HomeMy WebLinkAboutCOM 0769.000 2006-2008
Emily L Naeole
Council Member
Mailing Address: Business Address:
(Former County Building) 333 Kilauea Avenue, Second Building) 25 Aupuni Street Ben Franklin Building
Hilo, Hawai'i 96720 Hilo, Hawaii 96720
Hawai `i County Council
County of Hawai `i
Telephone: (808) 961-8267 Facsimile: (808) 961-8912
MEMORANDUM
TO: Pete Hoffmann, Chair
And Council Members
FROM: '0Emily Naeole, Council Member
DATE: October 25, 2007
RE: A Bill Amending Chapter 2, Article 25, Section 2-136 of the Hawaii
County Code Pertaining to Definitions Relating to the Appropriation of
Funds to Non Profit Organizations
Attached is a bill amending Chapter 2, Article 25, Section 2-136 of the Hawaii
County Code pertaining to definitions relating to the appropriation of funds to non profit
organizations, striking the reference to 501 (c) 3 organizations, specifically. This
reference to a specific tax exemption from the Internal Revenue Code limits our ability to
provide contingency relief funds to neighborhood watch and community association
groups that may be, say, 501 (c) 4 or 501 (c) 6 non profit organizations.
EIN/tce
43 ARP 19
Comm. No. -7 `49
Ref. To: C-I
Ref. Date
Hawaii County is an Equal Opportunity Provider and Employer
Ott.25. 2001 1:11FM COH -URCHA';:U Rc.7230
William TAabs
Post-W Fax Note 7671 DM0 1040°t~? ®r
Dheclar
To U F,an A%% L Co./D~pt Co. Nancy E. Cra4cs
'nr
Deputy Direr
,
Phone N Phone #
Faze IJs Fax#
f Hawaii
Finance Department
2$Aupun1 Strett, Room llg • Hilo, Hawaii 96720
(808)961.8234 . Fm(808)961-8248
January 26, 2007
Pete.Hof farm, Chairman, and
Members of the Hawai'i County Council
Hawaii County Council
25 Aupuni Street
Hilo, HI 96720
Subject: Hill for an Ordinance Amending Chapter 2, Article 25, Section 2-139 and Section 2-l il),
Hawaii County Code
Chapter 103D-102, HRS, the Hawaii public procurement code, provides exemptions from the code for
"grants" issued by the counties pursuant to their respective charters or ordinances. Chapter 2, Article 25,
Sections 2-139 and 2-140, HCC, establishes procedures for awarding grants to nonprofit organizations.
These procedures are limited to the annual grants awarded by the Hawaii County Council ($900,000), and
do not cover grants awarded through other means.
The purpose of the enclosed bill is to broaden the scope of Sections 2-139 and 2-140 by establishing
procedures for the awarding of grants to nonprofit organizations from other sources, including the
Council's district contingency relief account.
In your deliberations, we ask that particular attention should be given to the current definition of
"nonprofit". According to Section 2-136, "Nonprofit organization means an organization organized for
other than profit-making purposes and which has a current 501(cx3) tax-exemption from the Internal
Revenue Code." This means that grants to organizations in excess of $25,000 without this designation
would be subject to competition.
Should you have any questions or concerns, I will be happy to discuss them with you. Please contact rte
at your convenience. Thank you very much.
William Tak ba
Director
Enclosure
APPROVED:
Q~a~
Harry Kim
Mayor
.Oct . 25. 2"07. 1:12fM~COH :JRCHADC, ko723(,
COUNTY OF HAWA161 STATE OF HAWAVI
BII.I. NO. ~Q
-
ORDINANCE NO. 07 52
AN ORDINANCE AMENDING CHAPTER 2, ARTICLE 25, SECTION 2-139 AND SECTION
2-140 OF THE HAWAII COUNTY CODE 1983 (2005 EDITION), AS AMENDED,
ADMINISTRATION, RELATING TO APPROPRIATION OF FUNDS TO NONPROFIT
ORGANIZATIONS.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. Purpose.
The purpose of this ordinance is to clarify grants to nonprofit organizations and clarify
disbursement of these funds in compliance with Chapter 103D of the Hawaii Revised Statutes
Procurement Code.
SECTION 2, Chapter 2, article 25, section 2.139 of the Hawaii County Code 1983
(2005 Edition), is amended to read as follows:
Section 2-139. Procedure for awarding grants.
(a) All grants made to a nonprofit organization by the County shall he
made in accordance with one of the following procedures:
(1) Grants-in-Aid:
(A][(1)] Annually, before November 30, the director shall, for the
purpose of soliciting applications, establish a sum of at least
$900,000 to be available in the ensuing fiscal year for funding
requests by nonprofit organizations. The director shall publish
a notice soliciting applications in two newspapers of general
circulation within the County of Hawaii by November 30.
(D)[(-2)] All applications for grants shall be submitted to the
director on or before January 31 preceding the County's fiscal
year, which begins on July 1. Applications shall be prepared
on forms provided by the director. Applications not in
conformance with the requirements of the County Code may
be rejected.
[Q(041 The director shall submit to the council all qualifying
applications for its review and appropriation of funds. Site
visitations of nonprofit organizations submitting complete
applications may be conducted by the council and its
designated staff, as deemed necessary by the chair of the
Oct. 25. 2007_ 1:12PM-COH PURCHAS:N'G _ Nc. 7230_,,,'
appropriate committee, after January 31 but prior to final
action on the operating budget by the council. Any site
visitations shall be publicly noticed and conducted in a manner
that allows flexible councilmember participation and
designated staff support.
(12[(4)] Upon favorable action by the council to appropriate funds
for the giant, the director shall notify agencies of their funding
or lack thereof by July 3l and award the grant in compliance
with this article.
(2) Grants From District Contingency Relief:
(A) Approo0ations from the District Contingency Relief Qrartts
shall be transferred to an accenting County departmenUage nc_y
via resolution identifying the nonprofit organization and the
specific program, nroiect. or event for which the grant shall be
used.
(B) All Purchases of equipment for organizations must fo11Qw
procurerrrcnt law an be domiciled in the County departments.
Equipment, supplies, and products are the property of the
County.
(3) Other Grants:
(A) Grants in excess of $25,000 to nomrofit organizations shall
specifically identify the oreanizatio receiving the grant and
the purpose for which the grant shall be use do an ordinsmee
or resolution.
B) Grants in excess of $25.000 to organizations that do not ouglify
as naa=fit organizations shall specificallyy identifthe
pumose for which the grant shall be used in an ordinance or
resolution and be aMw to competition in compliance with
Chanter 103D of the Hawaii Revised Statutes.
(C) Grants of $25,000 or less may be authorized bXtthe finance
director for public purpose projects or prggrams upon written
request of a finding annoy or department. Such grants shall
not be limited to nonprofit organizations but sWL=cifically
identify the organization and pro amLnroiect or event for
which the aant shall be used and comply with the Rules and
$gg_ulations of the Director of Finance.
(b) In the event that a grantee organization is unable or unwilling to provide
the public service(s) for which a grant was appropriated, the following
prscedures shall aoix.
(1) For rg ants-(n-aid. the mayor may direct the finance director to
solicit applications from eligible nonprofit organizations to fulfill
the specific public purpose(s) for which the funds were originally
appropriated for the remainder of the fiscal year. The director shall
forward recommended application(s) and appropriation measure(s)
to the council for its decision. Funds appropriated to a successor
nonprofit organization shall not exceed the balance of unexpended
County funds awarded to the original grantee nonprofit
2
- - -
Oct. 2;. 2007 12PM_(OH PURCHRS:NG. No 7230....'
organization.
(2] or wants from the District Contiggc1a Relief the council :may
direct the return of the full Wropriation or the balance of
unexnended funds.
(3) For other grants. the finance director may direct the return of the
full grant amount or balance of the unexpended funds.
SECTION 3. Chapter 2, article 25, weton 2-140 of the Hawaii County Code 19£3
(2005 Edition) is amended to read as follows:
Section 2-140. Procedure for awarding purchase of service agreements.
All purchase of services made to a nonprofit organization by this
County shall be made in accordance with the following procedures:
(1) For purchases of services made pursuant to section 2-139(a)m:
U[(I)] Annually, before November 30, the director shall, for the
purpose of soliciting applications, publish a notice soliciting
applications in two newspapers of general circulation within the
County of Hawaii by November 30.
(__)B [(2-)] All applications for purchase of services shall be submitted
to the director on or before January 31 preceding the County's
fiscal year, which begins on July 1. Applications shall be
prepared on forms provided by the director. Applications not in
conformance with the requirements of the County Code may be
rejected.
Q[(3)] The director shall submit to the council all qualifying
applications for its review and appropriation of funds. Site
visitations of nonprofit organizations submitting complete
applications shall be conducted after January 31 but prier to
final action on the operating budget by the council. These site
visitations shall be conducted in a manner that allows flexible
councilmember participation and designated staff support.
@)1(4)] Upon favorable action by the council to appropriate finds
for the purchase of service, the director shall prepare a conract
with the nonprofit organization for the purpose of the purchase
of service award which shall meet all legal requirements of the
County and shall include program, fiscal and audit reporting
requirements sufficient to allow the director, the legislative
auditor or council to effectively monitor and evaluate the use of
the purchase of service. Agencies shall be notified by the
director of their funding or lack thereof by July 31.
U For purchases of services made pursuant to section 2-139(x)(2):
(A) At any time during the year, pursuant to resolution, the council
may direct that a portion or all of a councilmrmber's district
contingency relief may be used by a designated noil-profit
organization.
(B) A contract she be prepared with the nonprofit organisation for
the pPmose of the purchase of service or good which shall meet
3
Oct. 25. 2007 1:13FM COH PURCHAS:NG Nc.1230 5
all legal requirements of the County and shall include program,
fiscal and audit reverting reguiremcnts sufficient to allow the
legislative auditor or cogpgil to effectively monitor and evaluate
the use of the pmlghase of service or good.
SECTION 4. Material to be repealed is bracketed and stricken. New material is
underscored. In printing this ordinance, the brackets, bracketed and stricken material, and
underscoring need not be included.
SECTION S, If any provision of this ordinance, or the application thereof to any person c r
circumstance, is held invalid, such invalidity shall not affect other provisions or applications of the
ordinance which can be given effect without the invalid provision or application, and to this one,
the provisions of this ordinance are declared to be severable.
SECTION 6. This ordinance shall take effect upon its approval.
INTRODUCED BY:
COUNCI (EMBER, COUNTY OF AW 'I
Hilo, Hawaii
Date of Introduction: March 9, 2007
Date of 1st Reading: March 9, 2007
Date of 2nd Reading: March 21, 2007
Effective Date: April 4, 2007
REFERENCE: Comm. 174
4
Oct.25. 2001 1:''3FM COH ''JRCHAST\C kc ~23P
OFFICE OF THE COUNTY CLERK
County of Hawaii
Hilo. Hawai'i
Introduced 13y: Emily Naeole ROLL-CALL VOTE-r'-~
Date Introduced: March 9, 2007 AEf WBS'
First Reeding: March 9, 2007 Ford X _
Published: March 17, 2007 Higa X - ,
Hoffmann X
REMARKS: - - -
Ikeda X
Jacobson X
--...I•---..
Pilago X
Yagong X
F Ylunoto X - - -
L_
Second Reading: March 21, 2007
ToMayor: March 28, 2007 ROLL CALL VOTE
Returned: April 4, 2007 AYES NOES ABS i.,
Effective: April 4, 2007 - - -
Ford X
Published: April 23, 2007 X
Hip _
Hoffmann X
REMARKS: Ikeda X
Jac obson x
Naeole X -
Pilago x
Yagong x -
Yoshimoto g
1 DO HEREBY CERTIFY that the foregoing BILL was vdypted LY11 >ut C cil published as
indicated above.
APPROVED AS TO -Q C Iry
FORM AND LEGALITY:
COUNCIL H N
DEPU PORATION COUNSEL
COUNTY F HAWAII
% ~J COUNTY CLERK
Date 13, BMW: 50
Reference:
pprove Disapprovedihis day
of n . 10 J 1 Ord No.: 07 $'2..
r
R, CO OF HAWAI'1
Oct, 25. 2007 1:13PM COH PURCHASING N:, 1230
ADMINISTRATION 2 15
Article 24. Payment to County, Subsequently Dishonored.
Section 2-134. Service charge assessed.
In all instances where money due the County of Hawaii is dishonored when presented for payr,::ci, tle:
County may assess and collect a service charge in the amount of $20 against the payor. Payment of ':his l::"'
service charge shall be made in U.S. currency or other form acceptable to the director of finance, All ia:;
collected pursuant to this section shall be placed in the custody of the finance director for deposit ir: tit
general fund.
(1981, Ord. No. 708, sec. l; Am. 2003, Ord, No. 03-104, sec. 1.)
Article 25. Appropriation of Funds to Nonprofit Organizations,
Section 2-135. Purpose.
The purpose of this article is to establish standards for the appropriation of funds to nonln'i!
organizations providing programs and services which the County has determined to be in the public's intere;l.
(1982, Ord. No. 774, sec. 1.)
Section 2-136. Definitions.
As used in this article, unless the context otherwise requires;
(1) "Conflict of interest" means a substantial probability that action taken by an individual wil. , e3u1: h
measurable direct benefits accruing to the individual as opposed to benefits accruing in femsta
an industry.
(2) "Director" means the director of finance of the County.
(3) "Gram" means an appropriation of public funds to a nonprofit organization for a public purpose
(4) "Nepotism" means appointing persons to positions on the basis of their blood or marital relztionshq:
to the appointing authority, rather than on merit or ability.
(5) "Nonprofit organization" means an organization organized for other than profit-making p cft cs.::
and which has a current 501(c)3 tax-exemption from the Internal Revenue Code.
(6) "Perquisite" means a privilege furnished or a service rendered by an organization to an empCc3e:
officer, director, or member of that organization to reduce the individual's personal eKpenscs.
(7) "Purchase of service" means the exchange by an agency of goods and services to be delivar~;l by i
nonprofit organization to the general public for cash payments substantially equal in vale°. In sncl i
goods and services.
(1982, Ord. No. 774, sec. 1; Am. 1986, Ord. No. 86-52, sec. 2; Am. 1995, Ord. No. 95-138, sec. 2; Am. 1997,
Ord. No. 97-103, sec. 2.)
Section 2-137. Eligible organizations.
All grams and purchase of service payments made by the County to nonprofit organizations sr:: to N
made in accordance with these standards so that the funded nonprofit programs yield direct benefits to t h!
public and accomplish public purposes. No grant or purchase of services contract to a nonprofit org rimfou
shall be made unless the nonprofit organization meets the following criteria:
(1) The nonprofit organization is chartered or otherwise authorized to do business in the Scat,- f,
charitable purposes and exempted from the Federal income tax by the Internal Revenue Service.
(2) The purposes for which the nonprofit organization is organized provide benefits to the peepb: or 14,
County.
(3) The service or activity to be provided by the nonprofit organization, and funded by the Gorr ty,
shall address educational concerns, culture and the arts, the needs of the poor, youth, the aged, th, )sc.
with physical or emotional disabilities, victims of crimes, or victims of health or social xr€ ,Es
may be determined by the County.
2-45
Oct.25. 2001 1:13PM (CH PCRCHA3.'%G U 7230
Tail~~thly;~lhlfiam '
From: Masuda, Crai
g
Sant: Thursday, November 03, 2005 2:33 PM
To: Ashida, Lincoln; Gray, Bill; Leithead-Todd, Bobby Jean; Bell, Barbara
Ca: Bauman, Robin; Takaba, William; Takase, Gerald; Rodillas, Martha; Garson, Kathy
Subject: RE: Pete Hoffman, Discretionary Fund
FYI , I gave BJ a copy of the October 25, 2005 Bill Smith memo setting out the procedure to
Council for this kind of fund transfer. As stated in the memo council will need to fill out the R & D
application and approval process before the required confirmatory letter that will trigger the
transfer resolution will be sent. As I discussed with BJ seems that there has not been a showing
of public purpose for expending these funds even if this is a non-profit.
I think that Bill Gray is correct that as it stands this is not a procurement issue under 103D nor is 'I
the Finance Director kind of Grant under Rule 16. Section 2-135 grants doesn't seem to work
either. So for my 2 cents it seems like the transfer should be thru R&D if they can so the public
purpose. Like BJ says although it's their discretionary fund it's still public monies.
From: Ashida, Lincoln
Sentt Thursday, November 03, 2005 8:40 AM
To: Gray, Bill; Leithead-Todd, Bobby Jean; Bell, Barbara; Masuda, Craig
Cc: Bauman, Robin; Takaba, William; Takase, Gerold; Rodillas, Martha; Garson, Kathy
Subject: RE: Pets Hoffman, Discretionary Fund
I am copying this series of emails to Craig Masuda, our Finance Department attorney, for h is
Information and input.
From: Gray, Bill
Sent: Thursday, November 03, 2005 8:32 AM
To: Ashida, Lincoln; Leithead-Todd, Bobby Jean; Bell, Barbara
Cc: Bauman, Robin; Takaba, William; Takase, Gerald; Rodillas, Martha; Garson, Kathy
Subject: RE: Pete Hofrman, Discretionary Fund
At the risk of sdcking my nose where it doesn't belong (again), if this is a grant, its not a
procurement issue.
103D- I 02(b)(2) (A) exempts " For grants or subsidies as those terms are defined in
section 42F-101, made by the State in accordance with standards provided by law as
required by article VII, section 4, of the State Constitution; or by the counties pursuant to
their respective charters or ordinances."
I think Corporation Counsel needs to tell them exactly what they need to do, if anything,
to comply, Is the budget ordinance enough to cover this type of thing, or do they need to
pass a specific ordinance for each such grant?
I think the "grants" we have made under Finance Director's Rule 16, (16.8(d)) are really
essentially 103D-305 small purchases which we approve as "competition not practical"
(essentially a sole source). This night fall under this process, but I for one would be a lot
more comfortable if there was some open and public process where all community
groups would have an equal opportunity to receive these funds, as R & D currently
Oct.2,'• 2007 1:10M COH PURCHASING N, _/230
advertises and selects projects on relative merit. Bobby Jean is right on when she says
"there needs to be some parameters to how they spend the discretionary money."
It seems like I've also had this discussion with Connie Kiriu and she was also concerned that
there be some standard process.
Bill Gray
Purchasing Agent
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
808-961-8440
FAX 808-961-8246
---Original Message-
----From: Ashida, Uncoln
Sent: Thursday, November 03, 2005 6:52 AM
To: Ieithead•Todd, Bobby Jean; Bell, Barbara
Cc. Bauman, Robin; Takaba, Wllllam; Gray, Bill; Takase, Gerald; Rodillas, Martha; Garson, Kathy
subject: RE: Pete Hoffman, DWewnary Fund
Bobby,
Thank you for your wise counsel, as always, and for staying on top of this. I wanted to add
my observation that this is not the first time we have seen this with some of the new Council
members. I have offered (in writing, multiple times) the Council In-service training by cur
office, but have not been taken up on it.
The bottom line for this issue is this: The Council needs to realize this is taxpayer money, n; t
theirs.
Thanks for letting me share my input.
Linc
From, Leithead-Todd, Bobby Jean
Sent: Wednesday, November 02, 2005 7:13 PM
To., Bell, Barbaro
Ce: Bauman, Robin; Ashida, Uncoln; Takaba, William; Gray, Bill
Subject: RE: Pete Hoffman, Discretionary Fund
Barbara,
I have several concerns over this transfer of funds. Pursuant to the Chapter 5 of the C ounty
Charter the Department of Environmental Management is to promote'Rhe wise management
of our waste." The department "shall manage solid waste, wastewater and recycling
programs of the county and exercise such other functions as prescribed by ordinance.' So
the question I ask is this a solid waste program of the un ?
If this is a grant to a non-profit, this is outside of the normal non-profit grant program the
Council runs which is provided for in the County Code. This transfer may run afoul of Sectior:
Ort.25, 2001 1:14PM CCH PLRCHAS:KG Uc.72Y)
2-83(b)(3) and (5) of the County Code. When we give out grants, we advertise and give all
non-profits an opportunity to submit an application for the funds.
Since Article 25 Sections 2-135-142.2 of the County Code governs grants to non-profits.
Section 2-137 states that "1a]II grants and purchase of service payments made by the County
to nonprofit organizations are to be made in accordance with these standards." Section 2-
139 states that all grants to a nonprofit shall be made pursuant to the procedures within that
section. If this is a grant to a nonprofit, it is not consistent with the county code. If this is a
purchase of services it should be done pursuant to Section 2-140. There is some provision in
Rule 15 of the Finance Dept. for grants to nonprofits, however, I believe that rule predates the
most recent amendment to the County Code regarding grants and purchase of services.
Bill and Bill, any comments? I know we want to work with the Council, but there needs to be
some parameters to how they spend the discretionary money.
From: Bell, Barbara
Sent., Wednesday, November 02, 2005 6;05 PM
To., Lefthead-Todd, Bobby Jean
Cc: Bauman, Robin
Subject: FW: Pete Hoffman, Discretionary Fund
BJ, I tried to get out of this by telling Pete Hoffmann that this didn't look like a project that
discretionary funds were to go to.
However, it appears he has approval from Council side somehow. I don't want to bring it up
directly with Pete, again, do you know if this is OK?
Thank you, Barbara
From: Copman, Unda
Sent: Tuesday, October 25, 2005 1:49 PM
To: Bell, Barbara;
lindae808aa,yahoo.comCc <mailto:lindae808(a yg&og.comCc>: Ho, Nelson
Subject:
Aloha Barbara Bell & Linda Elliot,
Linda Copmen here from Pete Hoffmann's office. Would you kindly review the attached draft
resolution to transfer $10,000 from Mr. Hoffmann's discretionary fund to DEM, then to North
Kohala Community Resource Center, to assist with site preparation (specifically hauling away
of rubbish cleared from the site) for the Hawaii Wildlife Center.
Barbara, would you kindly review the DEM account number and name to receive the funds
« File: Reso Transfer to DEM 051024.doc << File: com_wildlife 051024.doc , and
let me know if these are correct.
Linda, would you let me know when you are ready to go with this funds transfer, so that we
can get the ball rolling. It will take at least two months to process this funds transfer, so the
sooner we start, the better.
Looking forward to hearing back from you both by November 1, if possible.
Mahalo,
Linda
Oct. 2:. 2007 1aP COH PURCHAS'NG Nc.7230
iTRATION GRANTS AND SUBSIDIES ,F-,t?
nadical malpractice risks only) Note
(L 1988, a 266, pt of em L j Privatizadoe; eontreeting of so"MMO t r ices with the private rector (TepeahA Lune 0.::p r, I,
c 132,13; am L 2004, a 216, tool, ego, 42.
. F• ernes lteremrcaa
. Purchases of health and hvm services, tee chapter 103F.
sent provteiew, sec chapter 97A
[W-1011 Definitions. As used in this [chapter), unless the contr r.! rh •a d l
Late, tee requires otherwise:
e claim within the purview, of "Grant" means an award of state funds by the legislature, by an apps viAi t c c ~il
and the comptroller may pay to a specified recipiem to support the activities of the recipient and prradt h;
community to benefit from those activities.
"Recipient" means any organization or person receiving a grant or LIN i 1,
"Subsidy" means an award of state funds by the legislature, by sc app c.
priation to a recipient specified in the appropriation, to reduce the costs in:t, n s.1 b y
9r the organization or individual in providing a service available to sot is of R J
t: members of the public. [L 1997, c 190, pt of §31
[142F-1021 Applications for grants and subsidies. Req rests f,-. ipa r t
and subsidies shall be submitted to the appropriate standing cornmitterr cif i b
legislative at the start of each regular session of the legislature. Each req;wgi: sb a 1
1 state:
(1) The name of the requesting organization;
321.233, I, (2) The public purpose for the grant or subsidy;
(3) The services to be supported by the grant or subsidy;
r,. rP
l comptroller may..
(4) The target group; and
liability of the State that may (5) The cost of the grant or subsidy and the budget. [L 1997, c 190, p'' of 131
Pursuant to section 29-15.5;
µ (§44.F-1031 Standards for the award of grants and subsidies. (a,l (Iru in
ere to cover the liability of a and subsidies shall only be awarded to individuals who, and organization s nth is b :
rsuant to section 41D-2.
[L (1) Are licensed or accredited, in accordance with federal, state, or erns t,,
statutes, rules, or ordinances, to conduct the activities or prov;de ty'
services for which a grant or subsidy is awarded;
(2) Comply with all applicable federal and state laws prohibiting d4 ui h r a
SES OF SERVICE tion against any person on the basis of race, color, nation I c63 e
religion, creed, sex, age, sexual orieutation, or disability;
(3) Agree not to use state funds for entertaiamem or lobbying aetiviti ;r; a u'.
t' (4) Allow the state agency to which funds for the grant or subsidy v c n
a k appropriated for expenditure, legislative committees and their su n% t a:
a the auditor full access to their records, reports, files, and other mlat x'.
documents and information for purposes of monitoring, meantrlug tar.
effectiveness, and assuring the proper expenditure of the gram or s l ibs'i y
(b) In addition, a grant or subsidy may be made to an organization onl J if t it
ES 1 organization:
I (1) Is incorporated under the laws of the State; and
(2) Has bylaws or policies that describe the manner in which the activ tic; r
services for which a grant or subsidy is awarded shall be conduine<(
provided.
s (c) Further, a grant or subsidy may be awarded to a non-profit org;Lu.2wit4
only if the organization:
(1) Has been determined and designated to be a non-profit organizs:inn 1,3
the Internal Revenue Service; and
Till i
i
I
4
Ott.25. 2001 1:'SPM COH P''JRCHAS'NG ~o, 72P
42F-103 STATE FINANCIAL ADMINISTRATION
1
(2) Has a governing board whose members have no material COWL :t a'
interest and serve without compensation. [L 1997, c 190. 3t of [ i'I
[142F-1041 Contracts for grants and sobsrlim a*gx4xatitut 'air t
be disbu;*d,Oy.a contract between the state ages y desig min d
'f'or the.60Kupnationa by the legislaaue, and the st ctpient i,f a_e
ee 0_ ve as o 51tLo NW-do y at the: Sscal yuv
gr r~ :aeapp[vpsiar4d„povldedthetup•uon-
be disbursed prior to the evxutiot r fit e
c pt of §31
[§42F-1051 Allotment Contracts to disburse and appropriations for 1,. aas
and subsidies shall be subject to the allotment system generally applicable I t al
appropriations made by the legislature. [L 1997, c 190, pt of §3]
I ;
[142F-1061 Monitoring and evaluation. Every grant or subsidy st-al b:
monitored by the expending agency to ensure compliance with this chapter sal: th;
public purpose and legislative intent of the grant or subsidy, [L 1997, c 190, pt o.'?]
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Oct-i5- 2007 1:15PM COH DJRCHA31NG Rio.7230
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STATE OF HAWAII
STATE PROCUREMENT OFFICE
P.O. Box 119
Honolulu, Hawaii 96810-0119
Tel: (808) 587-4700 Fax: (806) 5874703
www.spo.hamii.gov
SP) 06-N40
May 24, 2006
Ms. Colleen Schrandt
Legislative Audit Analyst
County of Hawaii
Office: of the County Clerk
25 Aupuni Street
Hilo, :Hawaii 96720
Dear Ms. Schrandt:
This is in response to your May 19, 2006 request pertaining to applicability of MS
Chapter 103D, the procurement code regarding "grants". The procurement code provides
exemptions for "grants" as follows:
§103D-102(b)(2)(A)
For pants or subsidies, as defined in HRS Chapter 42F made by the state, or by
the counties pursuant to their respective charters or ordinances; or
§103D-102(b)(2)(I)
Pursuant to HRS Chapter 103F, for contracts to provide health and human
services. Act 169, SLH 2005 amended section 103F-101, to allow the counties to
utilize Chapter 103F to purchase health and human services.
We view appropriated funds, which do not specify a named recipient or provides, to be
subject to compliance with the procurement code, unless addressed by county charter or
ordinance.
Sincerely,
Aaron S. Fujioka
Administrator
Oct. 25. 2001 15PM COH PURCHASING No 7230
MAY-19-2008 FRI 12 17 PM CoN Legislative Auditor FAX NO. 808 981 8672 1' (1
C'ON8TANC0 K, KIItlU WILLIAM r,. ; h41'l l
f'a,nb r.'hr.! rhytryV~wP :hr
County of Hawat'1 ~ ale "'pt
Office of the County Clerk DEM
25Aymj.9tvgt :4
ufln, 1lawalYDd72f) ~ I1
Talcphrmr: (YOJ)9014z5J 1•'41fnurs; r808)961.891. !W^~?' '~V dleter--f•,.:
May 19, 2006 Q,-sf 1f.na ~y 'n.o
Ms. Ruth Yamaguchi
State of Hawaii
Office of Procurement
1151 Punchbowl at,
Honolulu HI 88813
Fax: 1808) 588-0870
Ruth,
As discussed in our telephone conversation 1 respectfully request your written Intsipreta C I
of opinion pertaining to exemption of County `grant awards" under MRS 103b-1020))(2)(A.I,
Just to reiterate, you Indicated that In the case of the 'grant awards' by the County I_egisl:r
Branch directly to a service provider in accordance with the County Code the awards woul l
be exempt under HRS1030-102(b)(2)(A),
The scenario for which I would like to request your wrrttsn interpretation of the applicability df
procurement law or exemption there from fa:
A County agency or department submits its annual budgot for review and approval, the
budget includes monies in an account tided "xxxx programs", the budget is adopted by
ordinance. The agency subsequently develops "grant guidelines" broadly outlining provider
qualification criteria and program requirements, limits the portion of the program funds to bin,
allooei:ed to any individual provider, and subsequently contracts with the provider applicart,:
that it determines are qualified. There is no public reading or formal legislative branch
approval of the grant guidelines or awards or contracts, The situation Is not specifically
addressed by the County Charter or Code.
Sincerely,
tf~rGC~e c:X-
COLLWIN SCIlIkANDT
UgisWive Audit Analyst
Nawof'i County 4 An NgenlOpporrually ProvrdrrAndAmploysr
Oct.25. 2007 1:16PM COH PIIRCHAMC~'0.7230
Takaba, William
From: earon.fujioka@hawaii.gov
Sent: Wednesday, May 24, 2008 3:18 PM
To: Takaba, William
Subject: For Your Review Please
Cc-HI Audkor.pdf 06-0340.doc
Bill,
I
In,'ollow-up to our discussion yesterday, please let me know if you have
any concerns with my draft reply, thanks, Aaron
(See attached file: Co-HI Auditor,pdfl(See attached file: 06.0340.doc)
I
it
Oct.25. 2001 1:16PM COH PURCHASING No 7230
DEPARTMENT OF FINANCE
COUNTY OF HAWAII
STATE OF HAWAII -
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
Pursuant to and by virtue of the authority set forth in ;E;E:ic.i:.
10-14 and Section 13-7 of the Charter of the County of liawaiA., ii
Chapters 91, 103 and 103D, Hawaii Revised Statutes, the Dirac=oz
Finance of the County of Hawaii, subject to the approval i!if 1:
Mayor of the Count$ of Hawaii, hereby amends the Rult:n it
Regulations of the Director of Finance by amending "Rule No, lip
relating to purchase of materials, supplies, equipment and see;,ici
to read as follows:
RULE NO. 16
RULES AND REGULATIONS RELATING TO
PURCHASE OF MATERIALS, SUPPLIES,
EQUIPMENT AND SERVICES
Sec. 16.1 Definitions. For the purpose of this Rule f;c,
following terms, phrases, words and their derivations shall hn . C
meaning given herein. When not inconsistent with the context,
used in the present tense include the future, the masculine shill 1
deemed to embrace and include the feminine and the singular sha11 1
deemed. to embrace and include the plural. The word "shall"
always. mandatory and not merely directory.
-1-
Oct.2;. 2007 1:16PM COH PuRC4asIUG X0.7230
(b) Purchases over $400.00, shall be made by the Divi3iod n:
Purchasing, except for those items specifically delegwr':0
to certain using agencies or those items specifi.ciO.J-1
exempt by law or rule. Agencies shall submit a requ:is,i.{:uji
to the Division of Purchasing together with :cnfly:
specifications for the requested goods or services.
sec. 16.8 Hon-competitive Purchases Hon-competitive pwith;i;
shall conform to Hawaii Revised Statues and. Hawaii Administrit+:i i
Rules, provided that unless otherwise exempt by rule or law:
(a) Purchases over $400.00, but less than $5,000.00, sail.] 'i
approved in advance by the Purchasing Division.
(b) Purchases over $5,000.00, but less than statutory
for advertised bids or proposals, shall be approved .i
advance by the Director of Finance.
(c) Purchases for amounts exceeding statutory limits ':ri:
advertised bids or proposals shall be made only i
conformance with all requirements of Hawaii Xiiliv,r i
Statutes including posting on the Purchasing DIV13 101
Bulletin Board for the required period of time, n:n9,
exceeding $100,000.00, including cost and pricing dat;:,,
(d) Grants to non-profit agencies, charitable institutions j
community group§, not to exceed $25,000.00, tnay
authorized by the Director of Finance for worthy projccUt
-9-
./Oct.25. 2001 1:'6PM COH PURCHASING x0,7230 ;
or programs which enhance the community or provide not:
services or assistance to residents or visitors, aE:n
written request of a funding agency.
Sec. 16.9 Approval and Signing of Purchase orders.
il, a) Purchase orders and confirming payment authorizatior.r. ;dE
be approved and signed by the Director of F.;naac ,
Purchasing Agent or any employee authorized by the W.rarl,::
of Finance.
~(b) Signing of purchase orders and confirming papnI.It
authorizations may be by facsimile signature.
(c) Electronic transactions without physical documents Iue.,r 1,i
employed, provided that proper controls i:a,:aacJi~
electronic verification are instituted.
Sec. 16.10 Negotiated Sales of Property. The Director of Virer1s
may dispose by negotiated sale any County property found •azuee:r at
for public purposes and valued below $250.00, without PLII:
auction. The Director of Finance may authorize the transfer of ~
Y
County Property found unusable or in excess of neads to
recognized charitable or non-profit organization if, :1n s~
Director's opinion, there will be a public benefit to ecali i
transfer. Such transfers shall be made in accordance vrith riii;t !¢t
procedures established 'by the Director of Finance and w.. :;t
procedures and a record of any such transfers shall t,e l:t! 1:
available for public inspection.
-10-
0c (.2;. 2007 1:'6PM COH PURCHAS''NG ~o.723(1
Paea10-
$103D-102 Application of this chapter. (a) This chapter shall appal,,
to all procurement contracts made by governmental bodies whether `.I-_e
consideration for the contract is cash, revenues, realizations,
receipts, or earnings, any of which the State receives or is owed;
in-kind benefits, or forbearance; provided that nothing in this
chapter or rules adopted hereunder shall prevent any governmental
body from complying with the terms and conditions of any other gr~:re,
gift, bequest, or cooperative agreement.
(b) Notwithstanding subsection (a), this chapter shall not apply I:(:)
contracts by governmental bodies:
(1) Solicited or entered into before July 1, 1994,
unless the parties agree to its application to a
contract solicited or entered into prior to July I.,
1994;
(2) To disburse funds, irrespective of their sour.::e:
(A) For grants or subsidies as those terr_s
are defined in section 42F-101, made by the
d-1^~~~ State in accordance with standards provi:::,1
sOc( 64, by law as required by article VII, section.
4, of the State Constitution; or by the
counties pursuant to their respective
charters or ordinances;
cov#rj
I,rg
(B) To make payments to or on behalf of
public officers and employees for salariE,•s,
fringe benefits, professional fees, or
reimbursements;
(C) To satisfy obligations that the Statr :Ls
required to pay by law, including payinc
fees, permanent settlements, subsidies, nr
other claims, making refunds, and rEturr,:: n(j
funds held by the State as trustee,
custodian, or bailee;
(D) For entitlement programs, including
public assistance, unemployment, and
workers' compensation programs, established
by state or federal law;
(E) For dues and fees of organizations of
which the State or its officers and
employees are members, including the
National Association of Governors, t:he
National Association of State and Count-
:n ! UMAG/t, 1</LTT14Z/Y1n2T.I=q mnzn.nl 111"'fft.
00 21. 2007 1:'7PM COH PLRCHAS;NG No.7230 ~ l)
Pas r, ~r' !
Governments, and the Multi-State Tax
Commission;
(F) For deposit, investment, or safekee'cin;
including expenses related to their dep~'=.i.1.
investment, or safekeeping;
(G) To governmental bodies of the State;
(H) As loans, under loan programs
administered by a governmental body; ane
(I) For contracts awarded in accordance
chapter 103F. (Ra"w A. ttmt1 SWICCO
(3) To procure goods, services, or construction ~'.rcrn
a governmental body other than the University of
Hawaii bookstores, from the federal government, c_,r
from another state or its political subdivision;
(4) To procure the following goods or services o,).ich
are available from multiple sources but for whirl-,
procurement by competitive means is either not
practicable or not advantageous to the State!
(A) Services of expert witnesses for
potential and actual litigation of lega'
matters involving the State, its age:nciE::,
and its officers and employees, includir(.[
administrative quasi-judicial procee:din<G'"
(B) Works of art for museum or public
display;
(C) Research and reference materials
including books, maps, periodicals, and
pamphlets, which are published in print,
video, audio, magnetic, or electronic f r, nu
(D) Meats and foodstuffs for the Ka7.aupzr,,:,
settlement;
(E) Opponents for athletic contests;
I
(F) Utility services whose rates or pri*. 3
are fixed by regulatory processes or
agencies;
(G) Performances, including enterta..nme;,:,
rIAAA-n„'qnrueninzn=e mnIn_ni 1,V" II
0c (.2-1. 2007 17PM COH MCHADG ~07230
Page
speeches, and cultural and artistic
presentations;
(H) Goods and services for commercial resa:.o
by the State;
(I) Services of printers, rating agencies,
support facilities, fiscal and paying
agents, and registrars for the issuance ::Yid
sale of the State's or counties' bonds;
(J) Services of attorneys employed cr
retained to advise, represent, or provic.
any other legal service to the state or i.uy
of its agencies, on matters arising under.
laws of another state or foreign countrl,
in an action brought in another state,
federal, or foreign jurisdiction, when
substantially all legal services are
expected to be performed outside this St:tnt
(K) Financing agreements under chapter 'D,
and
(L) Any other goods or services which t}.(
policy board determines by rules or the
chief procurement officer determines in
writing is available from multiple ~ourci
but for which procurement by competitive,
means is either not practicable or rot
advantageous to the State;' and
(5) Which are specific procurements expressly exe,mpi.
from any or all of the requirements of this chafi;Fx
by:
(A) References in state or federal law t.t
provisions of this chapter or a section (,ff
this chapter, or references to a pazticula:_
requirement of this chapter; and
(B) Trade agreements, including the Uruguay Round General Agreemea.C,
on Tariffs and Trade (GATT) which require certain non-constrcctiur.
and non.-software development procurements by the comptroller to lj(
conducted in accordance with its terms.
(c) Governmental bodies making procurements which are exempt from
this chapter are nevertheless encouraged to adopt and use previs.om;
of this chapter and its implementing rules as appropriate; proviclf-d
Mnnaf~n114fRRRntnIT)17-TRq 0101TVt--- 'rl.'2CCf
Oct.25. 2007 17[M (CH FLRCHAS'NG %0.7230
Pal;; 4
that the use of one or more provisions shall not constitute a.
of the exemption conferred and subject the procurement or the
governmental body to any other provision of this chapter. [L Sp ".193
c 81 pt of 92; am L 1994, c 186, §6; am L 1995, c 16, §1 and c 1"1.;
§3; am L 1996, c 13, §3; am L 1997, c 186, §§2, 5 and c 352, §23; ;-;Ii
L 1999, c 149, §12; am L 2001, c 200, 94; am L 2002, c 182, §4; am
2003, c 9, §3)
Attorney General Opinions
The Code did not apply to board of trustees of deferred compensation
plan's existing administrator or investment-product-provider
contracts because they were entered into prior to July 1, 1954
applicability date in subsection (a) (Comp. 1993). Att. Gen. Op. 54••
4.
Case Notes
Subsection (b) precludes administrative review of a chief prccure,::<str.
officer's exemption determination; hearings officer correctly
concluded that officer did not have jurisdiction to review chief
procurement officer's determination that the interim library
automation services contract at issue was exempt from the .
requirements of the procurement code. 93 H. 155, 997 P.2d 567,
p viou4 Vol.Q2_Ch00Q¢-Q 15. lipt
httn•//w i rnnitnl hnwnii onv/hrcrnrrent/Vn102 Ch0046-0115/HR90103D/HRS 0103D-01... P,41) )