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HomeMy WebLinkAboutMIN CRCOC 2026/07/07 (2024-2026) Committee on Communications, Reports, and Council Oversight 21st Session Hawai`i County Building 25 Aupuni Street Hilo, Hawai`i July 7, 2026• CALL TO The regular meeting of the Committee on Communications, Reports, and ORDER: Council Oversight was called to order at 12:43 p.m., in the Council Chambers, Hilo,by Ms. Michelle M. Galimba, Chair. ROLL CALL: Present: Ms. Michelle M. Galimba, Chair Ms. Rebecca Villegas, Vice Chair(came in later) Mr. James E. Hustace,Member Mr. Holeka Goro Inaba,Member Ms. Jenn Kagiwada,Member Mr. Matt Kaneali`i-Kleinfelder,Member Ms. Ashley L. Kierkiewicz,Member(came in later) Ms. Heather L. Kimball,Member Mr. Dennis "Fresh" Onishi,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: The following individuals registered to speak and came forward when called by the Chair: (There were none.) COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Change Order As directed by the Chair and with no objection from the Council Members,the of Business: following item was taken out of order: Comm. 943: REVIEW OF THE COUNTY AUDITOR'S QUALITY CONTROL SYSTEM FOR THE PERIOD OF JULY 1, 2022—JUNE 30, 2025 From County Auditor Clare McAdam, dated June 17, 2026. Motion to Close File: Mr. Hustace moved to close file on Comm. 943. Seconded by Mr. Kaneali`i-Kleinfelder. CRCOC-21 July 7,2026 CHR. GALIMBA: County Auditor, take it away. (Note: At this time, County Auditor Clare McAdam came forward to address the members of the Committee.) MS.MCADAM: Aloha. Thank you for having me here, Chair Galimba. I wanted to present; we have our two peer reviewers who have agreed to zoom in kindly and just talk a little bit about the peer review process that happened earlier this year in March. So I'd just like to hand it over to them so they can speak a couple of words about the process and what they did and the findings. Oh, sorry. I'll just introduce them again. That's Paul Geib,who's from Wisconsin, and Stan Sewell from City of Chattanooga in Tennessee. (Note: At this time, Peer Reviewers Paul Geib and Stan Sewell came forward to address the members of the Committee via Zoom.) MR. GEIB: Good afternoon. Thank you to Max and Clare for inviting Stan and I to present the results of the County of Hawai`i, Office of the County Auditor Peer Review to this committee. Again, I am Paul Geib, I'm the Chief Auditor from Milwaukee Public Schools. Stan, City Auditor from the City of Chattanooga, and both of us are long-time members of the ALGA (Association of Local Government Auditors)Peer Review Committee. Stan and I conducted this ALGA peer review for the period July 1, 2022,through June 30, 2025, and we did issue a report in March of 2026. What I wanted to mention is that the governing auditing standards require a peer review to be scheduled once every three years after that initial review. So this review was in keeping with those requirements. We actually spent some time before arriving onsite to review a lot of the materials. So we looked at the office's manual. We looked at the written policies and procedures around how they conducted their work. We looked at the internal monitoring procedures,which were very robust. We reviewed a sample of engagements and working papers, and we also reviewed documents related to the independence of the office, which is key,which really is fundamental to adhering to the standards. We looked at training and development of auditing staff, and we also interviewed all of the auditing staff, including Clare and Max as well. All of that work resulted in a pass opinion with no management letter comment, which means that we essentially opine that the office was adhering to the government auditing standards,really at the highest level of assurance that the office could achieve. Stan and I also believe that it really is a,you're very lucky there. You have an excellent leadership team and Clare and Max and, you know, a team of audit Page 2 CRCOC-21 July 7,2026 professionals that do quality work and have impactful findings. So we were also very impressed by really the level of hospitality and welcoming nature of the office as well. And it didn't hurt that I was leaving winter in Milwaukee in February to come there for the review. But Stan and I were very,very appreciative of the level of cooperation and hospitality. So, Stan,if you want to add anything. MR. SEWELL: I'm Stan Sewell, as he said, from the City of Chattanooga in Tennessee, and I think Paul covered very well what the peer review program is and what is, and requirements, and the outcome. You can't ask for better than a pass opinion with no management letter comment. The team is very good, and as Paul said,they were very hospitable. The Mayor and the Council were both also hospitable. We got to meet some of you all, and so you guys are just wonderful in general. I can't wait to get back to visit your state and your county. You're a great group of people all the way around, and you are lucky. You do have an excellent team, and that's not just Clare and Max,but the entire team you have in your audit office. You have some good people. And where I am, and I know Paul is more than happy to answer any questions if anyone has it. Any questions? But I really don't think there's much more that we can say because we don't have bad things to say, so that's very good. CHR. GALIMBA: Thank you so much Mr. Geib and Mr. Sewell for your work on this. And congratulations to Auditor McAdams and your team for a wonderful result. Anyone? Nope. All in favor of closing file on Communication 943, please say"aye". Any opposed? Vote on Comm. 943: The motion to close file on Comm. 943 was carried by the (Filed) following voice vote: Ayes: Committee Members Hustace, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Galimba—9. Noes: None. Absent: None. Excused: None. CHR. GALIMBA: And we will go to the top of the agenda from here. Return to Order The Chair directed the Committee to return to the order of business. of Business: Page 3 CRCOC-21 July 7,2026 Comm. 35.7: QUARTERLY AFFORDABLE HOUSING REPORT: JANUARY 1, 2026— MARCH 31, 2026 From Housing Administrator Kehaulani M. Costa, dated May 29, 2026, transmitting the above report pursuant to Section 11-19 of the Hawai`i County Code. Motion to Close File: Mr. Hustace moved to close file on Comm. 35.7. Seconded by Ms. Kagiwada. CHR. GALIMBA: Ms. Costa, please come forward. (Note: At this time,Housing Administrator Kehaulani M. Costa came forward to address the members of the Committee.) MS. COSTA: Hi. Good afternoon, Kehau Costa,Housing Administrator. You're familiar with our quarterly reports, and there are no changes since last quarter. CHR. GALIMBA: Thank you. Council Member, Kagiwada. MS. KAGIWADA: Thank you, Chair. Just a question on the Dolphin Bay. How are the—are those rented out now? MS. COSTA: Yep. So Dolphin Bay is an active lease-up. We have units leased, and property management is Marks Development. We had a leasing morning last week, I believe, and I think there were about 40 individuals there just picking up keys and units were being leased. MS. KAGIWADA: Okay. Great. I know it's not in the scope of this report,but it just seems—I'm not surprised that things are pretty stagnated. It seems like, like not a lot of movement on these numbers and things. Are we going to be seeing some increases in some of these— MS. COSTA: Units. MS. KAGIWADA: Units and stuff coming in soon, or what's on there? Just a brief. MS. COSTA: Yeah, so I think, Na Hale Makoa is the last one that was on,that's the Waikoloa 140 units. The next affordable housing complex that is coming up is Kuakini Heights, and they broke ground. And so that'll be 100 units in Kailua- Kona. That'll be our next large multi-family unit. Page 4 CRCOC-21 July 7,2026 MS. KAGIWADA: Okay. And what's the AMI(Area Median Income) levels for that one? MS. COSTA: It's 60 percent. MS. KAGIWADA: Okay. MS. COSTA: Yeah, 60 percent. . MS. KAGIWADA: Okay. Still really—I'm just looking at this as a whole. Really missing that workforce piece. Seeing so much for the lower end but very little for,kind of,the workforce. MS. COSTA: Yes. MS. KAGIWADA: I didn't know if you're aware of this. I just would love to see some of those numbers increasing going forward. I know you're working on it. MS. COSTA: Yep. MS. KAGIWADA: Anyway. Thank you. I yield. • CHR. GALIMBA: Council Member,Villegas. MS. VILLEGAS: Hi. MS. COSTA: Hi. MS. VILLEGAS: How are you, Administrator Costa? MS. COSTA: Great. MS. VILLEGAS: Good. Nice to see you today. Just a quick question, and I apologize because I'm going to forget the name of the project. But it was apartments, or an apartment building,purchased, I believe,through HOPE Services,that's over by, off of Kuakini, near,kind of,McDonald's,the Jack in the Box area. Has that—the last I was hearing from the coconut wireless is people still hadn't been placed there. MS. COSTA: So I'm familiar with the property, I'm not familiar with the timeline. I know that they had some deferred maintenance that they were working on to get the building ready,but I don't know the timeline or the status. Page 5 CRCOC-21 July 7,2026 MS. VILLEGAS: Okay. Well, if they're listening,please get it done. Community is concerned that all that money was put into this building and it's still not utilized. So thank you. I yield. CHR. GALIMBA: Council Member, Onishi. MR. ONISHI: Thank you,Madam Chair. Back to Dolphin Bay. So at our previous meeting back in Kona, I think was, and you know, Council Member Kaneali`i-Kleinfelder had mentioned about recouping, or to kind of getting back to that zero point. MS. COSTA: Mm hmm. MR. ONISHI: And the way it was explained to us, like within those five years, would get revert to recouping the money that we invested. Is that true? MS. COSTA: So I don't have the pro forma and operational budget in front of me to answer specifically. But yes, that is the intended goal. The first year is often subsidized operational costs, as you're leasing up and filling the units. And then the goal is to be operational with a reserve. MR. ONISHI: Now, how much did we purchase that,Dolphin? MS. COSTA: Dolphin Bay, I believe, was about$2,000,000. Maybe a little over. MR. ONISHI: And how many tenants going get in there? MS. COSTA: Eighteen units. MR. ONISHI: Okay. I mean,just that the numbers just couldn't seem correct when it was told to us at that meeting. So,I don't know, maybe if you can,when you guys go back, to let all the council members know how that will work out in the five years with 18 tenants,right? We will recoup the$2,000,000. MS. COSTA: The revenue in from— MR. ONISHI: Right. Yeah. MS. COSTA: In five years,the operational cost will be sustainable— MR. ONISHI: Right. MS. COSTA: Of operating. And then you look at if you're talking about recouping the cost of the building. Page 6 CRCOC-21 July 7,2026 MR. ONISHI: Yeah. Right. MS. COSTA: That's a longer period, right? Just like a mortgage. MR. ONISHI: And I think that's where council member had mentioned about that;recouping the cost. MS. COSTA: Okay. We can provide you with that information. MR. ONISHI: Yeah. Okay. Thank you. I yield. CHR. GALIMBA: Yes. Thank you for all the work that you and your team do trying to get affordable housing happening on this island. And I know it's a very, very difficult job, and slowly we're getting there. All in favor of closing file on Communication 35.7,please say"aye." Any opposed? Vote on Comm. 35.7: The motion to close file on Comm. 35.7 was carried by the (Filed) following voice vote: Ayes: Committee Members Hustace, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Galimba—9. Noes: None. Absent: None. Excused: None. CHR. GALIIVIBA: Thank you. We can move on to Communication 941. Comm. 941: FOLLOW-UP AUDIT OF THE OFFICE OF HOUSING AND COMMUNITY DEVELOPMENT AFFORDABLE HOUSING CREDITS—REPORT NO. 2026-01 From County Auditor Clare McAdam, dated June 1, 2026,transmitting the above audit report,pursuant to Section 3-18(d)(3) of the Hawai`i County Charter. ; and Comm. 941.1: From County Auditor Clare McAdam, dated June 17, 2026,transmitting a PowerPoint presentation. Motion to Close File: Mr. Hustace moved to close file on Comm. 941. Seconded by Ms. Kagiwada. CHR. GALIMBA: Auditor McAdam. Page 7 CRCOC-21 July 7,2026 MS. MCADAM: Thank you, Chair Galimba. Clare McAdam, County Auditor. We're happy to present to you today with the follow-up audit of the Affordable Housing Credits, which was performed by the County Auditor's Office, from March 2023. That audit report had several recommendations, and we're happy to say that six of those have been completed, with one still in progress. So just want to run through those recommendations and those statuses now for you. (Note: At this time,Ms. McAdam came forward and provided a - PowerPoint presentation to the members of the Committee. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office or online at http://hawaiigounty.gov.granicus.com. A copy of the PowerPoint presentation is made a part of the record, see Comm. 941.1.) CHR. GALIMBA: Any questions, comments? Member, Inaba. MR. INABA: Thank you, Chair. I just want to point out for the first recommendation regarding the amendments to Chapter 11, I want to say that we have made changes, and actually significant changes to the parts related to this audit. While the ad hoc committee is about to finish up our work and bring the main,I guess, significant overhauls,I would want to say that things like reporting on the affordable housing credits; reporting on the signing of affordable housing agreements; those are all things that have been taken up. So I know it says, "in progress,"but I think the majority of the work related to this audit has been done, and there might be a little bit more touch-ups and finalization as part of the overall Chapter 11 audit. But thank you so much to you folks and the Office of Housing for working closely with our County Auditors to make this change. It's been incremental,but we've seen significant progress in terms of the reliability and transparency, especially with the dashboard. So thank you, Clare and Maxinne, and the whole team at the Office of the Auditor. CHR. GALIMBA: Council Member, Kagiwada. MS. KAGIWADA: Thank you, Chair. Ah yes,thank you so much for the audit. I think it's really helpful for us,but also for the public,to be able to see this and see the step-by-step with the recommendations and follow-through. I do want to compliment the dashboard. I've shared it out with many people. It's a very helpful tOol for the public and for us as well. So thank you, OHCD (Office of Housing and Community Development),for really getting on with that and doing an outstanding job. Page 8 CRCOC-21 July 7,2026 And then,just on the last note, Council Member Inaba's comment, I'll just say I'm really looking forward to having that come forward. I know there's at least one development in District 2 that's kind of waiting on seeing what's going to be coming out of that as well. So I know we want to get that out there so that we can start supporting development in appropriate places. So thank you so much for all the teamwork, and once again,thanks. I yield. CHR. GALIMBA: Council Member, Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you. Ms. McAdam. I was going to call you Clare,but it's not professional. McAdam, did you see the paper recently regarding the folks who got in trouble for the affordable housing? MS. MCADAM: Sure. MR. KANEALI`I-KLEINFELDER: Okay. So that really was the purpose for why we dug in so much on affordable housing. So thank you for bringing this report to us. Your findings were accurate and pointed to a good direction for the department as far as our affordable housing credits are concerned. So I appreciate the work that you folks did and looking forward to some of the audits we have coming back to us around some of the same issues,but little bit different. Thank you. MS. MCADAM: Sure. Yeah, I just want to also make sure that, you know, I say that the Office of Housing and Community Development has done an enormous amount of work and have been very dedicated in doing that. So I think really the credit goes on them. MR. KANEALI`I-KLEINFELDER: Thank you for saying that. Thank you. I yield, Chair. CHR. GALIMBA: Council Member, Kierkiewicz. MS. KIERKIEWICZ: Thank you. I just wanted to confirm that work is underway on Chapter 11, as you noted in your report. There were two ad hoc committees, one to really dive into what are the issues, what are we trying to solve for, how do we use Chapter 11 as a tool to catalyze more affordable housing development in the communities that need it. And the second ad hoc really got into the nitty-gritty of, like, actually writing code. My office is meeting with Office of Housing and Community Development (OHCD) later this week. We can also provide you with a copy of the draft ordinance so you can review it in parallel with our Legislative Review Branch, Page 9 CRCOC-21 July 7,2026 but I think it checks all the boxes and probably even goes beyond to think through how this can really be sustainable. I also want to give a lot of credit to OHCD leadership and team, who for many, many years have just tried to make some changes internally so that we can ensure there isn't any improper issuance or transfer of credits going forward. Because that was the crux of this whole review, and I think that has actually catalyzed strengthening the department and has really supported our specialists in being, I think,being more proactive in engaging housing developers,who are really partners in the whole housing ecosystem,to ensure that they have the support that they need to get projects off the ground. So thanks for doing a very thorough review and highlighting the dashboard piece. I don't know if this is something you can answer or if this is a question better for Housing. The dashboard's very impressive. I'm also wondering, is there another layer that Housing is tracking that shows where housing is needed? It's great to know where it is. But is it truly sort of meeting the needs of each community? MS. MCADAM: Yeah. I think that might be more of a question for the department. MS. KIERKIEWICZ: Is there, like, a secret layer? Okay. Alright. There's no secret layer,but I think, you know to the point being made here,it's wonderful that we have all this housing development on the map,in the pipeline. But just wanting to make sure that folks are able to live and work in the same community. Thanks for all your hard work on this. I yield. CHR. GALIMBA: All in favor on closing file on Communication 941,please say "aye." Any opposed? Vote on Comm. 941: The motion to close file on Comm. 941 was carried by the (Filed) following voice vote: Ayes: Committee Members Hustace, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Galimba—9. Noes: None. Absent: None. Excused: None. Comm. 942: WAIWAI NONPROFIT GRANTS COMPLIANCE REVIEW FOR FISCAL YEAR 2024-2025 From County Auditor Clare McAdam, dated June 12, 2026,transmitting the above report,pursuant to Chapter 2,Article 25, of the Hawai`i County Code. Page 10 CRCOC-21 July 7,2026 ; and Comm. 942.1: From County Auditor Clare McAdam, dated June 17, 2026, transmitting a PowerPoint presentation. Motion to Close File: Mr. Hustace moved to close file on Comm. 942. Seconded by Ms. Kierkiewicz. CHR. GALIlVIBA: Auditor McAdam. MS. MCADAM: Thank you. Clare McAdam, County Auditor. I'm joined today with Jasmine Santos, who was lead auditor for this review. So today we're going to present the results of Grants-in-Aid Review for the fiscal year 24-25 (2024-2025). (Note: At this time,Ms. McAdam came forward and provided a PowerPoint presentation to the members of the Committee. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office or online at http://hawaiigounty.gov.granicus.com. A copy of the PowerPoint presentation is made a part of the record, see Comm. 942.1.) CHR. GALIMBA: Thank you. Council Member, Kagiwada. MS. KAGIWADA: Thank you, Chair. Thank you for this great report. Can I just drill down a little bit on your observation around fiscal sponsorship. You have two organizations noted here, and I'm just trying to understand what the problem is, or if there is an issue here that you're noting. Because when I read through it, I don't see exactly what the issue is. MS. MCADAM: Sure. In the application form,there is a process where,if there is an organization that doesn't have that 501(c)(3) status, a fiscal sponsor can sponsor them. What I didn't see in that application was any provision in there that they could charge administration fee, and we're just presenting what we found without judgement. I mean, fiscal sponsorship might be fine,but the County had not provided for that in the application process. And so I think, you know, if that's something that we're thinking is a good idea,then maybe we should just document that and make that available to everyone. MS. KAGIWADA: I see. Okay. So not so much that there was necessarily a specific issue with these being out of compliance or anything like that,but just that maybe a little more clarity, guardrails around this so that it's clear to everybody what's happening. MS.MCADAM: Yeah. Page 11 CRCOC-21 July 7,2026 MS. KAGIWADA: Okay. Because the ten percent administrative fee, as long as the suborganizations weren't also doing administrative costs. MS. MCADAM: Oh yeah, there was no double dipping on that. MS. KAGIWADA: Then it should be okay as far, I think, what we, you know, felt. But I can see where needing to be very clear about that might be helpful. Okay. Thank you, I do appreciate that. Yeah, thank you for this. So there were three organizations who did not participate or get back to you. That's what you're saying,right? Oh, and they're listed here. MS. MCADAM: Yeah. MS. KAGIWADA: Okay. Okay. Alright, thank you so much. Appreciate this. I think this provides a lot of good,healthy input for further work on the Waiwai grants. I yield. CHR. GALIMBA: Council Member, Onishi. MR. ONISHI: Thank you,Madam Chair. Great work. I was reviewing that, and too bad we couldn't get this prior to awarding this year's, right? But thank you. So now my question is to Finance. Can I have the Finance Director? (Note: At this time,Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Diane Nakagawa,Finance Department. MR. ONISHI: Thank you. I know Finance is going through a new system,right? To help make it easier to monitor these awarded grants,right? Do you know when we'll be hundred percent? MS. NAKAGAWA: So yes, we are very excited about our grant management system. We're actually doing a very soft launch today for some of our grants. Still working through the bugs,but we really wanted to kind of jump right in there and start this improvement process and efficiencies. These are things we've been talking about for a long time. So the system is live. I encourage you to check it out. Maybe give it some time, a little bit, as we get through some of the initial bugs that we're seeing this morning. But the intent of the system is really, is two things. One, for our internal ability to better track and better keep all of our grants in one place; better management of that. Two, externally for those that are applying for grants, we want to make it as easy as possible and consistent as possible. Page 12 CRCOC-21 July 7,2026 So one of the things that we have heard is that, you know, one grant requires this, or I gave it for this,but you don't have it for this, you know. So we want to make it easy and have this host as a repository for those agencies to have these documents in this system. So a lot of the things here, you know, we hope to improve with this technology and system. And, like I said, we have pushed on it in the past six months to get it ready and out live, and it is there. I can't promise you that it has no bugs,but we will continually work on getting it as best as it can be to make this process easier. MR. ONISHI: And how many staff will be helping to review these documents? MS. NAKAGAWA: So just to be clear,the owning department will still have a role. So they have been brought in to review the different requirements or different options within the system. So they will still be, they will still have their login to be able to review the grants that they oversee in the various areas. So it will not be completely Finance's responsibility to do that. Things will be shared with the kind of an owning departments. MR. ONISHI: Okay,because with this report that we have received, there's a lot of outcomes of those, I guess, applicants that have received the funding that didn't complete their paperwork or incomplete of paperwork. So now my question is, so this happened in 24-25 (2024-2025). In 25-26 (2025-2026), was any of these applicants who was like deficient of reporting all their reports or with their paperwork, were given grants again? MS. NAKAGAWA: I don't have that list in front of me,but I believe so. MR. ONISHI: Okay,because then,to me,if they were incomplete in reporting at the end of their fiscal year, we shouldn't be awarding them again. Because now it's like going be, could be this 25-26,they could do the same thing again,right? MS. NAKAGAWA: Yeah. So we're in the process. Where we're at right now is at the contract stage of those awards. So we can have a little bit further discussion on moving forward. MR. ONISHI: And I know you folks, with Chair Inaba,have been working on this to get a better process, right,to get all this. But just kind of looking at the report and then seeing what's happening, and I'm just hoping that this can kind of get moving fast—well, faster, or if we need more bodies to help do the evaluations. MS.NAKAGAWA: I think we've made some significant efforts to get this better. We can always do more. But the grant management system and the constant communication between the departments,between Council and Administration on this particular one,will make this process better. Page 13 CRCOC-21 July 7,2026 While I'm up here, I do want to state for this report,you know, happy to work with our auditor here. For those applications or contracts that have insufficient document or missing required application documents, we did go ahead and verify all of those. And so it may just have been missed in the review,but all of those that are in here marked with specifically required application documents, we did go ahead and find, and we do have them. So we'll work on that. Again,this is partially something that a new grants management system can help that we're all looking at the same information in the same way. MR. ONISHI: Okay. Thank you. I yield. CHR. GALIMBA: Thank you. Council Member, Inaba. MR. INABA: Thank you. We do have Special Assistant Jessica Valdez here if anyone has questions as well. And for those three organizations who have not provided or responded to your inquiries, my office won't be signing any of the agreements for the upcoming fiscal year until you hear back from them. And to Ms. Valdez, if we can also do a check, not just with the County Auditor but also with our own internal reporting to make sure that we are not signing any agreements for the current fiscal year for those who have not provided their final year report for the previous awards. But thank you, Auditor, and we will work with your office to make sure that those three organizations do respond to those inquiries. Thank you. CHR. GALIMBA: Council Member, Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you very much, Chair. Thank you, Ms. McAdam. This one I was very interested in. The Waiwai grants do good in the community,but it's also subsidizing non- profits to do work that we can't. So seeing an actual audit of what's being presented back to us; what we're requesting; the different layers of transparency that we're beginning to build, which is our own CoHnect Program, as well as better reporting from Ms. Valdez's office,is key. What I'd like to see was you actually dug in and found some discrepancies. While it sounds weird, we write contingency refund requests from our offices all year, every year. And we put aside, I mean there's $900,000 for contingency relief fund requests from Council Members, that's handled by Ms. Valdez, as well as each one of our offices. And then we have two, I don't like the wording on the code right now, what is it, a minimum of$2.5 million will be set aside for Waiwai grants alone, as well as a number of other funds that we have that provide funding to non-profits. Page 14 CRCOC-21 July 7,2026 If we're going to subsidize from general fund, the work in the community that we set aside money for, we have to make sure there's return on investment. And when the organizations aren't reporting that our funds, their money, went to the right places, did the right thing, or did what they said they were going to do, then we have an issue and we need to address how much funding we're going to put out the next year. So I've been waiting for this report. Thank you. It highlights something that I've been assuming for a long time. So I really appreciate your office, always have. I'll be working with Ms. Nakagawa to see what can be done. We all talk about fiscal responsibilit,this is a component of that. It may seem like a small percentage of our budget,but it's important to make sure that our organizations are doing what they say they're going to do with the money that we provide and not try to skate out of providing information that they're required to give us, yeah. So I appreciate Mr. Inaba's comments. I really appreciate the report. And as for the body, I think it was five or six years ago, we have amended that section of code that says $2.5 million dollars annually. Instead of saying a maximum of, it was changed to a minimum of. And it was $1.5 million, and it was changed to a minimum. Instead of a maximum of$1.5 million, I think it changed to a minimum of$2.5 million,which is a concerning,but very small word change because that doesn't mean we're going to cap it. It means it's uncapped and it's open to available funding. That has concerned me from the day we did it, and I've seen different amounts set each year for the different grants coming in. Again, I appreciate what non-profits do,but there's a layer of responsibility that we have to have in government when we play with tax money. So thank you very much. Thank you, Chair. CHR. GAL] BA: Council Member,Hustace. MR. HUSTACE: Thanks, Chair. Auditor McAdam,just a question on the two programs for travel expenses. Do you equate their travel as the same as training and conferences, even though it may be a competition? Is there some nuances there? Or— (Note: At this time,Audit Analyst Jasmine Santos came forward to address the members of the Committee.) MS. SANTOS: Jasmine Santos, Audit Analyst with the Office of the County Auditor. For the two programs that did do the travel, we did review the requirements, and in that, if it was for the competition; we allowed it. But in these two specific instances, in their application they specifically said it was travel for training of their staff, which is not allowed under the current requirements. Page 15 CRCOC-21 July 7,2026 MR. HUSTACE: I think some of their applications may have changed then over time about how they disclose what those travel expenses are for. So then that particular year they said it was for training purposes then. MS. SANTOS: Yes. MR. HUSTACE: Okay. Okay. Thanks for the clarity. Thanks, Chair. CHR. GALIMBA: Council Member, Kimball. MS. KIMBALL: Yeah, I just had one very brief question. With respect to the identification of potential vulnerability regarding board member payments,is that something you think we need to legislate around or just provide greater clarification in the application process? MS.MCADAM: Yeah. I think either or. I think the fact that when we first started noticing this,I thought it was a one-off. But when it turned out to be approximately 20 percent of the total awardees,it seems that there is a miscommunication in the community as to whether board members can be compensated. And my literal interpretation of that was for anything. So, you know, executive directors,their portion should not be on the board. But,you know, I've had sort of conversations, and some people have interpreted that differently. And so the fact that there is 20 percent of this grant awardee population who have executive directors on the board, and I think it would benefit community if there were some clarification. Not necessarily legislation change,but maybe just a clarification of how you want to present that. MS. KI IBALL: Yeah. Thank you. I think there might be a need for something in legislation around this. I know that it's not something that's only been identified as an issue of vulnerability with the Waiwai's but other County grants. So Council Member Inaba, maybe you and I could have a conversation. As the expert on grant making within the County I think this is something I'd like to maybe work with you on, some language around. CHR. GALIMBA: Council Member, Kagiwada. MS. KAGIWADA: Just a quick follow-up on that. So in this report, you've identified, I think, eight organizations who reported compensation to members for participation on the board. That's not the same number you just talked about, which was having executive directors on the board. So can you clarify those two different groups? Page 16 CRCOC-21 July 7,2026 MS. MCADAM: Yeah. They weren't necessarily compensated for being on the board. They were just compensated by the non-profit. So— MS. KAGIWADA: An employee or something. MS. MCADAM: Yeah. Most of them were listed as an executive director or a title such as that. I don't know if anyone received compensation for being on the board, and I presume not, but that's just a normal non-profit. MS. KAGIWADA: Right. Okay. But I only see eight organizations listed here, and you talked about the 20 percent, so. MS. MCADAM: Yeah, it's 20 percent of the universal of the grant for the awardees. MS. KAGIWADA: We have many more than that. Oh, of the ones you looked at. MS.MCADAM: Sure. MS. KAGIWADA: Okay, okay, okay, got it. I was like, okay. Thank you. MS. MCADAM: And also just to highlight as well,that was eight of the publicly available tax returns that I could find. So, some of the organizations weren't large enough to have to file a full tax return, or a tax return at all, and so that's why I couldn't see that— MS. KAGIWADA: There could be more. MS.MCADAM: That particular schedule. They didn't have to complete that. So there could be more. MS. KAGIWADA: Yeah. Okay, okay. Thank you. I just wanted to clarify those numbers. Thanks. I yield. CHR. GALIMBA: Council Member, Kierkiewicz. MS. KIERKIEWICZ: Thank you. I have a few questions,but I just wanted to take a moment to kind of reflect how far we've come. I mean, since I've been on the Council,I remember we would get like four binders,thousands of pages of information. Non-profits were still submitting their applications via paper,like literally had to go Finance by 4:30 (p.m.)to make sure all the copies were in. And then the next year we moved to an online Google form, and every single year it's just,I think,been a better experience for not just the Council and Finance Department,but also the community. They work so incredibly hard. It should Page 17 CRCOC-21 July 7,2026 not be excruciating to access critical funds so that they could advance their mission. A few questions. You know in your observations, you note that many of the non- profits have an issue with documentation, not necessarily service delivery. What is your recommendation to help with that? MS. MCADAM: I honestly think the new grant management system is really going to help because that's going to require standardized documentation to come in. And I think the fact that they will be providing that through the application process, which will then—if there were any issues perhaps, or things that needed clarification at that point, that could be assisted with before they reach the award decisions. So it's not going to be something that we're finding post-award, you know,post end of the year, when they receive those funds. And to find,to provide documentation for an award that was over a year old,perhaps maybe we want to make sure they're—too. So I think, I really do have a great hope and relief that this grant management system is going to really help on all levels of that. MS. KIERKIEWICZ: Thank you. I think I asked my question incorrectly. I didn't mean documentation in terms of paperwork, more so documentation of service delivery, and so— MS. MCADAM: Right. Oh, okay. MS. KIERKIEWICZ: Right. Like, how were they sort of documenting the measureable outcome, the public benefit? Like how is that being captured? Is that information that's being provided to the County sufficient? Because the report made it seem as if it was insufficient or unclear. MS. SANTOS: Oh, okay. So in that sense,I would say that a lot of the documentation—each organization has their own way of counting their public benefit, or, you know, they provide us whether it be a qualitative or quantitative number or figure of what they're going to provide services for. On our end, when we're reviewing that and they're trying to come back and tell us what it is that they did, some of them don't have a baseline to measure from a previous year. Some of them kind of put out this methodological type of—it's a benefit,but they're not counting actual figures. For us,we want to make sure that what they're saying they're doing,is what they're actually doing. MS. KIERKIEWICZ: And there's evidence for that. MS. SANTOS: Yeah. Right. Page 18 CRCOC-21 July 7,2026 MS. KIERKIEWICZ: Right. Okay. MS. SANTOS: And that's where we're kind of seeing a gray area where some of them, like they count every single head that comes in versus other ones,they're just kind of, "Okay, we filled this particular space on this particular date and time." There's no actual measure of, did it increase their knowledge,if their purpose is education, or are they getting food to tables? And there's that inconsistency there. So I feel like we have made strides in, you know, kind of defining what the public benefit, or, you know, the definition of what public benefit is. And it's just kind of providing them that guidance of, you know,they stay on track with what they're doing. And hopefully I answered your question correctly. MS. KIERKIEWICZ: Yeah, and you know what it's sparking for me is this idea of, like, a difference of like what success looks like for each of these organizations. For some it's, "I hosted the event." MS. SANTOS: Right. MS. KIERKIEWICZ: Whether or not people came, I still delivered the event versus we hosted something, we said 300 people would show up,three hundred fifty came; so we exceeded expectations. So I think it would be interesting to try to find some kind of like baseline to quantify the outcomes and success. And I say that because, for a couple of reasons, this information is supposed to feed into the change framework, so making sure we continue to strengthen that relationship with Hawai`i Community Foundation, so we can capture the Hawai`i Island work that's happening into this larger data set that is being shared across the State because that's how a lot of policy and funding decisions are being made at,like, state and federal levels. So that's one piece. On the other side,you know, as this program continues to evolve, and council members are going to be pressed to make hard decisions in the future, a lot of non-profits are going to need financial support. I think it would be nice to have this catalog of previous information around the successes that non-profits had in meeting the goals that they stated in previous applications. And just your thought, Auditor. If there was one legislative fix that you would recommend,just kind of based on your review of the program, this audit, understanding our Code, what would that be? Sorry. Putting you on the spot. MS. MCADAM: Totally on the spot. Honestly, I'd really like to see the compensation point cleared up because that's,you know, it's being noted in other Page 19 CRCOC-21 July 7,2026 organizations and it's, you know, in other programs, sorry. Yeah, I'd like to see that. MS. KIERKIEWICZ: The board compensation. MS. MCADAM: Yeah, I'd like to see that. Because I think 80 percent are doing it one way, 20 percent are doing it another way,just within this program. And I think that's an inequity there, and I think it should be— MS. KIERKIEWICZ: Clarified and in the Code. MS.MCADAM: Clarified so that everybody can operate under the same set of rules, I think. MS. KIERKIEWICZ: So my understanding, and correct me if I'm wrong, I don't want to put out misinformation,but a board member of a non-profit cannot be compensated for serving on the board? MS. MCADAM: Well, yeah. I mean— MS. KIERKIEWICZ: They can be compensated to do work on behalf of the organization, is that true? Corporation Counsel, do you want to step forward? She's like, "We're getting into the legal weeds here." I think it's an important point of clarification that we should just put on the record now, and as folks are working on code amendments, they can keep this conversation in mind. Thank you. (Note: At this time, Corporation Counsel Renee Schoen came forward to address the members of the Committee.) MS. SCHOEN: Good afternoon. Renee Schoen, Corporation Counsel. Yeah, we are getting into the weeds. So our Code provision specifically says that board members cannot be compensated,period. MS. KIERKIEWICZ: Period. MS. SCHOEN: It doesn't get into specifics as to, you know, compensation for serving on the board. And so that has been where a lot of the questions have arisen. MS. KIERKIEWICZ: Okay. MS. SCHOEN: Yeah. And I do say, I have to say,that our Code provision does track the state statute. Page 20 CRCOC-21 July 7,2026 MS. KIERKIEWICZ: Mm hmm. MS. SCHOEN: Which, you know, generally allows non-profit organizations to compensate their board members. But if they are receiving state funds,they cannot be compensated. MS. KIERKIEWICZ: Got it. MS. SCHOEN: But similarly, there's no distinction between, you know, compensation for serving as a board member or just compensation,period. MS. KIERKIEWICZ: Mm hmm. Okay, we've got our work cut out for us. Legislative changes, yes. Thank you. Thank you. Appreciate the report. I yield. CHR. GALIMBA: Council Member, Kagiwada. MS. KAGIWADA: Thank you. Just a follow-up. Sorry, I might need you back, Renee. Just a follow up on that because I work with a lot of non-profits and been part of lots of non-profits. What about—because a lot of times non-profits really need that executive director information in their board meetings. Can they be non-voting members of a board and still meet the criteria that the State—because they're not full members of the board, they're, I don't know what the term is,but they're not voting on anything that may affect their compensation or anything like that,but they're there on a regular basis to provide information to the rest of the board on programs and other things. Did you have any sense of that? MS. SCHOEN: No, I don't. I mean, you know, as I said our language tracks the state language, and so, you know,there's no specificity regarding, especially, you know, as it relates to grant funding. I think, you know,if there's no grant or governmental-type funding involved, it doesn't really matter. But, you know,the Legislature, I guess,really wanted to ensure that there was no compensation whatsoever, especially for performance of your duties as a board member. MS. KAGIWADA: Okay. I don't know,Auditor McAdam,if you have any weigh-in on this issue or a possible solution for non-profits. Did you have any experience with the non-voting type member? MS. MCADAM: Not personally, no. I mean,I don't see why they couldn't always have meetings, for example,but not actually being on the board. MS. KAGIWADA: So maybe they're just required to attend as part of their job, but they're not on the board. Yeah, okay. Okay. Alright. Thank you. Appreciate that. Page 21 CRCOC-21 July 7,2026 CHR. GALIMBA: All is well. Okay. All in favor of closing file Communication 942,please say "aye." Any opposed? Vote on Comm. 942: The motion to close file on Comm. 942 was carried by the (Filed) following voice vote: Ayes: Committee Members Hustace, Inaba, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Galimba—9. Noes: None. Absent: None. Excused: None. CHR. GALIMBA: And we have come to the end of our agenda. We are done for today and we'll see everyone again tomorrow morning. ADJOURN- There being no further business, Chair Galimba adjourned the meeting at MENT: 1:48 p.m. Approved: Ms. Michell . Galimba, Chair (Date) Communications, Reports, and Council Oversight Committee MG/mp • Page 22