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HomeMy WebLinkAboutCOM 0046.007 2016-2018 �tv.oFk,`Y DRU MAMO KANUHA ;' °J c� PHONE: (808)323-4267 Council Member 'n ,,�;,� FAX (808)323-4786 •��I�� %.�...r I' EMAIL:dru.kanuha@hawaiicounty.gov District7, Central Kona :-- ►,v+ HAWAII COUNTY COUNCIL West Hawai`i Civic Center 74-5044 Ane Keohokalole Highway,Kailua-Kona,Hawaii 96740 COUNTY CLERK COUNTY OF HAWAII RECEIVED MEMORANDUM Time Lr',2.$PM By 410 DATE: November 14, 2017 Date 2.017 NOV 14 TO: Valerie T. Poindexter, Council Chair and Members of the Hawai`i County Council FROM: /Dm Mamo Kanuha District 7 Council Member SUBJECT: Minutes of the Hawai`i State Association of Counties Executive Committee Meeting Held on October 27, 2017 and November 6, 2017. Attached are the minutes of the Hawai`i State Association of Counties Executive Committee meeting held on October 27, 2017 and November 6, 2017. Please place this item on the agenda for the next available Governmental Relations and Economic Development Committee meeting. DK/lw att. LAO 7 Comm. No. ' Ref. To: 61 rz,EDC. Ref. DateNOV 1.� 21�7 ._ Hawai`i County is an Equal Opportunity Provider and Employer. Hawai`i State Association of Counties (HSAC) - NI* SP • Counties of Kauai,Maui, Hawaii and City & County of Honolulu * * ; Op cOUN���'_ MINUTES I HSAC EXECUTIVE COMMITTEE MEETING Friday, October 27, 2017 Historic County Building 4396 Rice Street, Suite 201 Lihue, Hawaii 96766 I. CALL TO ORDER The HSAC Executive Committee was called to order by HSAC President Dru Kanuha at 3:15 p.m. The following members comprising a quorum were present: County of Hawaii: President Dru Kanuha Councilmember, Hawaii County Council County of Kauai: Vice President Derek Kawakami Councilmember, Kauai County Council County of Maui: Secretary Stacy Crivello Presiding Officer Pro Tempore, Maui County Council City and County of Honolulu: Treasurer Ikaika Anderson Councilmember, Honolulu City Council Others Present: Council Chair Mel Rapozo, Kauai County Council Councilmember Mason Chock, Kauai County Council Aida Kawamura, Legislative Assistant, Office of Council Services, Kauai County Council Brandon Mitsuda, Administrative Support Services, Honolulu City Council Carla Nakata, Legislative Attorney, Office of Council Services, Maui County Council II. APPROVAL OF AGENDA There being no objections, the agenda was approved as circulated. III. MINUTES A. September 11, 2017 HSAC meeting minutes Vice-President Kawakami moved to approve the Minutes as circulated. The motion was seconded by Treasurer Anderson and unanimously carried. "5EASIC Page 12 � SA )w . �f COUNS��� IV. REPORTS A. Treasurer's August 2017 Report Treasurer Anderson reported that HSAC started the month of August with a balance of $144,564.60 and had receipts of $2.35 and expenses of $11,119.00, leaving an ending balance of $133,447.95. See attached worksheet for additional information. Vice-President Kawakami moved to approve the Treasurer's Report for August 2017. The motion was seconded by Secretary Crivello and unanimously carried. B. County Reports. 1. City and County of Honolulu Report. Treasurer Anderson reported that yesterday, the City and County of Honolulu's Zoning and Housing Committee considered a number of short-term rental proposals. He said they had a number of land use ordinance amendments that they considered, varying from a resolution that offered enforcement only, with no means for permitting, two resolutions that offered limited permitting of transient vacation rentals regardless of whether an owner occupant was present on the property, and another proposal that he offered that would have only allowed for a limited number of owner-occupied bed- and-breakfasts to be permitted. The litmus test for owner occupancy was the homeowner's exemption for property tax purpose. His legislation had coupled with it strict enforcement, with daily fines ranging from $1,000 to $5,000. At the end of the hearing, the Committee decided to forward all of the measures out of Committee to the Council, where they will hear them next Wednesday. If that vote holds, it seems that they will forward all of the proposals out of the Council to the planning commission, then they will come back to the Council in the form of bills. At this point it seems the mindset of the Council is to hear them. It's been two years since they had this discussion. Prior to that, they had a full discussion on the Council floor, measures were brought to third reading in 2009, and there were insufficient votes of the Council and the bills died on the floor. This is very contentious, very emotional. He said the Council is also prepared to host the HSAC annual conference at the Sheraton Waikiki and Royal Hawaiian Hotel, from June 21 through 23, 2018. See handout. 2. County of Hawaii Report. President Kanuha said the Hawaii County Council passed a lot of resolutions. One was to request the State Legislature amend the Hawaii Revised Statutes and be subject to the Sunshine Law. This measure was similar to what Kauai passed previously. There were a few members who were hesitant to support it, AS C Page 3 i SA02; s )' ,„. but it was agreed upon by the entire Council. They also passed a resolution urging the United States to seek a peaceful resolution between the U.S. and North Korea, which was jointly introduced by Councilmembers Chong and Poindexter. It was a spirited aloha message from Hawaii County to urge peaceful negotiations instead of this talk that happens back and forth between two leaders who have nuclear capacity. They also passed out through committee the HSAC legislative package. There were a lot of errors in the package, which a lot of Councilmembers understood. But they wanted to just approve of the entire package and bring it to HSAC, where HSAC could discuss it further. It would have been difficult to amend a lot of these things. The Executive Committee can go over it later when the measures come before it. The package passed committee and will go to the Council on November 3rd or 4th. The Council confirmed two appointments — the Finance Director and the Parks and Recreation Director. They had a lot of directors resign in recent months. Previously their Public Works Director retired, prior to that their Mass Transit Director resigned. So they are actively pursuing a mass transit administrator and a public works director. They have an emergency mandated, 25 percent water restriction in Kona still in effect. 3. County of Kauai Report. Vice-President Kawakami said there are a few priorities moving right now. For HSAC, the good news is most of the package passed through. The bad news is one item didn't — the Airbnb bill. First and foremost, he said we should take a look at what's being promoted and whether they are complying with County zoning. Kauai doesn't feel they are complying, so it's hard for us to allow them to collect GET and TAT. Kauai is also going through their General Plan review. The plan sets the foundation for growth and growth management and what the island will look like in the future. Every ten years they update it, and this one is seven years overdue. The last general plan update was in 2000. They are finally deliberating on it on the Council floor, so a couple of things had to change. Their typical five-person committee generally meets once a week. They have two committee meetings and two Council meetings a month. But because this document is the magnitude it is, they have been meeting in one-week blocks. They are having problems reaching quorum, so they put everyone temporarily on the Planning Committee. They are anticipating going until mid- December until they can get their amendments done. They had their first hearing on the GE surcharge for the counties. He anticipates vibrant discussion. He said no one wants to raise taxes, but realistically, he doesn't think we can depend on increased State and Federal funding in the near future. The restriction is that the funds be used for transportation and roads. This would generate revenue of $25 million for Kauai County. 3son AS CO Page 14 i SA 11. . President Kanuha asked when the deadline is for the counties to enact a GE surcharge. Vice-President Kawakami said March 2018. Secretary Crivello said it runs for 12 years, right? Vice-President Kawakami said yes, 12 years. He said the City and County rail will need this GE surcharge in perpetuity because it will always need to be subsidized. He said the only time he believes the residents think about the surcharge is when they talk about extending it. 4. County of Maui Report. Secretary Crivello reported that regarding the State-owned Makena Beach Park, the Council passed on first reading a bill to authorize the Mayor to enter into an intergovernmental agreement amending the prior MOA. She said the cost of the insurance policy is about $100,000 per year; the County is forced to purchase its own liability insurance. At the last Council meeting, they adopted a resolution authorizing the employment of the Legal Aid Society of Hawaii as special counsel to provide legal services to seniors and grandparents raising grandchildren to be administered by the Office on Aging for two years, starting October 2017 through September 2019, in an amount not to exceed $70,000 per year. Maui also adopted a resolution for the 2018 County legislative package, including a bill to prohibit the use, sale or distribution for sale of skin care products containing oxybenzone and octinoxate; and a proposed State bill to increase revenue for each county's affordable housing fund through a one percent conveyance tax. The County's Director of Finance has resigned, with the Deputy Director of Finance up for confirmation for the position. She said she has heard other resignations will be happening. At its meeting of October 16, the Council's Policy, Economic Development, and Agriculture Committee recommended the proposed resolution for the HSAC package be adopted without revision. She noted a Council committee recently went to Hana and recommended approval of a Hana 100 percent affordable housing project, with 25 affordable lots. She said with respect to the GE surcharge, she is a member of the Maui Metropolitan Planning Organization ("MPO"), which recommended the Council at least hear it. The proposed GE surcharge will be challenging. The subject was referred to the Budget and Finance Committee, so we will see where that goes. She said she believes Council Chair White will try to work on the TAT remarketers bill further. She said he is considering HSAC's concerns. She also said she would speak with Senator English about the bill relating to tort liability. Treasurer Anderson made a motion to receive the reports. Vice- President Kawakami seconded the motion, which was unanimously carried. The Executive Committee welcomed Council Chair Rapozo and Councilmember Chock to the meeting. ytp<E Ass Page 15 SAS= C. National Association of Counties (NACo) Report. Secretary Crivello referred to a handout from Councilmember Riki Hokama, who asked if she could present it to the Executive Committee. NACo has State Executive Directors, and has asked for an official proposal. They are hoping to come to Hawaii in 2019, probably in October. She said Hawaii doesn't have an Executive Director. Councilmember Hokama offered Maui, but if anyone else wants to host he is open to that. He is looking for HSAC support in hosting this conference. President Kanuha asked who would be hosting the conference, would it be the State Executives, HSAC, Maui County? Secretary Crivello said she would ask Councilmember Hokama to come to the next meeting to give a further update. She believes his intent is for HSAC to be part of hosting the conference. President Kanuha said maybe it can be placed on the next agenda. Secretary Crivello passed out their request for proposals. President Kanuha asked how much involvement HSAC would have, and that it would be good to talk about it and hear from Councilmember Hokama. President Kanuha said the only other NACo update was that the Fall Board of Directors meeting and Poverty Summit would be held in Fort Worth, Texas in early December. President Kanuha plans to attend. It was said that Councilmember Arryl Kaneshiro also plans to attend. D. Western Interstate Region (WIR) Report. President Kanuha said both he and Council Chair White went to Pinedale, Sublette County, Wyoming, for the conference, and noted a report had been prepared. He said one of the main policy statements was to get support on the national wildfire issues. He said they gave updates on how Hawaii can have greater participation in WIR. President Kanuha said they focus a lot on public lands. He said Hawaii has issues with endangered species that they all have issues on, so they want to get to know how Hawaii can have a greater part of these discussions. Treasurer Anderson moved to receive the NACo and WIR reports. Secretary Crivello seconded the motion, which was unanimously carried. V. OLD BUSINESS The Executive Committee discussed the WIR position which President Kanuha intends to step down from. Council Chair Rapozo said he was honored to be considered. He noted Council Chair White had mentioned it might be good to get someone younger in the position. He asked where the discussion was at. He said Councilmember Mason Chock is interested, and has attended several of the functions. Councilmember Chock said that if there is a void, then he is willing to look at it. It was noted that after the recommendation is made to the Councils and the Councils approve, then a letter is sent to WIR, and that would take care of it. Vice-President Kawakami asked whether there would first need to be approvals for President Kanuha to be removed. It was noted that the removal and appointment could occur simultaneously. President Kanuha said 5'• Page I 6 SAS* .,ORc. 0.- meeting,at the next HSAC Executive Committee e g, a resolution to remove himself and appoint Councilmember Chock would be posted for discussion. VI. NEW BUSINESS There was no new business for discussion. VII. ANNOUNCEMENTS A. Scheduling the next meeting. 1. Change November 6, 2017 date. The Executive Committee decided to leave November 6, 2017 as the date of the next meeting. Council Chair Valerie Poindexter, the alternate for President Kanuha, is available to attend that day. B. Other announcements. There were no other announcements. VIII. ADJOURNMENT The meeting was adjourned at 4:05 p.m. :�pTE As Hawai`i State Association of Counties (HSAC) ;-P• c>9� Counties of Kaua`i, Maui, Hawaii and City & County of Honolulu ; 9SA Z CouN„m, MINUTES HSAC EXECUTIVE COMMITTEE MEETING Monday, November 6, 2017 Committee Room, 7th Floor 200 South High Street Wailuku, Hawaii 96793 CALL TO ORDER The HSAC Executive Committee was called to order by HSAC Vice-President Derek Kawakami at 10:17 a.m. The following members comprising a quorum were present: County of Hawaii: President Valerie Poindexter (Alternate) Council Chair, Hawaii County Council County of Kauai: Vice President Derek Kawakami Councilmember, Kauai County Council County of Maui: Secretary Stacy Crivello Presiding Officer Pro Tempore, Maui County Council City and County of Honolulu: Treasurer Ikaika Anderson Councilmember, Honolulu City Council Others Present: Council Chair Mike White, Maui County Council Leinani Wessel, Council Aide to Councilmember Dru Kanuha, Hawaii County Council Aida Kawamura, Legislative Assistant, Office of Council Services, Kauai County Council Brandon Mitsuda, Administrative Support Services, Honolulu City Council Alan Texeira, Office of Councilmember Ikaika Anderson, Honolulu City Council Troy Hashimoto, Executive Assistant, Council Chair Mike White Michele Yoshimura, Legislative Analyst, Office of Council Services, Maui County Council Carla Nakata, Legislative Attorney, Office of Council Services, Maui County Council ``1,1E ASIC Page 1 2 .j _ s II. APPROVAL OF AGENDA There being no objections, the agenda was approved as circulated. III. REPORTS A. Treasurer's Report 1. Treasurer's Report. Treasurer Anderson said the Treasurer's Report was just given at the October 27, 2017 meeting on Kauai, so he will stand on that report. SecretaryCrivello moved to approve the Treasurer's Report. The motion PP was seconded by Treasurer Anderson and unanimously carried. B. County Reports. 1. City and County of Honolulu Report. Treasurer Anderson reported that Resolution 17-281, relating to the 2018 HSAC Legislative Package, moved out of the Honolulu City Council for the final time last Wednesday. He also reported that dates have been set for the 2018 HSAC Conference, which will be held June 21 through 23, 2018, at the Sheraton Waikiki and the Royal Hawaiian Hotel, with accommodations available and events to be scheduled at both locations. He passed out a "Save the Date" flyer, which is attached. 2. County of Hawaii Report. President Poindexter said they are working on their mass transit plan. The County is in the process of gathering community input from around the island. Once that is done, findings on surveys and recommendations for bettering the transit system will be shared with the Council. Work is also being done on Hawaii County's water use plan, which includes provisions for the Keauhou Aquifer System. The community opposed the plan, saying they are not ready to have the plan vetted through the Council yet, so the plan was earlier withdrawn to get more community input before it is resubmitted. Hawaii County has received some money through the research and development arm at the University of Hawaii to look at sustainability of sweet potatoes on the island because there are some sweet potato farmers who are having a hard time finding lands to cultivate sweet potato. Once they plant, they have to allow the soil to regenerate. She said Councilmember Kanuha had put into the capital budget improvements for Kahaluu Beach Park. There has been a lot of erosion at the park because of high water levels, most likely resulting from climate change. They will need to look at even possible larger setbacks there. Hawaii County passed the legislative proposals for the 2018 ;00,TE AS '. • Page I 3 .‘ SAS_ 1 '�R fOUNt�t HSAC Legislative Package. They also had an opportunity to meet with their State representatives to give them updates. She said we need better communication with our State representatives. She noted a communication breakdown at the State Special Session. President Poindexter said they had a great dialog at their meeting, and asked whether it makes a difference if the Council has a resolution supporting action. A State senator said it definitely makes a difference what the Council supports. She said meetings are livestreamed, so the public gets to hear what's going on. She hopes all islands can have communications with their State representatives. She also said a meeting regarding their airport had been held, and the Council wasn't included. Although the airport is not a County facility, she would like to see more collaboration. 3. County of Kauai Report. Vice-President Kawakami said a lot has happened on Kauai since the Executive Committee last met. He said a few election cycles ago, the people voted for a County Auditor. Since then, there hasn't been an audit that's been done. Kauai doesn't have an auditor right now, and are having a hard time recruiting one. They cut funding for the auditor because it was tying up funds that could have been used for park improvements, traffic alleviation, and housing. The Charter Commission will be taking up a repeal of the function. Today and tomorrow, Ways and Means is coming to Kauai. Kauai has only three representatives and one senator and because of that they have had a collaborative effort. Ways and Means is meeting with the Mayor, Vice- President Kawakami, and the Council Chair to go over the administration's priorities. He said they are requesting $1,000,000 for a Kauai Fire Department helicopter hangar. He described the County/State nexus for the project as involving a State airport and County department, with the bulk of rescues on State Department of Land and Natural Resources property. They are also asking for a CIP appropriation of $1,500,000 for design and construction of an affordable housing project that is a transit-ready development. Kauai is adding an appropriation for a shooting range. Right now there is no shooting range so people are target practicing in hunting areas, creating a public safety issue. The County would be the main point person, but there would be a stewardship agreement with one of the gun clubs on Kauai to help manage it. President Poindexter noted that Ways and Means came to the Big Island but didn't have the courtesy to contact her while there. She had put a communication forward and invited them to come. They only contacted Councilmembers Aaron Chung and Dru Kanuha, and she had no invitation to participate in the meeting. 4. County of Maui Report. Secretary Crivello reported that this past Friday, the Maui County Council adopted a resolution approving the entire 2018 HSAC Legislative Package, noting concerns about the -``ytwfEASS�C. Page 14 1 Ni structure of the tort liability bill and Kauai's concern about the transient accommodations tax ("TAT') remarketers bill. She said the Council also received a report from the County Auditor regarding premium pay and overtime of the Department of Fire and Public Safety. The Council passed on first reading a proposed bill to create a separate real property tax classification for short-term rentals and a proposed bill to allow condo units to be dedicated for long-term residential use. The Council continues to amend the County's residential workforce housing policy to try to make it more effective. The Council amended provisions relating to deed restrictions and the application selection process for ownership units. The Council adopted a proposed resolution to pass a 100 percent affordable housing project in Hana to provide 25 affordable housing lots for income groups ranging from below 80 percent to 140 percent of the area median income. The Council also passed on second and final reading Bill 86 (2017), authorizing the Mayor to enter into an intergovernmental agreement amending the Memorandum of Agreement for lifeguard services between the State and the County for Makena Beach Park. Treasurer Anderson made a motion to receive the reports. Secretary Crivello seconded the motion, which was unanimously carried. B. National Association of Counties (NACo) Report. Treasurer Anderson said there were no additional remarks other than what was presented on Kauai. He reminded the members that the NACo legislative conference will be from March 3 through 7, 2018, at the Washington, D.C. Hilton. Vice-President Kawakami encouraged everyone to attend this conference. Treasurer Anderson said the subject matter at the legislative conference is the best of the NACo conferences. C. Western Interstate Region (WIR) Report. Secretary Crivello asked Council Chair White if there was anything to report on WIR. Council Chair White said the general focus of the meeting he attended was on issues with forest service and payments in lieu of taxes and once again there was not much on the agenda that pertained to Hawaii. Secretary Crivello made a motion to receive the NACo and WIR reports. Treasurer Anderson seconded the motion, which was unanimously carried. IV. NEW BUSINESS A. Discussion: HSAC to host NACo National Council of County Association of Executives Secretary Crivello said on behalf of Councilmember Riki Hokama, she was distributing a handout addressed to President Kanuha. The National Council of County Association Executives ("NCCAE") is in the process of selecting a location for their 2019 annual meeting, with tentative dates set for October 22 00E ASso% A . Page 15 SAS. through 25, 2019. She said Councilmember Hokama is asking us to consider hosting the national conference. Reading from the handout, she said the association provides a vehicle through which its membership improves the administration of the various associations of counties and associations of county officials, and provides a forum through which members meet and exchange information of importance. The annual meeting will draw approximately 100 County State Association executive directors and presidents, with 10 national staff assisting. We need to decide by the end of this year, as NCCAE leadership aims to make a decision early next year. Councilmember Hokama attached the request for proposals form. He said in his correspondence that he realizes HSAC is not an official member, but the NCCAE is open to exceptions. Holding the annual meeting will provide our member counties an opportunity to share our voice on a national level, and can provide an economic boost to our local economies. Treasurer Anderson asked whether Maui County wants to do it. Vice-President Kawakami said the applicable motion would be a motion to proceed with the RFP. He asked how do we determine which of the islands would be the applicant? He said historically, we've been able to piggyback on other State association of counties executives. He said they had a relationship with Tom Sweet. Hawaii was able to get our commitments in early, and this may be a way for us to build relationships with state associations and various directors. Secretary Crivello made a motion to proceed with the RFP, which was seconded by Treasurer Anderson. Treasurer Anderson asked whether the Executive Committee would give Maui priority. The Executive Committee noted that according to Councilmember Hokama, Maui is willing to host. The Executive Committee noted the RFP says if $6,000 is budgeted and $7,000 is the actual cost, we would be asked to make up the difference. The motion was unanimously carried. B. Discussion re: HSAC Corporate Member of Hawaiian Air and Hawaii State Cars program Secretary Crivello said when her office staff makes her travel arrangements, she doesn't get booked with corporate benefits for HSAC travel. She also currently makes reservations on her card and seeks reimbursement. She said her staff called Hawaiian Air and it was easy to be added on, so now her pCard for HSAC is part of Hawaiian Air's corporate program. She said if other Executive Committee members are not registered under the corporate program with Hawaiian Air, then they might want to consider registering. For rental cars, she still goes through the reimbursement process. She also asked whether the Treasurer might be able to explore converting the debit card to a credit card. C. 2018 HSAC Legislative Package; discussion on items to be included and/or removed 1. Resolution 17-159; 2018 HSAC Legislative Package (Maui) AS •1 4w . Page 16 ,1 A 111 s GR COUNS�� Secretary Crivello reported that the Maui County Council passed the HSAC package as is. She said the tort liability bill has to be rewritten, and that she thinks the Council's Policy, Economic Development, and Agriculture Committee might help to rewrite it. She also said she didn't know if the Council will submit separately as a standalone bill the TAT remarketer legislation that Council Chair White authored, which Kauai had concerns about. 2. Resolution 2017-49; 2018 HSAC Legislative Package (Kaua'i) Vice-President Kawakami said Kauai County fixed the language for the tort liability bill as part of its County package. He said the flaw with the bill is because the language is to repeal the sunset date. In actuality, the law doesn't exist. So it's now a standalone bill that's being submitted on behalf of Kauai County. He also said the third-party remarketers bill didn't pass the Kauai County Council. He said there were some concerns and the Council felt some of these companies need to do a better job of managing what they're marketing. Some are illegal and Kauai County Council is hesitant to allow them to start collecting taxes until their operations are cleaned up. He said it sounds like the measure will move forward anyway. President Poindexter said there was a question from Councilmember Ruggles about the bill for an act relating to zoning. Her question was whether this would phase out Airbnb. Vice-President Kawakami said when he goes back to Kauai he will have Kauai's planning director reach out to the other counties because this is an administration-driven policy. He said the bill was something he introduced previously because when he was at the State House the 14th District was home to many of these transient vacation rentals that were outside their visitor designated areas ("VDA"). Right now the bill is asking the State Legislature for the vehicle to amortize some of these vacation rentals that are outside the VDA. If you were to show you were paying GET and TAT previous to a certain year, you were grandfathered in, so you were getting a permit to break the law as long as you were paying taxes on it. They are trying to find ways to amortize these vacation rental units over a period of time. If the property with the permitted use were to be sold, that use would dissolve upon the transaction—that's the vehicle they are looking at. That being said, eight percent of the TAT Kauai collects is for these vacation rentals that are outside the VDA. So, Kauai's Real Property Assessment Division has sat down with him as well, to say there's a conflict in our philosophies. The Planning Department is concerned about maintaining neighborhoods and slowly amortizing these uses out, but on a tax revenue side, Kauai has concerns because that's still eight percent of its revenue. Finance is saying they won't make a judgment rE ASS�C(1 A•. O'• Page 17 .1„1fe '�f COUNt�t call on it, it's still eight percent. Vice-President Kawakami said he will have Kauai personnel reach out to help give guidance on what this bill involves, and to give others talking points. Secretary Crivello asked whether Council Chair White would like to comment on the TAT remarketer bill. Council Chair White said there are several elements to the tax collection of the bill. One applies to wholesale travel companies, which are Pleasant Hawaiian, Delta Vacations, Hawaiian Vacations, all the established older tour companies. All of them look like they are currently collecting GET on the total amount and the TAT on the hotel portion. They take roughly a 25 percent margin, so in the past they've collected the GET and TAT on the total and they've sent the accommodation portion to the accommodation operator and kept the other tax and not paid any of it. Now the State Supreme Court said you have to pay the GET but because you're not an operator and the law says only operators are liable for the TAT, they've chosen not to collect the TAT on their margin. In some cases, they are still collecting that; Expedia still collects the full amount and keeps the TAT portion and pays the GET portion. So it's a little bit confusing. Airbnb collects no taxes — either GET or TAT. He said we don't at this point know what the MOU that they've reached with the Governor is going to provide by way of protections for the counties. If he were to take the amount of revenue the State is missing out on, just on his hotel, 430 rooms, that's over $500,000 a year on TAT on the wholesalers' portion of the purchase. So that's money that's either being collected and not paid, or it's not being collected, but that means the wholesalers can undercut his hotel's pricing by about 3-1/2 to 4 percent. If he applies what is being lost to the 43,000 or so hotel rooms Statewide, it's about $65 million in revenue they're missing. So the bill says if you're a wholesaler and you're taking care of that purchase and taking a margin, then you need to pay taxes on that margin (TAT). He noted if you're an Expedia, Travelocity, Pleasant Hawaiian, Airbnb, Home Away, or VRBO, you're a remarketer. Council Chair White also said hotels like the one he manages have rate parity agreements with most of their wholesalers, so if the hotels sell a room for $200, remarketers can't sell a room for more or less than $200. Remarketers take 25 percent out of that. They will then be responsible for paying taxes on the 25 percent. VRBO collects taxes in their transaction, but as far as he can tell they don't include their fees in the TAT or GET calculation, so there's in some cases a customer fee that they charge and there's a booking fee that they charge and a registration fee that they charge to the accommodation. The bottom line is they're only charging the TAT on what the operator is charging; they're not charging it on the other fees. If there's a marketing fee paid by the „EA,„,\ sA o• Page 18 i., a, ` couNt operator to the remarketer, that's included in the tax calculation. All the various fees will be included in the calculation for tax purposes. Chair White said they're very concerned about Airbnb, VRBO, all these entities dealing with unpermitted rentals. He said they will be engaging most likely a company called Host Compliance, a company using algorithms on the internet to identify every rental, who owns the property, where it's located, to enforce against them. He said there are laws saying if you're advertising on the internet for a rental, you're admitting you're doing business. The bill will also require VRBO, Airbnb, and Home Away to identify who they're paying taxes on behalf of, so they can be pursued. He is also wanting the State Department of Taxation to communicate with the county's Real Property Tax. The most important piece is the bill is saying all revenue that comes from a wholesaler comes to the counties, not to the State. The concept is the State capped the counties ten years ago, and in that time the counties have gotten an additional $2.2 million, while the State has gotten an additional $310 million. The intent was to say this would be in addition to the $103 million. He said he will submit the bill as a standalone measure. Senator Roz Baker has offered to introduce it, and he will look for someone in the House to introduce it. He also said the one percent that was passed is less than half of what they would have generated if they had fixed the law, just from the wholesalers he deals with. Vice-President Kawakami asked if Maui County will be entertaining the proposition to take the GET surcharge we are being handed. He said when he was at the Legislature, he said the GET should be set in stone. In his opinion, it's frustrating the constituents of the City and County of Honolulu because they're already paying it, and it's just a reminder whenever it is brought up for extension. Treasurer Anderson said they have had that discussion a number of times. As much as the State legislature says they do not want to play an active part in Honolulu's rail system, they are an active partner at their choosing. They're the ones who have had phased extensions, rather than making it effective in perpetuity. So the Legislature has decided to play an active role in Honolulu's transit system. Council Chair White also said in the TAT remarketer bill, he has also added a provision that was not in the initial bill that all monies collected and passed on to the counties over and above the $103 million would be placed in a tourism impact fund to be established by each county. The purpose is that in the time Maui County has been receiving TAT we got over $500 million. There's not a single thing anywhere in the County we can point to and say the visitors paid for that. Council Chair White also AS�C� t Page 19 ..1 SA. s '°RcouNT`E said 48 percent of TAT is generated on Oahu, 52 percent on the neighbor islands. Sixty-six percent of GET is from Oahu, thirty-four percent from the neighbor islands, so the scales are tipping a bit. 3. Resolution 17-281; 2018 HSAC Legislative Package (Oahu) Treasurer Anderson said Honolulu has passed everything that's in the package currently. If there are individual items that become known later, their office would be happy to facilitate introduction of legislation individually. Alan Texeira of his staff continues to have a great working relationship with some lawmakers there. President Poindexter said the State Special Session had nothing to do with their behavior now. They feel they are above us, that we're not working together. The bottom line is our job is the people, so there is no hierarchy in her view. She said she doesn't think HSAC should ever feel it was the special session that caused the problem because they never paid attention to HSAC before. She asked whether anything ever passed from the HSAC package. Vice-President Kawakami said tort liability for lifeguards always passed previously. Treasurer Anderson said from a historical perspective, he believed this is the first time at least in recent memory that HSAC actually pushed back. This past session HSAC took a different approach, and he thinks that upset some people. President Poindexter said for some of the differences she's had, she's been able to call State legislators up. She thinks the constituents saw that they are not afraid to stand up to State legislators on their behalf, and the constituents have hope. The bottom line is the health and safety of the community. She said we just need to start paddling forward. 4. Resolution 361-17; 2018 HSAC Legislative Package (Hawaii) President Poindexter said Hawaii County is really in support of proposals 2, 3, 4, 5, 7, 8, 10, 11, 13, 15, and 16. However, the County requested HSAC whittle down the amount of items in the package, and that effective dates be amended to reflect current effective dates. The Council passed the resolution, including all proposals, but said they would like to particularly support those items (see handout) and they were lukewarm to the others. Vice-President Kawakami said that's the report from all four counties regarding the 2018 legislative package. Secretary Crivello asked, because it's all voted on, will we dissect the package further? Vice- President Kawakami said this is the package. He said he didn't know how it's been done historically before. But he does know that every year ;,StwTE AS,�C P a 110i� SA w ;4..,OR during session or prior to session they have a luncheon meeting and open it up to all legislators, and we will do that again this session. He said these are all good talking points when you talk about reaching out to your delegation. Secretary Crivello said last year we had a luncheon and gave them a booklet. We're reminded that they take care of the schools and the hospitals, what do you guys do? President Poindexter said she was warned by the House Speaker to be careful about going down the tit-for-tat road because it's a slippery road. The Executive Committee discussed that a lot of what the State provides is constitutionally mandated. Vice-President Kawakami said, on the policy side, there's very few top priorities on this list. Lifeguards and lifting the TAT cap rise to the top. He suggested members go find their state legislator and find that county park that they can share the glory for on funding. V. ANNOUNCEMENTS A. Scheduling the next meeting. 1. December 19, 2017, in Kona, Hawaii, tentatively at 10 a.m. or soon thereafter. B. Other announcements. Secretary Crivello thanked Kauai for hosting the Executive Committee last month, and noted the collaboration was impressive. VI. ADJOURNMENT The meeting was adjourned at 11:32 a.m.