if the Council was to let's say vote this resolution down, what does that look like in the court system? Page 8 FC-13 June 17, 2025 MR. DISHER: That would mean that currently the two officers as well as the County are all jointly represented by Corporation Counsel. If that occurred it is possible that one or both of the officers would seek their own counsel, and the County may have to pay for that later. And it's also most conducive to have a united defense when you have multiple parties defending themselves individually. MR. INABA: Okay. Thank you very much. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHI: Thank you, Mr. Chair. I see in here that the Police Commission did approve that they were in their duties. MR. DISHER: Yes. The officers were working within the scope of employment, yes. MR. ONISHI: Okay. So that's great. The last thing I have to say is that at least you guys are coming to us prior to what the other case we had where we kind of made like a settlement or gave a number, right? So this is a reverse, which is great, which should be the process, correct? MR. DISHER: Yes. I'm aware of the other case. The process basically for the indemnification, it needs to happen prior to trial. Obviously, settlement discussions or settlement approval could occur any time, even early on in a litigation. Like I said, this is the only reason that this one is currently on is we were close to trial and there's actually no sense to pull it. Might as well proceed. Right now there's a high probability that this one will still go to trial. MR. ONISHI: Okay. Okay. Thank you very much for your work. MR. DISHER: No problem. CHR. KANEALI`I-KLEINFELDER: Thank you. One more question. To Mr. Inaba's point, the last hearing, one of the previous hearings we had at Council we discussed an indemnification of Parks and Recreation employees, and then it actually made the paper, which is interesting because it wasn't an interesting story for them to pick up and run. I got a couple calls about it. But then to have this one follow almost back to back with the previous, and then to Mr. Inaba's question of, you know, we've been here a number of years and I've never seen this many indemnifications. Is it just we're getting lucky right now that we have this many or are we following a process that changed? MR. DISHER: I would not define it as getting lucky. It's probably the other way around. The litigation has been heavier I would say in the last couple years. And like I said, at least for the purposes of my case, I can't speak to the other case; because we were close to trial this needed to happen. Page 9 FC-13 June 17, 2025 CHR. KANEALI`I-KLEINFELDER: Okay. And the sixth whereas, or fifth whereas, Section 2-180(a) of the Hawaii County Code, requires the adoption of resolution by the Council in order to effectuate the joint defense of the County and individual defendants. Is that what drives the Council document or approved document to indemnify? MR. DISHER: Yes. Per the Hawaii Colhty Code, thIl is req[ired; regEires resolution. Yes. CHR. KANEALI`I-KLEINFELDER: Okay. Okay. Thank you very much. Anything further? Okay. Thank you very much, sir. We have a motion on the floor to forward Resolution 217-25 to Council with a favorable recommendation. All in favor? Vote on Res. 217-25: The motion to recommend adoption of Res. 217-25 was (Approved) 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. BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. 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 of up to $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 Postponed: April 15 and June 3, 2025 (Note: There is a motion by Council Member Kaneali`i-Kleinfelder, seconded by Council Member Galimba, to recommend passage of Bill 38 on first reading.) Relinquish Chair: At this time, the Chair relinquished the chair to Vice Chair Hustace. ACTING CHR. HUSTACE: Thank you, Chair. It is 1:27 p.m. I'll be the presiding officer. Any discussion on the motion? This bill has been postponed as Page 10 FC-13 June 17, 2025 identified by the clerk. We'll lead off with Council Member Kaneali`i- Kleinfelder, if you'd like? MR. KANEALI`I-KLEINFELDER: Thank you very much, Chair. To the Council, thank you for listening to me, for your patience, and to the different departments who have helped get us to this point. Mahalo as well, Ms. Nakagawa and to our Real Property Division (RPT), Mr. Keita Jo and Lisa Miura. We do have Mr. Jo and Ms. Nakagawa in our Hilo Chambers. And we had a few. testifiers in different committees today actually speaking to this matter. So let's get right to it. Motion to Amend: Mr. Kaneali`i-Kleinfelder moved to amend Bill 38 with the contents of Comm. 203.1. Seconded by Mr. Inaba. ACTING CHR. HUSTACE: Mr. Kaneali`i-Kleinfelder, the floor is yours. MR. KANEALI`I-KLEINFELDER: Thanks, Chair. The amendment in front of you does a few things that actually get to the point of what we were discussing in our first hearing. Real Property Tax expressed that this would create hardship on their employees to the point of perhaps losing all of our Real Property Division staff. So we changed the script a little bit and instead of an application to the department, or the Real Property Tax Division, we changed the methodology to the HOA (Homeowners Association) submitting information in a manner prescribes by the administrator of the Real Property Tax Division that they can then cross reference with their internal list, which provides the department with relief on the amount of applications they'd have to process from everyone who wanted to participate in the program. Mr. Jo does have the amendment, and Ms. Miura was able to look this over and she it her blessing, but she is not here today; she's on vacation. As well this amendment drops, well does two things. One we pointed out at the last hearing that we had put in the words greater than $500, which would mean that you get a credit for more than $500. So we addressed that mistake. We changed the wording to lesser than, and also to Ms. Nakagawa's request to lessen the financial impact or the revenue loss from this bill, dropped it to $400 as the greatest amount that you could apply for, for a real property tax credit if this bill were to pass. So two-step effort; one to relieve the improper wording for greater than and then one to decrease the amount that is available as a credit towards real property taxes by the individuals applying. I think the real substance here for the Council today is that in this amendment what I found in Council is a lot of times we try to get real prescriptive about what we want to do. In this case I took a step back and I offered to the director or the administrator that we will provide her the ability to prescribe how she intakes the information to provide the credit. And that switch alleviated the hardship on the Page 11 FC-13 June 17, 2025 department and removes the people who are going to quit because this is too much work and makes the process more streamlined. I do need to mention too that the beauty of this is this requirement that they provide information to the Real Property Tax Division will begin to reinforce how our HOAs do their bookkeeping and the consistency in being responsible to the individuals within their own communities, their own subdivisions, their own HOAs, how they're being responsible for their funds, where their funds are going and what their fees are, and who's paying and who's not because ultimately if you don't pay your road dues, your homeowner association fees, the community association is able to put a lien of the property. Although it's very hard to enforce and creates hardship within the community. So there's always been this flux of what money came money came into an HOA, where it went, who did what with it. But this begins to really solidify from the government end in an interesting approach that we're going to be looking for much tighter bookkeeping from the HOAs. So kind of a two-part attack; one, we're going to provide the credit to help people with these public purpose projects in their communities. And then two, we're going to require the HOAs to get their business together as far as they provide that to the County in a manner prescribed by the Director. Any questions I can answer, happy to. This was in parallel with the departments and addressing some of the questions that we had at the April meeting, and I appreciate your patience in getting to this point. I yield. ACTING CHR. HUSTACE: Thank you, Council Member. We'll go to Council Member Onishi first. MR. ONISHI: Thank you, Chair. Just had a question. So this is for property owners that has permitted housing on the property or is this for all property like lot owners? MR. KANEALI`I-KLEINFELDER: Happy to answer that question to the Chair, I mean, it can go both ways; that can be a general bill question or that can be an amendment question. ACTING CHR. HUSTACE: You want to speak to the amendment right now? MR. ONISHI: This could be part of the amendment. ACTING CHR. HUSTACE: Okay. Then you want to direct your question to the Council Member? MR. ONISHI: Yes, please. Page 12 FC-13 June 17, 2025 MR. KANEALI`I-KLEINFELDER: You're welcome to check with the department. This is for homeowners in the homeowner exemption class only, which means you're a resident and you're a primary homeowner and it has to be in a subdivision that is not gated. That's the gist of the basic requirements we built in. MR. ONISHI: But then also the home has to be permitted? MR. KANEALI`I-KLEINFELDER: I mean, I don't know. That's questionable. MR. ONISHI: I mean, because that would good that if it's being permitted then they get this exemption is great and it would maybe convince the ones that are unpermitted to get permitted because then that's an income for property tax, right, to collect from that. ACTING CHR. HUSTACE: Council Member, did you want to ask the department itself? MR. ONISHI: I mean, just to the author — ACTING CHR. HUSTACE: The maker? MR. ONISHI: Yeah. To the maker. ACTING CHR. HUSTACE: We do have resources in Hilo if you wanted to speak too? MR. ONISHI: Just something to think about. Okay. I yield. ACTING CHR. HUSTACE: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you. Thank you, Chair. Do we have Finance Director Diane Nakagawa here? MS. KIMBALL: We do, and Deputy Administrator Keita Jo is here as well. MS. KAGIWADA: Great. Thanks. Finance Director, do we have an estimated annual revenue loss on this program. (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: I believe we do. I'm going to let our Assistant Administrator Keita Jo speak to that. I will say, you know, unfortunately we have not had extensive time to go through this internally. So between our team here still there's some questions that we still have and potentially some legal questions Page 13 FC-13 June 17, 2025 on this as well. But just to answer your question, I'll get Keita Jo, our Assistant Administrator, to walk through that estimate as we see it today. (Note: At this time, Assistant Real Property Tax Administrator Keita Jo came forward to address the members of the Committee.) MR. JO: Keita Jo, Assistant Real Property Tax Administrator. Council Member, to answer your question, we had done an .initial analysis when the original bill was proposed. And at that time it was incumbent on owners to apply for this program. So we estimated about 40 percent of all eligible properties in specific subdivisions would actually apply, and at that point the estimate was $840,000. But with this amendment, with the HOAs more or less applying on behalf of the owners and providing a list to Real Property Tax, we think that adoption rate will be closer to 100 percent so we're looking $2.1 million dollars in reduced revenues. MS. KAGIWADA: Thank you. And then to Section 19-105, does this last paragraph mean that all people will still continue to pay the minimum tax rate regardless of this? That's kind of how I'm reading it. But is that correct? MR. JO: That is correct. So based on the amendment an individual can receive a credit between $25 and $400, but by no means would they pay any less than the $200 minimum tax. MS. KAGIWADA: Okay. Okay. Thank you. Well Director Nakagawa, do you want to share some of your concerns right now or are you just needing more time to go over this at this point? MS. NAKAGAWA: You know, in speaking with our Corporation Counsel, we do need a little more time to go through some questions regarding kind of the automatic just to go through whether or not that this credit can be applied automatically without owner consent. So there's still some things that we haven't had the time to work through. Unfortunately our administrator is on vacation, and we hadn't had a chance to connect on this issue. MS. KAGIWADA: Okay. Thanks. And for Real Property Tax, do you have any concerns that you want to share right now or are you also needing some more time? MR. JO: I think while Council Member was willing to mitigate the concerns that the department or division had regarding implementing this bill by no means is it smooth sailing. So there's a lot of back end programming that will need to be done in order to stand up this program and it's in part because of the fluidity of how much of a credit a person can receive. Our system currently is not built to handle that, so I'd have to reach out to the vendor to see how much that would cost for modification. Page 14 FC-13 June 17, 2025 You know, I think there's also another component to it on road maintenance association's (RMA) willingness to share their records with us as it would be prudent for us to audit, right? So we're going to get a list from RMA and we're going to want to audit to make sure that in fact those parcels have paid. So I don't know what the appetite for the RMAs to provide that information to us or the owners for that matter. So there's some things that we would definitely need to work out in order to roll out this program. MS. KAGIWADA: Okay. Thank you. To the maker, did you have any thoughts of where this $2.1 million will be made up or is that just —did you have any thoughts on that? MR. KANEALI`I-KLEINFELDER: I do actually. Before I jump in to where it would be made up, Mr. Jo, what is that number based on? MR. JO: The number is based off of our prior analysis. So the legislation in front of us reduced the maximum amount from $500 down to $400. And so majority of road maintenance associations are below that $400 threshold, so it really did not impact the numbers too significantly from our prior analysis. MR. KANEALI`I-KLEINFELDER: Where did you get — ACTING CHR. HUSTACE: Council Member. Sorry. Council Member Kagiwada has the floor still and she had a question for you. Did you want to answer that question and then we can go back to you? MR. KANEALI`I-KLEINFELDER: I am. Sorry. I'm trying to answer her question because I want to make sure that that $2.1 million is actually the correct number before we dive into that number and where it's going to come from, I've got to verify the number. MS. KAGIWADA: Okay. Well I don't, yeah, if you just give me a very short answer on where it would come from regardless of what the number ends up being? MR. KANEALI`I-KLEINFELDER: Then my answer would be this. If it's $2.1 million, if, because what I'm hearing from both RPT and Diane is how do we know we'll get 100 percent utilization even though our numbers are 100 percent utilization. If there was 100 percent utilization and there was a $2.1 million reduction, in the past two or three months, I've seen a number of bills come in that actually reduced our revenue and were called a drop in the bucket. Two; revenues were up above what we forecasted at all levels, GE (General Excise), fuel tax, and our RPT values. So when we started this process it was a question mark, but now that we've gotten to a point in our budget where we've increased the staffing in RPT, we've had higher than expected revenues, we have a fund balance holding exactly where we left it and we're in a good spot, my concern is Page 15 FC-13 June 17, 2025 not so much where we're going to make it up from but in leaving these funds in our taxpayers pockets because the purpose of these funds are public purpose. These are for roadways that are public purpose in use, and these are funds being expended by private members in our community to provide public access roads. So it's not, and I guess long story short, not so much of where it's going to come from, it's where is it coming from and what are we going to do about it and what is our moral obligation as such to take care of this for our community. ACTING CHR. HUSTACE: Thanks, Council Member. Back to Council Member Kagiwada. MS. KAGIWADA: Thank you so much. I'm not going to be supporting this bill at this time. It sounds like there's a lot of unanswered questions and I have a hard time supporting this when we've got so many other really important day to day issues out there that this body has not been willing to support. So I yield for now. Thanks. ACTING CHR. HUSTACE: Thank you, Council Member. Hang on one second. Anyone else? Council Member Kimball, checking in Hilo? MS. KIMBALL: Yes. I have a couple quick questions. ACTING CHR. HUSTACE: Please. MS. KIMBALL: First is just a statement actually. I think that the amendment to reducing it from $100 to $25, I actually would suggest that we keep it at $100. I think, you know, if we're considering this and the additional work that it's going to mean for both the road maintenance organization but also for RPT, there has to be a little more skin in the game I guess is my thought. The other aspect of this, tapping into Deputy Administrator's comment about auditing of the road maintenance organization is because the intent of this is to kind of offset those road maintenance fees that, you know, the County doesn't spend in these areas to me there has to be some piece in here that verifies that the road maintenance organization is actually spending the money properly to do the road maintenance work. Like there's a missing control piece in here that I think is necessary for me to feel comfortable that we are providing the benefit for the intended purpose, right? And I may be remembering history wrong, but I know that there's been problems in the past with some of these road maintenance organizations where fees were collected and disappeared or were not properly accounted for. So I think because we're essentially using public funds in this regard, we do need to have that sort of transparency and accountability from the road maintenance organization. Page 16 FC-13 June 17, 2025 I'm okay with the other amendments, but I'm still not clear and I feel like this should be clear. Is this a one-time thing like that water heater thing or is this something that folks can get on an annual basis? ACTING CHR. HUSTACE: Council Member, is that to the maker? MS. KIMBALL: That is to the maker. Thank you. ACTING CHR. HUSTACE: Okay. Council Member, please. MR. KANEALI`I-KLEINFELDER: Thank you very much. Good question, Council Member Kimball. I'll hit you kind of quickly to the last question, it's a year over year because they pay these fees yearly to upkeep the roads. To the $25 decrease from $100 to $25, we do have some communities paying less than $100 for their road dues in a year, and that's places like Hawaiian Acres where the road dues are voluntary. They're trying to increase their funding, but they only pay $30 to the roads corporation per year for 77 miles of roadway upkeep mind you. Does that help? MS. KIMBALL: It does. My counterpoint to that perhaps to that would be it sounds like maybe they need to collect a little more. And I'm happy to support, conceptually I support what you're trying to do here, but I think in that particular case if that's the amount of roadway then maybe it needs to be closer to $100 a year and this bill would incentivize that. ACTING CHR. HUSTACE: Okay. Ms. Kimball, the floor, are you yielding? MS. KIMBALL: I yield the floor. Thank you. ACTING CHR. HUSTACE: Thank you. Any other discussion before we go back to the maker? MR. KANEALI`I-KLEINFELDER: Yes. Thank you. To Ms. Kimball, yes, but their bylaws usually allow only a 10 percent increase per year and that is very problematic, meaning that you go up to $33 next year if they enacted something. Maybe they could do a big step up, but depending on the different associations' bylaws first, how much they can increase their road dues at one time and how that's done. So yes, I love your idea, but it really comes down to the individual association and roads corporation making those step ups and getting there to where they need to be. Completely agree though, it should be more. Back to you, Mr. Jo. So just kind of hitting this, kind of honing in on this evaluation because this happened to me in the past where you throw out a big number, everybody runs away scared, but reality is a number is only as good as what it's based on. So I've been dealing with this issue for six years and what I do know is that not every association pays $400, and I wouldn't even call that a Page 17 FC-13 June 17, 2025 good average. So not quite good on the numbers, plus our original estimate was based on $500 per property. So I just want to hone in on those numbers. What are these numbers really based on; what was your average; how many parcels times how much? So I can really hone in on what our revenue projected loss would be. MR. JO: Absolutely. So the numbers are based off of subdivisions that were provided by the maker of the bill. We had 14 subdivisions that were provided to us, which accounted for over 9,200 parcels within those subdivisions that were receiving homeowners' exemptions. The way that the 100 percent adoption rate was calculated was rather than going to 9,300 parcels and those individuals would each have to apply annually, right? So you're going to get a loss of individuals who are going to apply on an annual basis. The original estimate was 40 percent, but because we only have 14 subdivisions in that analysis, we took a look at the likelihood of those 14 road maintenance associations of filing on behalf of their owners. And so that likelihood becomes a lot higher. You're chasing after 14 individuals more or less as opposed to 9,300. Even though there are some road maintenance associations that pay more than the $400 threshold, in the case of HPP (Hawaiian Paradise Park), it's not much more than the $400. And so, that's where that analysis and those numbers came in. And at this point it's an estimate. You know, we were made aware of this amendment recently. Although we discussed it in short, we do need more time to do the analysis to come up with some more exact figures. But $2.1 million seems to be a number that we're comfortable with at this point. MR. KANEALI`I-KLEINFELDER: Okay, okay. So that's kind of an average you guys are taking with the parcels and the different rates being collected for the yearly association maintenance fees. MR. JO: Correct. And we're subtracting out the minimum tax, right? So not everybody's going to get the $400 credit because there are parcels that are paying less than $400 in their property taxes. MR. KANEALI`I-KLEINFELDER: Okay, okay. That's helpful. So least we're level set on the number now. So at $2.1 million, Diane, I think I did the math last night that comes down to about, is that .2 percent of our total County budget this year? If we have a $960 million budget, does that sound about right to you? MS. NAKAGAWA: Assistant Administrator is furiously calculating it at the moment. MR. KANEALI`I-KLEINFELDER: And if I'm right, I was doing some math last night. Let's just say I was working on this last night. I think that if you multiply Page 18 FC-13 June 17, 2025 something by .1 percent or .2 percent, does that mean you times it by .002 percent? Sorry, .002. MS. NAKAGAWA: It's actually .2 percent. MR. KANEALI`I-KLEINFELDER: .2 percent, so you know what I'm saying. Okay. So this really is a drop in the bucket. And to the amendment, I look for everyone's support. And I'm not going to get through all the details today. ACTING CHR. HUSTACE: Thank you. Any other discussion? Council Member Kagiwada. MS. KAGIWADA: Thank you. To RPT, when you go back to look at this a little more could you please provide us with some information around where subdivisions are on this island that would be eligible for this? MR. JO: We can certainly do that. I will say that majority of the 14 subdivisions that were provided to us are located in the Puna District. MS. KAGIWADA: Okay. So $2.1 million every year to go to one district. Point of Information: MR. KANEALI`I-KLEINFELDER: Point of information. Sorry. One district. He said Puna, which actually is (Districts) 4, 5, and 3. And just to clarify, that's only some of it, so not all. Thank you. MS. KAGIWADA: Majority. Yes. Majority of. So I'd like to, yeah, just know how this was. And this is just coming from the same person who said we couldn't afford $2 million for food production for our entire island. So, okay. I yield. ACTING CHR. HUSTACE: Thank you, Council Member. I understand your point. But your request is to RPT for just better analysis across the entire County, correct? Thank you, Council Member. Appreciate you. Alright, any further discussion on the amendment? Just to the maker, I do have .some concerns about the legal questions that could potentially be there that were eluded to, that we don't necessarily have the answers for right now. And then I guess the question to Council Member is on this new addition for these HOA or road maintenance account requirements because we don't, please remind me because if we don't really have any sort of other requirements that we request of HOAs, this would be kind of a new frontier in this sort of sense, correct? If we're requesting information from these organizations, from these private entities, that would have to do with auditing and accounting for, correct? MR. KANEALI`I-KLEINFELDER: I'm going to give you kind of a medium answer. ACTING CHR. HUSTACE: Okay. Page 19 FC-13 June 17, 2025 MR. KANEALI`I-KLEINFELDER: Okay. Yes. Yes, it is. It's not new to HOAs. They have to collect this information anyway. They need to know who's paying. For the County, this would be our first step into seeing what is being paid and what's being collected. Although Mr. Jo kind of framed it as, you know, this would be a new frontier and maybe a concern, I actually see it as beneficial because this is something that's come up in the state discussion and the state lens a few times, which is how should the County be involved in the private organizations in the private maintenance and in the HOAs and what's going on so that we can better perform our responsibility as a government for our residents. So to have this step be included and being new, yes. Is it a step in the right direction, I believe so, yes. ACTING CHR. HUSTACE: Okay. Where do you stand on, you've heard some of the concerns and the thoughts from department leads on their need for more time and analysis for some of these things; where would you like to go with this? MR. KANEALI`I-KLEINFELDER: I'm totally open to taking my time. I want to get this right. I've had a lot of people reaching out to me saying, yes, we love it; we need the help. I look at the public purpose component and I cannot feel that we have a moral obligation to help. So I'll take as much time as I feel what is needed to get us to the right place and get us to the end zone. So no rush, no rush, to your question. ACTING CHR. HUSTACE: Okay. Okay, the one other question that I had that kind of came up from previously on the HOA requirements, we've heard just a couple of I think it was one written testifier and one today in oral testimony. Are we going to see potential push back from HOAs that do not want to disclose what they're doing? MR. KANEALI`I-KLEINFELDER: You know, that's a good point. It was brought up with Mr. Jo and to Corporation Counsel before the meeting. And I think there's a good point in there. I would be hopeful that our HOAs are willing to step up and start because I mean they're really required to do so. They have to be accountable to both their residents and to —I mean, they've got to be accountable to their residents within the subdivision to provide good bookkeeping for the decisions that they're making. And without doing so, without any kind of enforcement over what's being collected and where it's going, then we kind of play that role of where do we step in as government. So this to me is actually a nice step in that direction if you will. ACTING CHR. HUSTACE: Thank you. I guess I would like to see kind of just this more played out a little bit and some of the analysis; have Administrator with Assistant Administrator kind of work through these numbers and really provide us a better picture Countywide if that's possible as well as maybe some review of potential legal challenges that may come about. Council Member Kimball, I do see your light on if you had another thing to mention? Page 20 FC-13 June 17, 2025 MS. KIMBALL: Yeah. I have one final thought since it sounds like this is going back to the drawing board. I think it's worth considering how this would play with the other bill that you had introduced, Council Member, about the application to use public funding for repair and maintenance on private roads. I think that there's probably also an overlap here that we need to consider, right, is that we're giving this tax break because we are not using public dollars to repair these roads. But if we were to use public dollars to repair roads in an area maybe they shouldn't be eligible for the tax break as well. Just a thought. ACTING CHR. HUSTACE: Thank you, Council Member. Council Member, response? MR. KANEALI`I-KLEINFELDER: Not so much a response but just I think about your question, Mr. Hustace. And then to maybe Corporation Counsel, for the legal concerns that have been brought up today by Director Nakagawa, any comment on what those legal concerns are? So we have an idea of where I'm going with this or maybe we have some on the fly creative ideas that help us in the process. (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. Thank you for the question. In reviewing the full amendment before us today, I did have some concerns that I need time to research into specifically the original bill required the property owner to apply for the tax credit. The amendment says upon receipt of documentation from the road maintenance associations the taxpayer is entitled to receive the credit. So what I need to look into is whether there are legal issues; is the reliability on behalf of the County if the property owner doesn't apply for the taxpayer putting aside the benefit that they will oversee, it's the act of not having them apply and the RMA doing it on behalf of the property owner. MR. KANEALI`I-KLEINFELDER: Okay. So it needs a little bit of review from your department. So no giant pressing concerns. And then the one thing that was brought up was, I mean, imagine someone who doesn't want the credit. I'm trying to wrap my brain about who out there would not want to see the property tax credit when property tax evaluations and assessments have actually doubled in the past three or four years. But it's a good question. MS. WONG: Correct. There's that part but also looking at what if the association doesn't file by the September 30' deadline, are then effectively denying a property owner the ability to receive a tax credit if they had applied themselves by the deadline? You know, the solar heater provision of the real property tax code requires the application. So it does stand out that in this Page 21 FC-13 June 17, 2025 situation we are deviating from actually all of the other real property tax programs we have that require a property owner to apply. MR. KANEALI`I-KLEINFELDER: Okay. So to that point, and it's a good point, in discussion with Administrator (Lisa) Miura, we found that solar hot water credits are much less in number than the amount of numbers that have to do with applications for this program. And so that was the fear originally expressed by Real Property was how much of a work load this would increase if they had to process, you know, X thousands of applications coming in from the community. And so I'm trying to find a streamline approach for them was where we find this amendment. So yes though, we don't want people to miss out if this were to go on and try to find a nice, you know, clean method of requiring HOAs to do so or have a backend method if the HOA fails to do so by a certain time, then we could do the following. Can we work on language to that effect to kind of persuade some of them legal concerns that are floating around? MS. WONG: Yes, yes. So what I'll do is I'll go back and take a look at the legal issue and then maybe come back with some proposed language to satisfy the legal concerns. MR. KANEALI`I-KLEINFELDER: Very fair. Thank you. Okay. To Mr. Hustace then. ACTING CHR. HUSTACE: Yes, Council Member. MR. KANEALI`I-KLEINFELDER: Chair, just because of what has been talked about today and thank you for the discussion. I love it. I'm going to withdraw Communication 203.1. Withdraw Motion Mr. Kaneali`i-Kleinfelder announced the withdrawal to to Amend: amend Bill 38 with the contents of Comm. 203.1. ACTING CHR. HUSTACE: Okay. Communication 203.1 has been withdrawn from the floor. MR. KANEALI`I-KLEINFELDER: Okay. And then back to the main motion, I'll postpone Bill 38 to the July 8t' committee hearing. Is that correct, Mr. Henricks? ACTING CHR. HUSTACE: Yes. July 8t' is our next committee meeting in Hilo. Motion to Postpone: Mr. Kaneali`i-Kleinfelder moved to postpone Bill 38 to July 8, 2025. Seconded by Ms. Galimba. ACTING CHR. HUSTACE: Any discussion on the postponement? Council Member Inaba. Page 22 FC-13 June 17, 2025 MR. INABA: Thank you. Just quick. I wasn't expecting the motion on the postponement, so quickly. But I just want to throw this out there as an idea. Verifying actually that the funds, because right now it's just a matter of when property owners give the money to the organization, but I think it's kind of important to note that the funds are actually spent on the purpose of road improvements. So if that can be a consideration somehow in the interim. Thank you. ACTING CHR. HUSTACE: Thank you, Council Member. Anything else on the postponement? Council Member Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Yeah, thank you very much, Mr. Inaba. That's a great point. And then to the Council, I appreciate your patience. And then to the departments, Ms. Nakagawa, thank you very much; Mr. Jo, thank you. And then I'll be in touch. And to Corporation Counsel, thank you for your quick but succinct review. I yield, Chair. ACTING CHR. HUSTACE: Okay. So just encouragement, Mr. Kaneali`i- Kleinfelder, just to work with these departments. I think there's some questions about some of the legal challenges or, you know, a good well-rounded picture of the County and how this impact is. So we look forward to seeing how that plays out at the July 8"' meeting. MR. KANEALI`I-KLEINFELDER: Thank you. ACTING CHR. HUSTACE: Of course. Motion is to postpone to July 81' for Bill 38. All those in favor please say "aye." Vote on Motion The motion to postpone Bill 38 to July 8, 2025 was carried to Postpone: by the following voice vote: (Approved) Ayes: Committee Members Galimba, Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder — 9. Noes: None. Absent: None. Excused: None. ACTING CHR. HUSTACE: At this time, I will pass back presiding officer to Chair Kaneali`i-Kleinfelder. Relinquish Chair: At this time, the Acting Chair Hustace relinquished the chair to Chair Kaneali`i-Kleinfelder. Page 23 FC-13 June 17, 2025 CHR. KANEALI`I-KLEINFELDER: Thank you very much. At this time, let the record reflect I have assumed chair of the meeting. It is 2:02 p.m. Seeing we've reached the end of our agenda and there are no more items on our agenda today. Mr. Clerk, we're adjourned. ADJOURN- There being no further business on our agenda today, Chair Kaneali`i-Kleinfelder MENT: adjourned the meeting at 2:03 p.m. Thank you very much. Approved: 6 (Date) ITIIMAIq Page 24