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HomeMy WebLinkAboutMIN FC 2026/07/22 (2024-2026) Committee on Finance 40th Session West Hawai`i Civic Center 74-5044 Ane Keohokalole Highway,Building A Kailua-Kona, Hawai`i July 22, 2026 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 10:23 a.m., in the Council Chambers, Kailua-Kona,by Mr. Matt Kaneali`i- Kleinfelder, Chair. ROLL CALL: Present: Mr. Matt Kaneali`i-Kleinfelder, Chair Mr. James E. Hustace, Vice Chair Ms. Michelle M. Galimba,Member Mr. Holeka Goro Inaba, Member Ms. Jenn Kagiwada,Member Ms. Ashley L. Kierkiewicz,Member Ms. Heather L. Kimball,Member Mr. Dennis "Fresh" Onishi,Member Ms. Rebecca Villegas, Member(came in later) STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA HEMS: The following individual registered to speak and came forward when called by the Chair: ti Dell Otsuka: Comm. 98.5; and Comm. 98.6, comment. COMMUNI- The Chair directed the Committee to proceed to the next order of Business, CATIONS: Communications. Comm. 98.5: THIRD QUARTER REPORT OF PERSONS EMPLOYED UNDER A CONTRACT FOR LESS THAN 90 DAYS: JANUARY 1 — MARCH 31, 2026 From Human Resources Director Sommer J. Tokihiro, dated April 1, 2026, transmitting the above report pursuant to Section 2-12.5 of the Hawai`i County Code. Motion on Close File: Mr. Hustace moved to close file on Comm. 98.5. Seconded by Ms. Kierkiewicz. FC-40 July 22,2026 CHR. KANEALI`I-KLEINFELDER: Discussion, Council Members? Okay. Just asking,is Administrator Tokihiro available? (Note: At this time, Human Resources Director Sommer Tokihiro came forward to address the members of the Committee.) MS. TOKIHIRO: Good morning. I'm here. CHR. KANEALI`I-KLEINFELDER: Thank you. Just speaking to what we heard from the testimony this morning,would a larger subset of information, more than the 90 days, help the Council see something that we may not with the reports as they are filed now? MS. TOKIHIRO: No. I believe that the information reported on a quarterly basis gives you the information on all of these contracts. So I'm not sure that anything further would assist the Council unless there's a specific question. CHR. KANEALI`I-KLEINFELDER: Okay. Thank you,Director. Seeing no discussion, motion is on the floor to close file on Communication 968.5. All in favor? Vote on Comm. 98.5: The motion of close file on Comm. 98.5 was carried by the (Filed) following voice vote: Ayes: Committee Members Galimba,Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali'i-Kleinfelder—9. Noes: None. Absent: None. Excused: None. CHR. KANEALI`I-KLEINFELDER: Please let the record reflect that Council Member Villegas has joined us. Comm. 98.6: FOURTH QUARTER REPORT OF PERSONS EMPLOYED UNDER A CONTRACT FOR LESS THAN 90 DAYS: APRIL 1 —JUNE 30, 2026 From Human Resources Director Sommer J. Tokihiro, dated July 1, 2026, transmitting the above report pursuant to Section 2-12.5 of the Hawai`i County Code. Motion on Close File: Mr. Hustace moved to close file on Comm. 98.6. Seconded by Ms. Kierkiewicz. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member Inaba. Page 2 FC-40 July 22,2026 MR. INABA: Yeah, thank you. Director, some of these positions I'm seeing in both reports from the Prosecuting Attorney's Office for law clerks. How come we're not hiring for full time law clerks? (Note: At this time,Human Resources Director Sommer Tokihiro came forward to address the members of the Committee.) MS. TOKIHIRO: We do have full time legal clerk positions,but there's also an exemption in the HRS (Hawai`i Revised Statutes) that allows the prosecuting attorney to hire law clerks on a temp basis. MR. INABA: Thank you. And then for our helicopter pilots, I'm seeing them on both reports too. Can you give us a little insight there? MS. TOKIHIRO: Yes. So the County previously contracted with a company that provided the pilots that would operate our helicopters and that contract with that individual ended. And so,we are working towards,you know, we needed to maintain the services and so we initiated 89-day contracts because there's some details to be worked out as far as which bargaining unit these helicopter pilots would fall under; we've been working with the Fire Department and HFFA (Hawai`i Fire Fighters Association) to establish longer term contracts and then working towards eventually creating a position in the civil service that accurately reflects the work that our helicopter pilots perform because our positions are different from those in the City and County of Honolulu because of our medical transport and because of the FAA (Federal Aviation Administration) requirements associated with that. So we've been utilizing the 89-day contracts while we work out the collective bargaining issues. And then once that's resolved we'll be in a longer term contract then working towards establishing permanent civil service. MR. INABA: Thank you. Are there any contracts that are over 2,500 or not related to the state of an emergency declaration that are not included in this report? MS. TOKIHIRO: No. MR. INABA: Perfect. And moving forward if we're going to have a lot of new Council Members coming up,if we would please as part of the transmittal letter, site the section of code 2-12.5, so that people know where to look at for the requirement of this quarterly report,please. Thank you. MS. TOKIHIRO: Okay. Will do. CHR. KANEALI`I-KLEINFELDER: Thank you very much. Seeing no further discussion. Thank you for your time, Director. We have a motion on the floor to close file on Communication 98.6, all in favor? Page 3 FC-40 July 22,2026 Vote on Comm. 98.6: The motion of close file on Comm. 98.6 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. 604-26: AUTHORIZES THE MAYOR TO ENTER INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE STATE OF HAWAI`I, DEPARTMENT OF TRANSPORTATION,TO RECEIVE FUNDS TO UPDATE THE COUNTY'S MOTOR VEHICLE REGISTRATION SYSTEM TO IMPLEMENT A SURCHARGE DESIGNATED FOR THE SAFE ROUTES TO SCHOOL PROGRAM Allows for the receipt of$6,282.72 of federally-derived funds for expenses associated with programming and updating the County's motor vehicle registration system. Reference: Comm. 959 Intr. by: Council Member Kaneali`i-Kleinfelder(B/R) Motion to Approve: Mr. Hustace moved to recommend adoption of Res. 604-26. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member. Galimba. MS. GALIMBA: I guess this would be for Finance. I just wanted to ask, in the whereas clause where it says each county to impose and collect a five dollar surcharge on certain motor vehicle registrations to help fund the Safe Routes to School Program, what's the concept for certain? (Note: At this time,Finance Director Diane Nakagawa and Motor Vehicle License and Registration Division Administrator Naomi O'Dell came forward to address the members of the Committee.) MS. NAKAGAWA: Good morning,Members of Council. Diane Nakagawa, Finance Department. Joining me will be Naomi O'Dell, our Vehicle Registration and Licensing Administrator. To answer your question,just briefly, this item is in agreement with the state to assist us in some funding to update our system. This was required through Act 212 for the five dollars for vehicle registration. All the Page 4 FC-40 July 22,2026 counties are on the same system and just haven't had a change to reconfigure the system to allow us to do this collection. The City and County does hold the system and so they're in the process of getting it updated probably through the end of the year. I believe this amount will just help our cashiering system. But I'll let Naomi explain just a little bit about the details of that. MS. O'DELL: Hi. Naomi O'Dell. These funds will be used for our cashiering system. It helps to make it more efficient for the fees to go from the main frame directly into our cashiering system. The counties of Hawai`i,Maui, and Kaua`i do operate on the same cashiering system,but we are on different versions of that system. The five dollar assessment fee will be on all the vehicles. It will fall under as a state registration fee and from the state registration fee, we need to separate all the different fees that are within there such as the emergency medical, the accessible parking, and now the safe routes. MS. GALIMBA: Thank you. Do you have an estimate? I mean, this sounds like it will be a considerable fund,which is a good thing. We do need to make sure our kids are safe getting to school. I'm just wondering if you have an estimate of what this five dollars per vehicle will be bringing in on an annual basis. MS. O'DELL: It would be really considerable. I believe we have about 195,000 vehicles on island. MS. GALIMBA: Okay. Thank you very much. In support. I just wanted to get a little more detail. Thank you so much. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Hustace. MR. HUSTACE: Thank you, Chair. Just for clarification, do we need to strike that word certain in that whereas clause then? MS. O'DELL: I don't know. It's in the act itself, certain vehicles. MR. HUSTACE: Okay. I think Council Member Galimba was kind of leaning with that point about what vehicles are being identified here. But if it's all vehicles,then it should say all vehicles or just motor vehicles,right? MS. O'DELL: I would say that it would be the exempted vehicles; county vehicles, state vehicles. MR. HUSTACE: Right. Okay. Just the question if it needs to be struck. That's all. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. Page 5 FC-40 July 22,2026 MS. KAGIWADA: Thanks, Chair. To follow up,I love that there's going to be some money for the Safe Routes to School. I think it's a really important program. But this is a state entity, correct? MS. O'DELL: Yes. MS. KAGIWADA: And is there anything that says that they'll be using this money in the counties in the act; will that money actually come to the counties, or could it all be stuck in Honolulu? MS. O'DELL: Monies are supposed to go through DOE (Department of Education). MS. KAGIWADA: So out to the counties or out to the different areas. MS. O'DELL: Hopefully. MS. KAGIWADA: Hopefully. Okay. So in the act is doesn't define what the money will be used for? MS. O'DELL: No. MS. KAGIWADA: Okay. Do you have anything to add,Director? MS. NAKAGAWA: Just that the collection does go back to the state. MS. KAGIWADA: It all goes back to the state. Okay. I guess I have a little bit of a concern there that we're just once again feeding the state coffers without necessarily seeing results out here. So I'll look into it a little more before the next meeting and try to get some information on that. Alright, thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Diane, so this is a requirement by the state legislation that we pass this? MS. NAKAGAWA: Yes. CHR. KANEALI`I-KLEINFELDER: And so this would be roughly$975,000 from the County, correct, Ms. O'Dell? MS. O'DELL: Yes. CHR. KANEALI`I-KLEINFELDER: So from the County. And I'm just looking at this almost like our state TAT (Transient Accommodation Tax). It goes to the state and then the state redistributes back to the counties at their discretion. Page 6 FC-40 July 22,2026 MS.NAKAGAWA: Prior TAT collection. But yes, this will go back to the state for redistribution. CHR. KANEALI`I-KLEINFELDER: So it will be at the discretion of DOE to distribute back to the counties required percentage of per county or exactly what we give them or minus administrative fees? MS. NAKAGAWA: I don't believe that was the discussion we were just having, so we'd be happy to look a little more into it as well and see what that potential redistribution could be. CHR. KANEALI`I-KLEINFELDER: So they didn't provide that to us? MS. NAKAGAWA: I don't believe it's in there. MS. O'DELL: No,they have not. CHR. KANEALI`I-KLEINFELDER: Yup. If it wasn't a requirement, I'd be inclined to say no for two reasons. One, there's been no equity for the Safe Routes to School Program so far. I've seen it in two districts versus having schools island wide that need assistance. And then furthermore, I mean,these are state highways that are being fix safe route to school issues and they're using the counties to collect the funds so they can provide the money back for the programs, it's a little convoluted as far as the requirement. But if there's a requirement that we pass this bill to collect the fee, that's an interesting way to go about the state providing funds to fix safe routes to schools. Okay,before the next hearing—thank you. Ms. Wong MS. NAKAGAWA: We might have more information. Hold on. CHR. KANEALI`I-KLEINFELDER: Yes. Thank you, Diane. (Note: At this time,Deputy Corporation Counsel Keyra Wong came forward to address the members of the Committee.) MS. WONG: Good morning. Keyra Wong, Deputy Corporation Counsel. So the language of the act says, "in addition to any other fees required by law, counties shall impose and collect a five dollar surcharge." And to answer your question, Council Member Hustace. I think the reason why it says certain in the resolution is because there are some vehicles that are not subject to these fees being imposed. For example, like antique cars,DLNR (Department of Land and Natural Resources), HPD (Hawai`i Police Department)vehicles. So it's only certain vehicles that are going to be assessed basically that state registration fee. So that's why it says certain. So I think it's okay. Page 7 r- • FC-40 July 22,2026 CHR. KANEALI`I-KLEINFELDER: Ms.Wong, is there anything about the prescription of funding back to the counties within the act that created this or is this an open ended five dollar fee and then we'll do what we want? MS.'WONG: It does provide that the surcharge shall be deposited into the Safe Routes to School Program special fund, which is established under(HRS) 291C-4. And then if you go to (HRS) 291C-4, it has a number of things, and I don't know the relationship to which the special fund comes to impact our schools on our island in our communities. So I think that's something that we can look into. But it does say assessments collected for speeding in a school zone, safe routes to school program surcharges, monies collected from state reserved parking space enforcement fines. But we can definitely look into it. CHR. KANEALI`I-KLEINFELDER: Those are all allowed uses under the fund this five dollar fee will go to? MS. WONG: Under the special fund. Yes. CHR. KANEALI`I-KLEINFELDER: So it's not just safe routes to school. MS.WONG: They call it the safe routes to school program special fund. CHR. KANEALI`I-KLEINFELDER: And then under the fund we have multiple uses allowed by the state. MS. WONG: Yes. CHR. KANEALI`I-KLEINFELDER: That's so brilliant of them. MS. WONG: So we can look into that with the state to figure out more details because I get the question is how is this benefit coming back to our County. CHR. KANEALI`I-KLEINFELDER: And very specifically how do we then as a County with whatever funding we get from the fund that has multiple uses,how do we program that in an equitable fashion across the entire island, not just one or two districts. MS.WONG: Yeah, we can reach out to DOT (Department of Transportation) and get some information about that. CHR. KANEALI`I-KLEINFELDER: Yeah, that would be great. Okay. So you've got some homework before that next hearing then, yeah. MS. NAKAGAWA: Understood. CHR. KANEALI`I-KLEINFELDER: Thank you, Ms.Wong. Thank you, Page 8 FC-40 July 22,2026 Ms. Nakagawa, and thank you,Ms. O'Dell. Council Member Kimball. MS. KIMBALL: Yeah. I'm just revieing the HRS. It looks like there's a Safe Routes to School Advisory Committee which includes the County traffic officials that determine where the funding goes from that special fund. CHR. KANEALII-KLEINFELDER: Thank you. Okay, seeing no further discussion, motion is on the floor to forward Resolution 604-26 to Council with a favorable recommendation. Can I have a roll call,please? Vote on Res. 604-26: The motion to recommend adoption of Res. 604-26 was (Approved) carried by the following roll call vote: Ayes: Committee Members Galimba,Hustace, Inaba, Kagiwada, Kierkiewicz, Kimball, and Onishi—7. Noes: Committee Members Villegas and Chair Kaneali`i-Kleinfelder—2. Absent: None. Excused: None. (Note: Ms. Villegas voted"kanalua"then"no.") BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. Bill 171: AMENDS CHAPTER 2, ARTICLE 4, SECTION 2-12.7, OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED),RELATING TO FISCAL IMPACT STATEMENTS Requires that a fiscal impact statement prepared by the finance director be submitted with Council bills that have fiscal implications. Reference: Comm. 956 Intr.by: Council Member Onishi Motion to Approve: Mr. Onishi moved to recommend passage of Bill 171 on first reading. Seconded by Ms. Galimba. CHR. KANEALII-KLEINFELDER: Mr. Onishi, go ahead. Motion to Postpone: Mr. Onishi moved to postpone Bill 171 to September 15, 2026. Seconded by Mr. Inaba. MR. ONISHI: And just to note to work with Finance Director and the department on some kinks in this bill. Page 9 FC-40 July 22,2026 CHR. KANEALI`I-KLEINFELDER: Thank you. Any other discussions? Council Member Inaba. MR. INABA: I just wanted to clarify. Are we in Hilo in September for both meetings since we're in Kona for both meetings in August. My calendar is showing Hilo. MR. BROWN: And I'm sorry, could you repeat the September date you were hoping to postpone to? MR. INABA: September 15. MR. ONISHI: Yes. MR.BROWN: It is back in Hilo on September 15. MR. ONISHI: Okay. So September 15, 2026,in Hilo; correction. CHR. KANEALI`I-KLEINFELDER: Okay. Thank you. MR. INABA: Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you, thank you. Any further discussion? Hearing and seeing none, motion is on the floor to postpone Bill 171 to the committee hearings on September 15t. All in favor? Vote on Motion The motion to postpone Bill 171 to September 15,2026, to Postpone: carried 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. Bill 172: AMENDS ORDINANCE NO. 26-44,THE OPERATING BUDGET OF THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUNE 30, 2027 Appropriates revenues in the revenues in the State Motor Vehicle Weight Tax account($6,282.72) and appropriates the same to the Vehicle Registration Other Current Expenses account. Funds will be used for expenses associated with programming and updating the County's motor vehicle registration system. Reference: Comm. 959 Intr. by: Council Member Kaneali`i-Kleinfelder(B/R) Page 10 r FC-40 July 22,2026 • Vote on Bill 172: Mr. Hustace moved to recommend passage of Bill 172 on (Approved) first reading. Seconded by Ms. Kimball 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. Bill 173: AMENDS CHAPTER 19 OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED),RELATING TO THE ESTABLISHMENT OF A BED AND BREAKFAST HOME CLASSIFICATION FOR REAL PROPERTY TAXES Establishes a new "bed and breakfast home"property tax class for any property that is a vacation rental and the owner's principal residence; establishes a three percent annual assessment increase cap for the new tax class; and establishes a temporary tax amnesty period for properties that have existing vacation rentals in violation of the restrictions of the homeowner class to either cease the rental activity or to properly register the rental activity without being penalized. Reference: Comm. 960 Intr.by: Council Member Kimball Motion to Approve: Ms. Kimball moved to recommend passage of Bill 173 on first reading. Seconded by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: Council Member Kimball. MS. K IVIBALL: Thank you. Just to start off, my intention today is to postpone this and leave it in committee until next month just because our Real Property Tax (RPT) Administrator and Deputy Administrator could not be here today and I think it is important that they weigh in. However, since there are some important parts of this that I would like to get some feedback from the body on. I'd like to have a little bit of discussion prior to that postponement. I'll start with the most important section of the bill,which is Section 3,that is in regard to the amnesty program. Some of you may recall that this language was in Bill 121,the original short-term vacation rental bill. The intention of this is in part, even though that it is well documented within the Real Property Tax website, it's noticed on the tax assessments that people get delivered in the mail that whenever you rent for less than 180 days, that's considered a short-term rental, that's considered a commercial activity and therefor you are no longer eligible for the homeowners tax class. What this section does,because we want people to register under Ordinance 25-50,this proposes a little bit of protection so that they Page 11 r FC-40 July 22,2026 won't be liable for penalties and rollback once they get out of that tax class. Again, I think there is important fairness considerations here because other people who have previously been caught or self-reported have been liable for these penalties and back taxes. We can't be retroactive with this. But if our objective with Ordinance 25-50 is primarily compliance with registration, this is one way to protect some folks, and it also protects the Real Property Tax Department from a lot of difficult phone calls and appeals. The other part of this that is a little bit more complicated is in regard to creating a new class that is specifically for homeowners that are operating a bed and breakfast. And by creating this new tax class we could set a different percentage in terms of the tax rate. This also proposed that they are able to retain the three 1 percent cap that is provided for homeowners if they are operating a bed and breakfast. The argument for that is that the language that exists now and will continue to exist around bed and breakfasts or hosted rentals is that the bed and breakfast or hosted rental is subordinate to the use of the dwelling as a residence that is its primary usage. I will say just in case folks are wondering, we can't do things like apply the percentage just to a portion of the property that's being used as a rental, nor can we apply the cap in a proportional way. We do currently apply the homeowner's exemption in a proportional way based on how much of the house is being used for a vacation rental,but the rate and the cap can't be applied that way. We can also not apply a variety of caps for different uses. It's three percent or non. So those are a couple things that I discussed with Real Property Tax. I do, again, want to hold this in committee. I will say that both the Real Property Tax Administrator and Deputy and I did have concerns about the three percent cap and the fairness of that. It has been part of our County Code since the 80's that any commercial activity on residential property did disallow for you to be able to take that homeowners tax class. And so, you know,there could be an argument, for example, well if a bed and breakfast is a commercial activity and they get this three percent cap, how come somebody running an accounting office out of their house doesn't get that, or running a hair salon, something like that. So I think that it's important for us to deliberate and consider. Again, for me,the primary aspect of this bill that I would really encourage us to move forward is the amnesty part so that we can ensure full compliance with the registration process under Ordinance 25-50. I look forward to hearing your comments and suggestions on the draft. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Inaba. MR. INABA: Yeah,thank you. I think this is a good discussion point on allowance of commercial activity because I also see this bill going a different way and perhaps just allowing,you know,where we allow ag in the homeowner tax class section and adding bed and breakfast there so it's not creating a whole other Page 12 FC-40 July 22,2026 class because that goes back to what are we allowing commercially in these homeowner tax class properties. We know that there are people who either rent out a room or they might have a second dwelling on their property that they rent out as a vacation rental,but it's their home,right, and I think that's something we've heard consistently throughout discussions around vacation rentals. It's if you live there and that's your primary residence. In my mind I think I kind of treat that differently than just a property where you don't live because when you live there you care what's going on there probably more than if you don't live there. So I don't know, I just threw that idea out regarding potentially simplifying this bill and then it's a discussion on the Council on whether we simply just want to give them the same tax rate and benefits as a homeowner class if they're living there even if they're doing a bed and breakfast and that's something they need to secure from currently from the Planning Commissions. Is that right? MS. KIMBALL: Yes. In certain areas. We'll get into that later this afternoon. If I may, Chair,provide a brief response? The only hesitation I have about something like that, Chair Inaba,is because we've created the long-term rental class and that now receives the three percent cap if it's in the primary residence also. We just want to think about incentivizing different things. So that rental class is already slightly more than the homeowner's class. That was kind of the argument for creating this other class. We do have parity to the other counties that have a special class specifically for homeowners and bed and breakfasts. MR. INABA: Got it. Thank you. Thank you, Chair. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you. Yeah. I'm encouraged to see the thinking around this. I think it's important; I think it's,you know, one of the issues that has perhaps held up us being able to appropriately tax short-term vacation rentals that are not somebody's home. And I'm just wondering, one, how would this different? Would there be then this separate class, or not separate class but you had planned to have bed and breakfast be one of the two groups under the vacation rentals,right. And so would all the bed and breakfasts now be eligible for this because some of those have, my understanding is they have a host but it's not their primary residence. So where does that wedge of people fit in all this? MS. KIMBALL: If I may respond, Chair. This tax class would only be provided to folks that use it exclusively as their primary residence. So it wouldn't apply to bed and breakfast situations where there is a non-owner host onsite. That's why we titled it bed and breakfast home. Yeah. MS. KAGIWADA: Okay. Okay. Got it. And then secondly, I know you have the amnesty for bed and breakfast that may have kind of gotten caught in the Page 13 FC-40 July 22,2026 middle here. I'm also just looking at that long term. Is there anything special for those bed and breakfasts who have been real bed and breakfast for long periods of time already before we started doing anything around vacation rentals as far as them not being additionally taxed or having to register or pay those fees because they've already jumped through those hoops to get those special use permits in the past or will they be part in parcel of the same? MS. KIMBALL: So the folks that have been operating under a special use permit or use permit as a bed and breakfast that have not been identified by Real Property Tax, and that is possible from my understanding because that information is not shared, that they would be protected under this amnesty program. Correct me if I'm wrong, Director,but the way that there are fees,back taxes, and penalties assessed is that it goes back three years. So it doesn't go retroactive all the way back to when they started,even when the department actually levies their checking. The bill is right based on what Lisa and Keita gave me in terms of the actual dates. Just as a notice,there's two options for getting this amnesty. One is to either sign an affidavit that you're not going to do a bed and breakfast going forward or it is to register per Ordinance 25-50 or under Chapter 6. MS. KAGIWADA: Okay. Well I'll supportive overall. It sounds like there's some things you still need to work on,but I do really appreciate protecting our local residents who are just trying to make ends meet in this way and still it's their primary residence. And so I do appreciate this. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. Thank you for bringing this forward so we could have the discussion. Great points raised by my colleagues. I was curious about the amnesty timeline, and I wondered if that was realistic given the registration process has not yet launched? I just want to make sure that there's enough time for folks to register,become compliant, and everything on the County side to offer them the amnesty is possible. So I'm concerned about such a kind of quick window for all of this to happen, also the creation of a new class. We've just done long-term rentals; we have the residential tier 3; this would bring us to 11 general classes, 13 counting residential. I don't think it a matter of just adding another class within the system within real property tax. I would have to imagine that there's significant updates to forms and notices and procedures and just kind of public outreach that has to happen there, so I would want to understand the impact to RPTs operations, and I think Administrator and Deputy can speak to that when they're here at the next round of meetings. And then there was a point made about just perhaps mixed policy signals when it comes to long-term rentals and the right sort of incentive. So I wonder if this legislation might unintentionally weaken incentivizing going into long-term Page 14 FC-40 July 22,2026 because that was the point. This might be a financially preferrable option for folks, so I just want to make sure that as we move forward on this legislation and create the incentives that we're not unintentionally hurting ourselves in encouraging folks to sublet their homes for long-term rentals. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. MS. KIMBALL: So in response to that,you know,the Administrator and Deputy Administrator can speak to the challenges of adding a new class. It's actually not that difficult but I'll let them address that when they're here. I do think your point is well made about the potential to disincentivize, something that we've worked really hard to encourage, which is the long-term rental market, and I think that in it of itself is one reason to potentially create a separate class. Although I am sensitive to making the list of different classes too long but setting for example the bed and breakfast homeowner rate at something slightly higher than the long- term rental rate. We can still use that lever to incentivize,but I think there's an argument to be made once you put that three percent protection on,is it really all that significant to be at a slightly higher rate. So I think it's an important discussion for us to have so thank you for raising it. I'll leave it there for now. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. To the maker, I may have missed this, is there a definition of bed and breakfast in our code? MS. KIMBALL: Yes,there is. In Chapter 25. CHR. KANEALI`I-KLEINFELDER: Okay. Thank you. Okay. Anything further? MS. KIMBALL: Yes. I did remember Council Member Kierkiewicz raised the issue of the timing. There'll be another bill this afternoon that relates to the timing for the registration and providing rather than a specific date, to register by a window, and that window would end on December 31, 2026. So what I will say is that if in that bill we decide to extend that window by any length of time, I would subsequently extend the window here to match that deadline. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, seeing no further discussion, you wanted to make a motion? Page 15 FC-40 July 22,2026 Vote on Motion Ms. Kimball moved to postpone Bill 173 to August 4, 2026. to Postpone: Seconded by Ms. Galimba and carried by the following (Approved) 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. Bill 174: AMENDS ORDINANCE NO. 26-44,THE OPERATING BUDGET OF THE COUNTY OF HAWAI`I FOR THE FISCAL YEAR ENDING JUNE 30, 2027 Appropriates revenues in the revenues in the State Grants—Kona Low Small Business Recovery Grant account($500,000) and appropriates the same to the Kona Low Small Business Recovery Grant Program account. Funds will be used to support one-time relief to eligible Hawai`i Island small businesses that sustained material and economic or physical damage from the Kona Low Storm. Reference: Comm. 961 Intr.by: Council Member Kaneali`i-Kleinfelder(B/R) Vote on Bill 174: Mr. Hustace moved to recommend passage of Bill 174 on (Approved) first reading. Seconded by Mr. Onishi 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. ADJOURN- There being no further business on our agenda today, Chair Kaneali`i-Kleinfelder MENT: adjourned the meeting at 11:09 a.m. Thank you very much. Approved: 171 VP Mr. Matt Kan ali`i-Kleinfelder, hair (Date) Finance Co ''ttee MK/tk Page 16