HomeMy WebLinkAboutCOM 0685.000 1996-1998 NtY OI ~/,K
JOHN L. SANTANGELO, JR. '?J ~ Phone: (808) 961-8263
Couneilmember FAX: (808) 969-3291
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COUNTY COUNCIL , "
County of Hawaii Cl
HawaiiCaunty Building ~
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25 Aupuni Street
Hilo, Hawaii 967211
Januazy 20, 1998 -
TO: Council Members
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FROM: ~'Yo2[n Santangelo
Council Member
RE: Special Financial Management Districts
The attached proposal to establish a Hawaiian Pazadise Park Financial Management District
dated April 1997 is submitted for purposes of discussion in the appropriate Council Committee.
In addition, you will find a review of the Proposal by Legislative Analyst Gerald Monden, which
poses several basic questions and includes a Corporation Counsel opinion dated December 22,
1997, and a copy of Senate Bill 1915 relating to Political Subdivisions.
Should you have any questions, please feel free to contact me.
Att. (Proposal/LA Review/Opinion/SB1915)
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Hawaiian Paradise Park Financial Management District
PROPOSAL for 1Vlayor Steven Yamashiro
April 1997
We are thankfiil and appreciative for your concern for the problems of the many existing
"substandard" subdivisions of your County. Your proposed solution to return Real Property
Taxes to the subdivisions through creation of a Special Financial Management District will
enhance the quality of life for all residents in these areas. We are especially honored that you
have chosen Hawaiian Paradise Park as a model for the possible establishment of this process.
1. Background. Hawaiian Paradise Park is located IS miles southeast of Hilo,
contains over 8,800 building lots and was established in the late 19~Os. This subdivision
fronts State Highway 130 and stretches four miles to the Pacific Ocean and is three and
one half miles wide. Approximately one and one-half miles of Highway 130 passes
through the subdivision beginning at its northwest border. Hawaiian Paradise Park
contains 13=4 miles of roads which it maintains privately via an assessment to all lot
owners. The only other funds available for operating this subdivision are funds given as
membership dues, earned by fimdraising events or charged for rental of facilities by the
voluntary Community Association, Paradise Hui Hanalike. There is a small amount of
County infrastnicture within its borders with a fire station and proposed waterline
projects. Even the parks that are County property are maintained by the Community
Association's Paradise Hui Hanalike Corporation through volunteers. This voluntary
or,anization owns 191 acres of mostly undeveloped land which can only be used for
recreation or education by deed restrictions.
E{awaiian Paradise Park is considered a substandard non-conforming private subdivision
and currently this area is referred to in the County General Plan as an orchard.
I
At this time there are an estimated 2,600 homes in Hawaiian Paradise Park with over
6,000 residents. It is the fastest growing commwnity on the island with at least 100 homes
under construction on any given day.
The potential population at maximum buildout for this conununity with current ohana
housing regulations is well over 30,000.
2. Pupose. The Purpose of this proposal is to present ideas to the Mayor of the
County of Hawaii concerning the establishment of a Financial Management District for
- ~ Hawaiian Paradise Park by the County of Hawaii. A Financial Management District
(FMD) is defined as a certain specific area in which a designated elected organization
controls finances which are gained from taxes and makes policy and improvement to their
particular community tlvough community based input to benefit the residents/lot owners
and their families.
a. The purpose for the creation of the FMD would be to provide a
manageable and legal solution to address the public problems of the substandard
non-conforming private subdivisions.
3. Goal. To establish Hawaiian Pazadise Park as a Financial Management District
(FMD) so that this district may build necessary infrastructure and manage its assets
through the distribution of money gained by taxes paid to the County of Hawaii to the
FMD on an annual basis. The amount of money would be established by negotiating the
following.
a. Real Property Taxes. The County to return the gross receipts of collected
real property taxes annually.
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b. Cost of County Services. The FMD will contract with the County for the
following:
1. Police
2. Fire
3. Solid Waste
4. Tax Administration
4. Oreanization. A governing charter will be established with approval of the
County of Hawaii and the Courts governing the County. This governing charter will
provide for procedures and establish each of the following broadly defined items:
a. The FMD will consist of seven equal voting districts. Each district
electing a District Supervisor every two years with staggered terms. The seven
District Supervisors elect their governing executive body including President,
Vice President, Secretary and Treasurer. All positions will be unpaid volunteers.
Details of the election procedure will be defined in the governing charter.
b. The FMD Board of Supervisors consisting of all seven District
Supervisors selects and employs a qualified paid Manager who oversees a
supporting staff and the day to day operations of the District's activities, prepares
an annual operating budget and capital improvement budget.
c. The FMD Board of Supervisors will select a member who will be
responsible for being a liaison with the County in cooperative efforts and to
communicate to the County activities in which the FMD is engaged.
d. The FMD Board of Supervisors will file annually the operating budget and
capital improvement budget with the Director of Finance, County of Hawaii.
3
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1. Operations- would include Road Improvements and Maintenance
including a road safety program. Establishment of a water supply source
and delivery system. Establishment of a Community Security Service
coordinating with County and State police procedures, policies and
operations. Establishment of a community recreation system including
programs, parks, trails and other related activities.
2. Capital Improvements would include the providing of office space
and equipment for the increased administrative functions required by the
FMD. Capital Improvements would be accomplished incrementally and a
Capital Improvement Fund Should be created with an annual amount paid
into this fund determined. As the FMD's population and responsibility is
projected to grow, a plan for capital improvements must be established.
3. Grants. The creation of a FMD for Hawaiian Paradise Park would
make the community eligible for grants for which they are currently
ineligible. The FMD would pursue the issuing of grants for improvements
within the community.
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5. Data.
a. Summary of [he cost of Hawaii County services currently provided:
Police (Gary Maesato) $443,000
Fire (Gerald Makino) 205,288
Solid Waste (Marty Shimizu) 57,357
' Tax Administration (Mike McCall) 220,900
Total: $ 926,815
We recognize that other services are provided by the County that could not be internally
provided by the FMD but this we believe would be offset by any taxes received by the
County that we do not call attention to as being negotiated in an annual FMD budget.
b. Real Property assessed value $334,83,300 and Taxes Collected in'96 and'97
52,585,717
County Services Contracted to FMD - 926,815
Real Property Taxes Returned to FMD 51,658,902
c. Budget for One Year for the Hawaiian Paradise Park FMD:
1. FMD District Manager and one supporting staff member
$ 7,000
2. Office Equipment and Supplies 19,000
d. District Improvement Budget with minimum improvements:
1. Additional Administrative Office Space annual budget item
l 6,000
2. District Security Patrol (One patrol person, equipmendadministration
for 24 hours per day) 317,000
3. Road Paving and Improving S7,680,200 over 10 years
763,020
4. Water Development [0 2~th Avenue Park and Elementary School
$1,132,000 over 3 years 394,000
5. Park Development (3l acre parcel) 30,000
6. Road Safety (Blind Hill Removal, Traffic Signs and Lighting)
142,000
Total 51,761,020
5
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e. Desired additional services and improvements for the district
1. Additional Public ~~~orks, Parks and Recreation Department Heads and
supporting staff
$125,000
2. Additional Water Development throughout Paradise Park on an
incremental basis 0 million over a 30 year program)
$350,000
3. Additional Park and Recreational Programs and Improvements
20,000
4. Additional Administrative Facility Improvement
30,000
_ Additional Security Patrol (two on one shifr)
75,000
Total Additional desired improvements S 600,000
Total of all desired improvements 2,361,020
Real Property Taxes to return to FMD - 1,658,902
Amount over and above Real Property Tax requested for FMD 702,018
6. Summary. This proposal has been developed with the understanding that it is an
opening effort. The numbers portrayed are For example only and should be used as a
guide for discussion. There can be no doubt that the future of government must be
smaller and closer to the people. The ideas contained within this proposal are consistent
with that approach. Those individuals within the community who have worked on this
concept are indebted to the Mayor for the bold leadership this idea represents.
6
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DONALD IKEDA ~ •!~jjd,'. ~ ALAN S. F:ONISHI
County Cfr.k ~ Lkpun Caurtn C lr.k
CONSTANCE R. F:IRIU
OFFICE OF THE COU\`rY CLERK c`y"f"""'"~"°`
County of H.+uv~i
Huumi County Bmtl~ny+
25 .~"rani $vttt
Htlu. Huuaii 96720
January 21, 1998
TO: Councilmember Bobby Jean Leithead-Todd
Councilmember John Santangelo
Councilmember AI Smith
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FROM: Gerald Monden, Legislative Analyst
SUBJECT: Special Financial Management Districts
Having reviewed the attached proposal for a Special Financial Management District (SFMD) as
submitted by Mr. Walter Moe, I conclude that there is a need for statewide legislative authority
to create this model. Section 1 of Article VIII of our State Constitution, provides that "[t]he
legislature shall create counties, and may create other political subdivisions within the State, and
provide for the government thereof. Each political subdivision shall have and exercise such
powers as shall be conferred under general laws."
Historically, state government has provided general laws by which citizens can improve
substandard azeas. Examples of these general laws aze Improvement by Assessments or
Improvement Districts, Community Facilities Districts, and Tax Increment Financing. The use
of these funding vehicles, appeaz to be hampered by costly construction standazds and a
willingness of residents to participate individually.
The SFMD, as proposed, provides yet another way in which citizens can improve substandard
azeas. The SFMD creates a sepazate government in itself. Under the proposal as submitted by
Mr. Moe, the Hawaiian Paradise Pazk (HPP) SFMD will be funded by real property tax revenues
from within its geographical district. The SFMD will contract for services from the County of
Hawaii for the collection of real property taxes, for police services, for fire protection services
and for solid waste services. Residual funds will be used to upgrade infrastructure and to hire
staff.
In considering legislation for the creation of a SFMD, a number of questions or assumptions
need to be clarified by proponents of enabling legislation.
1. In providing for a political subdivision of a county, will there remain a sufficient
tax base or revenue source with which to support county operations? It is noted
t ~ ~
that the SFMD has no sunset provision and thus, once created, could continue
forever. With the success of the model SFMD in upgrading substandazd
subdivisions, additional SFMDs will be formed resulting in a further subdivision
of a county and reduction of its real property tax base.
2. Are real property tax revenues sufficient for the operation of the SFMD? Will the
SFMD also be responsible for setting its own tax rate? It is conceptualized that
the SFMD will contract with the County for the collection of real property taxes,
for police services, for fire protection services, and for solid waste services.
Nothing is mentioned about legal counsel; procurement counsel; personnel
services counsel; building, plumbing, electrical, and housing code inspection and
enforcement; engineering, flood control, drainage, grading, and construction
inspection and enforcement; road maintenance; planning and zoning
administration and enforcement; recreational administration and services;
delinquent taxes and real property tax appeals; the function of Clerk of the
SFMD; conducting annual elections; conducting annual audits of public finds;
debt service of existing county debt; and insurance for the SFMD. How will the
SFMD obtain these services? As proponents, is it the intent that these services be
provided by the county, and if so, at what cost?
3. With the possibility of creating more than one SFMD, will the County of Hawaii
be able to realize economy from its reduced service area? Will there be reduced
work loads such as in the azea of building, electrical, plumbing and housing code
inspection and enforcement? The proposed concept for the HPP SFMD addresses
park development, additional Public Works, Parks and Recreation Department
Heads and supporting staff along with funds for additional Pazk and Recreation
Programs and improvements. These services are currently provided by the
county and seem to be duplicated in the SFMD. If there aze no savings, is the
expansion into these azeas necessary?
4. How will Highway fuel taxes be apportioned? The Highways Division of the
Department of Public Works is funded by Gasoline Taxes . Assuming that the
SFMD will be adding some 134 miles of road to the government inventory, and
assuming that the SFMD will be maintaining its own roads, the County must plan
and program for the reduction it its fuel tax revenues.
During the review of the SFMD proposal and as a result of discussions with Mr. Moe, it was
noted that the SFMD proposal assumed that the Hawaii County Council could enact the enabling
legislation based on the provision of Section 10-12 of the Hawaii County Charter. To validate
2
this assumption, an opinion was requested from Corporation Counsel Richard Wurdeman.
His opinion dated 22 December 1997 finds that Section 10-12 of the Hawaii County Charter does
not apply to the such an entity like a SFMD.
For your information, please find attached a copy of Senate Bill 1915 relating to Political
Subdivisions, which was introduced by Senator McCartney before the Nineteenth Hawaii State
Legislature in 1997. This measure is still alive.
Attach.
Approved by:
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CG~2GGL(-c/
Connie Kiriu
Legislative Auditor
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Stephen K. Yamashiro Richard Wurdeman
Mayor - Corporaeion Comml
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(~nixixf~r u~ ~ttivttit
OFFICE OF THE CORPORATION COUNSEL
I0l Aupuni Stree4 Suite 725 • Hilo, Haaai'i 96720.4263 • (808) %I.8351 • Faz (808) 961-8622
22 December 1997
TO: GERALD MONDEN
Legislative Analyst
FROM: RICHARD D. WURDEMAN/`~
Corporation Counse
SUBJECT: SPECIAL MANAGEMENT DISTRICTS
This is in response to your request for comment on the proposal
of Mr. Walter Moe to establish what he terms to be a "Special
Financial Management District" at Hawaiian Paradise Park.
According to Mr. Moe's proposal, the District would presumably
be an autonomous legal entity, since it would have the power to
contract with the County for various services. It would also
have a charter, an elected board, and employees.
The County clearly has the authority to create special districts
of various kinds, and there already exists provisions for such.
Chapters 12, 32, 33, Hawaii County Code. As you correctly point
out, however, the power to create political subdivisions is
constitutionally vested in the Legislature. Hawaii
Constitution, Article VIII, Section 1. This, in the case of the
Island of Hawaii, it has been done through HRS §4-1(1).
Section 10-12 of the Charter, while it anticipates the
establishment of special funds, clearly does not contemplate
this type of proposal.
I also note that the submitted proposal does not address such
issues as the applicability of such burdens of political
autonomy as civil service and procurement regulations.
Gerald Monden, Legislative Analyst
Page 2
22 December 1997
It is recommended that the proponents of this plan be advised to
either restructure their concept to fit into an existing
structure, such as a Community Facility District, or that they
take their case to the Legislature.
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DO\ALD IkED.-~ ',~j '~,i'~ ALA\ S h0`ISHI
CaunnCfrri i Ck.un C,m~n l':r•k
CO`STAXCE R. RIRIU
OFFICE OF THE CO(1.~;T1' CLERK Crgv/dmr luJVVr
Crun;v of HJLLVa
Hvuvu Cvunty BwLl~~y.
2J Aupum $vta
H~Iv. HvuuJ 96720
DATE: December 18, 1997
TO: Richard Wurdeman
Corporation Counsel
FROM: Gerald Monden, Legislative Analyst
SUBJECT: SPECIAL FINANCIAL MANAGEMENT DISTRICT(S)
Attached is a proposal on the establishment of a Special Financial Management District for Hawaiian
Paradise Park by the County of Hawaii, which has been submitted to Council Member Bobby Jean
Leithead-Todd by Mr. Walter Moe. Basically, this proposal provides for the creation of a special district
within [he County of Hawaii, from which real property taxes are collected and used to make improvements
[o infrastructure that benefit the residenu and lot owners of that special district. The finances of this
special disvict, will be controlled by elected representatives of that special district. The special district will
contract with the County of Hawaii for needed specific services such as Police, Fire, Solid Waste and Ta+c
Administration.
It is suggested by proponents of the Special Financial Management District that pursuant to Section 10-I2
of the Hawaii County Charter, the Council may by ordinance establish such a special fund for the proper
and efficient segregation of fiscal operation of the county.
On the other hand, i[ is suggested that there is a need for statewide legislative authority to create this type
of district. Section I of Article VIII of our State Constitution, provides that "[t]he legislature shall create
counties, and may create other political subdivisions within the State, and provide for the government
thereof. Each political subdivision shall have and exercise such powers as shall be conferred under general
laws."
[s the County of Hawaii, under its Charter and or any existing statutes, authorized to create a Financial
Management District az a distinct operating unit within the County of Hawaii as conceptualized in the
attached proposal?
Your guidance az to the enabling authority will facilitate the direction of further discussions.
Attach.
xc: Councilmember Leithead-Todd
Councilmember Santangelo
Councilmember Smith
Mr. Walter Moe
Approved:
Connie Kiriu
o
THE SENATE v' N O' ~ 15 ~
NINETEENTH LEGISLATURE. 1997
STATE OF HAWAII ~i;l'r 2 4 1997
A BILL FOR AN ACT
RELATING TO POLITICAL SUBDIVISIONS.
BE TT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
1 SECTION 1. The purpose of this Act is to have the
2 legislature, pursuant to article VIII, section 1, of the
3 Constitution of the State of Hawaii, set forth the conditions and
4 procedures for the creation and incorporation of political
5 subdivisions within the State.
6 SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended
7 by adding six new sections to part I to be appropriately
8 designated and to read as follows:
9 ^546-A incorporation of Dolitical subdivisions smaller than
10 counties; petition. A maiority of the real property owners of
I1'^y area all of whom reside within a single county, may file
12 with the clerk of the circuit court of the county in which the -
13 area lies a petition prayina that the area be incoroorated into a
14 political subdivision of the county. The petition shall:
15 Set forth reasons why the area should be incorporated
16 into a political subdivision of the county;
17 LZ Be accompanied with a map or plat of the area sought to
18 be incorporated into a political subdivision of the
19 county; and
SB LRB 97-2499
Paget S+R~ N0. ~q'~
1 Designate not more than five persons who are empowered
2 to act for the petitioners in the incorporation
3 proceedings.
4 On receiving the petition the court shall serve on the
5 county a copy of the petition in the same manner as a summons
6 would be served in a civil action, and shall also _c_ause notice of
7 the petition to be published for a period of twenty days in a
8 newspaper having general circulation within the county. The
9~*++Pstion of incorporation shall be tried before the circuit court
10 in the same manner as civil cases are tried. Any person legally
llinterested in the subiect matter of the petition may appear
12 before the court and contest the granting of the petition for
13 incorporation by presenting the evidence as they deem relevant.
14 The burden of proof in incorporation proceedings is on the
15 petitioners and the standard of proof is a preponderance of the
16 evidence .
17 546-B Criteria for incorporation of political subdivisions.
18 The circuit court for the purposes of determining whether or not
19 the area should be incorporated shall consider whether or not
20 incorporation will leave the county with a residual area within
21 its boundaries for which the cost requirements or other burdens
22 of county services would materially increase over previous years
SB LRB 97-2499
Page3 S~LJ~ I VOA ~q~J
for for which it would become economically or practically
2 unreasonable to administer as a county. The court shall consider
3 all relevant factors including the effect of the incorporation of
4 the political subdivision on the following:
5 1~ The ability of the area sought to be incorporated to
6 subsist financially on anticipated tax revenues;
7 L2 j_ Fxistina or projected streets or public ways•
8 Water mains and water services;
9 LZ Sewer mains and sewer services;
10 Law enforcement;
11 Fire protection;
12 S?~ Zoning and other county services; and
13 ~ The area or community as a whole.
14 546-C Political subdivision incorporation decree and filing
15 of documeats. On the entering of a circuit court order in favor
16 of incozporation the circuit court shall cause to be filed _a
17 certified copy of the order and findings of the court together
18 with a transparent reproducible copy of the map or plat in the
19 office of the county recorder of the county in which the
20 incorporated area is to be located.
21 45 6-D Election of officials of the ne~v Doliticnl
22 subdivision. No earlier than two years, and no later than five
SB LRB 97-2499
Page4 S,U~ I VOA ~ 1~~
l~~ears after the entering of the circuit court order in favor o_f
2 incorporation the state office of elections shall adopt rules
3 establishing procedures for the election of officials of the new
4 political subdivision.
5 446-E Political subdivision; role of elected officials of
6 the new Dolitical subdivision and the office of Dlanning.
7 Elected officials of the new political subdivision shall, in
8 cooperation with the office of planning adopt rules pursuant to
9 chapter 91 for the implementation of incorporating political
lOsubdivisions within a county. For purposes of this section, the
llelected officials of the new political subdivision, in
12 cooperation with the office of planning, shall develop rules
13 including:
14 ~Z The system for determining and collecting the property
15 tax and other funds for the operations of the political
16 subdivision;
17 ~j_ The methods whereby responsibilities from the county
18 shall be transferred to the political subdivision with
19 the least amount of disruption of government services;
2p and
21 ~ a^y other coordinative cooperative and transitional
22 recruirement generated by the incorporation of an area
23 within a county.
SB LRB 97-2499
Pages S.B. N0, ~ql~
1 546-F Incorporation completed. Upon filincr of the petition
2 required by section 46-A the election of officials for the new
3 political subdivision required by section 46-D, and the adoption
4 and development of rules required by section 46-E, incorporation
5 shall be complete."
6 SECTION 3. In codifying the new sections added by section 2
7 of this Act, the revisor of statutes shall substitute appropriate
S section numbers for the letters used in the new sections
9 designated in this Act.
10 SECTION 4. New statutory material is underscored.
I1 SECTION 5. This Act shall take effect upon its approval.
12 G
13 INTRODUCED BY: ~ ~
SB LRB 97-2499
REPORT TITLE:
Counties
DESCRIPTION:
Authorizes the creation of political subdivisions within the'
counties.
SB LRB 97-2499