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HomeMy WebLinkAboutMIN CRCOC 2026/07/22 (2024-2026) DRAFT Committee on Communications, Reports, and Council Oversight 22nd Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii July 22, 2026 CALL TO The regular meeting of the Committee on Communications, Reports, and ORDER: Council Oversight was called to order at I:M p.m., in the Council Chambers, Kailua-Kona, by Ms. Michelle M. Galimba, Chair. ROLL CALL: Present: Ms. Michelle M. Galimba, Chair Ms. Rebecca Villegas, Vice Chair 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 Ms. Heather L. Kimball, Member Mr. Dennis"Fresh" Onishi, Member Absent& Excused: None. STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 963: ANNUAL AUDIT PLAN FOR THE FISCAL YEAR 2026-2027 From County Auditor Clare McAdam, dated July 6, 2026, transmitting the above audit plan, pursuant to Section 3-I8(d) of the Hawaii County Charter. Motion to Close File: Mr. Hustace moved to close file on Comm. 963. Seconded by Mr. Kaneali`i-Kleinfelder. CHR. GALIMBA: I believe we all have the County Auditor online. Thank you so much, County Auditor McAdam. CRCOC-22 July 22,2026 (Note: At this time, County Auditor Clare McAdam came forward to address the members of the Committee via Zoom.) MS. MCADAM: Good afternoon, Chair Galimba and Council Members. Thank you for inviting me here and by Zoom, which is very convenient for me. To present some of the highlights regarding our Annual Audit Plan that we've put together and presented to you. So just to run through some of the highlights there. We will continue to monitor the progress of the External Financial Audit performed by Accuity LLP for fiscal year ending 2025 and also for 2026. Looking to audit plan for our office, we are currently conducting an audit of the Office of Housing and Community Development's management of the Housing and Homelessness Funds as requested by yourselves. We have plans for two other audits during this financial year; the Department of Environmental Management(DEM), Wastewater Division, and also HPD (Hawai`i Police Department) Department's Evidence Storage Facilities. Other projects which that we will also be undertaking during the financial year while implementing a new process of semi-annual follow up reviews of all of our prior audits, I think I mentioned this in the budget meeting. We are currently tracking 99 recommendations and when we're meeting the departments, we're finding out that most of those recommendations they've already been implemented. And so we want to make sure,that we could present that to you, and so that you've got a more real time results of what's been happening with our-prior audits while than waiting for that final follow up report. So we're changing the process on the follow ups, so that we can more accurately and more timely report on the implementation actions of those departments that have been doing it. So that we can show you that they have been doing that Work. And I,think that's going to be a better procedure for both us and the departments going forward, hopefully. And then,we'll also just continue to investigate those tips that we've received for the Fraud,,Waste, and Abuse hotline. So those are highlights. I just wanted to thank my team, as always for their enthusiasm and professionalism and for their assistance with putting together this audit plan. Happy to answer any questions you might have. CHR. GALIMBA: Thank you. And thank you for your enthusiasm and professionalism as always. Anyone? Any comments, questions? Council Member Villegas. Page 2 CRCOC-22 July 22,2026 MS. VILLEGAS: Yeah. I guess and go ahead and stop me if this isn't directly related. Wondering on the timeline for us to see the results of the audit on the Department of Housing. MS. MCADAM: Yeah. MS. VILLEGAS: Office of Housing. Sorry. MS. MCADAM: I just figured that would be a question. So we're in the middle of it. I am formulating a follow-up request, which will go back to the Office of Housing and Community Development,probably next week. Most of those, we have received an enormous amount of documentation from the get-go. They just dropped huge amounts of data for us, and,we've been going through that. I'm going to ask for some more financial documentation with regards to the grant administrations obviously. ,And depending on' here that documentation is, if it's, hopefully, within the Office of Housing, we should be moving along, hopefully, pretty smoothly,With, and do some site visits, et cetera. If that information resides at grantees, I feel I don't know if I'll be able to give you a better idea of timeline on,that because, obviously, we'll have to liaise with all of those to get that information,knack to us. But we have been pushing to get this done by the end of the year. But again,that kind of depends on where that information that we're going to need is currently living. So I'm hopeful we'll be in a better position on this,perhaps towards the end, the middle of August. We'll be able to give you a better idea as to the timeline on that. But we are pushing to have that done by the end of the year. MS. VILLEGAS: Thank'you so much for clarifying and letting us know kind of where you're at. And with that, I would also put a call out to the grantees to get the information that they need to them,post haste. We, if that's the right way to say it,'I think it is vital and it is a huge part of this audit that the grantees are authentically and completely included in all this information. And everything you get to look at. So, thank you for your diligence in this. I know that's a heavy lift. But we all are anticipating having a report and being able to, more effectively, review the program and these plans, as well as the grantees. Thank you. I yield. CHR. GALIMBA: Council Member, Kimball. MS. KIMBALL: Yes. Thank you for being here. Just a quick question about the DEM Wastewater Division audit and if you could briefly go over the scope of work, or which area within Wastewater you're specifically looking at, and Page 3 CRCOC-22 July 22,2026 what was the motivation, in terms of including it in this year's list of audits, potential audits. MS. MCADAM: Yeah. We have had a couple of meetings now with the department, and we had a site visit to the Hilo Wastewater Treatment Plant last week. Just really interesting. We haven't narrowed down the scope yet. So I can't really give you any details about that. That may take some time for us to figure out. I guess the reason why I included it in the audit plain,,this will,you know, when we did a sort of a basic risk assessment, there's a lot of grant money going in there, there's a lot of projects to manage. So it was more of a risk assessment, sort of a now, as to why we went, and we haven't done an audit of the Wastewater Division prior, so it's all sort of tallied up nicely as to why we decided to go in now. But I don't'have a definitive scope as of yet., We just sort of started initial conversations. MS. KIMBALL: So, if we, as Council Members, had particular areas of concern we would like the office to review, there would still be an opportunity to provide that request to you? MS. MCADAM: Obviously, yes. Yes. MS. KIMBALL: Okay. MS.. MCADAM: Please do. MS. KIMBALL: Okay. I will follow up. Thank you. MS. MCADAM: Thank you. CHR. GALIMBA: Okay. All in favor on closing file on Communication 963, please'`say "aye." Any opposed? Vote on Comm 963: The motion to close file on Comm. 963 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: We can move onto the next item. Thank you. Page 4 CRCOC-22 July 22,2026 MR. BROWN: Thank you, Chair. Comm. 969: A PRESENTATION ON THE PROCESS FOR COMMUNITY FACILITIES DISTRICTS From Finance Director Diane Nakagawa, dated July 13, 2026. Motion to Close File: Mr. Inaba moved to close file on Comm. 969. Seconded by Ms. Kimball. CHR. GALIMBA: Finance Director. (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 Director. Just want to thank you for allowing us to be here today. We have a lot of discussions about deferring financing tools that are available. One of the ones that comes to the top a lot are Community Facilities Districts (CFD). And we've seen'a lot of interests as well, and we thought, as we move forward and talk to either,the developers or members of our community, we wanted to bring this overview forward to you to really go over the process. The County has only done one, and I thought it was time that we get a refresher on they process. So we are very fortunate to have with us today Adam Bauer and Mindy Kays from Fieldman, who is our Municipal Financial Advisors, and also 'Brian Hirai, who is our Bond Counsel from McCorriston Law Firm. Both have worked,with the County and supported the County for over 20 years in various projects. So we are fortunate to work with them and have their expertise here With us. So they will be going through the presentation, and I invite you to answer or to ask any questions following. Thank you. (Dote: At this time, Municipal Financial Advisor Adam Bauer and Bond Counsel Brian Hirai came forward to address the members of the Committee.) MR. BAUER: Great. Thanks. Once again, my name is Adam Bauer,joined by Mindy Kays and Brian Hirai to do the CFD 101. CFD is short for Community Facilities District. There will be a few things like that, that I might slip into acronyms, and feel free to stop me, and we'll slow down and do a reminder of what each item is. But this one is designed to not talk about a specific project and really just focus on the islands and Community Facilities Districts. Page 5 CRCOC-22 July 22,2026 (Note: At this time, Mr. Bauer 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. 969.) MR. BAUER: So those are all the slides we've prepared. It feels like we've covered a lot of ground, but both of us are available for any questions. CHR. GALIMBA: Thank you very much. You did cover a lot of ground quickly. Really appreciate you bringing us this information refresher on a potential tool for infrastructure and special facilities in our County. I see Council Member, Hustace. MR. HUSTACE: Thank you, Chair. Appreciate the presentation and the depth here to kind of disclose the process here. Thank you for the time. Just a couple of questions. The review committee, they're stood up at the very beginning of the process when the petition has been received, and they carry their work until that ordinance is formed? MR. HIRAI: Yes. MR. HUSTACE: And when that's formed,then that committee kind of dissolves? MR. HIRAI: That committee is also MR. INABA: Sorry. Could you turn on your mic. MR: HIRAL That committee is also well positioned when the bond issues come forward;having done all of the underlying analysis as to the formation of the district. So they are likely to be involved at that point to some degree, depending on the structuring of the bond issue. MR. HUSTACE: Okay. And then you had some other parties that were listed there too. These individuals that are outside of the review committee that are kind of working through the different parts of the process as well. Particularly, are these parties paid by the CFD fees? MR. BAUER: Yes. So the first portion of that is, I talked about getting the formation deposit, and there's a reimbursement agreement they get sent to sign too. So for the hourly work associated with formation, those parties are paid Page 6 CRCOC-22 July 22,2026 from that. And the developer will typically get reimbursed from bond proceeds for that deposit. But when you get to the bond sell portion, a lot of the parties there are paid from the bond proceeds. So some you don't want to have contingent, like our appraisal. Let's just say that an appraisal came in lower, and we'd want to know that, right? And so that will be one that we get some additional funds or deposits from the developer to make sure we have those paid. But underwriter, a portion of Bond Counsel, a portion of Municipal Advisor, a portion of Special Tax Consultant, all those are paid from the bond sale proceeds. It's a set of line items within the sources and,uses that we prepare. MR. HUSTACE: Now as the,you know, typically the one landowner that's identifying the CFD as a possibility for improvement of infrastructure in the area, and they'll sell out the parcels underneath over time as they subdivide and whatnot, the appraiser and kind of the appraised values could change over time though. And so will that fluctuate the taxes that are levied on each of the parcels over time? MR. BAUER: So the appraisal is done at that time of bond sale. They make sure that we have the value-to-1 en"ratio criteria. Once bonds are sold, that is set. No matter what those values change, they will not adjust up or down. The special tax rates are not tied to actual values of the property. It could be done, you know, any number of things; square footage, length of a lot, anything like that. So no But what would oftentimes happen is you have the appraisal done, and oftentimes the value of the property is improved over time. But one is you have moire construction and more homes built. That's a credit positive. And then, two,yes, in general,uptick in home prices, typically. And so, oftentimes, that value-to-lien ratio, which you could derive by looking at the disclosure reports, you would look at more value over time. But it would not change the amount that's actually collected from the property taxpayers. R. HUSTACE: Because that's set from the get-go there. MR. BAUER: That Rate and Method of Apportionment. MR. HUSTACE: But the build-out and development could change over time. You know, it's kind of a separate piece of it, but the build-out could change. And so it's early parties, early investors, or buyers of the parcels in there could have a different outcome than those maybe later on in terms of the evaluations Page 7 CRCOC-22 July 22,2026 are changing, or developer goes a different route in terms of build quality or those sorts of things. So there could be some differences there for sure. MR. BAUER: Oh sure. So we would want to, I think, more relevant in that regard is the tax burden, the effective tax rate. And so, what we would often look to do is, when we sell bonds at that point in time, make sure—okay let me make something clear. When we look at effective tax-,rate burden, we're not saying, "What do you think you're going to sell it for in five years?" And we're going to benchmark off of that. What we're going to look at is what are you selling'for now, and what's our appraiser saying you can sell it for now? And we're going to make sure we don't exceed that threshold now. So if it gets better for property owners, that's great. But what we don't want in the situation is when that tax burden,is so high it'll, one, make it so that they can't sell homes, or, two,you as a Council have set it up so that these homeowners have a very high tax burden,through the property. MR. HUSTACE: Thank you. You know, the,one CFD we have right now was a very specific infrastructure investment in wastewater_ And so when we're looking at, in this body, and the review committee are looking at that public benefit, you know, that one was avery specific, it was on the site. It didn't necessarily directly benefit the public good: So I'm curious how much, from the review committee, you know, that's really weighed in terms of the public benefit. Because that example we have was site- specific. Those improvements were on that property. So that one seems to be kind oftnnaybe miss the mark in terms of a public benefit, like a direct public benefit, of Some of the other listed things in terms of roads and surrounding areas,,not necessarily on the property itself. MR. BAUER: Yeah. So that was a very unique situation. You could very clearly identify the public benefit, and it was something that the County, I think, recognized as a real high priority for it. You're not sure you can get that many more of those circumstances. Now for a lot of the other CFDs, and I'm not speaking to any specific CFD right now, but what I'm saying was a lot of other CFDs where you get a set of homes being built in the area that's already pretty much well developed out. Sometimes identifying the public benefit in that situation is a little more difficult. It can take a long time to kind of sort through. And I think that's probably a more typical situation that you'd beI think we get two very clear situations, is what you just described through the last CFD and an Page 8 CRCOC-22 July 22,2026 enormous development that's really going to, and hopefully in a positive way, change an area, make it,you know, things more accessible. Those are the ones. The ones that are more difficult are some of these mid-size projects. And then it really has to be a hard discussion about what is the public benefit of doing this CFD. MR. HUSTACE: Thank you. The last question I had is kind of about that marketability of the CFD because, at one lens,you'know, as a potential buyer of a parcel within a large development, you say, "Well, the infrastructure is coming with this. It's going to be upfront. It's builtout,"these sorts of things. And then, through your analysis of existing CFDs, I mean, is that—does that outweigh the taxes levied over time for the duration of the CFD process? You know, in terms of marketability, in terms of this is something thatan investor or a homebuyer would be, "You know,this is a fantastic opportunity. The roads, these wastewater investments, really outweigh the taxes that I'm taking on down the road." MR. BAUER: Yeah, it says as long as you don't overburden the property, that's the truth. What we're seeing, and this is relatively new, last two or three years in this current housing market, is homeowners are just really embracing areas that have things like Community Facilities Districts. They have different names in different states. ,But, while you have these special taxes on real property, those projects are outperforming other projects in that they look to the amenities and kind'ofthe newer facilities. So I think that's what we're seeing as the answer, as yes. And I think two things. One is, if we overburden a property, then that would not be true. But two, to the extentthat those economics change, you're not going to be getting any petitions. If you're getting petitions, that developer has evaluated and said, "This works for my project." And I think then from the County's perspective, is that it's great that it works for that developer, that for-profit developer, but does it work for us? And that's where that public policy that we had just talked about layers into that. MR. HUSTACE: Thank you. I appreciate your time. Thank you, Chair. CHR. GALIMBA: Thank you. Council Member, Kaneali`i-Kleinfelder. Page 9 CRCOC-22 July 22,2026 MR. KANEALI`I-KLEINFELDER: Thank you. Thank you for the overview. It's similar, in a way, to our improvement district process, which I walked through early on in my career here, but different. MR. HIRAI: It's similar in the sense that the given district is supporting the infrastructure costs. The methodology differs in that the special tax, it's a really better suited for developements rather than established-communities, in that the improvement districts that you're familiar with, the rate is set, and that is the rate, and it's fine for an established community. But when you have a new development where there's undeveloped land, which will become developed land and therefore bear different burden for the tax, the Rate and Method of Apportionment is a more flexible tool to deal with evolving states of development within the district. MR. KANEALI`I-KLEINFELDER: Okay. Okay. Thank you-,— MR. HIRAI: If you have the tax on developed land, it's like some flat number per acre. As you get these lots subdivided and they become improved properties, they get a different tax category. MR. KANEALI`I-KLEINFELDER: In that circumstance, let's say the developer owned, you know, a large parcel, built out a quarter of it. The larger parcel, does the developer pay the,taxes in'the Community Facilities District on their portion of the remaining parcel? MR. BAUER: Yeah. So the Rate and Method would describe a typical Rate and Method Apportionment. So the first thing aboutRate and Method Apportionment, it says if the property is considered developed, we're going to levy. And let me explain to you why you wart to make sure that happens. Then, if bonds are sold, and there's not enough of those developed properties to be levied;then you levy undeveloped property. And typically that undeveloped property is almost all the developer would be paying back. But if the developer had full building permits and not sold those to individual homeowners, they would also be responsible for that portion of the developed levy as well. MR. KANEALI`I-KLEINFELDER: Would it be on a per lot basis? Per parcel basis? Or a per—what is the basis? MR. BAUER: It's most frequently done in,you can say per lot, but then there's a square footage identified and a tax rate identified to it. So hopefully it's set up Page 10 CRCOC-22 July 22,2026 so the smaller units are paying less than the larger units. Whatever the square footage was on the building permit will dictate what that developer is paying for that lot. MR. KANEALI`I-KLEINFELDER: Okay. That's more fair to say, yeah to, you know, 100 acres and you developed 25, you have one lot; but it's 75 acres you have. MR. BAUER: So let me—so on these type of developments, it'd be unlikely that you'd build one house on 75 acres. But whatyou might have is those areas have not sold a home yet. So you can say that property owner has one parcel. The undeveloped tax is done on a per acre basis. And so=what it's designed to do is say if every home was developed, here's the revenue stream that's needed. If no home is developed, state the number of acres within this CFD divided by the amount we need, and it's that,much per acre. So when a developer owns an undeveloped acre, they're paying their fair share in that situation. MR. KANEALI`I-KLEINFELDER: Okay—=Good. What in the petition part is a non-vote counted as? When I see a lot, and when I faced the lot in the improvement district process, was non-votes were counted as a, I can't remember if it's a positive or negative,but it has a,bearing. You know, a lot of vacant landowners, who don't vote, are they considered a yes or a no? MR. HIRAL For protest purposes? MR. KANEALI`I-KLEINFELDER: Yes. MR. HIRAI It is,it takes an,objection. If somebody is silent, it isn't—the threshold is 5% of the owners of property, or 55% of the property owned have filed,objections;,that stops it. So the others could be silent or they could be in favor. But they're treated the same. MR. KANEALI`I-KLEINFELDER: Sorry. So the silent votes are a negative? MR. HIRAL No. Silent votes are basically - MR. KANEALI`I-KLEINFELDER: They're not counted. MR. HIRAI: They are part of the numerator or the denominator, whichever the math part is. They are part you need 55% of the landowners to object in order to stop the process. If the remaining 45%, they could be in favor or silent, and they will be treated, I guess they will be treated, as in favor. Page 11 CRCOC-22 July 22,2026 MR. KANEALI`I-KLEINFELDER: Okay. So you have ten people. That's your pool. And you have six people that remain silent. MR. HIRAI: Then that doesn't pass the protest threshold. MR. KANEALI`I-KLEINFELDER: Okay. You have four people silent. MR. HIRAI: Yeah. If four people are silent and six object, then the proceedings have to stop for at least a year. MR. KANEALI`I-KLEINFELDER: If four people are silent out of ten MR. HIRAI: Yep. MR. KANEALI`I-KLEINFELDER: Six people object, it stops for a year? MR. HIRAI: It's what? MR. KANEALI`I-KLEINFELDER: It stops for a year? MR. HIRAI: Yes, under the County Code. I believe it's under the state statute as well. MR. KANEALI`I-KLEINFELOER: Okay. If four people object, sorry, if four people are silent and two people object, what happens? MR. HIRAI: Okay. At that point, it's up to the County Council to say, well,you can hear the,protest and you can say I think that's on balance. At that point it becomes a judgmehtcall; it's not a mandatory. MR. KANEALI"I-KLEINFELDER: Interesting. Okay. Define outperforming. MR. BAUER: In what context did I use that terminology? MR. KANEALI`I-KLEINFELDER: You said that developements or developers using Community Facilities Districts; developments are outperforming similar developments. MR. BAUER: Are they selling more quickly? MR. KANEALI`I-KLEINFELDER: Selling more quickly? MR. BAUER: Yes. Page 12 CRCOC-22 July 22,2026 MR. KANEALI`I-KLEINFELDER: So we look at outperforming as selling faster? Okay. And then what is there is a mention of a fee from your agency. Did I hear that correctly, or no? MR. BAUER: So the fees for the consultants on the formation side are typically charged hourly. And the developer is required to post a formation deposit to cover those fees. And then when it gets to bond sale, aportion of the fees switch to contingent and are paid for from bond proceeds. MR. KANEALI`I-KLEINFELDER: Okay. All proceeds? MR. BAUER: From bond proceeds. MR. KANEALI`I-KLEINFELDER: Oh, the bond proceeds::Okay. So it's interesting to me that a developer would use this tool to eliminate costs from their books to build out developments using the potential buyers of the properties to pay for the improvements that normally the developer would have to be installing. Does this in any way a11dw the developer to walk away from our subdivision codes by saying we're adheringto the code, yet we're going to build this out and put it on the individual homeowners,potentially in the future and now, to pay for? Or am I not understanding what yeou folks are presenting? MR. RAVER: So with the knowledge that I have available to me, there's nothing about forming a CFD and selling bonds that interjects with your building code or your approval process. 'This°is just a financing mechanism that allows for a portion of those to be financed. MR. KANEALI`I-KLEINFELDER: Okay. I'm going to yield for right now. Thank you. CHR.GALIMBA: Thank you. Council Member, Kimball. MS. KIMBALL: I think, Council Member Kaneali`i-Kleinfelder, I might have a mquestion that will get to the same answer that you're looking for, which maybe is a question to our Director, but you guys can perhaps answer as well. I'm curious why, from just a broad 30,000-foot-level view, why we haven't had more Community Facilities Districts attempted in the County. MR. BAUER: What I have found is areas, when they have them, they tend to have a lot of them. And so I think the islands, in general, have not had that many formed. And so it's not necessarily the norm. Page 13 CRCOC-22 July 22,2026 What if this one and,you know, others with other counties start happening on a more frequent basis? What'll happen is, when a property purchaser looks to buy land, they're going to say, "County of Hawaii does this. Here's the conditions that they will do them. I'm going to build that into my bid, in my purchase." And when that starts happening,you'll have more that would come your way. But right now, you just haven't had that. There was a lot of activity in the early 2000s, and all those developments stopped. And so we'll see how far this goes this cycle. MS. KIMBALL: Director, can I ask if you have any thoughts on—and while Director Nakagawa is coming up, how many are there in—I'll wait. MS. NAKAGAWA: Diane Nakagawa, Finance Director. I'm sorry. Could you repeat the last question? MS. KIMBALL: Same question, in terms of your thoughts from,having been here for a while. What reasons there might be for not having more than just the one? MS. NAKAGAWA: Well, I kind of laughed when,itwas asked, only because this team here, our support team, has been here much longer than I have, and they have gone through the various stages of tries that those that have come forward and things that have happened. So they have a lot more of the details of what,didn't' cite work. I don't know, Brian, if you wanted to add to that as well. MR. HIRAI: At one point, in the mid-2000s, from 2004 to 2008, there were probably,about 10 projects underway seeking CFD formation. 2008 hit, and all of those developments stopped. All of the capital to support the continuing developments stopped. And it took a long time for that to come back. And when the developments did start back up again, at that point there had been one CFD done on Kauai and none done anywhere else. And being the first one is sort of not the known quantity to the land developers as whether or not it's worth doing, whether they want to be the first ones, and what's going to be imposed. Sothose kinds of things kind of slowed things down as people examined, well, should we think about it? And I can't get inside the developers' head, but I know those things were going on. MS. NAKAGAWA: You know, our team was just talking about this earlier today when we were discussing the other the CFDs around the state. And as Brian mentioned, there was one in Kauai, and on ours we recently had got—we Page 14 CRCOC-22 July 22,2026 recently had another discussion with City and County of Honolulu, who, they were asking us for kind of, how do we go through this process because they are starting to get more interests as well. And this team also did a similar presentation there. So they're seeing the interests from the development community in this tool. And so, as Brian mentioned, there could be a number of reasons as to why things happened in the past and certain timing, the economy that could play into it as well. But I think once it starts happening, there's definitely more interest in it. MS. KIMBALL: Are there restrictions on the funds'acquired through this process, in terms of the procurement process and like, Dads-Bacon and all of that? Is that—because it's ultimately the funds go to the developer to do the improvement, right? They contract, they do all of that, or they because these monies flow through the County government.., are they restricted by these same restrictions that we have as the County? MR. HIRAI: There will be restrictions that will be imposed in the acquisition and funding agreement so that the County will be able to ensure that public policies, in terms of how these projects go forward, that public policies are honored, standards are applied. They may not be directly out of the statutes, but the County does have a say-so. MS. KIMBALL: Okay. I know mechanically what the difference is, but maybe just for folks here, the difference between a Community Facilities District and Tax IncremeritFinancing, which was an item that went through the Legislature. Which I find, if understand the,bills correctly, they actually require the counties to have tried to do Community Facilities District, before we can take advantage of the Tax IncrementFinancing. So'could you kind of describe where the two different—how the two models differ? MR. HIRAL For Tax Increment District, what is captured is the effective increase in the appraised or assessed value. As opposed to an add-on tax, it is the tax rate applied to a higher assessed value. NM. BAUER: Once again, Adam Bauer again. A CFD is creating a new revenue stream. That special tax will not exist should that CFD not be formed. Increment District is locking values in a certain place, and then above that, taking those and applying them into a very specific way, if there's no new additional revenue being created. It's just how you apply those. Those are the two big differences. Page 15 CRCOC-22 July 22,2026 MS. KIMBALL: So I'm not sure, Matt, if I was kind of getting at some of the questions. I can't always read your mind, like many of us. But I do think that we haveI don't think it's a mystery why we only have one and why these have been used so rarely. I think that there are a lot of things, probably, within our Code and structure, that actually disincentivized this type of approach of developer-funded infrastructure versus incentivizing, "Well, we'll just build it and then the County will have to have the responsibility for the infrastructure later." We have enough opportunities for variancesand getting around the requirements that I don't think a lot of developers would actually see the obligation to do this, and that's why we haven't had more of them actually used: I'll yield at that point. That's just my thought. CHR. GALIMBA: Council Member,Kagiwada. MS. KAGIWADA: Thank you, Chair. Just wondering, what would the role, if there is any, of our Office of Housing and Community Development be with these? Is it strictly they Would come and they would go to Finance, or they're talking to Finance and our Office of Housing andCommunity Development isn't really involved? And is our OHCD, are they well versed on this, already? Have you met with them? Do they know?, Is it something they can, for instance, recommend to a developer who may come it to meet with them and be needing some resources? Thank you,Director. MS: NAKAGAWA: Diane Nakagawa, Finance. At this time, no. The Office of Housing and Community Development is not involved in the CFD process today. MS. KAGIWADA: Are they at least aware? Do they know about it so they could tell developers about it if they came to them? MS. NAKAGAWA Yeah. We have had some recent discussions about how a CFD works, and we're looking at providing a little more education to some of the questions that we got from our Housing Administrator. S. KAGIWADA: Okay. MS. NAKAGAWA: Yeah. MS. KAGIWADA: Thank you. MS. NAKAGAWA: You're Welcome. MS. KAGIWADA: I yield. Page 16 CRCOC-22 July 22,2026 CHR. GALIMBA: Alright. All in favor of closing file on Communication 969, please say "aye." Any opposed? Vote on Comm. 969: The motion to close file on Comm. 969 was carried by the Filed following voice vote: Ayes: Committee Members Hustace, Kagiwada, Kaneali`i-Kleinfelder, Kierkiewcz, Kimball, Onishi, Villegas, and Chair Galimba—8. Noes: None. Absent: Committee Member Inaba 1. Excused: None. CHR. GALIMBA: That brings us to the end of our agenda. Thank you so much. ADJOURN- There being no further business, at�2744 p.m. Chair Galimba adjourned the MENT: meeting. Approved: Ms. Michelle M. Galimba, Chair (Date) Communications, Reports, and Council Oversight Committee MG/mp Page 17