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HomeMy WebLinkAboutMIN FC 2017/06/22 2017-2018COMMITTEE ON FINANCE 131h Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii June 22, 2017 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 2:02 p.m. in the Council Chambers, Kailua-Kona, by Ms. Maile Medeiros David, Chair. ROLL CALL: Present: Ms. Maile Medeiros David, Chair Ms. Karen Eoff, Vice Chair Mr. Aaron S. Y. Chung, Member Mr. Dru Mamo Kanuha, Member Ms. Susan L. K. Lee Loy, Member Ms. Eileen O'Hara, Member Ms. Valerie T. Poindexter, Member Mr. Herbert M. "Tim" Richards, III, Member (came in later) Ms. Jennifer Ruggles, Member STATEMENTS FROM THE PUBLIC ON AGENDA ITEMS: COMMUNI- r A TTnNc The Chair directed the Committee to proceed to the next order of business, Statements from the Public on Agenda Items. (There were none.) The Chair directed the Committee to proceed to the next order of business, Communications. Comm. 7.10: FINAL MONTHLY BUDGET STATUS REPORT FOR THE MONTH ENDED APRIL 30, 2017, FROM THE DEPARTMENT OF FINANCE From Finance Director Collins Tomei, dated May 26, 2017, transmitting the above report pursuant to Hawaii County Charter Section 6-6.3(h). Vote on Comm. 7.10: Ms. Eoff moved to close file on Comm. 7.10. Seconded Filed by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. FC -13 June 22, 2017 Comm. 14.14: REPORT OF CHANGE ORDERS AUTHORIZED: MAY 1 - 15, 2017 From Finance Director Collins Tomei, dated May 25, 2017, transmitting the above report pursuant to Hawaii County Code Section 2-12.3. Motion to Close File: Ms. Eoff moved to close file on Comm. 14.14. Seconded by Ms. Poindexter: CHR. DAVID: Any discussion? MR. KANUHA: Question. CHR. DAVID: Thank you. Mr. Kanuha. MR. KANUHA: I don't know if it's Finance or if we ask the Clerk about the web streaming for the Hawaii County Council, the Granicus. MR. HENRICKS: I wasn't aware that was on the change orders report. CHR. DAVID: Ms. Sako, do you MR. HENRICKS: You might have tosorry CHR. DAVID: You want to? MR. HENRICKS: We could try to get Mr. Maeda too. CHR. DAVID: Okay. MR. KANUHA: Sorry. CHR. DAVID: Either Deputy Director Sako, and maybe Mr. Maeda, if he's in the room? (Note: At this time, Deputy Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: Hi, this is Deanna Sako, Deputy Director of Finance. I don't see Mr. Maeda right now, but I think they went to get him. It looks like we exercised the option year to continue the web streaming service, but that's all I have in my notes. MR. KANUHA: Okay, because usually we put that in the description, right, of using the option year? MS. SAKO: Yeah, on mine it has the purpose to exercise the option here. Maybe I have the wrong one. Page 2 FC -13 June 22, 2017 MR. KANUHA: I'm fine with— (Note: At this time, County Clerk Stewart Maeda came forward to address the members of the Committee.) CHR. DAVID: Oh, there's Mr. Maeda. MR. KANUHA: Since you're there, you might as well. Aloha, Stewart. MR. MAEDA: Good afternoon. Stewart Maeda, County Clerk. MR. KANUHA: So this was—the change order is just for the option year, just continuing it on? MR. MAEDA: Yeah, we're just exercising our option year, so it's just going to continue the same service. MR. KANUHA: Okay. That's all. MR. MAEDA: Okay, thank you. CHR. DAVID: Thank you, Mr. Kanuha. Thank you, Mr. Maeda. Sue, I mean Ms. Lee Loy. MS. LEE LOY: Thank you, Chair. And I believe, maybe Deanna, this is on Kuawa fields. I understand we did a Fair Share release, and I guess I'm hoping that money is covering some of the change order on this particular MS. LEE LOY: Yes, there's funding available because of that. And, yes, the original money. MS. LEE LOY: Great. MS. SAKO: So yeah, there's enough money to cover it. MS. LEE LOY: Great. Thank you, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Anyone else? Alright, hearing and seeing none, all those in favor of filing Communication 14.14 please say "aye." Page 3 FC -13 June 22, 2017 Vote on Comm. 14.14: The motion to close file on Comm. 14.14 was carried by the Filed following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Mr. Clerk, please, Communication 15.10. Comm. 15.10: REPORT OF FUND TRANSFERS AUTHORIZED: MAY 16 - 31, 2017 From Controller Kay Oshiro, dated June 5, 2017. Motion to Close File: Ms. Eoff moved to close file on 15.10. Seconded by Mr. Richards. CHR. DAVID: Any discussion? Seeing none, all those in favor of filing Communication 15oh, I'm sorry, Ms. O'Hara. MS. O'HARA: Sorry. Would the Deputy Director of Finance be able to come back up? Deanna? (Note: At this time, Deputy Finance Director Deanna Sako came forward to address the members of the Committee. MS. SAKO: Hello. MS. O'HARA: Hi. And this is a real general question because I'm just not sure where we would see it and when it would come before us. But it has come to my attention that the Mayor has cancelled some Memorandums of Agreement or contracts, and I would assume that money has to be transferred back into another fund or somewhere. Where would we ever see that in these reports? MS. SAKO: So that would probably actually show up in the Monthly Budget Status report because there was more funding available. I'm not aware that some were cancelled. But let's say they were, then the money would basically be unencumbered and would be available for spending in the same account it was originally encumbered from. If it was originally encumbered in a prior fiscal year, then that money cannot be spent without Council action. MS. O'HARA: And that would be the case in these actions, as I understand it. Okay, thank you. MS. SAKO: Okay. Page 4 FC -13 Vote on Com. 15.10 Filed Comm. 114.1: Vote on Comm. 114.1 Filed June 22, 2017 CHR. DAVID: Thank you, Ms. O'Hara. Anyone else? Alright, hearing or seeing none, all those in favor of filing Communication 15.10 please say "aye." The motion to close file on Comm. 15.10 was carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Mr. Clerk, please, Communication 114.1. THIRD QUARTER REALLOCATION REPORT: JANUARY - MAR From Human Resources Director Sharon Toriano, dated May 18, 2017. Ms. Eoff moved to close file on Comm. 114.1. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Alright, Mr. Clerk, Resolution 227-17. 2017 ORDER OF The Chair directed the Committee to proceed to the next order of business, RESOLUTIONS: Order of Resolutions. Res. 227-17: AUTHORIZES THE FINANCE DIRECTOR TO INVITE PROPOSALS FOR LEASE BY NEGOTIATION OF 900 ACRES OF AGRICULTURAL COUNTY -OWNED LEASE LANDS, BEING TAX MAP KEY: 4-2-005:001, KOHOLALELE, HAMAKUA, HAWAII, PURSUANT TO CHAPTER 2, ARTICLE 19, SECTION 2-114 OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED) All or a portion of this 900 -acre parcel would be leased by negotiation for the purposes of diversified agriculture, eco -tourism, and pastoral uses. Reference: Comm. 315 Intr. by: Ms. Poindexter Page 5 FC -13 June 22, 2017 Motion to Approve: Ms. Poindexter moved to recommend adoption of Res. 227-17. Seconded by Ms. O'Hara. CHR. DAVID: Ms. Poindexter. MS. POINDEXTER: Yes, these are lands that were handed over to us because of the back taxes. And I think, maybe, Hamana, if you could explain a little bit more of how we got these lands? I think this is a way for the County to gain more revenue. I know we are always looking for revenue. We have this out there, and I think it should be in use. (Note: At this time, Real Property Manager Hamana Ventura came forward to address the members of the Committee.) MR. VENTURA: Thank you, Chair Poindexter. Hamana Ventura, Property Manager. In 1994, as part of a settled agreement County of Hawaii acquired approximately 3,500 acres from Hamakua Sugar Company. And as time has gone by, we've gone out to lease. Pa`auilo lands were the first to go up for lease, and then part of the acquisition was lands in Kapulena, and then this parcel, Koholalele. So what we're looking to do, as Council Chair Poindexter indicated, is that we're trying to identify potential revenue for the County, and leasing out these lands is one of the potential options that we could generate funds that can go into our General Fund, turn around and help us with our financial situation. MS. POINDEXTER: Approximately 40 plus thousand a year would you MR. VENTURA: Well, before I estimate, based on—what we're looking at, our existing lease revenue, that could potentially be what kind of income we're looking at producing. MS. POINDEXTER: Okay, thank you. So I'll yield at this time. CHR. DAVID: Thank you, Ms. Poindexter. Anyone else? Mr. Chung. MR. CHUNG: Yes. Good afternoon. MR. VENTURA: Good afternoon. MR. CHUNG: I'm guessing, since this authorizes the Finance Director to do certain things, and that would probably fall on you, right? MR. VENTURA: Yes. Page 6 FC -13 June 22, 2017 MR. CHUNG: So what would be your plan? MR. VENTURA: Our plan would be to come up with a proposal to go out to bid for leasing the property. MR. CHUNG: Yeah but, I mean this thing says for all or part of it. You have anything in mind or not really? MR. VENTURA: Well, definitely. MR. CHUNG: Okay, so maybe if you could lay that out for us. MR. VENTURA: Most likely it would be for cattle. MR. CHUNG: So large tracks? MR. VENTURA: Yes. MR. CHUNG: Okay. And about how many parcels? Or, all of it? MR. VENTURA: One parcel. MR. CHUNG: One parcel? MR. VENTURA: One parcel. MR. CHUNG: Okay. And you think—it's going to be competitive. A lot of people are going to be bidding for this thing? Or, you think just a few or only one? MR. VENTURA: Well, based on the size of the parcel, I anticipate that the larger landholders, larger ranch entities, are going to entertain this. It's not going to be a mom and pop's operation, probably, unless they have the willingness to put in the infrastructure. MR. CHUNG: Yeah. And then what would beI mean I'm in favor of it, of course. I just want to understand this better. So is it for income generation or to keep vegetation down, control—what would be the underlying purpose for all of this thing? MR. VENTURA: To generate income to the County. MR. CHUNG: And how much income are we looking at, about? MR. VENTURA: We're talking probably in the range of $20,000 to $30,000, or even up to $40,000 a year. Page 7 FC -13 June 22, 2017 MR. CHUNG: A year? MR. VENTURA: Yes. MR. CHUNG: Alright. Okay, thank you. CHR. DAVID: Thank you, Mr. Chung. Ms. Lee Loy. MS. LEE LOY: Thank you, Chair. Building off of thatHamana, thank you for being here. Could you provide a little bit of background on where this property is in relationship to other parcels and other neighboring parcels? MR. VENTURA: Okay. So we've leased out parcels in Pa`auilo, basically the Pa`auilo lands. And same, general this day, little bit Hilo side of the overpass. So I going say three to five miles down the street, if we're driving along Hamakua Coast. But it would be mauka of the road, so we're— MS. LEE LOY: Yeah, and so who are our neighboring landowners to this 900 acres? MR. VENTURA: Most likely Kamehameha Schools. MS. LEE LOY: Have we looked at what their long-range goals are? I'm just a little concerned because we want to be good neighbors. Because they're good neighbors and they have an overall, like larger master plan for their leases. I'm curious, like Mr. Chung, to see if we're actually complementing one another, or this is going to turn into a situation where we're going to be competing for watersheds, or putting more strains on our streams. I guess I kind of wanted to understand if we're giving consideration to that when we move forward with the lease. MR. VENTURA: Should we decide to move forward, then we'll have that conversation with Kamehameha Schools. But as far as watershed, to be clear, water is not available to this property, so the potential lessee would most likely bring in catchment system, create their own reservoir system to that effect. MS. LEE LOY: Yeah, I understand that part. But from an overall land management perspective, I recognize that when we do lease out large tracks of land, what are we doing to the overall ecosystem of it, and maintaining some areas that need to be conservation for forest and watersheds? MR. VENTURA: Sure. MS. LEE LOY: But from what you're telling me, this is a little more makai, correct? Page 8 FC -13 June 22, 2017 MR. VENTURA: Mauka, yes. MS. LEE LOY: Mauka, yeah. So my other question is, when you folks move forward with that lease or the framework of leasing it out, does the Council get to see that lease? MR. VENTURA: I'm not sure. That's a Corp. Counsel question. MS. LEE LOY: I'll ask later. And then you mention the revenue generation, where does that money go? MR. VENTURA: That money should go into the General Fund. MS. LEE LOY: And who accesses that money once we've earned that revenue? MR. VENTURA: If it's in the General Fund, then I think it becomes part of the entire County's General Fund. MS. LEE LOY: Is there any way to earmark those monies for specific uses around those surrounding properties? So if the revenue is being generated from that 900 acres, I'm assuming there will be some impacts to that area. Whether it's roads or other issues. I'm trying to MR. VENTURA: That sounds like a Deanna question. MS. LEE LOY: Okay. But I'm making sense, right? I justI want (Note: At this time, Deputy Finance Director Deanna Sako came forward to address the members of the Committee.) MS. SAKO: Deanna Sako, Deputy Director of Finance. Oh sorry, do you want to answer? MS. LEE LOY: I did Deanna. MS. SAKO: Sorry. I think that basically we don't earmark certain revenues, but we know we may have responsibilities to carryout in the future. MS. LEE LOY: Is there any way to ensure that the revenues generated from those lands would kind of stay in that general district? MS. SAKO: No, right now all of our revenue sources are listed together and it all goes to help balance the entire budget, and the expenditures in all districts. Page 9 FC -13 June 22, 2017 MS. LEE LOY: And this is just thinking outside the box, for Hamana or Ms. Sako. Would the County entertain an option to sell it rather than lease out? MS. SAKO: We have proposed to do that in the past, and it was rejected by the Council at that time. So we haven't brought it up with the Mayor, but, I mean it's definitely a possibility. MS. LEE LOY: Okay, I yield. MS. SAKO: Then we canso, yeah. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Richards. MR. RICHARDS: Good afternoon, Hamana. Thanks for being here. You said you've leased out parcels like this. I guess we have some likes and some comparisons, we can have. What kind of terms on the lease, on the other lands, that you offered? MR. VENTURA: Usually those are 10 -year leases with options. MR. RICHARDS: Okay, and anything longer than 10 -year, or is it just 10 -year with the options? MR. VENTURA: 10 -year with options. MR. RICHARDS: Okay, thank you. I yield. CHR. DAVID: Thank you, Mr. Richards. Anyone else before I go second round? Alright, Ms. Poindexter. MS. POINDEXTER: Yeah, and just to let the public know that I am aware that Alapaki Nahale-a of Kamehameha Schools (KS) has been in touch with our Planning Director to look at what talk with them about what they're planning to do. And I would hope that KS would also do the same when they're planning, because they have a lot of lands in Hamakua that we're concerned about. We've known what happened with some of the lease lands, or with the O`okala Dairy, and we talk about our watersheds. So I want them, as well, if they're holding us accountable, to be in touch and making sure that we're moving in the right direction to protect our watersheds. That they do the same, as well. MR. VENTURA: Yeah, I agree. MS. POINDEXTER: Yeah, relay that info—sentiment to them. Page 10 FC -13 June 22, 2017 MR. VENTURA: Yeah, we'd like to have that conversation. Get everybody at the table, to make sure we're all proceeding in the same direction MS. POINDEXTER: Right. MR. VENTURA: with the same goal in mind. MS. POINDEXTER: Thank you. Right, yeah. And I hope it becomes ato raise cattle on that because we know the industry, and we know that they are in need of lands where they can graze. So I'm in support of this, of course, of putting forward. But even if it's for grazing cattle, definitely. So, thank you. CHR. DAVID: Thank you, Ms. Poindexter. Anyone else? Ms. Lee Loy. MS. LEE LOY: Yeah, and that's exactly it. These are large tracks of land, and if we're not good land stewards, we end up giving away the milk and I don't want to do that. We have a number of partnerships in the area, with Kamehameha Schools and other large landowners. I guess I just kind of want the lease or whatever agreement is going forward with whomever the lessee is; that there's an understanding that this is for larger agricultural tracks of land, then there's a larger land stewardship goal that we want to maintain. That's just my general concern, so, thank you. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Richards. MR. RICHARDS: I guess this is where we need to weigh in on these conversations. A comment was made that the land would most likely be taken by a somewhat larger operation because they need to come with the resources, and that makes sense to me. MR. VENTURA: Correct. MR. RICHARDS: As you well know, this is my background. But with longer terms, a smaller operation could probably get into and probably qualify for NRCS (Natural Resources Conservation Service) funding and all that. So I would ask that maybe some longer terms on a lease be looked at, which allows someone the ability. Even if they're a small operation, they can actually get in there because they'll have time to recoup that investment. One of the hardest problems with agriculture, and we will be working on it, is land tenure; and ten years for cattle ranching is a blink, so we really need to be mindful of that. In my mind, if we can get a good steward. Because what Councilwoman Lee Loy had said, stewardship is definitely a part of it, and if they're not doing their job, we need to someone on land that is. But if we get them 15 years, even 20 years, I think we need to be mindful of that. Page 11 FC -13 June 22, 2017 MR. VENTURA: Okay, something we'll take into consideration and lay out when we sit down with the department to look at, for terms, parameters involved in the proposed lease. But, thank you. MR. RICHARDS: Okay. No, I appreciate that. Just that I'm mindful of a comment that was made to me by DLNR (Department of Land and Natural Resources), about highest best use, and they wouldn't give me a definition of that. To me, the highest best use is good land stewardship with a financial return, not just money. So, I yield. Thank you. CHR. DAVID: Thank you, Mr. Richards. Anyone else? No? Okay. Well, Mr. Ventura, thank you so much for explaining that. And I just have one question. MR. VENTURA: Sure. CHR. DAVID: Are there any other lands, such as this, that was settled for in other districts, in other areas, or is this the only one that exists right now? MR. VENTURA: Kapulena consisted of 35, well, excuse me, 1,700 plus acres. Last year we allocated 441 of those acres to the Hamakua Farm Bureau so they could start that pilot project related to community grazing, so that leaves us with a net of approximately 1,300 acres, which is actually 1,298, to see if we can proceed along the same lines, looking at possibilities in those lands out, as well. So we do have additional acreage available. In the past, that particular, Kapulena ag park per se, was assigned to R&D (Research and Development) to get the pilot project off the ground. We're going to wait for a little while to see what kind of results we have, but I can see it in the future as additional revenue source. And there's more than one type of use that we're looking at, whether it be cattle, intense agriculture, or maybe even for biomass, for alternate energy. We have a lot of potential out there we need to start tapping into, and that's why we're looking at these avenues. CHR. DAVID: Okay. And yeah, thank you for that. Because I was just wondering if there was like a list of areas that potentially we could get. We could acquire other properties in different areas that are faced with the same real property tax, retroactive kind of transfers to the County that maybe would open up the opportunities in other districts, aside from Hamakua. So, thank you. Thank you so much. Alright, I think we're done with this this. All those in favor of passing Resolution, I'm sorry, 227, please say "aye." Page 12 FC -13 June 22, 2017 Vote on Res. 227-17: The motion to recommend adoption of Res. 227-17 was (Approved) carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David -9. Noes: None. Absent: None. Excused: None. CHR. DAVID: Mr. Clerk, thank you, Bill 44. BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. Bill 44: AMENDS CHAPTER 19, ARTICLE 10, HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED), BY ADDING A NEW SECTION RELATING TO EXEMPTIONS FROM REAL PROPERTY TAX FOR PARCELS CLASSIFIED AS RESIDENTIAL, APARTMENT, COMMERCIAL, AND INDUSTRIAL Adds a new section which provides, without application to the Finance Director, exemptions from total gross value for certain real property tax classifications, as follows: (1) Residential - $30,000; (2) Apartment - $20,000; (3) Commercial - $40,000; and (4) Industrial - $40,000. Reference: Comm. 316 Intr. by: Ms. Ruggles Motion to Approve: Ms. Ruggles moved to recommend passage of Bill 44 on first reading. Seconded by Ms. Poindexter. CHR. DAVID: Thank you, Mr. Clerk. Ms. Ruggles. MS. RUGGLES: Thank you. I introduced this bill because I was concerned that across the board increases on property owners are regressive, and I wanted to explore options in order to protect low and middle range property values. Our office has obtained spreadsheets of certified values for 2018, from Real Property Tax, and we've been working closely with them for about the past month and a half and explored nearly 50 tax scenarios. We've discovered, with the rates that I previously proposed, which are not successful, that with these exemptions we could balance the budget without having to raise taxes on homeowners and ag, and also the minimum tax. So, that's really what this exemption bill was based on. Page 13 FC -13 June 22, 2017 The philosophy of trading exemptions, while increasing rates allows us to provide a safety net, ensuring that the burden is in place upon those who can least afford it. So this sort of is based on the same principals, of providing a $40,000 exemption to homeowners, and the exemptions for those over 60. But as of now, with our current tax rates that we just passed, this would put us at a deficit. I know that we were looking at creating a tax system focus group amongst ourselves to sort of explore options to overhaul our tax system; I think Ms. O'Hara had brought this up. If we are indeed going to move forward with that—first of all, if you guys would like, I look forward to hearing your feedback and discussing this. Either way, I am open to postponing this to a later date. But it might be applicable, I mean postponing it to the call of the Chair, to when it might be applicable. So, I'll leave it at that. Really, just the intent is I just want to make sure that people who are born and raised here can afford to stay here and raise a family. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Anyone? Mr. Chung. MR. CHUNG: Yeah, I'm going to be speaking against this bill. Well, maybe if I could just ask Ms. Ruggles a question? And this is now going to create further shortfall in the budget that we just passed. If I had to take a guess, and I really am just going to shoot from the hip on this, we're looking at anywhere from about six to $9 million dollars. Okay, where is that going to come from, or how are we going to make up that shortfall? MS. RUGGLES: It doesn't make sense to apply these exemptions to the current tax rates that we have. And when I ran the numbers, it would put us at a $6 million deficit. MR. CHUNG: So millions, right? MS. RUGGLES: Yeah. MR. CHUNG: Now, what did you say? It's not going to apply, what? MS. RUGGLES: It doesn't make sense to apply this to the tax rates that we passed a few weeks ago. MR. CHUNG: Why wouldn't it make sense? MS. RUGGLES: Because it would put us at a deficit and our budget would be MR. CHUNG: But this is a law and it takes affect on its passage. Page 14 FC -13 June 22, 2017 MS. RUGGLES: So if at any time next year we're looking at tax rates again, this could be brought up. Or if we're looking at other tax structures as a result of our tax overhaul discussion, this could be applicable. MR. CHUNG: Okay. Anyway, but yeah, that's incorrect. Because this is not a resolution or anything, this becomes a law, so I disagree with that. Also, I'm not a big fan of exemptions, because once you give exemptions it's hard to take it back, and that's what got us into this problem to begin with. I think one of the problems is—and as Mr. Richard said, our budget, actually our tax rates were the result of a compromise, where no one was really happy with what we got. But I really think one of the problems we had, no offense to anyone who supported it, is that we didn't raise or go with the Mayor's proposal. Or even Mr. Kanuha's proposal, with regard to the ag rates, because the ag rates have a lot the ag lands have a lot of exemptions, okay? Actually, that area is one where we have so much abuses. That's one of my regrets. But having more exemptions is going to cause more problems for this County over the long haul because we'll never be able to take it back later on, so that's my concern. I vote against. Thank you. CHR. DAVID: Thank you, Mr. Chung. Ms. Lee Loy, first round. MS. LEE LOY: Thank you, Chair. And thank you, Ms. Ruggles, I understand where you're trying to go with this, and it really is to open up a bigger conversation. With this, the way it's written, yeah we can't support it. But what I also heard you say is there may be an opportunity for us to look at a, like a real property tax sub -committee. And during our budget hearings, I specifically spoke to a Real Property Tax Appraisal Study that was done, and it laid out exactly what the County needs to do as far as overhauling our entire Real Property Tax Code and revenue system, in addition to the different types of policy changes that we have to make. I'm not going to be supporting this. But if there was a vehicle where we could start that conversation early and maybe get a sub -committee going, or a think-tank of people, not only from the County but from the Realtors Association, and the businesses, and farmers. Just a larger think-tank of how to overhaul a system that isn't working well enough for us. People have taken advantage of huge loopholes but they hide behind a designation that they truly don't support, and that to me is where it becomes unfair. And the idea of creating a safety net for people so that those who can afford more should help out more, I cannot subscribe to something like that. If we're all working together, we can all help share in the cost. But for those who make Page 15 FC -13 June 22, 2017 more, they can actually then make the choice to help out more, not be dictated on how to help out more. That is my philosophy going forward. Again, I'm not going to be supporting this bill. But if this turns into a sub- committee of real property tax reform, I'm in. I'm in. So, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Ms. Poindexter. MS. POINDEXTER: Yeah, I don't mind supporting your postponement to the call of the Chair. I like that idea, and just laying it on the table, because it's going to be to the call of the Chair when to bring it up. So if that committee should be formed, and they come up with some good suggestions that this may fit into, it may come up by the call of the Chair. The Chair may bring it back. Or if it doesn't, the Chair won't just bring it back. That's it. So I don't mind supporting your postponement to the call of the Chair. I will do that, if you do make that postponement. Thank you. CHR. DAVID: Thank you, Ms. Poindexter. Mr. Richards. Alright, I can't see the lights from there. Yeah, thank you. Ms. O'Hara? Mr. Richards. MR. RICHARDS: Okay, thank you, Chair. We went through quite an exercise to arrive at what we had with the current tax rates. And echoing Councilman Chung's comment about exemptions, I'm not wild on that. We make our tax code so complicated and convoluted that no one really understands what we're doing. We need to simplify. So I can't support this as it's written. We've been through the exercise, and I don't think what we need to do is find exemptions. I think what we need to do is fix the tax code as a whole. So in doing so, and thinking about that, I did check with Finance to find out what the impact to something like this would be, and they said it's closer to $8 million. We spent hours and hours trying to come up with a workable, and my term was the "bridge budget" to get us through this year, and give us a year to fix things. So, we need to get that done. So, I won't be supporting this. I would support call of the Chair, if they'll allow us. And then, it's my understanding, organizing, because we've all echoed this, I don't mindI didn't mind being disappointed with the Real Property tax rates for this upcoming fiscal year, knowing that this fiscal year, this upcoming fiscal year, we would work on fixing the Real Property Tax Code as a whole. So I support doing that in whatever venue that's going to be. So, thank you. I yield. CHR. DAVID: Thank you. Before I go to you, Ms. Ruggles, Ms. O'Hara, are you ready? MS. O'HARA: Yeah, I'm sorry. Page 16 FC -13 June 22, 2017 CHR. DAVID: Okay, no problem. MS. O'HARA: I just had to get clear on the technical issues. I appreciate that Ms. Ruggles brought this forward, and I also appreciate that she said she's willing to withdraw this bill at this time to the call of the Chair. Because, as she was trying to explain, this whole bill was predicated on the amendments that she made to the real property tax rates, which we didn't end up adopting her amendments. We ended up going about setting those rates in a different manner. So at this point in time, this doesn't really make any sense to discuss further. I have and am willing to consider, or I have spoken about and am willing to consider forming an ad hoc or task force, which I agree would be great to include members from the community. I want everybody to kind of think about that. Because if you've got a member in your community who would be a good asset on such a task force, it would be nice to do that outreach as we go about the process of forming that. And that's going to, of course, mean bringing a communication to the Council so that we can discuss it more fully. But, I also want to thank Ms. Lee Loy for bringing up the report, from March 2012. The title was technical assistance report evaluating property tax policies and administrative practices in Hawaii County, and it does have a really good matrix of suggestions and recommendations on the things that the County needs to proceed with in terms of making changes to its Real Property Tax Code, schedule, and classes. So, I'm willing to move ahead with that and I just want the Council to know that I'm fully in support of having a task force. And let's get this done, and done right. And I also agree with Mr. Chung's statement, about being very careful about how you put in exemptions. Especially hard -dollar amounts into the code, because dollar amounts change over time and you're stuck with this and then you've got to keep coming back and changing them and doing adjustments and all that. So I want to be sure that we look at various methods of approaching our property tax, that will shape the future for this island, and not make it so onerous for the workforce. We need to understand that people are being priced out of the community, and we need our workforce. So, very important. So, that's all I have to say. I won't be supporting the bill, but I am supportive, if Ms. Ruggles is willing to withdraw this. Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Ms. Ruggles. MS. RUGGLES: Thank you. I appreciate everyone's feedback and the discussion. I also just wanted to mention that, as many others here are, I am very concerned about the increase in residential that was implemented. And currently there's a big gap between a homeowner and residential, even though a lot of the times, not a lot of times, but a lot of the properties within the residential class are Page 17 FC-13 June 22, 2017 providing people with their primary residences, which are rentals. So,providing an exemption would help close that gap. But, I also understand the concern about nominal numbers, and if we want to work out a formula within our group, our working group, I think that's a great idea. Also, I have to point this out, something that Ms. Lee Loy brought up, about those who have more and can afford more and those who have less can afford less; therefore, we shouldn't be taxing people with less the same that that we're taxing people with more. That is that points to the idea that trickle-down theory has been disproven, so I just wanted to state that. So with that, I'll move to postpone this measure to the call of the Chair. Vote on Motion Ms. Ruggles moved to postpone Bill 44 to the call of to Postpone: the Chair. Seconded by Poindexter and carried by the (Approved) following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David - 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: This matter is postponed to the call of the Chair. May I please have motion to adjourn? ADJOURN- There being no further business, at 2:40 p.m., Ms. Poindexter moved to adjourn MENT: the meeting. Seconded by Ms. Eoff and carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David- 9. Noes: None. Absent: None. Excused: None. CHR. DAVID: We are adjourned. Mahalo. Approved: (if,in Ms. Maile Medeiros David, Chair (Date) Finance Committee MD/na Page 18