Loading...
HomeMy WebLinkAboutMIN FC 2026/08/04 (2024-2026) DRAFT Committee on Finance 41't Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii August 4, 2026 CALL TO The regular meeting of the Committee on Finance was called to order at 9:30 a.m., ORDER: 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 Ms. Jenn Kagiwada, Member Ms. Ashley L. Kierkiewicz, Member Ms. Heather L. Kimball, Member Mr. Dennis "Fresh" Onishi, Member Ms. Rebecca Villegas, Member Absent& Excused: Mr. Holeka Goro Inaba, Member 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 individual registered to speak and came forward when called by the Chair: Terre Hawkins: Bill 173 (Comm. 960); in opposition. Change Order As directed by the Chair and with no objection from the Committee Members, the of Business: following items were taken out of order: Res. 611-26: AUTHORIZES THE MAYOR TO ENTER INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE STATE OF HAWAI`I, DEPARTMENT OF THE ATTORNEY GENERAL, TO RECEIVE A GRANT FOR THE HAWAI`I POLICE DE-ESCALATION TRAINING PROJECT Allows for the receipt of$129,033 in federally-derived funds to be used to conduct Verbal Judo de-escalation training for law enforcement. Reference: Comm. 973 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) FC-41 August 4,2026 Vote on Res. 611-26: Mr. Hustace moved to recommend adoption of Res. 611-26. (Approved) Seconded by Ms. Kierkiewicz and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Bill 177: 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 Federal Grants —Byrne State Crisis Intervention Program Grant account($129,033) and appropriates the same to the Byrne State Crisis Intervention De-escalation Training Program account. Funds will be used to conduct Verbal Judo de-escalation training for law enforcement. Reference: Comm. 973 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Vote on Bill 177: Mr. Hustace moved to recommend passage of Bill 177 on (Approved) first reading. Seconded by Ms. Kagiwada and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Bill 178: 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 Federal Grants —Justice Assistance Grant-Special Response Team Capability Enhancement Grant account($20,797) and appropriates the same to the Justice Assistance Grant-Special Response Team Capability Enhancement account. Reference: Comm. 974 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Page 2 FC-41 August 4,2026 Vote on Bill 178: Mr. Hustace moved to recommend passage of Bill 178 on (Approved) first reading. Seconded by Ms. Galimba and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Return to Order The Chair directed the Committee to return to the order of business. of Business: COMMUNI- The Chair directed the Committee to proceed to the next order of Business, CATIONS: Communications. Comm. 23.39: REPORT OF FUND TRANSFERS AUTHORIZED: JUNE 1 — 15, 2026 From Controller Jon Arbles, dated July 6, 2026. Vote on Comm. 23.39: Mr. Hustace moved to close file on Comm. 23.39. Filed Seconded by Ms. Galimba and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 23.40: REPORT OF FUND TRANSFERS AUTHORIZED: JUNE 16—30, 2026 From Controller Jon Arbles, dated July 6, 2026. Motion on Close File: Mr. Hustace moved to close file on Comm. 23.40. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Any discussion? MR. HUSTACE: Yes, Chair. CHR KANEALI`I-KLEINFELDER: Mr. Hustace, go ahead. MR. HUSTACE: Thanks, Chair. First question is for Public Works, if we have anyone online from Public Works. Page 3 FC-41 August 4,2026 (Note: At this time, Public Works Business Manager Kelsey Kalua-Lewis came forward via Zoom to address the members of the Committee.) MS. KALUA-LEWIS: Hi. Good morning. MR. HUSTACE: Hi, Ms. Kalua-Lewis. Good to see you. Just a question on, this is for Building Division specifically. It mentions that funds are needed to cover May to June security guard services for County building because it was under budgeted. MS. KALUA-LEWIS: Yes. MR. HUSTACE: What does this look like for the current fiscal year now in terms of an appropriate funding source there? MS. KALUA-LEWIS: The current fiscal year, so actually in fiscal year 2027 we look like we might have to cover some additional costs that were not budgeted again. We added an additional location for the new Kaiko`o Building where the vehicle registration will be. So unfortunately, we're going to have to find funds to cover an additional increase and then of course the additional site. It shouldn't be too much. We think we can handle it within the budget. MR. HUSTACE: And so that new site was added towards the end of the last fiscal year then? MS. KALUA-LEWIS: Yes. It is a new location, so it was added on more towards the end of the fiscal year. We were in discussion with the vendor and there was a slight price increase to that as well, but we were too late in the budget process to amend that at that point. MR. HUSTACE: And so for a couple of months it was $56,000, so looking at quite a bit more then going forward? MS. KALUA-LEWIS: Our initial estimate to cover the overage is about maybe an additional, I think it was maybe just under $30,000. So we talked to Finance and we're watching the budget closely. That is an essential service so we want to make sure we have enough funds to cover it throughout the year and definitely will be more diligent in budgeting for fiscal year 2028. MR. HUSTACE: Thank you, Ms. Kalua-Lewis. Appreciate that. Thank you for your time. MS. KALUA-LEWIS: No problem. MR. HUSTACE: Chair, the only other remark I will make is on the Parks one. On the record here, unfortunate to see monies transferred away from aquatics Page 4 FC-41 August 4,2026 repairs to facilities, away from that because I know the Kohala pool is in need of repairs. So it's unfortunate to see those monies being transferred away. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. Actually Public Works, can you come back? Ms. Kalua-Lewis, are you available. Sorry. MS. KALUA-LEWIS: No problem. MS. KAGIWADA: Thank you for jumping on. So you've got two here from Traffic Division that are taking money from sources and putting it into traffic signals and highway materials; one to the tune of$176,000 and the other one $81,000. These are traffic signals that we did not anticipate or what's going on? MS. KALUA-LEWIS: Not necessarily. So we did come under budget in all those accounts that we were transferring from. So Traffic, we talked about this more towards the end of the year, they had some excess funds and the traffic signals, highway, the materials is something that we always need on hand and we can always use. You know, they store it in the warehouse, so when we discussed it we talked about just replenishing the stock, replenishing the supplied since we did have extra funds that were planning to lapse. MS. KAGIWADA: Okay. I see. So it's not that you had a specific area that you were working on that needed traffic signal materials this past year, you are just using some funds that were not utilized in other areas then moving it over and kind of getting ready for this upcoming year. MS. KALUA-LEWIS: Yes. Especially because, you know, there's a lot of unknown costs when there's damage or accidents. So always having supplies or a backstock is always helpful for that. MS. KAGIWADA: Okay. Okay. Thank you. I appreciate that. I yield. MS. KALUA-LEWIS: You're welcome. Thank you. CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHL Thank you, Chair. Is Parks and Rec here or in Hilo? (Note: At this time, Parks and Recreation Business Manager Charmaine Felipe via Zoom came forward to address the members of the Committee.) MS. FELIPE: Yes. Page 5 FC-41 August 4,2026 MR. ONISHL Good morning, Charmaine. MS. FELIPE: Good morning. MR. ONISHL Okay. CHR. KANEALI`I-KLEINFELDER: Sorry, Mr. Onishi. Can you please introduce yourself for the record? MS. FELIPE: Charmaine Felipe, Business Manager for Parks and Recreation. CHR KANEALI`I-KLEINFELDER: Thank you. MR. ONISHL Thank you. Okay. My question is, so there was money transferred from aquatics and went to recreation for electricity. Can you specify more on what is the electricity for; the field, lights, gyms? Because I've seen at times some of the field lights are on and nobody is on the field, because I was told it's on a timer. MS. FELIPE: Yes. And we've been monitoring it. They've been doing well in turning them off in a timely manner. I know we had that issue the prior year and that's why we've been monitoring it and they've been turning it off. The price of electricity and the service has gone up, and this is an island wide increase. MR. ONISHL Okay. Okay. Because it just says utility electricity due to higher usage. It's not like if you folks would say it was just because of the higher cost then that would be much better. MS. FELIPE: Yes. Yes, I agree. MR. ONISHL Okay. Okay. So I just wanted to put that note out. And please continue on monitoring those field lights because that's a lot of electricity that it's taking. And even, I've seen one time in Kona where the Old Airport, they had the soccer field. Those lights were all on and nobody was on the field. MS. FELIPE: Right. And in Kohala, you know, we had that big repair up at the Kohala field and now that field is in use more often. And so that could be a contributor to this as well. MR. ONISHL And just to give this balance, I also in my district, there's this one baseball park that on Sunday nights the lights are on and nobody is on the field. Yeah, so please continue doing that. Thank you. MS. FELIPE: Yes. MR. ONISHL I yield. Page 6 FC-41 August 4,2026 MS. FELIPE: You're welcome. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. I actually have a question for Finance Director. Director, I think we're all noticing an increase in funds for our security services throughout County facilities island wide, and I'm wondering if at the next committee hearing when we have these report transfers if we could get a full calculation of what's been budgeted and then all of the reported transfers over the last couple of fiscal years in relation to security services. I think it just points to a larger social issue that we're having to deal with. But I think it would be good for the Council to know just how much these services are costing the County. And I also am concerned about the movement of funding out of aquatics. Not only is Council Member Hustace's district impacted, but the Pahoa pool, which has hosted state and national swim meets, has been in need of dire repair and thankfully there is a geothermal fund to support some of those upgrades. I think it would be really helpful to know if these transfers being made, specifically more towards the end of the fiscal year, if you're taking that into consideration as you go into this next budget cycle, right, not just carrying over the same budget, but looking at where money was actually really needed and making those strategic adjustments. Do you want to elaborate on that a little? (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Good morning. CHR KANEALI`I-KLEINFELDER: Sorry, before you do, Ms. Kierkiewicz, where in Comm. 23.40 are you seeing the security services? MS. KIERKIEWICZ: Public Works. It's the first page and then there was a second one. I know I saw it on the first page, Chair. CHR KANEALI`I-KLEINFELDER: For the R&M (Repair and Maintenance). MS. KIERKIEWICZ: Yes. There are monies transferred out of accounts to support security services. CHR KANEALI`I-KLEINFELDER: Okay. Thank you. MS. KIERKIEWICZ: Thank you. MS. NAKAGAWA: Good morning, Members of Council. Diane Nakagawa, Finance Department. Definitely noted on the cost of security increasing over actually the last several years. In the past two budget cycles alone we've had Page 7 FC-41 August 4,2026 significant increases in various budget line items particularly in Parks and Recreation and the Department of Public Works. So yes, we would be happy to get a summary of those increases over the last several years. I think it is notable and critical for us to understand the need in the community and what those costs have been. So I can definitely work with those departments to get that report. MS. KIERKIEWICZ: And Director, I believe Mass Transit Agency has also seen an increase of security services. MS. NAKAGAWA: Absolutely. We'll look across all departments, but I was just thinking of a few that were notable. But you are correct, Mass Transit as well. Also, I completely agree and had noted it as we were having this discussion this morning, these are all things that feed into our budget review that's coming up in just a couple of months. So these are the questions from our team that we'll go through with each of the departments as we hear today if things weren't needed. I just think we can be better at budgeting so we need to look at those items that have come across or what are the reasons that funds weren't needed in certain line items and where they should be appropriately. I think we do the best we can to budget our needs and some things are unanticipated throughout the year, but there's always some improvement. And especially at the end of the fiscal year where we're seeing a lot of these transfers, these are good indications for how we can budget better in the upcoming budget review. So absolutely. MS. KIERKIEWICZ: Yeah. Thank you for that. I want to make sure that we're advocating for department's operational needs if they have what they need so they're not stretched thin but also recognizing that for many years constituents have asked for different capital improvements to facilities that they frequent in their districts. And I just want to make sure that if the money has been set aside for those uses that they're actually spent for those purposes and not transferred out to support other aspects of a department's operation. Thank you. I know that you're balancing so much. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Director Nakagawa, before you go, as part of that same discussion I strongly believe that a lot of the security services that we are utilizing for our facilities island wide revolve around our homeless usage of our facilities, including bus stops, our parks in the public areas that we maintain. So maybe reviewing the allowable uses of the homeless and housing funds to be able to be utilized for contractual services to supplement or maybe divert funding from our normal department's budgets and funds from the homeless fund instead. It might be a good use of funding. MS. NAKAGAWA: Yes, Council Member. We'll go ahead and take a look at that. CHR KANEALI`I-KLEINFELDER: Good. Thank you. Mr. Onishi. Page 8 FC-41 August 4,2026 MR. ONISHL Yeah. Thank you, Chair. Director, since Chair brought it up, I mean, we've had that discussion before. Because of the cause, like Council Member Kaneali`i-Kleinfelder mentioned, is that one of the problems is with the homelessness. And so the department should be able to be working with Housing and having some of that money that's for the homeless and housing fund be allocated to them, right, because that's one of the problems, right? And so how can we get that changed or to have the departments apply also for those fundings? MS. NAKAGAWA: So a couple different things. I think we can review specifically the allowances of those funds. And so we can work with Corporation Counsel to do that. I think part of it was also over the development of the funds and the usage of the funds' priorities that were developed and set forth by either Council and the departments on how those funds should be prioritized and used. But I think it's a discussion worth having on whether these increased costs are related and should be included. But I think it was collectively the team discussing how those funds would be used initially and for what particularly in services or other things like that, and this kind of involved into another need that we can look at. So, happy to work with Corporation Counsel to look at the allowable use and also come back and share that response and have that discussion as well. MR. ONISHL Thank would be perfect. And maybe you can even like send an email to all of us to let us know what we need to do. MS. NAKAGAWA: Okay. I'm happy to do that. MR. ONISHL Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay, seeing no further discussion, motion is on the floor to close file on Communication 23.40. All in favor? Vote on Comm. 23.40: The motion to close file on Comm. 23.40 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 24.37: REPORT OF CHANGE ORDERS AUTHORIZED: MAY 1 — 15, 2026 From Finance Director Diane Nakagawa, dated July 8, 2026, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Page 9 FC-41 August 4,2026 Motion on Close File: Mr. Hustace moved to close file on Comm. 24.37. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Is there any discussion? Council Member Hustace. MR. HUSTACE: Thanks, Chair. Just noting that on this communication, and I've already spoken with Director Nakagawa about this, the Wilder Transitional House Facility renovation improvements, the cumulative change order supplemental agreement total, that's not accurate. So there will be an adjustment made there in the future. I do have a question for Housing on this one though if we do have Housing online? (Note: At this time, Housing and Community Development Specialist Royce Shiroma came forward to address the members of the Committee.) MR. SHIROMA: Good morning. Royce Shiroma from the OHCD (Office of Housing and Development). MR. HUSTACE: Aloha, Mr. Shiroma. Good morning. Just a question on this project here. Could you give us a little insight into what these renovation improvements are looking like in this space? MR. SHIROMA: So just for context, this additional monies was because we got to RFP (Request for Proposal) twice. We were way over on the first RFP results and then this is the second one. We were short about$90,000 or some. The Wilder Project, which is an OHCD property or a County property. We were doing ADA (Americans with Disabilities Act) bathroom improvement renovations as well as the septic conversion. MR. HUSTACE: Thank you, Mr. Shiroma. I appreciate the details there. Thanks, Chair. CHR KANEALI`I-KLEINFELDER: Thank you. Mr. Shiroma, while you're with us, the Community Base Social Navigator's Program. MR. SHIROMA: I am sorry. I have to pass this to Keiko on this one. CHR KANEALI`I-KLEINFELDER: Okay. (Note: At this time, Housing Assistant Administrator Keiko Mercado came forward to address the members of the Committee.) MS. MERCADO: Good morning. Keiko Mercado, Office of Housing. Page 10 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: Good morning, ma'am. For the Vibrant Hawaii Community Base Social Navigator's Pilot Program. MS. MERCADO: Yes. CHR KANEALI`I-KLEINFELDER: Am I on the wrong item? I'm scanning ahead. I'm sorry, Keiko. MS. MERCADO: Okay. CHR KANEALI`I-KLEINFELDER: I'll be back. Thank you. MS. MERCADO: Sounds good. CHR KANEALI`I-KLEINFELDER: Thank you, Mr. Hustace. Okay. Any further discussion on Communication 24.37? Hearing and seeing none, motion is on floor to close file on Communication 24.37. All in favor? Vote on Comm. 24.37: The motion to close file on Comm. 24.37 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 24.38: REPORT OF CHANGE ORDERS AUTHORIZED: MAY 16 —31, 2026 From Finance Director Diane Nakagawa, dated July 9, 2026, transmitting the above report pursuant to Section 2-12.3 of the Hawaii County Code. Motion on Close File: Mr. Hustace moved to close file on Comm. 24.38. Seconded by Mr. Onishi. CHR KANEALI`I-KLEINFELDER: Discussion? Okay. Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you. I seen Ms. Morrison in the audience and I'm wondering if you're here to maybe talk a little bit about the HACBED (Hawaii Alliance for Community Based Economic Development) contract in relation to general plan outreach? Okay. Thank you. Because it looks like there was a change order in May of this year. Okay. An additional $65,000. (Note: At this time, Long-Range Planning Program Manager Bethany Morrison came forward to address the members of the Committee.) Page 11 FC-41 August 4,2026 MS. MORRISON: I think that was a no cost time extension. MS. KIERKIEWICZ: Okay. Okay. It was originally a $150,000 contract, but can you just talk a little bit about the role HACBED played recently? It sounds like this year in supporting some of the outreach for the general plan. MS. MORRISON: Sure. Aloha, good morning. Bethany Morrison, Long-Range Planning Program Manager for the Planning Department. So HACBED has been in contract for several years to support the general plan outreach. They help with some facilitation and different meeting process design stuff. So this year we were wrapping up,you know, the adoption of the general plan and also thinking about implementation and one of those things had to do with our community development plan (CDP) framework, which has more information in this 2045 plan than had been there. So we convened two different focus groups. One of them was our kind of, we called them the OGs, so this was our original group of folks that started to think about community development plans for our island, and we really wanted to get to the intent and the thought behind the design that went into those for 2005. So it included folks like our previous Planning Director Chris Yuen, Roy Takemoto from the Mayor's Office, who had been a Deputy Director for Planning at the time, a number of community members, Jane Testa, who had been at Research and Development(R&D), really to just get an understanding. So HACBED supported, again, process design and facilitation of that group. And then the second focus group that pulled in was planners from the counties to bring them here and have a one day work session to talk about all things kind of community development plan related to really try and get back into the framework and the design because as you guys know, we're going to be moving to the South Hilo CDP update this year, so this was all prep work. So it was kind of a general plan implementation focus group but really focusing on that next piece for us, which is our community development plans. MS. KIERKIEWICZ: And since you mentioned CDPs, any members of action committee, past or present; were they engaged in the conversation with HACBED? MS. MORRISON: Yeah. So actually Nancy Pissicchio had been an invite but ended up being diverted. It was a day, unfortunately, that we had an accident over Saddle Road and she couldn't make it to Hilo for that meeting. So we have reengaged with them kind of offline about sort of our follow up and what we've learned, and getting some feedback from them as well. MS. KIERKIEWICZ: Okay. And then is there like a report of work product that is going to come out of the time with HACBED that can be shared either with the Council or publicly? Page 12 FC-41 August 4,2026 MS. MORRISON: Sure. We have several work products from them. We're still waiting on the final wrap up from those focus groups, but happy to share that out. MS. KIERKIEWICZ: Yeah. And I'm really curious as we're spending time to think about updates to the CDP. I always think about the action committee component because the idea in my mind or I think the OGs have intended for community to take those plans and implement them and I'm always very curious about what has community's experience been to date and what are some changes that we need to make either within our code or internal processes to make sure that idea actually happens and takes off. MS. MORRISON: Yeah. Completely. MS. KIERKIEWICZ: Okay. We look forward to seeing the report. Will it be transmitted before the end of this Council term? MS. MORRISON: Yes, yes. MS. KIERKIEWICZ: Okay, great. Thank you, Ms. Morrison. MS. MORRISON: You're welcome. MS. KIERKIEWICZ: Chair, I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHL Thank you, Chair. Is R&D available? (Note: At this time, Research and Development Deputy Director Dennis Lin came forward to address the members of the Committee.) MR. LIN: Good morning. MR. ONISHI: You can introduce yourself. MR. LIN: Dennis Lin, Deputy Director, Department of Research and Development. MR. ONISHL Can you explain a little bit more about this amended term of agreement and budget allocation for the University of Hawaii? MR. LIN: Sure, yeah. So this one we originally budgeted for the $86,000, but because one of the livestock agents was hired for a portion of the fiscal year so the amount that they were invoicing us is reduced because it was a portion of the year, not the full year. Page 13 FC-41 August 4,2026 MR. ONISHL Okay. So that means you're not spending as much in your budget. MR. LIN: Yeah, we have a little bit of a reduction in that. MR. ONISHL Okay. And you have any future plans on what you guys are going to do with that balance? MR. LIN: Well right now as far as our agriculture budget allocation,you know, we did have $100,000 for food security allocated so we might utilize some of that monies to put towards the food security line item. MR. ONISHL Got it. Okay. And in the contract with CTAHR (College of Tropical Agriculture and Human Resources), is the contract fiscal year or yearly, like January to December or are we following the fiscal year July to June? MR. LIN: I believe I have Glenn here, if he's able to answer that question. (Note: At this time, Research and Development Economic Development Specialist Glenn Sako came forward to address the members of the Committee.) MR. SAKO: Glenn Sako, Economic Development Specialist working with the agricultural industry. The contact goes on a fiscal basis of July to June. MR. ONISHL Okay, good. Because in the past it was a yearly contract, correct? Is that correct? MR. SAKO: Yes. That's correct. MR. ONISHL Okay. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Okay. Keiko Mercado, please. Good morning, Ms. Mercado. (Note: At this time, Housing Assistant Administrator Keiko Mercado came forward to address the members of the Committee.) MS. MERCADO: Aloha. CHR KANEALI`I-KLEINFELDER: Okay. So back to my question from the last communication. The community based social navigators pilot program under OHCD, $800,000 was the original contract. That was on January 12, 2024. The 78 percent increase, what is that from? MS. MERCADO: So there were a couple times that we added funding to this contract. The first time was for a family centered coaching certification program Page 14 FC-41 August 4,2026 that was offered not only to the community navigators working with Vibrant Hawaii but was also offered to other organizations who are doing outreach and case management work including folks in our Section 8 staff. CHR. KANEALI`I-KLEINFELDER: Okay. MS. MERCADO: And then the added time was to expand services and increase navigators. CHR KANEALI`I-KLEINFELDER: Is there any other social navigator's programs that are running from other vendors? MS. MERCADO: Not in the same way that Vibrant Hawaii has it structured. No. CHR KANEALI`I-KLEINFELDER: So yes, but different. MS. MERCADO: I mean, we have case management that happens within our other partner orgs. But Vibrant's community navigators are really folks who are central in their own communities, which is why the requirement of the contract was to have minimum of one person in each district, and their job is really to understand the different resources that are available within community and how to connect folks to those. And even bigger than that is teaching other people in community how to access this information, where it's available, how it's available, so that they can help others; kind of a train the trainer on a certain level. CHR KANEALI`I-KLEINFELDER: Yeah. I remember this. I also remember walking through from the homeless and housing fund grants going out to Neighborhood Place of Puna as well as HOPE Services for basically exactly the same thing. MS. MERCADO: I would say it's different clientele, different participants. CHR KANEALI`I-KLEINFELDER: How often does OHCD review existing contracts within the broader scope of different funding sources but same programmatic concepts? MS. MERCADO: So every contract that we have is monitored at least monthly. Within the Homelessness and Housing Program, that analyzing happens very regularly and then on a larger scale, I mean, at least quarterly. CHR KANEALI`I-KLEINFELDER: Okay. What is the funding source for this social navigator's pilot program? MS. MERCADO: This fund source is ARPA (American Rescue Plan Act). Page 15 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: ARPA. MS. MERCADO: Yeah. So this contract is set to end in August of this year, end of this month, because all ARPA funding has to be expended before the close of this calendar year. CHR KANEALI`I-KLEINFELDER: Okay. MS. MERCADO: Yeah. CHR KANEALI`I-KLEINFELDER: Okay. So this isn't going to continue on then past, this funding source lasts the end of this period. MS. MERCADO: Yeah. Unfortunately, no. Right now during this final phase they're working on evaluation, documentation of best practices, and kind of a wrap up of the pilot program. I will say that one of the most recent, one of the times that we've seen this framework really be helpful and useful to community was during the Kona Low and then the recent earthquake. Because Vibrant Hawaii has so many different hubs around the island and they have these community navigators in place, we were almost immediately able to communicate and collect data from community from a civil defense perspective to understand what the immediate needs were. And so just having that infrastructure in place was extremely helpful. So, you know, we're always looking for different funding sources. I am disappointed that we aren't going to be able to continue this program right now, but it'll be great to see their final evaluation and report to figure out how we modify and continue. CHR KANEALI`I-KLEINFELDER: Okay. Where is the information from previous years for reporting for this and other social navigator's programs that we have? MS. MERCADO: We have reporting from Vibrant Hawaii per this contract. I can share that. CHR KANEALI`I-KLEINFELDER: And the other social navigator's programs that we have through Neighborhood Place of Puna and HOPE Services? MS. MERCADO: Those would be with case management, not social navigators. Those are with our program staff. CHR KANEALI`I-KLEINFELDER: And are the reports online? MS. MERCADO: No. CHR KANEALI`I-KLEINFELDER: Okay. Page 16 FC-41 August 4,2026 MS. MERCADO: No. But we can share those especially if you're looking for specific information. CHR. KANEALI`I-KLEINFELDER: Yes,please. MS. MERCADO: Okay. CHR KANEALI`I-KLEINFELDER: Okay. Thank you, Ms. Mercado. MS. MERCADO: Of course. CHR KANEALI`I-KLEINFELDER: Okay. Seeing no further lights and no further discussion, motion is on the floor to close file on Communication 24.38. All in favor? Vote on Comm. 24.38: The motion to close file on Comm. 24.38 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 27.6: REPORT OF DONATIONS RECEIVED FROM THE DANIEL R. SAYRE MEMORIAL FOUNDATION AS OF APRIL 2026 From Finance Director Diane Nakagawa, dated July 9, 2026, transmitting the above report pursuant to Resolution 468-20. Motion on Close File: Mr. Hustace moved to close file on Comm. 27.6. Seconded by Ms. Galimba. CHR KANEALI`I-KLEINFELDER: Any discussion? Council Member Galimba. MS. GALIMBA: I just wanted to say thank you to the Sayre Foundation for the trucks. They will, I'm sure, be very, very helpful for our public safety officials. CHR KANEALI`I-KLEINFELDER: Thank you very much, Ms. Galimba. Well said. Thank you. Okay. Seeing no further discussion, motion is on the floor to close file on Communication 27.6. All in favor? Page 17 FC-41 August 4,2026 Vote on Comm. 27.6: The motion to close file on Comm. 27.6 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 118.6: FOURTH QUARTER REALLOCATION REPORT: APRIL 1 —JUNE 30, 2026 From Human Resources Director Sommer J. Tokihiro, dated July 14, 2026. Motion on Close File: Mr. Hustace moved to close file on Comm. 118.6. Seconded by Ms. Galimba. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member Hustace. MR. HUSTACE: Chair,just a quick note. Director Tokihiro, happy to work with you and Director Nakagawa on providing additional clarity to this report. I think there's more we could kind of present in this report and from the public outset, what it looks like. So thanks, Chair. CHR KANEALI`I-KLEINFELDER: Thank you. Okay. Seeing no further discussion, motion is on the floor. All in favor? Vote on Comm. 118.6: The motion to close file on Comm. 118.6 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 574.3: REPORT OF NONCAPITALIZED DONATIONS FOR: APRIL 1 — JUNE 30, 2026 From Finance Director Diane Nakagawa, dated June 8, 2026, transmitting the above pursuant to Resolution 200-25. Page 18 FC-41 August 4,2026 Vote on Comm. 574.3: Mr. Hustace moved to close file on Comm. 574.3. Filed Seconded by Ms. Kagiwada and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Comm. 970: TABULAR SUMMARY OF NET FUNDED DEBT AS OF JUNE 30, 2026 From Finance Director Diane Nakagawa, dated July 13, 2026, transmitting the above report pursuant to Chapter 47C of the Hawai`i Revised Statutes. Motion on Close File: Mr. Hustace moved to close file on Comm. 970. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member Galimba. MS. GALIMBA: Thank you. Thank you, Director, for coming up. I just wanted to ask if there's any sort of material changes to this that we might want to know about? (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: Sure. Happy to answer that. Diane Nakagawa, Finance Department. As you know we just came before just a few weeks ago for the closing of the Iki Place Improvement District 21. So we went through the same format. We are required to come forward. And this one is for the end of the fiscal year. The only minor notable changes are the payments that we made during that closing and this report. So if you're comparing the two it's pretty similar except for a few payments. I'm happy to go through that if you'd like or just to note that the difference is in the payments that happened in the two reports. MS. GALIMBA: Thank you. Thank you very much. MS. NAKAGAWA: You're welcome. CHR KANEALI`I-KLEINFELDER: Thank you. Ms. Nakagawa, I have one question. The June 23, 2022, bond under Schedule D for the Water Supply Department, what was that for? $3.9 million. Do you know? MS. NAKAGAWA: Sorry. Schedule D. Page 19 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: Schedule D, June 23, 2022, obligation bond reimbursable, $3.925 million. MS. NAKAGAWA: I apologize, Council Member. I don't recall what that one was at the moment. We may have Chris Nakano, our Treasurer, on. He might have an answer. If not, we'll be happy to get that to you. CHR KANEALI`I-KLEINFELDER: Yeah. If you look into it, I'd like to know what all of those are for. I'm tracking the direction. MS. NAKAGAWA: All of the ones under Water Supply? CHR KANEALI`I-KLEINFELDER: Yes. MS. NAKAGAWA: Okay. CHR KANEALI`I-KLEINFELDER: I'm trying to track the direction of the Water Supply Department and how they align with what's happening in our County. MS. NAKAGAWA: Okay. Happy to get that for you. CHR KANEALI`I-KLEINFELDER: Thank you very much. Okay. Seeing no further discussion. Motion to close file on Communication 970 is on the floor. All in favor? Vote on Comm. 970: The motion to close file on Comm. 970 was carried by Filed the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. (Note: Items in this category were taken up previously, out of order.) Page 20 FC-41 August 4,2026 Res. 609-26: AUTHORIZES THE PAYMENT OF FUNDS OF LATER FISCAL YEARS FOR THE FUNDING OF COST ITEMS ASSOCIATED WITH THE HAWAI`I GOVERNMENT EMPLOYEES ASSOCIATION, BARGAINING UNIT 15, FOR THE CONTRACT PERIOD BEGINNING JULY 1, 2025, AND ENDING JUNE 30, 2029 The estimated costs over the four years of the new contact resulting from lump- sum payments, across-the-board increases, and step movements would be $1,819,315. Reference: Comm. 971 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Motion to Approve: Mr. Hustace moved to recommend adoption of Res. 609-26. Seconded by Mr. Onishi. CHR. KANEALI`I-KLEINFELDER: Any discussion? Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. I guess it's Finance I have a question for. As you're walking up, I'm trying to see in here where does health insurance fall in these agreements or is that a totally separate thing that isn't included here? (Note: At this time, Finance Director Diane Nakagawa came forward to address the members of the Committee.) MS. NAKAGAWA: I apologize, Council Member. I'm not sure. Is your question, where's the cost or not in the agreement itself? MS. KAGIWADA: I'm just wondering. I've noticed that this has everything, fringe benefits, it has pay, it has those things, but there's no mention of health insurance costs within this. And when I look at the details of what this fringe benefits are, it's not listed in there as part of the fringe benefits. So I'm just wondering, are health insurance costs not included in something like this for a reason; are the totally separate? MS. NAKAGAWA: I don't think it's included in this cost worksheet that we put forward but let me get for you where it is included and I'll show you where that is. But I just don't think it was included in this template. MS. KAGIWADA: Okay. MS. NAKAGAWA: But I'll double check for you. MS. KAGIWADA: Okay. Thank you. I do appreciate that because I know that's an issue. I don't know, I've been watching what they've been doing over on Maui and Kauai. I talked to the Mayor, right, since the very first meeting I had Page 21 FC-41 August 4,2026 with him about trying to look at seeing if we can do what they're doing on Maui in Hawaii, which is covering the cost of health insurance for our County employees. And so I would like to see kind of where those numbers are playing out and what we're talking about here, alright? MS. NAKAGAWA: Yes, will do. MS. KAGIWADA: Thank you. Appreciate that. MS. NAKAGAWA: Of course. MS. KAGIWADA: I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Seeing no further discussion, motion is on the floor to forward Resolution 609-26 to Council with a favorable recommendation. All in favor? Vote on Res. 609-26: The motion recommend adoption of Res. 609-26 was (Approved) carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Res. 610-26: AUTHORIZES THE PAYMENT OF FUNDS OF LATER FISCAL YEARS TO ENTER INTO A MULTI-YEAR LICENSING AGREEMENT WITH MRI SOFTWARE LLC FOR PHA PRO SOFTWARE AND RELATED SERVICES TO BE USED BY THE OFFICE OF HOUSING AND COMMUNITY DEVELOPMENT Authorizes the Mayor to enter into a five-year agreement with an approximate annual cost of$55,593 for the first year and increasing thereafter to provide software licensing and other related services to be used by the department to meet program requirements and efficiently document communications with applicants, participants, and vendors. Reference: Comm. 972 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Page 22 FC-41 August 4,2026 Vote on Res. 610-26: Mr. Hustace moved to recommend adoption of (Approved) Res. 610-26. Seconded by Mr. Onishi and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Res. 612-26: AUTHORIZES THE PAYMENT OF FUNDS FROM LATER FISCAL YEARS TO ENTER INTO A MULTI-YEAR AGREEMENT FOR ONLINE LEGAL RESEARCH SERVICES AND LEGAL PRINT RESOURCES FOR THE OFFICE OF THE CORPORATION COUNSEL Authorizes the Mayor to enter into a five-year agreement with an approximate monthly cost of$13,522.08 until December 31, 2026, and then $14,245 per month until the end of year one, with an increase seven of percent per year thereafter for proprietary software and other services. Reference: Comm. 975 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Vote on Res. 612-26: Mr. Hustace moved to recommend adoption of (Approved) Res. 612-26. Seconded by Mr. Onishi and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. Res. 627-26: AUTHORIZES THE MAYOR TO ENTER INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE STATE OF HAWAI`I, DEPARTMENT OF LAND AND NATURAL RESOURCES, TO RECEIVE A GRANT FOR FOUR ATTENDEES TO PARTICIPATE IN THE NATIONAL ALLIANCE OF PRESERVATION COMMISSIONS FORUM 2026 Allows for the receipt of$20,192 in federally-derived funds to cover travel stipends for two staff members from the Planning Department and two Cultural Resource Commissioners. Reference: Comm. 994 Intr. by: Council Member Kaneali`i-Kleinfelder (B/R) Page 23 FC-41 August 4,2026 Vote on Res. 627-26: Mr. Hustace moved to recommend adoption of (Approved) Res. 627-26. Seconded by Mr. Onishi and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. (Note: Items in this category were taken up previously, out of order.) 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 Postponed: July 22, 2026 (Note: There is a motion by Council Member Kimball, seconded by Council Member Galimba, to recommend passage of Bill 173 on first reading.) (Note: Comm. 960.2, from Council Member Heather L. Kimball, dated August 3, 2026, transmitting proposed amendments to Bill 173, was circulated.) CHR. KANEALI`I-KLEINFELDER: Ms. Kimball, go ahead. MS. KIMBALL: Thank you. So as you may recall, last meeting Real Property Tax Administrator Miura was not available to comment on this particular piece of legislation, so I did want to make sure you folks all had the opportunity to hear from her about the department's position. I will note, you know, I think there was a good discussion about this in the last hearing and there are definitely fairness concerns that should be taken into account. Page 24 FC-41 August 4,2026 The testifier earlier today mentioned,you know, perhaps dividing the property between the residential use and the commercial use. That's not something we can do in the system, so I just want to make sure that's clear. There's another piece of information that was made available to us in the intervening period here that adding the cap to this new tax class, if we were to create this new tax class, would actually cost us something since it would not be available for free within the RPT (Real Property Tax) software right now. So I'll let the administrator speak to that, but happy to take questions and have a deeper discussion about this effort. For me, the main this is the amnesty and part of that is encouraging folks to register under the new registration system. I do think that there are questions of fairness around that for folks that have been paying appropriately as a hosted bed and breakfast(B&B) all this time versus folks that have been operating under the radar. But at the same time, if the goal is to get everybody registered, you know, that's the other argument on the other side of that. So if I could ask Administrator Miura to come up and just give us a brief overview of the RPT position and then I'll let you stay in the hot seat for questions from my colleagues. Thank you. (Note: At this time, Real Property Tax Administrator Lisa Miura came forward to address the members of the Committee.) MS. MIURA: Good morning. Real Property Tax Administrator Lisa Miura. So I'll share some of the questions maybe we have or points that Council Member Kimball also brought up. We don't technically take a position of for or against. We give you the pros and the cons or some of the positives. As much as I would love to, our division is supposed to just adhere to what the County Council decides. In regard to or adding on to what Council Member Kimball said, currently our program cannot handle another tax class with a cap. And so right now you have a three percent cap on homeowner and affordable rental, which is at the same tax rate and the same cap. So she's correct, the current system cannot. We've put in a request already to see what the additional cost would be to do that programing. This would create your eleventh tax class for real property tax and that doesn't include your tiers. If you include the tiers, that would be 13 tax classes. So I believe a question would be if it provides more clarity or confusion for the taxpayers and for yourselves. And regarding the amnesty, Council Member Kimball brought it up. It's to encourage individuals to apply for I believe a different program within the Planning Department or Finance, however it's written. I know there's something coming up regarding that. The deadline for this is December 31", and that would be for individuals to apply for the amnesty. I think for our office, we're getting a lot of push back from some of the public in regard to other things that were approved previously, and I'll give an example; the long-term rental. I have some Page 25 FC-41 August 4,2026 individuals upset that we didn't notify them personally there was a long-term rental class, and so they didn't apply so they want it automatically. We don't give any programs automatically so our concern would only be that how the public would become aware that there's this amnesty period. Again, I'm not saying whether it's bad or good. I'm just saying it would be how the public would be informed of County Council action. And I know that's been a big discussion that Council Member Kierkiewicz has brought up. How are we going to do that. Our office is struggling on trying to keep up with the changes. All of them good. However, getting it to the public has been difficult because we used to rely on the newspaper or the media and it's not sufficient. We've put it in our assessment notice insert. Not everybody reads the assessment notice insert and that's all I can say about that right now. In regard to the amnesty, I do want to clarify, right now we are still trying to do compliance. We do not have a compliance officer. I think you've heard other departments are struggling to keep compliance officers. It's a pretty hated job in the County and they have been threatened before and none of our staff in Kona have been wanting to go and take that position right now. And I'm only sharing this for transparency for the Council. In regard to the homeowner tax class, we created the long-term rental, we, County Council, tax class to try and encourage owners to go into the long-term rental. And we did have a good amount of applicants for that. With the three percent cap, when it was on the—well, it is currently in the bill. I think our concern maybe is that it would unintentionally encourage owners to just go back to the short-term rental because the only difference they would've seen then is the dollar difference in your tax rate. And I have heard numerous owners come out and say I don't care how low you go on long-term rental;we're going to stick to our hosted short-term because of all of the tenancy laws. And again, I don't know how this bill would handle or deal with the public that wants to go back to short- term. Historically, owners that have registered with Planning previously for special use permit for hosted bed and breakfast(B&B), they've had to make that decision whether it was worth it tax wise to go to a special use permit. Those individuals for years, and I believe there's a testimony that come in late; it was submitted to me as well. An owner has done this since 2003 and she's felt like she played by all the rules,paid all her taxes, and now that there's this new tax class, you know, those individuals are going to get a break that wasn't considered. But it does bring up where does that leave the commercial. So if Council is willing to do an owner-occupied and I know it's called bed and breakfast, but it's for hosted rentals of less than 180 days, where does that leave the commercial properties? And that would be individuals like hairdressers, auto repair, massage, acupuncture, that currently are not getting the homeowner tax class because they are operating a business out of their home. So that's some questions that have Page 26 FC-41 August 4,2026 been presented to our office and we explain to them that you should come and provide your own testimony regarding that. But they would be excluded from this bill. I think the hard part for our office is I understand the carrots that are needed to be given, but it adds another stick and another layer of compliance for our office that I want to make sure we're able to handle. If the only difference is going to be a matter of a dollar or two in your tax rate between that and the homeowner, I don't know if Council would get to the point where they would just consider opening up, if you live on your home, you can rent it long-term, short-term, do your commercial activity and you're in the homeowner tax class, and that takes care of a couple of problems. One, I don't have to worry about compliance, I don't have to worry about my staff being threatened anymore by the public and you don't have to get the complaints. And I know this stems from those living on their property not being able to afford their increase in taxes because they've been roped back for the two years plus the current year if there's reviews. That does get away from trying to promote your long-term rental program. So that would be a decision that County Council would need to make as a whole on where you want to move the island and what kind of housing you're supporting. That's pretty much all I have. I'm here for any questions. I know it was a lot. I'm sorry. We couldn't make it last time, but we're here now. MS. KIMBALL: Thank you, Administrator, for all of that. And I have had conversations with the department around these items. You know, I look forward to the discussion from my colleagues and to answer any questions you may have. I do have an amendment on standby here that would still create the additional tax class but would remove the three percent cap provision. So as we have a conversation,just letting you know that's waiting on the wings if that's direction folks want to go. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. Thank you, Administrator, for being here. We were looking forward to your input and I'm a little bit confused about some of the things you said, so I'm going to try to clarify just a bit. So you do see in difference based on your experience between this group of homeowners and currently who they're mixed in with? MS. MIURA: I'm sorry. Between which two groups? MS. KAGIWADA: So the group of homeowners who rent something short or long term and those who it's not their specific home, you do see that there's a difference there that you think is a relevant difference. MS. MIURA: There's definitely a difference between the two groups. There are the non-hosted rentals where they don't necessarily even live on island, they Page 27 FC-41 August 4,2026 could live anywhere, versus those that live in their home and are renting a room, an `ohana unit, or a separate dwelling. Those individuals that apply for the homeowner program do get the homeowner exemption right now. They do not get the homeowner tax class. And I do know that there was a testifier here and I she was trying to say, do the part that you have the homeowner tax class as one tax class and the rest of the property separate. And I have to just remind current Council that the homeowner tax class is an overriding tax class, so it's all or nothing. We cannot split that category and mainly that is because you have the three percent cap on that program similar to the affordable rental. MS. KAGIWADA: So if you didn't have the three percent cap, which it sounds like it would be an additional expense to put that on anyway, is it something that you could do, or would it be pretty challenging for your department? MS. MIURA: So to create a new tax class the County Council can, similar to your long-term rental, we can create tax classes. There is room for that in our program. It's tying that to a cap with a different tax rate. MS. KAGIWADA: I see. So you couldn't have a cap for one part of the house and not have a cap for only part of the house. That's what you're saying. MS. MIURA: Correct. MS. KAGIWADA: Okay. I get it. Yeah. So I also see a real difference between people who live here and it's their home, and even versus those who may be a caretaker living on the property for the express purpose of maintaining the property as a short-term vacation rental (STVR)very differently I see those two categories, which is why I generally am intrigued and am supportive of this idea. I also don't think the three percent cap, as you mentioned iswe don't want to undermine our long-term and affordable rentals. Also it gets so close to the homeowners that there's not really a difference also. I think it's really hard because we have so many trying to make those distinctions. But to me if we're going to do this, we shouldn't make it so similar to the homeowners that it almost doesn't matter unless we do what you said, which was to consider allowing small businesses in homes without using your cap and your homeowners. So I think there's a lot to think about here. I know you're saying there's a lot of tax categories and everything. Would it be a particular burden for your office to have this additional category if you didn't have the cap? MS. MIURA: So without the cap it's possible in the current program without any major costs. It would just be the time and informing the public of this change and who would go into the program, and then that would bring up is December 3 1"a realistic deadline only from the standpoint, and I'm not involved in the other legislation with the rental activity of less than 180 days. And I keep going back to that because it's called different things by different people. I don't know how many of them are going to realize they can qualify for the amnesty in time if they Page 28 FC-41 August 4,2026 file by December 31 s; like how would they even know about it. I'm not saying it's a bad idea, it would be nice to have a clean start, but I just want to make sure everybody who can qualify for it is subject to. And just letting Council know, up until then we are still doing compliance. I haven't received anything formal stating that we needed to stop doing the current compliance as we get complaints. MS. KAGIWADA: Okay. Thank you. I yield for now. Thank you. CHR. KANEALI`I-KLEINFELDER: Thank you. Mr. Hustace. MR. HUSTACE: Thanks, Chair. Thanks, Administrator Miura. How many properties would you expect can qualify for this new classification? MS. MIURA: There are over 2,000 right now that we are aware of, but that's as we know of. MR. HUSTACE: And so that impact, the fiscal impact, will be substantial? MS. MIURA: Yes. And we didn't run those numbers yet since I came back, but we can base on what we have in our system. And how we would calculate that is just taking anybody with a homeowner exemption that is not currently getting a homeowner tax class for whatever reason. We don't separate in our system if it's because of hosted rental or commercial activity. MR. HUSTACE: Kind of on a more specific area, if we look at our residential class, our three tiers there including our higher value resort properties, could one of these properties be able to qualify for this B&B class as it's written here in terms of it's identified as a resident, it's their primary residence must be taxed at tiers one, two, or three and then be able to identify in this new tax class then. MS. MIURA: So when Council created the residential tier two and three it excluded those with a homeowner exemption so they're not in there. They would still pay just the residential tax. MR. HUSTACE: Right. But if they get that homeowner exemption, they say it's their primary residence, get the homeowner exemption, they'd be down a different tier then possibly. MS. MIURA: Correct. And there are properties in the resort area that are doing short-term rental including hosted. MR. HUSTACE: Yes. Council Member Kimball, maybe more of a question to you, you know, I understand that amnesty piece there but waiving the back taxes, I understand the penalties and the fees, but trying to bring it in compliance with waiving the back taxes may be a little bit too far and it could leave some that complied with the law previously and kind of create some imbalance there in Page 29 FC-41 August 4,2026 terms of the equity piece I think. Yeah. So if that's the case then just the penalties interest. But those back taxes are I think something to be considered for sure. Yeah. I think that's all I have for right now. Thanks, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Onishi. MR. ONISHL Thank you, Chair. So you mentioned about notifications, right, of the program, like having this new thing coming up. Do you have any other legislation that was done prior to other classes and are you folks up to par of the property owners meeting those deadlines? MS. MIURA: Do you mean are we following all the deadlines that's currently in the code that we're responsible for? MR. ONISHL Yeah. But then you need the applicant to also submit to meet these deadlines, right. Because we're doing this December 2026, so like you said, there might not be enough time. So would you want that to be pushed back? MS. MIURA: I believe if there's going to be a delay in individuals qualifying or applying for the hosted short-term rental if this is what this bill is trying to tack on with then there should be an extension or a way to notify everybody in the homeowner tax class, which is over 40,000 parcels, that if you're doing a hosted rental there's an amnesty program. I believe that would be a good way to notify them. That's not in my budget. MR. ONISHL Right. And I know not everyone watches these Council meetings, right. And then also in the newspaper, publicity wise, there's no outreach. So that's when people start hearing from the coconut wireless and that's when you folks are getting the phone calls, right? MS. MIURA: Correct. It would be great if more people read the newspaper. I don't. I read some headlines and when it's on social media, and when there's something on short-term rental I'll read it. But I'm not skimming it every day. So I'm not definitely putting down anyone who doesn't read the paper daily. So let's say County Council approved this today and it went through in September, I would have to go through procurement to get three bids to send out 40,000 plus notices. I'm not going to get that out to the public before December 31" deadline even if I had the funds. It's just a tight timeframe. But I understand where it's trying to tie into our current system. MR. ONISHL Right. And then there might be a change order of transferring funds from one account to another to help you with this advertising, correct? MS. MIURA: If I could even get that from my Finance Director. We're a little tight on funds this year. We were all told to watch how we spend. And so we've Page 30 FC-41 August 4,2026 pretty much budgeted in our office. There's no fat for us to try and skim from another account. MR. ONISHL Okay. Thank you. I want Planning to come up. Are you able to speak on behalf of the department or is Director available? (Note: At this time, Long-Range Planning Program Manager Bethany Morrison came forward to address the members of the Committee.) MS. MORRISION: I will do my best. MR. ONISHL Okay. Is this a push by the Planning Department to also get this moving forward? MS. MORRISION: I don't know that. Probably Council Member Kimball can speak to that better. But I know that we are definitely pushing hard to that September go live date and in fact that's why Director is not here right now because they're meeting with consultants to get that ready. MR. ONISHL Okay. Okay. I mean, because it seems like some legislation that is being put in is being rushed and it's for certain purposes of funding, right? And I had a meeting with Director of Finance, and I just feel uncomfortable because of, say the funding that the fees we'll be collecting, or the increase will be helping the Planning Department in providing more, I guess, employees, right? But then we don't really know what is the total expenses and what is the total income that's going to be coming in. And so I just look at this as like because if it comes from the department or comes from property tax, or it comes from Finance, or it comes from the administration, then I can see something like this legislation being put in, right, and what's going to happen with that additional funds, correct? But now, when individuals put this in, then it's like, okay, where's that catch, right? Where does this extra funding go to, right? And so that's the only thing I'm worried about. So maybe I'll just reach out to the director to find out,you know, what is his thoughts about this, right. MS. MORRISION: I know that what we now have is the STVR fund and that we have staff underneath that funding that are doing the program now and that is anticipated of course to increase with the legislation that you folks are considering. But that has nothing to do with the funds that would be coming in from the RPT. Those funds are separate. MR. ONISHL Right. And I did talk to director about having general funds being used for the positions of the STVR guys, right, and not waiting for these legislations all to come in and then we move forward. Yeah. But I'll talk to them. Thank you. I yield, Chair. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball. Page 31 FC-41 August 4,2026 MS. KIMBALL: Yeah. Just to provide some context to my colleague, Mr. Onishi. So this bill originated actually out of conversation with the Mayor and Managing Director. They had received some complaints, one of them from the woman who testified earlier today about the tax increases that they were affected by once they were discovered that they were operating short-term vacation rentals. And so I was meeting with the Mayor about something else and I say, well that's been the law since 1986. I said there was a way to change it; this is how it would be done, and that's the generation of this piece of legislation. So in terms of follow up, I suggest talking to the Mayor and the Managing Director on that. With regard to the communication issue, one thing that is perhaps a little bit different than some of the other initiatives is because we have concurrently the program with Deckard, that's going to be scrubbing the VRBO (Vacation Rentals by Owner), Airbnb sites to identify all of the short-term vacation rentals, we'll actually have a smaller pool, I think, that needs to be identified rather than all homeowners. So there's the sense that will act in concert with the Real Property Tax Department so we can do that notification. As far as timing goes,you know, there is synchronicity between Bills 173 and 175 about that time period where we're gearing people register their STVRs and this grace period for the amnesty. And so just for the sake of clarity, if we want to push this one out, I suggest we push that other one out as well just so that they're lined up identically. Totally happy to look at the back taxes issue in terms of the amnesty and all that. Again, I am putting this forward for discussion and so it that's something the body would generally like to see, I'm happy to put forth that amendment. I think we can do that and still maintain the integrity of the bill. I will leave it there. Unless there's no further discussion then I'll just put the amendment out there for—okay,you want to go first? CHR. KANEALI`I-KLEINFELDER: Thank you. Thank you, Administrator Miura. I always appreciate your opinion. Let's see here. You've raised some good points. I mean, really, we have the proposed thing which is in front of us. This would create a new tax class for those in the bed and breakfast category who chose to jump in. I'm going to assume, you know, don't shoot me but I'm going to assume the interest here is to collect taxes from businesses that do bed and breakfast activities and also to incentivize registration. That's kind of what I see this as. On the taxes side, they should already be paying their transient accommodation tax to the state and to the County. So we already have a tax revenue there. So in itself just on the business end, with what I heard from the director is an interesting component of what's in front of us if we look to by doing this create a different tax structure for those in the bed and breakfast home category. So seeing as we'd almost be creating a, I'm going to call it a double tax, because they're bringing a new property tax or an adjusted property tax rate stepping out of whatever they're Page 32 FC-41 August 4,2026 in now, which could be commercial, hotel and resort, residential, even homeowners, into the new bed and breakfast category, we don't have a rate for that right now, right, so we don't know where it would sit. Can I ask what your rate thought is? MS. KIMBALL: Yeah. I mean, given the other programs that we've tried to incentivize, I would envision this rate being somewhere above the long-term rental category but below the residential classes, which is where these properties for the most part fall at this time. CHR. KANEALI`I-KLEINFELDER: Okay. So somewhere between what is it six and fourteen. Is that what it's at? MS. MIURA: It's 7.75, and 11.10. But keep in mind agriculture is at 9.35. CHR KANEALI`I-KLEINFELDER: Okay. So somewhere between 7.75 and 11.10, is starting proposed tax rate. And then the agricultural component? MS. MIURA: So properties, as we have over 40,000 properties in the agricultural tax class right now because of their zoning and being larger than an acre even though they're not doing active ag use are at 9.35, even if they have a house on it. CHR KANEALI`I-KLEINFELDER: Maybe Ms. Morrison can answer this question because we just had this meeting with the Planning Department and there's a really interesting little component of ag tourism, but only for properties subdividing before a certain date. MS. MORRISION: There is a pre 1976 issue and then a post 1976 issue. So pre 1976 lots, they're kind of grandfathered in as far as the state land use agricultural district permitted uses. And then post 1976, then they have to follow what the state law says for agricultural districts. CHR KANEALI`I-KLEINFELDER: Correct. MS. MORRISION: So there's a bunch of things that play with from subdivision to STVRs to additional farm dwellings, all those things. CHR KANEALI`I-KLEINFELDER: It's kind of like the elephant,yeah, in this conversation, to me, because a lot of these are primary homes. The pre 1976 years can actually do an additional farm dwelling and then that farm dwelling could be used for a vacation rental, correct? MS. MORRISION: Yes. Page 33 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: I don't think most people understand that in full because it's a little bit more complex than the average person digs into. Would this property class be available to the pre 1976ers? MS. MIURA: The agriculture or the bed and breakfast? CHR KANEALI`I-KLEINFELDER: Bed and breakfast. MS. MIURA: Yes. From what I understand what they're planning on saying is it's actually the post 1976 that has more of the issue with a farm dwelling being rented out as a short-term rental. Our office doesn't look at that though. We look at how you're using the property and we go by what's on the bill. So we do have a conflict between what Planning is doing and Real Property in that regard. CHR KANEALI`I-KLEINFELDER: Okay. Before I forget, the last section, Section 2 of the proposed bill, Number 3, all parcels entering this class shall have the assessed value as of January I", of the following year and be subject to the above provisions. So that would be then, if they got in say tomorrow, then their assessed value would be this coming January I"? MS. MIURA: Correct. And keep in mind, there are already properties in the special use bed and breakfast. So we'd need to clarify, I believe those would automatically go into it. They don't have to apply for this program; this is an automatic. They go into this program if they've registered with the Planning Department. CHR KANEALI`I-KLEINFELDER: Just this section or across the board. MS. MIURA: It is just this section. The one thing they're applying for with us would be the amnesty. That's the only thing that requires an application. CHR KANEALI`I-KLEINFELDER: The assessed value is actual, January I", the assessed value or it's their existing assessed value, no more than three percent increase, blah, blah, blah... Because the assessed value of a home now versus a home from 10 years ago or 15 years ago is going to be incredibly different. MS. MIURA: It's going to be as of now. We're not looking backwards on changing. And the assessed value itself doesn't change. It's a new tax class. But then next year they would be subject to the three percent cap. It would set as the base year for it for this next year. CHR KANEALI`I-KLEINFELDER: That's going to be a big jump. MS. MIURA: You actually loose tax revenue with the bill. You don't increase it because they're not in the homeowner tax class now unless there's individuals that come in and say we've been doing it, but you've been giving us the Page 34 FC-41 August 4,2026 homeowner tax class because the homeowner tax class doesn't allow for hosted short-term rentals or anything less than 180 days. But the only ones that are not getting the homeowner CHR KANEALI`I-KLEINFELDER: Are the registered ones, yes. MS. MIURA: And the ones that we've caught through the years. CHR KANEALI`I-KLEINFELDER: So only the unregistered homes would see a huge spike in their valuation potentially. MS. MIURA: Correct. CHR KANEALI`I-KLEINFELDER: Okay. Okay. Thank you. Always helpful. Council Member Kimball. MS. KIMBALL: Yeah. So just to kind of give you a scenario to illustrate the point, you know, if you've had somebody that they had their kids at home, they've lived in their home for 25 years. It's been under the homeowner's tax class; they've had that three percent cap. That becomes a pretty big difference between the assessed value and the market value over that course of 25 years. The kids leave; they decide to rent their home as a bed and breakfast. They don't realize that by doing it for less than 180 days they're losing that cap. It's discovered, reported by a neighbor. The biggest impact to that residence is the difference in the assessed value based on the years under that cap. And it can be pretty significant if we're talking tens of thousands of dollars not adding into that the fees and penalties that may be associated with it. So,you know, that is part of what this bill is intended to address. You would think that there would be this sharing of information, but there are approximately 180 properties that have a bed and breakfast permit right now, per planning side. Now, I don't know if RPT has all of those actually identified and in the appropriate tax class or some of them are still sitting there in the homeowner's tax class, but part of the whole registration process that we're looking at,you know, this is going to be publicly. This information is now going to be available to Lisa and her team. And so the compliance bit on the Real Property Tax side does shift a little bit with the implementation of the software. Okay. Motion to Amend: Ms. Kimball moved to amend Bill 173 with the contents of Comm. 960.2. Seconded by Ms. Galimba. MS. KIMBALL: Yes. And just as a reminder, what this amendment would do is it keeps the creation of the new homeowner, the bed and breakfast homeowner tax class, it keeps the amnesty and removes the three percent cap. Page 35 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: Thank you. Discussion? Sorry, one more time, Ms. Kimball, what does it do? MS. KIMBALL: This removes the three percent cap from being applied to the new bed and breakfast homeowner tax class. So it still creates the new tax class for which the future Council would set the new rate, and it keeps the amnesty program for people that either register or discontinue doing short-term vacation rentals and it just removes that cap so there would not be that protection on inflation of market value over time. CHR KANEALI`I-KLEINFELDER: Okay. Council Member Kagiwada. MS. KAGIWADA: Thank you. I'm supportive of the amendment. Just to me, it makes a lot of sense so give them amnesty and at that time people can decide knowing full well what all the costs and everything are going forward, whether they want to continue doing short-term vacation rentals or they want to do long- term rentals or if they don't want to have commercial rentals at all on their property. And if they get the amnesty they will not be having a great big expense at that point. They will probably have very little expense, zero expense. I guess I need a little clarification on that; what might their expenses be at that point if they get the amnesty and they stop doing short-term vacation rentals. Would there be an expense for those folks or would they not have an additional expense, or is that a cloudy question that's hard to answer? Administrator,please. MS. MIURA: If I understand correctly, if somebody comes forward with this that they're going to cease to operate then it doesn't affect them. I believe the way the Code is written, and I can check with our County attorney, is that it just stays in the homeowner tax. They basically say, "hey, I was doing this. I didn't know." And they move forward but they cease. If we catch them after still renting after submitting that, then we're going to hit them. Sorry. I shouldn't say hit them. Then we're going to do a current plus rollback on the property because I don't think it's right that you come out and say I'm going to stop to avoid paying the taxes you should have per County Code that other people are and then you continue to operate. MS. KAGIWADA: Correct. And then if they get the amnesty registered and want to continue to do short-term rentals, they would lose their three percent cap and be in a different tax class going forward. MS. MIURA: Yes. MS. KAGIWADA: Okay. Thank you. I yield. CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Galimba. MS. GALIMBA: Actually I think my question is for the main body, so I'll wait. Page 36 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: Okay. Seeing no lights on, so on the amendment. All in favor? Vote on Motion The motion to amend Bill 173 with the contents of to Amend: Comm. 960.2 was carried by the following voice vote: (Approved) Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kaneali`i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. CHR KANEALI`I-KLEINFELDER: Back to the main motion, Bill 173, as amended with the contents of Communication 960.2. Discussion? Council Member Galimba. MS. GALIMBA: So I guess the one sort of manini technical question I have, and it's based on the fact that,you know, probably all of us have folks who have contacted us over the year that have been in that exact scenario of renting out their extra bedroom and not realizing what the implications of that are. So for that person who maybe is dealing with you right now, I assume they are not part of this, but I'm wondering if they would also sort of get the amnesty. Would they not? MS. MIURA: Correct. The way the bill is written, honestly, if we find out today and there are reviews going back at least two years or more,you get an amended notice for the current year, which is this tax year we're in right now, and two years prior. MS. GALIMBA: Okay. MS. MIURA: So the amnesty hasn't started; this bill hasn't been approved so we're not recognizing this nor have I received any communication or anything from Council stating that we should not be doing compliance right now. So we're continuing on as business as usual. MS. GALIMBA: Okay. Gotcha. Well I think this is trying to help people to do the right thing. In a way I wish we didn't have to do a whole other tax class to do it, but thinking it through it probably is the way that we need to go to do what we want to do or do you have any other thoughts on that? Is there a way to do this without creating another tax class? MS. MIURA: The only thing I shared earlier was not restricting your homeowner tax class to exclude rental activity of less than 180 days and commercial if you're going to look at that as well, where if you live on the property you apply for the Page 37 FC-41 August 4,2026 homeowner program, you just do whatever you want and you get the best benefits. Then you don't have to worry about the calls or the complaints or compliance or any of it. That's my only thought on that. I'm not saying that's what I'm supporting, I'm saying if that's where the concern is coming from, that's your other alternative. MS. GALIMBA: Thank you for talking me through it. Okay. That's all my questions for now. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Villegas. MS. VILLEGAS: Yeah. First off, grateful for your honesty when you say you consistently dance that fine margin of honoring, trusting, and respecting the decisions of Council while also honestly, respectfully, and authentically expressing the challenges in RPT, in your office, and acknowledging and making sure we have a depth and breadth of understanding of how the many changes we have made to property taxes in the last few years affect your department, the people there, and the capacities to do your job. We struggle, all of us, constituents included, with this dance of tax rates, tax brackets, the variety of nuance usages of private property and the many different ways we identify those properties and their uses. We also have a community on the one hand that struggles to pay their mortgage and gas and all those things while also having, in my district particularly, disproportionate amount of newer community members who have utilized this opportunity for predatory behaviors which have disproportionately unbalancing our housing market, the price of real estate,just about everything top to bottom. So how we bring back some balance, some equity, while doing the most good, right, and the least harm because we will not be able to please everybody. But most of us on the Council in some capacity are parents or aunties or uncles that understand the challenge anyway and the impossibility of pleasing everyone. I'm on the fence with this. I struggle because, you know, having been around when Bill 108 was originally passed, which was a great step in the right direction. Now trying to recalibrate and realign everything that was happening at that time which has only escalated over time, COVID (Coronavirus Disease) and all the different external factors, the people wanted enforcement of that current legislation. I mean, I really appreciate your honesty and sharing how difficult it is to have people be the inspectors and be the "bad guy, bad person" out there busting people. I am constantly surprised by the number of people under quite exotic circumstances that have the audacity to claim, you know, hardship under circumstances that they are operating certain businesses, models, on their residential property. Wealth creation is very different than keeping shelter and a roof over your head for you and your family. I wish people understood more authentically and deeply how wealth creation for some in this current economic Page 38 FC-41 August 4,2026 linear model eliminates shelter for the common good, the collective. So it does have direct impacts. I know I'm talking in circles and a little philosophical here, but this is where my mind goes in all of this, especially in District 7 where there really are no long-term rentals and our workforce travels for hours on end to get here to make wages that can barely cover the gas nowadays to get there. So we find ourselves in these trying times and tipping point. So my deepest intension is to approve of legislation and move us forward to kind of digging out of or like,you know, there's a lot of systems just one more second, Chair. I'll finish here. I'm just sharing my conflict in this and sometimes the more complicated we make it the more complicated solutions are. So how do we simplify, do the greatest good, least harm, and without putting our RPT under water. So that's where I'm struggling with right now. CHR. KANEALI`I-KLEINFELDER: Thank you. Council Member Hustace. MR. HUSTACE: Thanks, Chair. Chair, you asked Council Member Kimball about her idea about where the approximate rate would be set and those ideas. You know, personally, I think the window's a little bit tighter between ag and residential-1, I don't think it can go closer to that affordable one, but personal opinion there to be conserved later in date. I still have an issue with the amnesty side as I've mentioned before on the rollback taxes. I understand the penalties and interest, but you have people that are in compliance that have paid all of their taxes, so what does that fairness provide to those that have been in compliance if we're trying to get them into compliance still owe. So I think that's still something that we need to consider in terms of the rollback taxes. Thank you. CHR KANEALI`I-KLEINFELDER: Thank you. I have one more thing, but go ahead, Council Member Kimball. MS. KIMBALL: You get to speak then. Just to that, Council Member Hustace, I'm happy to bring forward an amendment next time for the body to consider that would remove the rollback portion of that amnesty program and keep the penalties and interest as the items that are waived. To Council Member Galimba's question, it's really Section 19-53(e-a) I and 11, that is the one that we need to look at as an alternative because those are the ones that exclude people from the homeowner's tax class if they're doing the short-term rental or the commercial activities. So another way of addressing this would be to approach it from an amendment from that section of the code. There might be one other section, Lisa, if you recall, but I think that is the main one that keeps people out of the homeowner's tax class. One other brief comment that I think is worth maybe having you touch, Administrator Miura, is what some of the other counties do for this, not that we should always look at what other counties do. Sometimes they do crazy things. But, you know, some of the other counties do have the separate tax class for the Page 39 FC-41 August 4,2026 bed and breakfast type unit and I believe Maui actually even has a tier structure around those that are based on value as well, not that I want to create three more classes, but just because that was raised by you, Council Member Hustace. So would you just speak to that real quick? Thank you. MS. MIURA: I didn't bring the all state and the other counties tax classes, but I believe two counties, and it's Maui and Kauai, have a type of owner occupied and one is commercial use on a property, whether that's short-term rental or regular commercial activity where the owner resides. And so I can bring that to the next Council hearing because I don't have that here today. And the other one I believe did have an owner occupied short-term rental usage. It might be called TVR (Transient Vacation Rental), TAR(Transient Accommodation Rental). Everybody is using different terms, which is really adding to the confusion for the public. I'm going to just state by less than 180-day rental. MS. KIMBALL: Thank you. I'll just conclude by saying to Council Member Villegas, I am equally conflicted, even as the introducer. Typically we introduce a bill we support. This is one that I'm not sure I support. I am as conflicted as you are. You know, we heard, Council Member Kierkiewicz and I, as we were working on Bill 121, that this is a big issue is that people use bed and breakfast models to make ends meet, to pay their mortgage, to send their kids to college, whatever and they're really getting hit hard with these tax implications. On the other side of it there's this whole fairness issue of people that were caught and have been paying the fair taxes and all that. So I am as conflicted as you and that's why we're having this discussion here because I really need to hear from you guys about where we want to take this. Thank you. CHR. KANEALI`I-KLEINFELDER: Council Member Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. Council Member Kimball, I was curious if you had socialized this particular piece of legislation with community. I always like to know the temperature of folks that are going to be impacted with particular legislation, and I know the struggle that has been mentioned here at Council is will folks opt into this program or long-term rental, right? Is this going to cancel that out potentially. So couple questions here; reaction from community, and then, Administrator, with the change that we've just made to the legislation, do you think that is appropriate; there's appropriate distinction now between whether or not someone who's going to decide whether long-term rental or this pathway is more financially liable to them. I'll start with you and then Council Member. Thank you. MS. MIURA: I believe with the removal of the three percent cap there's going to be enough of a difference between that and the homeowner if the goal is trying to incentivize long-term rental. I think the concern when you had the three percent cap is it's just going to be a few dollars difference in the tax rate, which is a huge difference, but the three percent cap is honestly, to me as a long-time homeowner Page 40 FC-41 August 4,2026 that does not do short-term rental, that would keep me from ever doing short-term rental. So I think that hopefully answers your question there. And I just want to clarify, the other counties that do have an owner occupied commercial use tax class or owner occupied hosted rental, do not have caps associated with those. Maui has zero caps. Everything is tied to the tax rate. At the end of the day I will say no matter what we do people are always going to want to save more on taxes. It's their personal budget. The other counties that have the lowest tax rates of any of us,you know, whether it's $2.50 for the homeowner, their taxpayers want to see the caps. We want to see a lower tax rate. It's always going to be a struggle no matter what Council goes with. But hopefully with the three percent cap removed that will be enough of a difference for the homeowners to make a decision. MS. KIERKIEWICZ: Thank you. I just wanted to make sure that was shared for the record. I think folks want to see their tax money spent responsibly and that there's an actual return on investment like the pool in their neighborhood is being fixed and they have an actual park that was envisioned 50 years ago actually being moved forward. So I mean, I don't think folks have an issue with paying taxes so long as there's delivery, there's results that they are seeing that improves our quality of life. Council Member,just wanted to know if you wanted to weigh in on just the socialization of this idea and the impact? You know, I think as you mentioned earlier the real struggle has been being able to differentiate between people that live here and actually rely on this as an income to help pay for mortgage, they have parents that are in long-term care, they're paying for their kids college; and then you have individuals that don't live here and have the means, have the luxury to have an additional home and this being another source of income. So we've struggled with being able to differentiate those. So just again wanting to know what community reaction has been to this particular legislation. MS. KIMBALL: So I think if I could summarize the reaction from the community is as mixed as our own feelings and sentiments about it here. You certainly have the folks that have already been identified as operating a short-term vacation rental and then hit by these big bills, right? They've called to say, "Hey, what can we do?" Unfortunately, we can't do retroactive fixes. So you have that camp. Then you have the camp of folks that have either issues with the short- term vacation rental next door or they think there's a fairness issue. They've been following the law, they think there's a fairness issue and so they're less supportive of it. But then you have this whole other category like can you provide some relief, this is how we stay afloat. A lot of those folks I would say are the ones on agricultural land too,just to make a note of that. This was originally part of Bill 121. There was this put in there, so it was socialized with all of those conversations. It's also been up on the TVR website for a while now with some dialogue about it there,what it does, put out a couple Page 41 FC-41 August 4,2026 newspaper articles and things like that. So that's how it's been socialized and again, mixed response. MS. KIERKIEWICZ: Yeah. Thanks for that honesty. I'm really struggling here. Thank you. I yield. CHR. KANEALI`I-KLEINFELDER: Thank you. Ms. Kagiwada. MS. KAGIWADA: Thank you. Sorry. Just a quick comment on the tax rates and thinking about how, I think there was a comment made that we may lose tax revenue with this program. We don't necessarily have to. Depending on what next year's Council decides around the rates, it could be that this rate stays at the current Residential Tier 1, and then potentially the Tier 1 Residential, which no longer has our residents and homeowners in it, could potentially be raised. So it actually could be a revenue source going forward if we dethatch, I think, what we all seem to want to do, which is dethatch our resident homeowners from undo burden here. So I just want to mention that. I yield. CHR KANEALI`I-KLEINFELDER: Thank you. Okay, Bethany, are you speaking for the Planning Department today? MS. MORRISON: I was here for a specific resolution and the next Bill 180. CHR KANEALI`I-KLEINFELDER: Who's speaking for the Planning Department? MS. MORRISON: I can try and then if not, I can try and get our director down here. CHR KANEALI`I-KLEINFELDER: Maybe between the two of you. MS. MORRISON: I kept telling him, I think we're wrapping up. CHR KANEALI`I-KLEINFELDER: Yeah. But you forgot about me and my last comments. MS. MORRISON: You want me to bring him down. CHR KANEALI`I-KLEINFELDER: No. Let's see how this goes and we can go from there. So homeowners' exemption, this sits in the property tax code 19-71, because it's mentioned in this—it's mentioned, it's not a section, right? So 19-71(e); that's not a date; that's just a code section. Portions of real property including principle home used by any person for commercial purposes, which are legally permitted as a home occupation shall be excluded from this exemption but shall be entitled to an exemption with respect to the portion they have used exclusively as a home. The next section, Section F, notwithstanding paragraph Page 42 FC-41 August 4,2026 19-71(a-e), which is what I just read, above having portions of the principle home located on real property used exclusively as a residential housing rental for a term of not less than six months shall not prevent ineligibility for the exemption. So that's our long-term class carved out, correct? That still allows someone to have a homeowner's exemption. MS. MIURA: Correct. Just the exemption section. So that lowers your taxable value. The tax class is in 19-53. CHR. KANEALI`I-KLEINFELDER: Okay. Now, in the same sense, for Section E, because there's always different ways to skin a cat, right? Could we address, instead of a tax class, which I can see the heartburn for RPT right now, instead of the tax class, could a bed and breakfast be considered a homeowner occupation? We may need Jeff, but I mean, I thought we give it a shot. What do you think, Bethany? MS. MORRISON: We do have a definition of home occupation in our zoning code, and we do have it permitted within certain land use districts. It is different so far from a bed and breakfast or an STVR, by definition. CHR KANEALI`I-KLEINFELDER: Okay. So I didn't hear a no, but I did hear it's different. MS. MORRISON: It is different in our code currently. CHR KANEALI`I-KLEINFELDER: Okay. MS. MORRISON: It could be changed. CHR KANEALI`I-KLEINFELDER: Jeff, she did a good job. So catching up, so we're on the bed and breakfast RPT code that Council Member Kimball created. What I'm dancing around is there's always different ways to do something. So we're discussing the formation of a bed and breakfast and the associated components of how we break it down. Also allowed in the homeowner's exemption category is a homeowner occupation. Could a bed and breakfast be included in the classification of a homeowner occupation, which can then be charged fees and blah, blah, blah, by the department? (Note: At this time, Planning Director Jeffrey Darrow came forward to address the members of the Committee.) MR. DARROW: Jeff Darrow with the Planning Department. Aloha, Chair and Vice Chair, and members of the Hawaii County Council. If I understand your question correctly, you're asking whether or not bed and breakfast can fall under home occupation within our code? Page 43 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: Correct. MR. DARROW: Okay. So currently home occupation within our code is limited to very particular uses but only one employee outside of the people residing in the house. So it typically could fall under that. We don't have a charge for that, it's just right now a declaration that you file because that's what it was called, a home occupation declaration. CHR KANEALI`I-KLEINFELDER: Is it like a $25 filing fee? MR. DARROW: No filing fee. CHR KANEALI`I-KLEINFELDER: It's free. Home occupation; anybody can do it right now? MR. DARROW: Correct. CHR KANEALI`I-KLEINFELDER: Okay. MR. DARROW: And again, the way we look at bed and breakfast operations, and we've been meeting with Public Works, we've been meeting with other agencies, we look at it as subordinate and incidental to the single-family dwelling. It's not meant to be seen as a hotel or a lodge or an inn; it's meant to be accessory to the single-family dwelling and incidental to that main use of the dwelling. And again, as Council Member Kimball mentioned, it's a means that many people use to supplement their income and afford their mortgages and be able to make it here. CHR KANEALI`I-KLEINFELDER: Agreed. So the E section is what I'm looking at because then it gets specific. Those portions of the real property and or structures including the home used by any person for commercial purposes, which will legally permit it as a home occupation in accordance with the zoning code shall be excluded from the exemption but shall be entitled to an exemption with respect to the portion thereof used exclusively as a home. So it actually is this balance between homeowners' exemption and homeowner occupation, but you don't get your homeowners exemption for the portion of the home being used as a home occupation. So I almost want to say this actually does exist kind of right now in our code for those able to be in the homeowner occupation or to sign up for a homeowner occupation. MR. DARROW: So this would, if you were to compare it to a home occupation, a B&B, it would really depend on the amount of bedrooms that a particular applicant would request. Obviously if it was one bedroom, it would be less. If it was five bedrooms, that would be quite a substantial amount of the overall dwelling. Page 44 FC-41 August 4,2026 CHR. KANEALI`I-KLEINFELDER: It would be. And then we'd change the way we'd tax the building because this allows us to and RPT stop me if I'm wrong. MS. MIURA: So currently even if you have a bed and breakfast,you are getting a homeowner exemption, they just don't get the homeowner tax class. And the exemption amount cannot be more than the value of the area that the owner is solely occupying. And that's how we apply that homeowner exemption. So they are getting it currently. And if an owner does a beauty salon, they don't get the exemption for the portion of the beauty salon, but it doesn't cover the homeowner tax class. CHR KANEALI`I-KLEINFELDER: Okay. Okay. I don't know if it made things better or worse, but I mean there you go. Sorry I'm just thinking out loud really but I'm trying to find a different way of achieving the same result should just from what I'm gaging from the conversation as a whole today. Council Member Kimball. MS. KIMBALL: Yeah. Just to kind of build off on that. You know, one thing that's nice about the exemptions is that they are generally a more progressive solution in the sense that lower income, lower properties receive a greater benefit from the exemption than do higher value properties. And so another strategy around this would be to look at those exemption rates, which we did four to five years ago now, we did do an increase and that had been the first increase in, what was it, 30 years or something lengthy. At any rate,you know, I do think that clouds this conversation to have raised it, but it is another approach to this that is worth consideration. I can't believe I just said that about something you proposed. CHR KANEALI`I-KLEINFELDER: You did call me crazy and once in a while I prove it, but there is usually some kind of logic behind the craziness. Sorry, one more question for RPT. Within that same Section 19-71(b), the use of a portion of a real property, accessory building structure, used for the sole purpose of agricultural activities shall not affect the exemptions otherwise provided by this section. So I'm going to go back to the pre 76ersI gotta do it. Pre 1976, can get a homeowner's exemption and call it agricultural tourism activities because that's agricultural without affecting their homeowner's exemption. Is that right? MS. KIMBALL: May I answer that for you, Director? MS. MIURA: You are more than welcome to because the words that are about to come out of my mouth are not good for Council. MS. KIMBALL: So a homeowner can get the agricultural tax dedication benefit. So that is the lower property values that come from being in one of the ag programs as well as the homeowner tax class on their primary residence meaning Page 45 FC-41 August 4,2026 they get the three percent cap and the lower tax rate. We do not allow under our agri-tourism language in our code agricultural tourism to regulate short-term vacation rentals because the state law restricts agri-tourism covering overnight accommodations to counties with at least three islands, which is something that I've been trying to change for years because it's not very logical. All of this, all of the TVR stuff on ag land would be better regulated under ag tourism and I will be the first to admit that. But there's no relationship between ag tourism and tax policy at the County level. So we don't regulate overnight accommodation. CHR. KANEALI`I-KLEINFELDER: Can you summarize what she just said and then incorporate your experience into this? MS. MIURA: I don't step on Planning's policies or their chapter. I think a nice way to summarize it, so real property tax, what we're focusing on in that exemption in particular is the agricultural land use. So someone can now apply that County Council approved it and get a home exemption even though they have a lower agricultural use land value. You can also get the lower homeowner tax class and be doing active ag use. That was something Council approved so that farmers and ranchers on their own property can get the best of both worlds, and they can make money in regard to their ag use. So if they have a little farm stand, they can sell it and we're not going to come in and say, "That's commercial. You're out of the homeowner tax class because it's tied to ag use." And I know where you're going because I can see it, you're going to ask about farm stays. CHR KANEALI`I-KLEINFELDER: I won't even ask. MS. MIURA: Okay. So I will state this. Anything less than 180-days rental, and that's why I keep harping on that, is how it's worded in our code. We don't typically go to Planning every time we get a compliance single, is this pre 1976 or post? You have a rental of less than 180 days,you're supposed to pay TAT (Transient Accommodation Tax),you don't qualify for the homeowner tax class. I hope that answers that. I don't want to be used as the carrot and the stick for planning and building because it's too convoluted as it is in a tax structure, but that how we are used. CHR KANEALI`I-KLEINFELDER: I don't think I'm as smart as you think I am. I'll leave that one alone for a minute. MR. DARROW: Council Member? CHR KANEALI`I-KLEINFELDER: Yes. MR. DARROW: Real quick, I just wanted to maybe throw more of a wrench into this. So Planning for years has been trying to get the Land Use Commission to change their policy on agricultural tourism and overnight accommodations because as Council Member Kimball said, it is specific to Maui, right, the County Page 46 FC-41 August 4,2026 with three islands. We all argue we all have three islands but regardless it was specific to that. We were the first County to initiate the agricultural tourism ordinance and when we did, we had a section in that code, which is in our zoning code, that if agricultural tourism wanted to do overnight accommodation they had to come in for a special permit. So we've had not many, but a few come in that have legitimate agricultural tourist operations and they apply for a special permit to do the overnight accommodation as part of the overall agricultural tourism operation. And again, we'd love to see that more in line with agricultural lands that there be this strong connection to overnight accommodations and agricultural type uses, but it's hard when you're talking smaller lots; lots that are mainly lava or, you know, they're very poor for agricultural type purposes. But we have quite a number that offer, you know, they have tremendous agricultural operations going on and they really do provide an experience for locals and tourists to be able to see that operation. CHR. KANEALI`I-KLEINFELDER: Okay. Last question for Ms. Kimball. So when I said incentivize people to be in the tax class, is the incentive through if you don't sign up we're coming for you or is the incentive you save money on your property taxes by being in a different property tax class than where you are now? MS. KIMBALL: The intent of the bill is two-fold. One is to incentivize registration into the TVR platform by providing that amnesty period. The second is to acknowledge that a hosted rental or bed and breakfast is different from an unhosted rental and because it also serves as somebody's primary residence, perhaps they should get some tax relief as compared to a short-term unhosted vacation rental. CHR KANEALI`I-KLEINFELDER: Okay. Okay. Thank you. Okay, further discussion? Okay. Roll call on Bill 173, as amended with the contents of Communication 960.2? Vote on Bill 173: The motion to recommend passage of Bill 173 on first Failed reading failed by the following roll call vote: Ayes: Committee Members Galimba, Kagiwada, Kimball, and Chair Kaneali`i-Kleinfelder—4. Noes: Committee Members Hustace, Kierkiewicz, Onishi, and Villegas —4. Absent: Committee Member Inaba— 1. Excused: None. Page 47 FC-41 August 4,2026 Bill 180: AMENDS ORDINANCE NO. 26-44, THE OPERATING BUDGET OF THE COUNTY OF HAWAPI FOR THE FISCAL YEAR ENDING JUNE 30, 2027 Appropriates revenues in the Federal Grants—Certified Local Government account($20,192) and appropriates the same to the Certified Local Government Program account. Funds will be used to cover travel stipends for two staff members from the Planning Department and two Cultural Resource Commissioners. Reference: Comm. 994 Intr. by: Council Member Kdneali'i-Kleinfelder(B/R) Vote on Bill 180: Mr. Hustace moved to recommend passage of Bill 180 on (Approved) first reading. Seconded by Ms. Galimba and carried by the following voice vote: Ayes: Committee Members Galimba, Hustace, Kagiwada, Kierkiewicz, Kimball, Onishi, Villegas, and Chair Kdneali'i-Kleinfelder—8. Noes: None. Absent: Committee Member Inaba— 1. Excused: None. ADJOURN- There being no further business on our agenda today, Chair Kdneali'i-Kleinfelder MENT: adjourned the meeting at 11:48 a.m. Thank you very much. Approved: Mr. Matt K5neali,'i-Kleinfelde , Chair (Date) Finance Committee MK/tk Page 48