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HomeMy WebLinkAboutMIN FC 2018/03/13 2016-2018Committee on Finance 2911 Session Hawai `i County Building 25 Aupuni Street Hilo, Hawai `i March 13, 2018 CALL TO The regular meeting of the Committee on Finance was called to order at ORDER: 9:03 a.m., in the Council Chambers, Hilo, by Ms. Maile Medeiros David, Chair. ROLL CAT,T,- 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 Ms. Jennifer Ruggles, Member STATEMENTS FR MA TUF PT TRT .TC ON A CTF.ND A TTF.MQs The Chair directed the Committee to proceed to the next order of business, Statements from the Public on Agenda Items. The following individuals registered to speak and came forward when called by the Chair: Virginia Aste: (representing the Orchidland Neighbors) Rene Siracusa: (representing Malama O Puna) Toby Hazel: Rufus Sonognini: Tom Burton: Comm. 608, in support. Comm. 608, in support. Bill 113 (Comm. 780); and Bill 115 (Comm. 786), comment. Comm. 744, comment. Comm. 744, comment. Abelghassem Abraham Sadegh: Bill 114 (Comm. 781), comment. FC -29 March 13, 2018 COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 14.30: REPORT OF CHANGE ORDERS AUTHORIZED: JANUARY 15 — 31, 2018 From Finance Director Deanna Sako, dated February 16, 2018, transmitting the above report pursuant to Hawaii County Code Section 2-12.3. Vote on Comm. 14.30: Mr. Richards moved to close file on Comm. 14.30. Filed 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. Comm. 15.25: REPORT OF FUND TRANSFERS AUTHORIZED: JANUARY 16 — 31, 2018 From Controller Kay Oshiro, dated February 7, 2018. Vote on Comm. 15.25: Mr. Richards moved to close file on Comm. 15.25. Filed Seconded by Ms. O'Hara and carried by the following voice vote: Comm. 15.26 Vote on Comm. 15.26 Filed Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Chair David — 9. Noes: None. Absent: None. Excused: None. REPORT OF FUND TRANSFERS AUTHORIZED: FEBRUARY 1 — 15, 2018 From Controller Kay Oshiro, dated February 21, 2018. Mr. Richards moved to close file on Comm. 15.26. 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. Page 2 FC -29 Comm. 114.4: SECOND QUARTER REALLOCATION REPORT: OCTOBER – DECEMBER 2017 From Human Resources Director William V. Brilhante, Jr., dated February 6, 2018. Motion to Close File Ms. O'Hara moved to close file on Comm. 114.4. Seconded by Mr. Richards. March 13, 2018 CHR. DAVID: I believe we have Human Resources in the room. Ifno? Mr. Brilhante? Okay, I believe Mr. Brilhante was supposed to be here, or Jennifer Sakamoto. But what we can do is, let me just table until we get somebody from Human Resources. Motion to table, please? Vote on Motion to Ms. Lee Loy moved to table Comm. 114.4. Seconded by. Table: Mr. Richards and carried by the following voice vote: (Approved) 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, so Communication 114.4 is tabled for now. Mr. Clerk, Communication 608. Comm. 608: REQUESTS DISCUSSION WITH CORPORATION COUNSEL JOSEPH KAMELAMELA REGARDING PUBLIC PURPOSE AND PROCESS FOR THE USE OF CONTINGENCY RELIEF FUNDS From Council Member Jen Ruggles, dated November 15, 2017. Postponed: December 4, 2017, and January 23, 2018 (Note: There is a motion by Ms. Poindexter, seconded by Ms. Lee Loy, to close file on Comm. 608.) CHR. DAVID: Thank you, Mr. Clerk. I believe—Ms. Ruggles? MS. RUGGLES: So move. CHR. DAVID: Oh no, we already on the floor. MS. RUGGLES: Oh, thank you. CHR. DAVID: So go ahead with the discussion. Page 3 FC -29 March 13, 2018 MS. RUGGLES: Okay, great. Well, I appreciate everyone entertaining this discussion, and I also appreciate the testifiers coming out to remind us the context of this communication. So even though the Code is clear and says that it doesn't say we can or cannot use contingency funds for Capital Improvement Projects (CIP). Even when it meets public purpose and even though we do have a lot of precedent, of us using contingency funds to help with CIP projects, apparently it is the new Corporation Counsel's position that we are not that he is interpreting it, officially, that we cannot use it for CIP. Such interpretation is constraining me from meeting the needs of my district, especially considering the history of Capital Improvement Projects that are allocated to Puna, in my district, it's important that I can be able to use my contingency funds to make up for that. So I am looking at the amendment that one of the testifiers testified to, and I think we'll take it from there. CHR. DAVID: Thank you, Ms. Ruggles. Anyone else? Seeing none, alright, all those in favor please say "aye" on filing Communication 608. Vote on Comm. 608: The motion to close file on Comm. 608 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. Comm. 744: REQUESTS PRESENTATION BY STEFAN BUCHTA, OF THE LELEIWI COMMUNITY ASSOCIATION, REGARDING THE EFFECTS OF SHORT-TERM RENTALS ON THE SURROUNDING COMMUNITY, REAL PROPERTY TAX REVENUE, AND THE REAL ESTATE MARKET From Council Member Susan L. K. Lee Loy, dated January 30, 2018. (Note: Comm. 744.3, from Council Member Susan L. K. Lee Loy dated March 9, 2018, transmitting a hardcopy of the PowerPoint presentation by Mr. Stefan Buchta, of the Leleiwi Community Association, was circulated.) Motion to Close File: Ms. Lee Loy moved to close file on Comm. 744. Seconded by Mr. Kanuha. CHR. DAVID: Ms. Lee Loy, go ahead. MS. LEE LOY: Thank you, Chair. Stefan, if we could bring you forward? Page 4 FC -29 March 13, 2018 (Note: At this time, Mr. Buchta came forward to address the members of the Committee.) MS. LEE LOY: When I first took office, this issue regarding vacation rentals in my community, especially Keaukaha because it is a beach community, was feeling the pressure of short-term vacation rentals popping up. I had attended the Leleiwi community meeting, and they had shared their frustration. And then, I also had an opportunity to meet with Mr. Sonognini about an area, which is residential. We tried to address the issues there, and the pressures that they were feeling in a residential community and the pressures of people coming through a community that was quiet and just not ready for people coming late at night, at all hours of the evening. It became very apparent, to me, that there was a need to address this issue. We have extremely talented individuals in our community. I had the opportunity to meet Stefan; we talked at length about how to approach this. I didn't want to craft policy that was driven from a silo. I wanted to draft a policy that was driven by data. Thank you, Stefan, for doing the heavy -lifting and identifying those challenges. And what I want to do, is use this as an opportunity for Stefan to take a—share with the Council his findings that is impacting not only my community but communities all across the island. So, with that, Stefan, if you could please introduce yourself and then share the information. It is my hope that at the end of this conversation, you know, some question and answer with Stefan. We have something pending that will hopefully come up soon, but it will enlighten us at different ways to address this throughout our entire island. So, Stefan, if you could? CHR. DAVID: If you could identify yourself for the record, and then go ahead. MR. BUCHTA: Hello, I am Stephan Buchta. For the record, I'm presenting on vacation rentals, on the challenges of vacation rentals across the whole island. Not going to only speak about our neighborhood excessively—even though I can't help to bring some pictures of individual objects in the neighborhood. Because when you start to get interested in a problem, then it sometimes—you know, those experiences, first experience that you have, that tend to stick with you and drive you later on and tend to motivate you. Thank you so much, Council Member Lee Loy, for the opportunity. This all started a little bit as a challenge. Because six months ago, I had identified the problem. I am German. Bicycle guy, who goes around neighborhoods, you know, don't drive. So I saw this change on the ground. That all of a sudden, houses started being empty. At certain times of the year, not always, rental cars would be in front. I'm Page 5 FC -29 March 13, 2018 like, this used to be a neighbor and now that's a rental car, that's odd. This house looks a little bit too nice; oh my God, it's getting a complete makeover. So you see these changes as a neighbor. I started inquiring, what is this? I brought it up to Sue Lee Loy as a concern, because I noticed that almost 20 percent of our neighborhood had been converted. Sue said, "Well, if you really want people to listen to this, you can't do this on a level of a neighborhood." Because we can't make policy for one neighborhood. That's not good policy. I have a history of collecting data. I've once helped the city of Beijing, with their pollution problem. It's a similar issue. It's where there were many, many polluters, but they would be hiding. Because there are strict laws, even in Beijing, believe it or not, against all that smog. But a lot of the construction sites, they won't cover up all the dust. Once the inspector shows up, they'll put water on top and everything. So finding them was key. So I thought, whoa. What you're going to be seeing is a survey of the whole island, of about 5,000. Now, we can argue how many they are actually. Nobody knows the exact number, and that is because it depends, somewhat how you count them. A lot of people list their unit, they list their whole house, but then they also list the two-bedroom in the same house. They're hoping that they catch either a couple that will rent the two-bedroom, or they will check a whole family or a whole group to rent the whole house so they can make double. So you have a lot of double things of that kind. It's not a huge amount. But I would say it's like 20 percent or so, the listings of that kind. But I can tell you for sure there are more than 5,000, individual listings, bed and breakfast owners, on this island at this point. Some people say it's as high as 8,000, I don't believe this. But it is also growing at a very rapid rate, between 100 and 200 every month now. It's crazy. It's almost a historic change that's happening around us. I couldn't believe it when I saw it. Before I launch into the data, there's one thing I want—if there's nothing else, that you take away fromI tried to put this into an image; in Japan, somebody told me there's a saying that says, "As a bee gathering flowers, it takes only the taste of them but it doesn't harm the color of scent." So it's a beautiful image of—you go somewhere but you don't take nothing from it. But then this person that told me, was talking about there's also ants and ants also come to flowers. Ants is kind of sticky, but individually it's not damaging the flower. But what if there's lots of ants, then you actually damage the flower. So what I would like you to take away from this presentation, as a major point at the end, there are bees and there are ants. If you have too many ants, it will kill the flower. I think that's where we're starting to see in our residential neighborhoods, and also in some of the ag zones, where you will see when you look at some of the maps, that it's running wild there. There are tent cities, sprawling behind already approved houses. Luxury tents with wooden bathrooms next to them. It's quite amazing how creative people get. Page 6 FC -29 March 13, 2018 And I found there's now a hot -spring. Not joking, down in Puna, rented two hours at a time, under B&B (Bed and Breakfast). Where you can go down—and they claim they have the original Japanese hot -spring experience. I have a long history in Japan. I don't believe that you need more soil, I mean, different kind of soil, but they claim they have it. It's fully booked, a week out. So it's not only at B&B, this is going crazy. All kind of businesses uses it now. It's not only short-term vacation rentals. (Note: At this time, Mr. Buchta gave a PowerPoint presentation to the members of the Committee. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's office. A copy of the PowerPoint presentation is made a part of the record, see Comm. 744.3.) MR. BUCHTA: Thank you very much for your time. CHR. DAVID: Thank you, Mr. Buchta. Council Members, I think we need to have like a five-minute break before we continue with this. So, I'm going to take a five-minute recess. Alright, we're in recess. Five minutes. Thank you. Recess: At 10:55 a.m., the Chair called for a recess. Reconvene: The meeting reconvened at 11:04 a.m. CHR. DAVID: Aloha, everyone, and welcome back. I am taking the Committee on Finance out of recess. Mr. Chung, I believe you were first. MR. CHUNG: Thank you. First of all, I wanted to thank Ms. Lee Loy for asking for this presentation. Because, Stefan, I've got to say in all of my years working on this Council, and there have been many, I don't think I've come across as thoughtful or as well-done a presentation that I've seen today. You have such a pleasant demeanor about yourself, that made it much more easier to listen to. I don't have any questions for you. I guess it's a function of your presentation being so well-done. It touched all of the points; public policy and all of the different type of legislations. I mean, it was very comprehensive. But as Ms. Lee Loy intended, you are going to be a wonderful resource for each of us going forward. I would anticipate that many of us will be calling you from time -to -time. And we don't have to spend time asking questions of you right now. I just wanted to make that comment. Just a real short comment, though. Many years ago, one of the smartest guys I've ever worked with, John Ray, who was a former Council Member from Waimea, made a presentation to all of us, but it wasn't as a Councilperson. He had already left the Council and wasI think it was in his role with the Leeward Planning Page 7 FC -29 March 13, 2018 Conference, I think. I'm not too sure. This was many years ago. And then, he talked about the decline in resort, you know, the hotel industries on this island, and the rise of it. At that time, it was called the resort nodes being places where people will go to moving forward. Of course, I don't think he anticipated what we see right now. But in his own way, he articulated the rise of this phenomenon. So, that was quite interesting. But I just really wanted to thank you and thank Ms. Lee Loy. And anticipate that I will be talking to you in the very near future. Thank you so much for coming. CHR. DAVID: Mahalo, Mr. Chung. Ms. Lee Loy. MS. LEE LOY: Thank you, Stefan. Really, this was the opportunity for you to share your wealth of information with each individual Council Member. You touched on something that is impacting each and every district in its own very unique way. But we're looking at how do we create those policies, create the opportunities? I'm lucky enough to be able to communicate with you on a daily basis, so I'm not going to have any questions right here, right now. But you have left us with those questions of, how do we empower communities to maintain their community character, while still looking at opportunities for our real property tax base, the enforcement that goes with it? I appreciated all the different areas of the best practices and some of the areas in which we will have to take a very multi -pronged approach, with help from the State, help with our Code enforcement. I'm actually looking at a bigger picture, when we go through our General Plan update, and maintaining each and every district, and the uniqueness of those districts, while still creating an enforcement and a policy. So, thank you so much for your time. I really hope that all of my other colleagues take the opportunity to reach out to Stefan, and fine-tune what future legislation we might be having, coming forward. So, I thank you and yield at this time. CHR. DAVID: Mahalo, Ms. Lee Loy. Mr. Richards and then Ms. Poindexter. MR. RICHARDS: Thank you, Chair. Echoing Mr. Chung's and Ms. Lee Loy's comments, about "well done, excellent presentation." I do have a question. I will be reaching out to you later. But my take -away from your presentation was, first of all, it's not a one size fits all. It's depending on where we're looking at. It's a character of the community. It's one of the comments you made on your monster, I guess we'd call it, Keaukaha side. I mean, the whole reason people want to come here is the character of the community. So the paradox is, the more you impact that, that Page 8 FC -29 March 13, 2018 character disappears. So, it's a short-term gain; but if you slowly erode that to nothing, then what's the attraction to bring balance? So, mindful of that. You did touch on the economic side, which is part of the balancing act that we have to embrace and figure out how to make this work. Because there's an economic impact, positive to the County. If we can embrace that and engage that for the County, there's some good benefits. But we have to strike that balance in there. I was looking—here's the question. You have your best practices. My question is, what were some of the worst practices? I was looking for that slide. What were some things that other jurisdictions tried that were really bad ideas? I was kind of wondering if you had any comments on that. Because there's no point in us discovering the bad ideas ourselves. Let someone else tell us what they were. Do you have any comments on that? MR. BUCHTA: I think what I talked about, the end of the presentation, it wasn't so much the policy that they had put in. It was—they didn't emphasize enforcement. That they had to adjust the policy later on. Many times in order to make it work. Is that, whatever policy you go in—and it's interesting. Berlin put 100,000 euros; San Francisco originally put in only 500. It didn't have much different impact. Because the 100,000, you would only catch a few guys. So if you look at the total amount of listings, it didn't drastically reduce it but it caught a few major, you know, offenders in residential neighborhoods. So I think it'sit really depends on what you expect out of it. If you expect a large impact on the amounts of listings, then you're going to put a different policy in that if you just want to curb a few big operators, as I would be advocating for. But I've been generally puttingI'm seeingI haven't seen a lot of super bad policy put in at this point. Because everybody's looking at this explosion, and it's happening in real time. They're trying to curb it. They're finding out that the real problem is not just, you know, putting the policy but the enforcement. I think every county and every area is unique. So to some extent, we're not the same as San Francisco. We have more absentee owners with their houses. We have different constituencies. So I think whatever we put in, we'll have to adjust on the grounds relatively quickly. I don't know if the mechanism, as bids get put out, allows that; to adjust things on the ground, to maybe even at every six months or at every year. Let's say, to see, you know, is this curbing and how are the hosts adjusting? Because you're looking at sort of a designer made system; is where you put some policy out, then the host will first hide and the host will, you know, maybe split up the houses. You know, maybe hide behind the lessees. That's what you see on the mainland. They're very creative. Because there's so much money at stake. The few smart hosts will—what you tend to see, will get very creative. So I think the message isn't—it's not so much the smarts you put in Page 9 FC -29 March 13, 2018 now. Because you don't understand the system until you see upgrading, when you put it in. But one thing we can take away from this, some cities don't put in density regulations. I think that's definitely not good, right? They just outright ban everything, as some of the other counties here in Hawaii have tried, and that definitely won't work. So I think that's a not so good practice. It's very well -meant, but I think it's not enforceable. MR. RICHARDS: I appreciate that. And what I'm MR. BUCHTA: Maybe I'm struggling with the answer, but I would say look at it as a dynamic system and adjust as you go. MR. RICHARDS: Yeah, kind of a work -in -progress. MR. BUCHTA: As a work -in -progress. MR. RICHARDS: Which then highlights that what weI think what we should be doing as a Council, come back to your first slides, is identify what we're trying to accomplish; what's the purpose, what's our goal, and then craft the legislation around that. Is it to maintain communities? Is it to allow but minimally impact? So that's a definition we've got to arrive at before we can actually come up with something meaningful, but then also with the expectation that we're going to have to adjust this as we get into it. Okay, thank you, Chair. I yield. CHR. DAVID: Thank you, Mr. Richards. And now we go to Ms. Poindexter. MS. POINDEXTER: Thank you, Chair. And thank you so much for that presentation. I mean, I'm sure everybody appreciates what you did because it's makes it more real. It was a little bit more scared than I was first thinking it was, and it's more than I thought it was, which is very, very disturbing. Because what will our island look like in two years or maybe even one year? If we don't put anything in place right now, what are we doing to our communities? The developerI think I read somewhere, whether it was in the paper or whether it was online, criticizing the way our homes were built. Like, it was built so poorly, and what he's bringing in is like the best. Like what you had stated, and basically saying it was ugly homes. But I just want to tell him, I'm so proud of my plantation home that I grew up in. I love it. You know what, had holes in the wall; that I could see the sun coming through the wall on some mornings. Mosquitos coming in. We had to light mosquito punk, whatever it was. But you know what, that's made us who we are today. We are so proud of that. These people are coming, developing and over -developing, and chasing and pushing out our local people because no rentals available for our local people in Page 10 FC -29 March 13, 2018 residential communities. They're turning residential communities into these resort areas, which is unfortunate. We're going to lose who we are. We are trying to preserve our cultural heritage, our lifestyle. There is room for development; but like you said, in controlled areas, maybe? But we've really got to consider how stiff we want to make this. Because if we're too lenient and leaving some loopholes, we're still going to cause a lot of damage. I don't want my grandchildren to come visit Hawaii, because they cannot live here already. They moved to New York. They cannot afford it herein the country side of New York. But come back and look at this place, and all it is, is you come back to a tourist destination, and say, "Look, my grandmother was a part of this." You know, we lost everything growing up here. And, here, us, the lawmakers, are not doing, me—you know, we need to do something about it. So I just want to thank you for opening up more of my eyes and seeing how immediately we need to start putting this at the top of our priority, to make sure that we can save this beautiful place we call Hawaii. Thank you. CHR. DAVID: Thank you, Ms. Poindexter. Ms. Ruggles and then Mr. Kanuha. MS. RUGGLES: Thank you. Thank you for this. It was captivating and very well put together. I have a couple of questions. In the beginning, you mentioned that—to sort of set the context for the presentation, there are entire blocks of residential neighborhoods, and people rent them like hotels with no supervision, and the owners are often out of state. And then, with the revenues by host -type graph here, it says six percent of the hosts or commercial hosts that rent out two or more places and make 35 percent of the revenue. But what I was looking at, is the commercial host. Are those the ones that you're referring to as far as the ones that rent like hotels, and they live out-of-state? MR. BUCHTA: So, the name "hotel" is a strong name, right? They would not call it a hotel if you asked them. But they're rooming houses; let's put it this way. They're not a hotel, in the sense that they don't always have a bedroom right next to, you know, the share bedroom. But yes, yeah, they are the type of host that basically does not live in the structure and that keeps adding structures. You know, next to a structure that they already have, using the capital that they make from one structure, rolling it into the next structure. So, purely investor -type, you know, investor type behavior. MS. RUGGLES: Okay. MR. BUCHTA: As opposed to home behavior. Page 11 FC -29 March 13, 2018 MS. RUGGLES: Okay, great. So I just wanted to make sure that, that's only six percent? MR. BUCHTA: That's only six percent. MS. RUGGLES: According to your—okay. MR. BUCHTA: Yeah, it's true. I looked across the island. They're not that hard to find on the computer. Because you can match them up in the tax base, and they're only six percent, yeah. MS. RUGGLES: Okay, thank you. MR. BUCHTA: But the whole six percent, big projects partially, you know. So those are the ones that will be more resistant to change, you know. MS. RUGGLES: Right. Does it say, as far as—okay, so the six percent are the owners. Do you have any stats on the amounts of rentals that they actually own? MR. BUCHTA: It's totally different. I would say the most owned three, on the average. MS. RUGGLES: Of that six percent? MR. BUCHTA: The really bad ones own up toand no, 12. But most of them own three or four. MS. RUGGLES: Okay, thank you. MR. BUCHTA: They start usually with one house up on Hamakua. Then they realize, "Well, Miloli`i kind of look similar, so why don't I try there?" And then, they have another in Miloli`i. And then, the really small—in Kawaihae, down there, looks like similar again. You know, near the beach—let's see. So if they find an open house, then they'll move there. It's sort of random. Where, they can find empty houses that they can add to their base. So, that's that kind of behavior. But as they go on, they're now rapidly adding because they know the time is running. For the ones that I've been observing, they're now adding one every six months. MS. RUGGLES: One every six months, thank you. These numbers here that you have, these hot spots around the island, how did you get these? MR. BUCHTA: Yeah, so what I did, is I pretended to be a human user, going to AirBnB, and I had a list of the different cities. There's a Hawaii GIS (Geographical Information System) project that's really great. It's run by the State. So somebody put all the parcels, all the lots on the whole island into a file. Page 12 FC -29 March 13, 2018 I took that file, and I downloaded into a computer database. For every lot on the whole island, I go to AirBnB, and see if there's anything around. You know, for many lots they're not listed. They're like, you know, maybe some our conservation and in the middle. So I find the ones that are around. Then I start matching, and seeing if they're the same first name. For example, this is Robert who runs this. Is there a Bob or Robert in the tax records of that lot? That's basically how you do it. But sometimes it doesn't match because the host is some realtor who is doing it for him. Then you try to match the shape of the house, and you try to match the descriptions. Surprisingly, computers are good at this. Only a few percent fall that you can't automatically match. So that whole data basically matched all lots. Every single lot in the whole island, against all listings on AirBnB. Then put them on a google map, so that's what you're looking at. MS. RUGGLES: Thank you. So is this how you sort of mitigated for duplicate listings? MR. BUCHTA: Yeah. So one good thing—this list that you're looking at is only AirBnB. When you go out to VRBO (Vacation Rental By Owner), HomeAway, there is a leader of other companies. They're cleaning out as big as AirBnB. AirBnB is the gorilla. Then, you find lots of duplicates because there's big incentives to list them on several. In fact, some of the commercial owners put up their own websites. This one guy, with his hotel tower, he has a beautiful site with seven homes listed. Three in Hawaiian Beaches, four in Keaukaha, it's all listed there. So, they create their own websites too. So you're going to have lots of duplicate lists. But if you stay just inside the AirBnB, in this case for these numbers, I did. Then, it gets simple. There's not going to be many duplicates because you don't start double -bookings. If you're going to, as an owner, have duplicates, then you're going to have pain. Because somebody is going to go in and type in their credit card, and you're going to have to call them and put that booking back. I would say only those double -listings. But those I can field by computer because they're on the same lot. So it's actually not it's good that you asked that question. Because the people who have vested interest, they will push back on these numbers hard. They will say, "Oh, there's only a few thousand. We don't believe these numbers." Until you sit them down and zoom in on their own lot, then they'll actually see it. MS. RUGGLES: Yeah, I think it would be great to get a good breakdown of how we got these numbers, so this is something that we can explain to the public as being valid. MR. BUCHTA: Right, yeah. But please handle those numbers with care because I did not realize myself, people know the same, illegal. If such a map gets Page 13 FC -29 March 13, 2018 published, then they feel threatened. I moved those pins around subtly so that they're not exactly on the property. So maybe if you publish it or somebody in the County publish it officially, then maybe we can use these maps. But they're sort of explosive. MS. RUGGLES: Thank you. So just looking at it, I was actually pretty shocked to see that there are probably about 1,000 in my district. I was wondering if you happen to know of any numbers on economic activity, that these AirBnBs have provided alone? Do you know of anyone who may have done a study like that? MR. BUCHTA: Yeah, there's plenty of studies on the mainland, but I don't know if they really apply. Because, especially in the Puna district, there's lots of agriculture land -type vacation rentals that are quite unique. I don't know if they compare to, like the cities, like in San Francisco. Having lived in San Francisco, I don't think they compare. I think there's not a lot. But if you let me know what kind of data you'd like to see, then I could maybe generate that. MS. RUGGLES: Yeah, that is definitely something. Because we need to know all of the data so that we can make a good decision to base upon it. MR. BUCHTA: I mean, what's easy to calculate is we have the numbers, which are whole -house rentals, that you can easily get. And you can generate tax numbers and other things from that. You have ideas how we can MS. RUGGLES: Yeah, I'm more looking atI'm interested in, how much do they contribute in terms of the wraparound services that come with each vacation rental? MR. BUCHTA: Yeah. My census right now MS. RUGGLES: That way we know the impact of the decision that we're making. MR. BUCHTA: They will definitely generate. And I've known—some people anticipate the backlash, so they pay fairly good wages now. I've seen guys in Kona that have multiple units on Alii Drive, and they pay $25 an hour for cleaning in order to—so I think they're doing this in good faith to avoid this. But what tends to happen, is I had a neighbor that got very worked up because I was working on this and he didn't like the idea. His significant other was one of the people cleaning in one of these places. So I asked the owner of this place, "Did you employ her recently," and he's like, "Well, I haven't really needed for a couple of months." So you will see, as these units are often empty and not yet reliable places of work. I think the only way that you can make them reliable places in communities, like Volcano, where there's so many of them, that people Page 14 FC -29 March 13, 2018 can go from one to the next. But they're not going to create permanent employment yet because they're too fractured. MS. RUGGLES: Okay, that brings me to my next question. You mentioned that there might vacation rentals that are beneficial for the island, like in Volcano. Because those are the kind that we might want to build markets around, and then there are others that are taking houses off the market. So what is the criteria, in your mind, that sets Volcano apart from other districts? MR. BUCHTA: I think it's basically the character of the houses there. I mean, Volcano is a design community to some extent. Isn't it? At least I feel that way. When I go in there, the house is sort of built around the theme of the parks and the ferns. So there is a sense of this is a design community. It's not like a community like Keaukaha, that's sort of homegrown with lots of, you know, Hawaiian residents still there and people actually fishing off the reef and the ponds. But it's a community that embraces that artistic designs more than the organically -grown sense. So I think it will be easier there to actually take it forward and make it even more, you know, into an asset. I also say that because—I've talked to many Volcano people about this. I ran into one guy, he's doing frog control there, coqui frog control, and I thought he would be a good person to talk to because he goes to everywhere. I asked him, "What do you think about vacation rental?" He's like, "Yeah, sure." If you ask anybody in our neighborhood, you know like, whoa, vacation rental. I think they'll embrace it. MS. RUGGLES: Yeah. So I think that's the important point of discussion, which is what is these criteria of an appropriate place for them and a non -appropriate place? And then start from there, as far as establishing our value system. MR. BUCHTA: Yeah. Yeah, soI mean, one is support and tourist infrastructure next to it, like the park that's already there. I think that's an important criteria. Another one is, is there an infrastructure already? In Volcano, there's an infrastructure. There's so many vacation rentals now, that there are people—like one host has six vacation rentals that they're taking care of They already have worked out how to go from house-to-house, how to change the bedding, how to open the locks at the door, so there's services already in place that have grown around it because it's so dense. You can take advantage and enhance on that. When you already have that in place, it's a big asset. MS. RUGGLES: Right. This is my last question; which is, what are your qualifications? MR. BUCHTA: Oh, this is a funny story. Because I don't really have any background in government. This kind of has chosen me, this problem. Sometimes you get chosen by probably my wife hates this because when I'm Page 15 FC -29 March 13, 2018 sitting at dinner, I'm talking about vacation rentals. She doesn't really appreciate that very much. But you get chosen by problems. There's nothing you can do about it. You know, I work for—most of my life, for Oracle Corporation in Silicon Valley, so I was on the other end. MS. RUGGLES: Oracle? MR. BUCHTA: Oracle, Larry Ellison's company. I was a product manager. I would talk to customers. I would do what I was doing here. I would go out; I'll take a product that we had built, and I would go to customers all over the world and I would find out what did they really think about this. Does this suck or is this a great product? Management wants to know; do we put money into this or don't we money into it? So they would send me, and I would go to Ikea, in Sweden. I would sit down with the Ikea guys, telling me what you really feel about this. And then I'd go back to Redwood City, and I would say, "Whoa, we have a problem here. The developers think they're doing a great job." So this is what I've done for many, many years. I found that in this environment, it kind of—it's a very similar problem because you're building the business case around something. You're doing it by actually going on the ground, talking to people, creating data from the ground up. MS. RUGGLES: Okay. I actually have another question here. You mentioned that once houses are put to international tourist standards, that they will never be converted back. What are the—there's actually a document that's called International Tourist Standards? MR. BUCHTA: No, I shouldn't have said—yeah, I don't know. I mean, the people who are coming into these vacation rentals, coming out of hotel rooms, right? That's their back—kind of the idea that they have. I talked to Doug Arnott, from Arnott's Lodge. I was curious about something, about the same idea. So I asked him, and he said, "I'm putting all these upgrades in now because I have to compete. I'm bringing my rooms up to international standards." It really is that notion that there is a standard that somebody expects. When they go into a room, they expect, you know, a flat -screen TV to be there; in shared home, that's not necessarily there. They expect a cooler with beer. If they are Chinese, they expect hot water, because we heard Chinese people love to drink hot water bottles. MS. RUGGLES: Okay, but this isn't actually an official standard set by any tourist organization? MR. BUCHTA: No. MS. RUGGLES: Okay. Page 16 FC -29 March 13, 2018 MR. BUCHTA: Because this is not actually a standard. I don't think anybody has made that standard. Especially for short-term vacation rentals, it's still very, very diverse. But you've got to have more of a city audience, right? I mean, their backtalk is hotels and cities, and they will expect similar kinds of things. MS. RUGGLES: Great. Thank you. MR. BUCHTA: I do a lot of AirBnBs. I did nine last year. When I go into an AirBnB room, I kind of expect a queen size bed. I don't why. But, yeah. MS. RUGGLES: Thank you for the explanation, Mr. Buchta. I'll yield at this time. CHR. DAVID: Thank you, Ms. Ruggles. Council Members, I know we have Mr. Kanuha, Ms. Eoff, and Ms. O'Hara left. But I just to remind you that Mr. Buchta can always be—we can contact him. So if you have a specific question, I'm thinking of our agenda, the other items we have on our agenda, so if I could ask that you keep it kind of short and sweet on your questions. Thank you. Go ahead, Mr. Kanuha. MR. KANUHA: Thank you. Thank you, Stefan, for being here. I don't have specific questions. It's just more of—finally I get to hear your presentation. I know it was kind of held off one time. This is great to know. Because I don't want to talk about the legislation that is going to come up, but, you know, you hear—you've been hearing—we've been hearing—or I've been hearing for the last several years the impacts that these short-term vacation rentals are having on residential communities. Especially in my district, where I have a lot of residential communities, you can slowly see what `s happening in these communities. I never really knew the numbers. But you have a neighbor that will call me—and now recently, since all this stuff was happening, since the bill came out every single day you'll hear of the negative impacts to our residential communities. I love the way you put it earlier, that we embrace the good ones and we look at how to curb the bad ones. I don't know if that was the exact language but that's what I heard. I absolutely agree. You know there are places around this island that these short-term vacation rentals are a positive impact on our residents and a positive impact on the tourism industry. I really do think that we can find a way, a unique way, for this County to promote these short-term vacation rentals, while also holding in place a certain type of regulation. That's really what I always aim for. You know, find the balance. Look at this entire island and find that unique balance. This island is going to be different from Maui, which is going to be different from Honolulu. Our island is going to be different from Kauai. So, it's just figuring out that balance and working within the confines that we have here, within our laws, and really taking a lead, you know. You look at the purposes and Page 17 FC -29 March 13, 2018 goals that you listed here, "Reign in the expansive short-term rental growth." never even knew there were that many. I had no clue. The legislation that is going forth was driven by, for me, driven by people calling my office all the time, saying that there's a problem here. We need to do something about it. They saw what happened on the other islands, and they see it happening here. But now we actually have some data to back up what these people were saying, every single time that they called my office. So I loved this presentation is being presented to us, and I really look forward to talking to you afterwards, about all the other stuff that you were talking about. I really want to meet and talk story more. You know, other purposes; maintain neighborhood character and unique field. I live in one of the oldest subdivisions, or my family lives in one of the oldest subdivisions in Kona. You see the housing being taken out and, you know, they don't have any CC&Rs (Covenants, Conditions & Restrictions), that they have an active community association that can curb these vacation rentals within there. So you'll, you know, see the vacation rental sign be popped out here and there. It's taking away from—it's exactly doing what you said, taking away from available housing, and that is a huge problem. I cannot even afford to a buy house in Kona, or if find a house, at that. Minimize impacts on residential areas, as what I just said. Enable economic opportunities and support tourism. See this is the supporting part of short-term vacation rentals. It is a unique thing, and we're now figuring out the opportunities that these have for the tourism industry. I mean, we are at an all-time high right now, and it's great. You know, there's a lot of jobs out there. There's a lot of economic growth. And at some point, we're going to be generating money for the County. There isn't a separate category for this, but there should as hell might be after some regulation goes through. And really, I love the purpose of developing a vision for the role of these home -share rentals in Hawaii County. That's really what we we're aiming to do, and really look forward to working with this Council and hearing from the community about how we make that vision and how we approach this. I never had any questions now. I really want to talk to you in length about more of this stuff, and that's where all of my questions are going to be. But thanks, Ms. Lee Loy, for bringing this to the Council. And I really appreciate your presentation and all the information that it provided. I yield. CHR. DAVID: Thank you, Mr. Kanuha. Ms. Eoff. Page 18 FC -29 March 13, 2018 MS. EOFF: Thank you, Madam Chair. I wanted to follow Mr. Kanuha, maybe because we share the Kona district, maybe because we've worked on this. But I just really wanted to thank you. You gave us a lot of things to think about. You covered a lot of issues relating to vacation rentals. But the thing that really struck me the most, I think, was seeking this balance, and spoke very philosophically about our role as policymakers or lawmakers. That it is our responsibility and our kuleana to find a win-win, where we can mitigate impacts to our neighborhoods and yet see the appropriate need for an alternative mode of—you know, for vacationers. So I just wanted to thank you for making that point clear, and some of the other the Alexander Hamilton quote. I mean, it kind of gave us a great perspective. I'm sure we will look forward to more discussions with you and with each other as we move along. So, mahalo. Mahalo, Ms. Lee Loy. CHR. DAVID: Thank you, Ms. Eof£ Ms. O'Hara, go ahead. MS. O'HARA: Alright, thank you. And, Stefan Buchta? Okay, can I just call you Stefan? I really, really appreciate the presentation. I, too, am a bit of data nerd. So I really, really appreciate it. You did reference, when you were giving us the raging popularity slide, you know, the conditions that you had to place on the data, moving the actual locations around a little bit and what not. I would love to be able to have access to the full data. My district is Lower Puna, and if I'm reading your map correctly, we have like 850 vacation rentals between Paradise Park, Hawaiian Beach Shores; and Kapoho, which has turned into almost nothing. Especially the gated community there, has really, really lost their sense of community, and I hear a lot of complaints about that, as well. It's also problematic because we have some of the older subdivisions on island. There are some State laws. You referenced the one about homes built before 1973. There's also a reference in State law to subdivisions created before 1976, and how this all affects the short-term vacation rental, legislation that we've come with. So it's ever and always challenging to find the right mix. But I'm just going to throw out, just a question, and it's based on other ways that other counties have dealt with the short-term vacation rental. Would you care to offer an opinion on whether it might be best to go with, say, a grandfathering system versus a quota based system? MR. BUCHTA: It's interesting to see other counties don't really have that notion of grandfathering. That is something really unique to Hawaii. I've never heard that term when I talk to anybody out there, really. But of course they have the same problem, people are already there. Page 19 FC -29 March 13, 2018 Yeah, it's all quota based. What you see, yeah. But I think there was a technical reason why grandfathering could be attractive, right? Because I think the type of permit that could be given to people who grandfather has other implications in the planning framework. I don't know, to put it that way, I don't know if the semantics really matters at that point that much because eventually the—density still acknowledges that somebody is already there. You're going to have to decide to take somebody away or even stop it at the current level. Whether you call it grandfathering, you call it concentration, I don't know if it will make a lot of difference at the end. MS. O'HARA: Well, thank you for that. I, too, would like to stay in touch and talk more, so please feel free to share your contact information. Thank you. MR. BUCHTA: Thank you. CHR. DAVID: Thank you, Ms. O'Hara. Given that no one else's light is on, Mr. Buchta, thank you very much for today's presentation. I think I need to also say thank you to Ms. Lee Loy. I don't know how you found this gem of a data person. I think you've basically clarified at least the vision of what this particular issue is, and it's not a singular issue. It's like multi -issues that we have to be mindful of when we entertain any solution. So I'm very, very pleased, and I'm very happy to make to your acquaintance today. We will keep in touch because I know that this is going to be a topic that is not only important but it will be ongoing. So, thank you very much and have a nice day, as we proceed with our agenda. Mahalo. Thank you. First of all, all those in favor of filing Communication 744 please say "aye." Vote on Comm. 744: The motion to close file on Comm. 744 was carried by Filed the following voice vote: Ayes: Committee Members Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and and Chair David – 8. Noes: None. Absent: Committee Member Chung – 1. Excused: None. CHR. DAVID: Mr. Clerk, may I have a motion to take, what is it, Communication 114.4 off the table? Page 20 FC -29 Vote on Motion to Remove from Table: (Approved) March 13, 2018 Ms. Lee Loy moved to remove Comm. 114.4 from the table. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Eoff, Kanuha, Lee Loy, Poindexter, Richards, Ruggles, and Chair David — 7. Noes: None. Absent: Committee Members Chung and O'Hara — 2. Excused: None. CHR. DAVID: Mr. Richards, I believe you had a question for Mr. Brilhante. Would you please come forward? MR. RICHARDS: Yeah, Mr. Brilhante, come forward, please? (Note: At this time, Human Resources Director William V. Brilhante and Manager - Classification and Pay Division Jennifer Sakamoto came forward to address the members of the Committee.) MR. BRILHANTE: Good morning. William Brilhante, Director of Human Resources. MR. RICHARDS: Thanks, Mr. Brilhante, for coming forward. I appreciate your patience as we were going through the other presentation. Just for my own edification, can you explain this document to us and what it covers? MR. BRILHANTE: Yes. Again, good morning, Councilman Richards and Council Members. William Brilhante, I'm with the Department of Human Resources. I also brought with me today Ms. Jennifer Sakamoto, who is the Classification and Pay division head. Basically, pursuant to an ordinance, we're required to provide the Council with a quarterly report, which reflects the total number of reallocations of the County employment positions. And what a reallocation is, pursuant to the HR (Human Resources) career ladder, or the HRS (Hawai`i Revised Statutes) merit principal, generally each of the positions within the County has career ladder. So say for example, like an engineer with the Department of Public Works, we have Engineer I, II, III, and IV, and those classifications or those position descriptions are defined by the skill level and the amount of responsibility and work they have. So often times, say an engineer position, an Engineer III position becomes vacant, it's very hard. There's some unique qualifications and characteristics and requirements that may be only specific to an engineer who worked in the government sector, who could meet those Engineer III level requirements. Page 21 FC -29 March 13, 2018 So what we do, is we reallocate the position down to maybe an Engineer II or Engineer I, which is more of an entry level engineer position, which would afford a better applicant poll to afford us the opportunity to, you know, through an open competitive recruitment process, to bring in a well-qualified engineer, who through gaining experience and time and just becoming more familiar with the governmental process, is able to progress backup the career ladder, which would then be an Engineer II or Engineer III. So what this document specifically reflects, is you look at from October 2017 through December 17, this is the snapshot of all the reallocations that the County has engaged in during that time. And another really easy example, to articulate what we're talking about, say a firefighter recruit, you know, he'll come in as a recruit. As he passes his probation, he'll then progress to Firefighter L And then as he gets certified through as an EMT (Emergency Medical Technician) or MICT (Mobile Intensive Care Technician), then he moves up to a Firefighter EMS (Emergency Medical Services) Specialist, and that's the career progression. That's primarily what this document reflects. If you go to page three, and then there's an attachment (page 4), it's entitled Quarterly Reallocation Report Summary, and it looks like this. If you look over here, that first column on the bottom, you see 43 in bold, for total, that's primarily all the temporary reallocations that we've done for recruitment. Okay, so that's the specific example that I articulated. If you look at the next column, there's Permanent Reallocations. The permanent reallocations are more inline with the information on page 3 of 3, which is—you know, we take an assistantor take aagain, my example with the Civil Engineer III, as articulated in the fourth column, would get reallocated up to a Civil Engineer IV. And then the one below that, we look at the Building & Grounds Utility Worker for Parks and Recreation. Well, that one is kind of along the lines of—what Ms. Sakamoto does, is there was a request made by Parks and Recreation that this individual was performing work that was outside of his original scope of responsibility. He was doing more. He was doing more repairs. He was doing more kind of independent work. So Ms. Sakamoto and her assistant went out to the zoo and did an audit of the position; and they did, they confirmed, you know, through the report, through their investigation, that this individual was working doing more work than what he was originally classified as. So then, the process was that, we came back and we initiated the paperwork, or the department initiated the paperwork, to reassign that individual to a building maintenance worker. So that's second example of what is being captured in this reallocation report. Page 22 FC -29 March 13, 2018 MR. RICHARDS: So then, on your example there, the $740, is that a raise that goes to the individual? Is that how I'm reading that? MR. BRILHANTE: If you look at itI just wanted to confirm. If you look at the final comment column, it says Fiscal Year 17-18, that's that $5,180. That's the total annual cost of the reallocation, so that's what the total annual increase in salary that employee will receive. MR. RICHARDS: Okay. And then converse, if you go up to Fire EMS, where it's a negative, you have monthly. It goes down $602, down $5,400. MS. SAKAMOTO: Jennifer Sakamoto, from HR. So yeah, that would mean that there was a cost savings, and sometimes it's because of what's already budgeted by the department. So it looks a little strange, that's why would there be cost savings if a position is going up. But it's because maybe in their budget they were budgeted at a higher rate. So, we rely on what the department provides us in their packets. MR. RICHARDS: Okay. Alright, I appreciate that. Thank you, Chair. CHR. DAVID: Thank you, Mr. Richards. Anyone else? None? Alright, then all those in favor—thank you, Mr. Brilhante and Ms. Sakamoto. Thank you. MR. BRILHANTE: Thank you. You're welcome. CHR. DAVID: All those in favor of filing Communication 114.4 please say Ic aye. Vote on Comm. 114.4: The motion to close file on Comm. 114.4 was carried by Filed 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, can we just move down the agenda and go to Order of Resolutions? Please, Resolution 519-18? ORDER OF The Chair directed the Committee to proceed to the next order of business, Order RESOLUTIONS: of Resolutions. Page 23 FC -29 March 13, 2018 Res. 519-18: ACCEPTS PAYMENT OF IN -LIEU FEE IN THE AMOUNT OF $23,600 BY WAINANI 42 LLC TO PARTIALLY SATISFY CONDITION "L" OF ORDINANCE NO. 98-66 Partially satisfies the affordable housing requirement for the development of 50 units for Phase II of this development project, located at Puapua`a 1st and 2na North Kona, covered by Tax Map Key: 7-3-010:027. Reference: Comm. 782 Intr. by: Ms. David (B/R) Motion to Approve: Ms. Poindexter moved to recommend adoption of Res. 519-18. Seconded by Mr. Richards. CHR. DAVID: I believe Mr. Gyotoku in the house and also Mr. Rodrigues, if Council Members has any questions. (Note: At this time, Housing and Community Development Administrator Neil Gyotoku came forward to address the members of the Committee.) CHR. DAVID: Mr. Gyotoku, would you like to say something? But if we don't have questions thenoh, we might have questions after you give us a brief—yeah, give us a brief explanation of the resolution. Thank you. MR. GYOTOKU: Hi. My name is Neil Gyotoku. I'm the Housing Administrator. This $26,600 is the second part of the in -lieu agreement, where Wainani 42 provided fees for their development. This development is on the bottom part of Ka`iminani, Kona. CHR. DAVID: Okay, Mr. Kanuha, go ahead. MR. KANUHA: How long is it going to take them to satisfy all the payment in -lieu fees? MR. GYOTOKU: This is the second payment; the second phase. I believe they have a potential to develop 41 of 91 more units, and if they do so, then they would have to pay a fee. MR. KANUHA: Got you. So after every increment, it MR. GYOTOKU: Right. MR. KANUHA: Got you. CHR. DAVID: Alright, anyone else? Ms. Eoff, go ahead. Page 24 FC -29 March 13, 2018 MS. EOFF: Can you quickly explain to us how the money being paid to you helps us to build more affordable houses? MR. GYOTOKU: As far as—it's a check that they provide to us, this resolution would allow us to deposit into the Housing Revolving Fund. The Housing Revolving Fund is approximately about $1 million and it can be used for any housing projects within a 25 -mile radius of that Wainani. It can be used for things to help other projects to be developed or to improve existing projects around that area. MS. EOFF: And that would be used within 25 miles MR. GYOTOKU: Twenty -five -mile radius. MS. EOFF: Thank you. CHR. DAVID: Thank you, Ms. Eoff Anyone else? Seeing none, all those in favor please say "aye." Vote on Res. 519-18: The motion to recommend adoption of Res. 519-18 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: Thank you. Thank you, Mr. Gyotoku. MR. HENRICKS: Madam Chair, shall we do Resolution 522-18, while Mr. Gyotoku is at the table? CHR. DAVID: Oh, yes. Great idea. Go ahead. Change Order of As directed by the Chair and with no objection from the Council Members, the Business: the following item was taken out of order: Page 25 FC -29 March 13, 2018 Res. 522-18: ACCEPTS FINAL PAYMENT OF IN -LIEU FEES IN THE AMOUNT OF $50,000 BY KW KONA INVESTORS, LLC, TO SATISFY CONDITION "B" OF ORDINANCE NO. 87-113 Completes payment on a $100,000 in -lieu fee affordable housing requirement to allow for the development of 50 hotel units at Ka`upulehu, North Kona, covered by Tax Map Key: 7-2-010:010. Reference: Comm. 783 Intr. by: Ms. David (B/R) Motion to Approve: Ms. Poindexter moved to recommend adoption of Res. 522-18. Seconded by Ms. Eoff CHR. DAVID: Mr. Gyotoku. MR. GYOTOKU: Again, this is like an in -lieu payment agreement, from the KW Kona Investors, and basically it was for the development of Kona Village. This is the second part of the payment. CHR. DAVID: Okay, alright. Ms. Eoff, did you MS. EOFF: Same situation as the Housing Fund? MR. GYOTOKU: Yes, exactly. Within 25 miles, it goes into the Revolving Fund. CHR. DAVID: Thank you very much. Seeing no other discussion, all those in favor please say "aye." Vote on Res. 522-18: The motion to recommend adoption of Res. 522-18 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: Thank you, Mr. Gyotoku. Return to Order The Chair directed the Committee to return to the order of business. of Business: CHR. DAVID: Mr. Clerk, could you read Resolution 520-18? Page 26 FC -29 March 13, 2018 Res. 520-18: AUTHORIZES THE PAYMENT OF FUNDS OF A LATER FISCAL YEAR AND OF MORE THAN ONE FISCAL YEAR FOR A MULTI-YEAR LEASE OF REAL PROPERTY FOR THE COUNTY OF HAWAII OFFICE OF THE LEGISLATIVE AUDITOR Authorizes the Mayor to enter into a five-year lease agreement with New Kaiko`o Building, Inc., beginning May 1, 2018, with an option for a five-year extension, for space in the Bank of Hawaii Building located at 120 Pauahi Street, Hilo. The expected cost of this lease is $1,838.20 per month. Reference: Comm. 785 Intr. by: Ms. David (B/R) Motion to Approve: Mr. Richards moved to recommend adoption of Res. 520-19. Seconded by Ms. Eoff (Note: At this time, Property Manager Hamana Ventura and Legislative Auditor Bonnie Nims came forward to address the members of the Committee.) CHR. DAVID: Thank you. And I believe we have Legislative Auditor here and Mr. Ventura. Any questions, Council Members? If not, I will not call MR. RICHARDS: I'll ask her a quick question. CHR. DAVID: Okay, Mr. Richards. MR. RICHARDS: They came all this way, right? CHR. DAVID: Thank you for being very patient. Mr. Ventura, identify yourself. And I believe Mr. Richards has a question. MR. VENTURA: Good morning, members of the Council. Hamana Ventura, Property Manager. MS. NIMS: Bonnie Nims, Legislative Auditor. MR. RICHARDS: Thank you for coming up really quick. Just a question. So am I understanding, this is moving the office from where you currently are? MS. NIMS: Correct. MR. RICHARDS: And from what I know, you've been working on this lease just to make—this works better for the County. Explanation, is this a better place? Probably easier to find when we're looking for you. MS. NIMS: Closer, anyway. Page 27 FC -29 Vote on Res. 520-18 (Approved) March 13, 2018 MR. VENTURA: As I stated earlier, Hamana Ventura, Property Manager. Sort of similar situation to yours, finding a space that works better. More convenient structure -wise. It's a similar situation. MR. RICHARDS: And as far as rent, we're on power with that? MR. VENTURA: Comparable. MR. RICHARDS: Okay. Alright, thank you. I yield. CHR. DAVID: Ms. Ruggles, go ahead. MS. RUGGLES: Thank you. What is the rent that you're paying now? MS. NIMS: Our current is about $2,000 a month. MS. RUGGLES: Okay, so this is actually less than that? MS. NIMS: Yeah, I think actual rent is $1,930 a month, and then the CAM (Common Area Maintenance) is on top of that. MS. RUGGLES: Okay, great. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. And if there's no more questions? Thank you, Mr. Ventura and Ms. Nims. Alright, all those in favor please say Ic aye. The motion to recommend adoption of Res. 520-18 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, Resolution 521-18. Page 28 FC -29 Res. 521-18 Motion to Approve: March 13, 2018 AUTHORIZES THE PAYMENT OF FUNDS OF A LATER FISCAL YEAR AND OF MORE THAN ONE FISCAL YEAR FOR A MULTI-YEAR LEASE FOR FIVE DIGITAL MULTI -FUNCTION COPY MACHINES FOR THE DEPARTMENT OF ENVIRONMENTAL MANAGEMENT Authorizes the Mayor to enter into a five-year lease agreement for five copiers at an approximate monthly cost of $300 each. Four copiers would replace units at various Solid Waste scalehouses and baseyards and one copier would be used at the Pu`uanahulu scalehouse. Reference: Comm. 784 Intr. by: Ms. David (B/R) Ms. O'Hara moved to recommend adoption of Res. 521-19. Seconded by Ms. Poindexter. CHR. DAVID: Any discussion? Ms. O'Hara. MS. O'HARA: Well, I see we have Solid Waste Chief here, and perhaps he just wants to say few words about this. CHR. DAVID: He was also patient this whole morning. (Note: At this time, Solid Waste Division Chief Greg Goodale came forward to address the members of the Committee.) CHR. DAVID: Thank you, Mr. Goodale. MR. GOODALE: Yeah, good morning. Greg Goodale, Solid Waste Division. I don't really have anything more to add. But if you have any questions, I'm happy to answer them. MS. O'HARA: I don't really have any questions. These are just needed replacements. Apparently, they aren't very pricey and they're not adding or enhancing the services provided in any way. Or, are they? MR. GOODALE: They do. This has actually been the direction that a lot of the different—not only our department but around the County people have been going in this direction with this type of equipment. Doing the multi-year, which allows for the upgrades as opposed going into like a purchase situation, where we wind up with a piece of equipment that gets outdated. So this has actually been the preferred way of going through this. So we believe this is an improvement. MS. O'HARA: Okay, thank you. Nothing further, Chair. CHR. DAVID: Anyone else? No? Well, thank you, Division Chief Goodale, for waiting all this morning. Page 29 FC -29 Vote on Res. 521-18 (Approved) Change Order of Business: March 13, 2018 The motion to recommend adoption of Res. 521-18 was carried by the following voice vote: Ayes: Committee Members Chung, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, and and Chair David — 8. Noes: None. Absent: Committee Member Ruggles - 1. Excused: None. CHR. DAVID: Thank you. Alright, Mr. Clerk, can we skip over Bill 113 and go to Bill 114, please? Okay now, Bill 114. As directed by the Chair and with objection from the Council Members, the following items were taken out of order: Bill 114: AMENDS ORDINANCE NO. 17-39, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAII FOR THE FISCAL YEAR ENDING JUNE 30, 2018 Increases revenues in the Federal Grants — Housing Choice Voucher Program account ($2.5 million); and appropriates the same to the Voucher Rental Subsidies account, for a total appropriation of $17.5 million. Funds would be used for payment of rental assistance for eligible participants. Vote on Bill 114 (Approved) Reference: Comm. 781 Intr. by: Ms. David (B/R) Mr. Richards moved to recommend passage of Bill 114 on 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. CHR. DAVID: Mr. Clerk, Bill 115, please? Page 30 FC -29 March 13, 2018 Bill 115: AMENDS ORDINANCE NO. 17-39, AS AMENDED, THE OPERATING BUDGET FOR THE COUNTY OF HAWAII FOR THE FISCAL YEAR ENDING JUNE 30, 2018 Decreases the appropriation in the Geothermal Other Current Expenses account ($30,000); and appropriates the same to the Geothermal Parks and Recreation account. Funds would be used by the Department of Parks and Recreation to provide access to computers and wireless internet connection (Wi-Fi) at the Pahoa Community Center. Reference: Comm. 786 Intr. by: Ms. David (B/R) Motion to Approve: Ms. Ruggles moved to recommend passage of Bill 115 on first reading. Seconded by Ms. Poindexter. CHR. DAVID: And I believe we have Deputy Arai in chambers, if anyone has questions. If not—Ms. Ohara? MS. O'HARA: Yes. CHR. DAVID: Okay. MS. O'HARA: We have discovered there's an issue with this in terms of the wording. Mr. Arai, can you come forward, please? Our Deputy Director and Finance Director, and we were discussing out in the hall. (Note: At this time, Deputy Planning Director Daryn Arai and Administrative Services Officer Douglas Ley came forward to address the members of the Committee.) CHR. DAVID: Okay, go ahead. MS. O'HARA: Just some background. You heard testimony from Ms. Hazel earlier. And to put this all together, we had back in '08, a Geothermal Community Benefit funding for conversion of what was then the old fire station in Pahoa to the senior center. I think there was some $187,000 allocated for that conversion, and not all of it was used. That's the $71,000 that she keeps referring to, is in a CIP account with Parks and Recreation. But this is a project that I've been working on for over year -and -a -half, or about a year -and -a -half, to get the senior center equipped with Wi-Fi because it wasn't provided when the conversion was done. Ms. Ruggles has already allocated some contingency funds from her account for fixing the Wi-Fi at the community center. These are two separate facilities, separated by a parking lot. So, that's already in the works. This is for not only the Wi-Fi and getting the connectivity for the Page 31 FC -29 March 13, 2018 senior center, but also to purchase the computers so that we can start giving classes to the seniors at the senior center. In a meeting that was held in December, I believe it was, with Ms. Hazel and Sarah Steiner—it was also about an agreement that Parks and Recreation entered into for Second Saturdays. It was clear that we couldn't move the $71,000 from the CIP account to an operations account. Because the work that we're trying to do is operational, it's not CIP. The Director of Finance was there. She went across the hall and asked Mr. Yee if he'd be willing to release another $30,000 to do this project, from the Geothermal Community Benefit Fund. Now, normally those requests come in from the representatives of the geographical district, which would be either myself or Ms. Ruggles, but this was done by the administration, and somehow in preparation of this bill, that language about the senior center seems to have been dropped out. So, I just want to be clear. Because this money is not intended for the Pahoa Community Center, or what we call the Neighborhood Facility is the actual correct name, it's intended primarily for the senior center. So that's kind of the background, and I'll let Deputy Director inform us further. MR. ARAI: Good morning, Committee Members, Chair David. CHR. DAVID: Good morning. MR. ARAI: My name is Daryn Arai, Deputy Planning Director. On my left, is Douglas Ley, who is the Administrative Services Officer for our department. Bill 115 was sort of structured around communication we received from Department of Parks and Recreation, which misidentified the Pahoa Community Center as the recipient for the funds and for the Wi-Fi service. We were able to verify with Parks and Recreation, Roxie Waltjen, the Director, that it was intended to be the Neighborhood Center, facility center that would be for which the funds would be appropriated. I was able to get ahold of the Planning Director, as well, to get his concurrence; that the funds be identified to the Neighborhood Facility Center, and he did concur. Hopefully, with those reassurances in mind, and we believe that Bill 115 is generic enough. That it didn't specifically identify the Pahoa Community Center as the sole recipient. It's generic enough that we think, just by virtual of confirming the original intent, and hopefully it'll be sufficient that no further amendment to Bill 115 is necessary. MS. O'HARA: I'm going to say I have to disagree with that. You have not once mentioned the senior center. These are different facilities. The Pahoa Neighborhood Facility is different than the senior center. Page 32 FC -29 March 13, 2018 MR. ARAI: Oh, okay. MS. O'HARA: Yeah. And the reason I say this, is the original allocation that came out in 2008 specified intended uses for that CIP funding that was taken from the Geothermal Community Benefit Fund. MR. ARAI: Sure. MS. O'HARA: We are beholden to those uses. And so I think it does need to be amended to be specific to the senior center because this was—or you could say, senior center and community neighborhood facility, if you wanted to expand that way. MR. ARAI: Oh, okay. And I'm sorry I misspoke. I guess I got caught off -guard when the names changed during the introduction. I'm just familiar with the community center and the senior center, so I'll just leave as that. Let me correct myself. My understanding is that Wi-Fi services or equipment for the community center is—has recently been completed, from what I understand. MS. O'HARA: Correct, and that is with the funding that Ms. Ruggles MR. ARAI: Right, so MS. O'HARA: That was a repair because of some damage done in 2014, when we had lots of meetings there for the lava response. MR. ARAI: Right. You know, obviously—with the equipment being available at the community center, obviously the intention of this bill was to provide funding for Wi-Fi services at the senior center. That being said, it was confirmed with Director Waltjen, confirmed with Director Yee, they're all good. So hopefully that along with the Bill 115 being generic enough, that we believe it could support it with this clarification. I'll leave it at your hands at this point. But I just wanted to reassure from the administration standpoint, we believe we can support Bill 115 as written. MS. O'HARA: Okay, I'm glad we're in agreement. I would like to see the proper names used for the facilities. You know, you go down the road, five years, and people can start arguing over this kind of minutia. I know we're on the same page right now, and I'm really happy about that. But we have two more reads for this bill, so it should be easy to do a simple amendment and put the right terminology in there, if you don't mind. Or I could take it on, I don't know; however you want to do it. MR. ARAI: Sure. One way or the other, we'll figure a way to define it more specifically in the bill. Okay, I appreciate that. Thank you. Page 33 FC -29 March 13, 2018 CHR. DAVID: Thank you, Ms. O'Hara. Mr. Kanuha. MR. KANUHA: Yeah, and just kind of going off of that. With the bill itself, you know, I mean it doesn't specifically have that fund source. You know, it's going from Geothermal OCE (Other Current Expenses) to Geothermal Relocation and Community, and then function and activity, Geothermal Parks and Recreation, and the fund, Geothermal Relocation and Community. So I'm just trying to figure out where within those confines are you going to put the actual terminology for the—either—see, I don't want to say community center. Or is it just the background communication, where it's talking about the Pahoa Community Center or, you know, the request for conciliation part. Is that theI'm just figuring out if it really matters within the actual bill itself. CHR. DAVID: Yes, Mr. Kanuha. Go ahead, Ms. O'Hara. MS. O'HARA: Well, if we're talking—in response to that, if we're talking a legal interpretation, you could ask Mr. Kamelamela. But my experience with the pre-existing resolution, was that it's all defined in this communication and this background sheet, and either of them contain the name Pahoa Neighborhood Facility and Pahoa Senior Center. That's what I'm asking to be changed, so it is clear where we're spending the money, yeah. MR. KANUHA: Yeah, got you. How many computers does the $30,000 buy? MS. O'HARA: It's not just computers. MR. KANUHA: And the wireless internet. MS. O'HARA: Yeah, there's at least about $10,000 in hardware that needs to go into the senior center to support all this. The last quote on the computers was about $10,000 or more. The $30,000 was allocated because we—those quotes are already 15 months old, so they have to be redone. We expect the prices to be a little bit higher. We just wanted to be sure we had enough money to finish the project. We may have a little excess. We're not sure at this point in time. MR. KANUHA: And so how many computers again? MS. O'HARA: Oh, I think—yeah, I haven't visited this quote in a really long time. I'm going to say off the top of my head 20, but I may be wrong on that. MR. KANUHA: I yield. CHR. DAVID: Thank you, Mr. Kanuha. Ms. O'Hara, are you—okay. Anyone else? Okay, all those in favor of Bill 115 please say "aye." Page 34 FC -29 March 13, 2018 Vote on Bill 115: The motion to recommend passage of Bill 115 on (Approved) first reading 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: Thank you, Deputy and Mr. Ley. Alright, please, our last item, I believe, is Bill 113. Return to Order The Chair directed the Committee to return to the order of business. of Business: BILLS FOR The Chair directed the Committee to proceed to the next order of business, ORDINANCES: Bills for Ordinances. (Note: Items in this category were taken up previously, out of order.) Bill 113: AMENDS CHAPTER 2 OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED), BY ADDING A NEW ARTICLE RELATING TO COMMERCIAL SPONSORSHIP OF COUNTY ASSETS Establishes a process for individuals, corporations, and other organizations to obtain sponsorships for County facilities, parks, programs, equipment, and tangible property in exchange for financial considerations to increase County revenue from sources other than real property tax. Reference: Comm. 780 Intr. by: Ms. Lee Loy Motion to Approve: Ms. Lee Loy moved to recommend passage of Bill 113 on first reading. Seconded by Mr. Richards. CHR. DAVID: Ms. Lee Loy, go ahead. MS. LEE LOY: Thank you, Chair, members of the Committee. Lucky Bill 113. This bill actually is something that other municipal use in a way to generate additional revenues for maintaining County assets. What I did was, is take a look at what those other municipalities did. One example we have, most recently, is what the Honolulu Zoo did to help provide for funding for their various exhibits in their zoo. What I did, is create a framework. That basically, if we could invite community partners to the table to help us maintain some of our aging infrastructure, some of Page 35 FC -29 March 13, 2018 our County assets, this would be a vehicle for them. As a qualifier, it's a $20,000 buy -in. I picked that number because it was my hope that a sponsor would be committed, and that number I wanted to set rather high. Because if you're coming with that kind of money, you're committed helping the facilities. I also put in safeguards related to how a sponsor could be recognized, ensuring that we would adhere to our sign ordinance, which has strict rules and regulations in and of itself. It would also ensure that a facility would be named or continued to be named through the process that we already have by the Council. So for example, a sponsor could not step in and rename Edith Kanaka`ole Tennis Stadium. All of those controls would be maintained. If a sponsor was interested, first step would be, is to work out a sponsorship agreement with the director of that department. So for example, with Parks, the sponsor would hammer out an agreement on what they would choose to sponsor, what they would get in exchange for that sponsorship. Once that agreement is hammered out between the department director and Corporation Counsel, it will be then further reviewed by the Department of Finance because this will be revenues into the County. And what we wanted to do, is ensure that revenue that the sponsor was hoping to enhance the facility with would stay there and it wouldn't fall into some general fund to be further moved around. And then the final and third safeguard was, once that sponsorship agreement was hammered out between the department director, and then with Finance, this body would then have to further adopt that sponsorship agreement by resolution, in which there would be a larger public review process. I did provide in this bill some other safeguards about sponsorship recognition, branding, publicity, and advertising, which is contained in Section 2, Sponsorship Agreement, letter (f), just to ensure that, you know, it will be in concert with the community and just limiting slanderous or defamation or libelous types of information. I don't know of any sponsor right now who would take this on. But I don't think it hurts to have a vehicle somewhere in our Code. And, who knows? Who knows who might be able to use this at a later time? It is creative. It is innovative. I feel that these are the types of policies that we can put out there and maybe invite sponsors for different programs, different facilities. I'm open to any suggestions and your feedback. I yield at this time, thank you. CHR. DAVID: Thank you, Ms. Lee Loy. Questions? Mr. Richards, go ahead. MR. RICHARDS: Okay. Thank you, Chair. CHR. DAVID: You're welcome. Page 36 FC -29 March 13, 2018 MR. RICHARDS: Ms. Lee Loy, couple questions, and I'll just kind of cluster them all together. What is your vision as far as one of these? You discussed some metrics, but are we talking about—like in Seattle, you have Safeco Field. I think it's a football stadium there. Is your thought process along those lines? I didn't see anything here about a time -constraint. So say if you had a sponsor that wanted to put their name on the sports field, for instance, for "x" number of times, is that something that you wanted to leave up to the department heads? To put a timeline on that, or you want to leave it a little loose? Just give me your thoughts on that, please? MS. LEE LOY: Thank you. That's an excellent question. I think the safeguard is, the facility wouldn't change. The name of the facility wouldn't change. So it wouldn't become Verizon Tennis Stadium. It would remain Aunty Edith Kanaka`ole Tennis Stadium. However, as far as the timeline, that is all very negotiable between the Director. Part of that reason I wanted to leave it a little flexible is because I could not even begin to understand the age of the infrastructure, of that facility, and what the overall needs are. That would actually be best handled by that department. So for example, sponsoring a scoreboard, that's all well and good. But would we need to address upgrading our electrical components to that facility? Perhaps. Does it fit within that facility, the power for that new scoreboard? That's something that should be addressed by that department, and could be further, kind of re -tooled or further discussed within that sponsorship and that sponsorship agreement. Because one, we want to enhance the facility, but we also want to ensure that facility doesn't get stuck with something that doesn't fit or they can never really use to maintain or enhance that facility, which is the purpose of this bill. As far as timelines again, hammered out with the department. The safeguards are sponsorship agreement with the department, reviewed by the Finance Director, and then confirmed by the Council. So very transparent, open process. All of that questions could be worked out long before it even gets to us. MR. RICHARDS: Can I follow-up? CHR. DAVID: Sure, go ahead. MR. RICHARDS: In your vision, you know, let's take Edith Kanaka`ole Stadium, are you thinking it would be the Edith Kanaka`ole Stadium sponsored by, with the signage underneath? Something along that line? MS. LEE LOY: It could be. Or we could do whatever things we hold at that facility. The programs would actually have a tennis tournament at Edith Kanaka`ole Stadium, sponsored by Dr. Tim Richards, within the program. But Page 37 FC -29 March 13, 2018 again, this would all be hammered out within the sponsorship agreement. About what is allowable, what is not allowable; what the sponsor wants in exchange, agreed to by the department; further confirmed by the Finance Director, and then further understood by this body. MR. RICHARDS: Okay, thank you. I think this isI'm going to support this because this is a good direction to be going. When you start talking about financing outside of our current bucket, so looking and being mindful of that. I can see where it can be done very tastefully and very done well, if we do it appropriately going forward. I like the concept as a whole. Little concern about some of the metrics that I mentioned, but I think those are workable. So at this point, I yield. CHR. DAVID: Thank you, Mr. Richards. Ms. Ruggles. MS. RUGGLES: Thank you. I just have a question. Under Section 2(e), it says, "Sponsorship recognition shall not constitute a public forum for communication and debate." I was wondering what you meant by that? Because when we look at what it was required, we have to hear a resolution, which would require public comment and maybe debate amongst ourselves. So yeah, I'm just having trouble putting the dots together. MS. LEE LOY: Thank you. I think if you back up from that sentence, the public recognition of commercial sponsorship envisioned, this agreement is not intended to create a public forum for communication or debate, it actually prefaced by it, should be appropriate and not distract or detract from the public's experience. So I think that actually speaks to design guidelines for that community or for that facility. We have a number of facilities that are kind of older, and there's some characteristic traits within those facilities. And what we want to do is create something that actually enhances that but doesn't detract from that experience. So I wouldn't anticipate someone stepping in, for example, to Liliuokalani Gardens with a big billboard sign. The safeguard is we have a sign ordinance that would prohibit that. Then as we step through this process, we could create that same design guidelines, through the sponsorship agreement, assuming that sponsor is willing to adhere to those things. Working with the department head, reviewing it with the Finance Director, and then confirmed by the Council. I hope that answers your question. No? MS. RUGGLES: No, it doesn't. I'm sorry. But that's okay, it's not that urgent. I was just confused about the sponsorship recognition constituting a public forum for communication and debate, yeah, I just don't understand what that means. MS. LEE LOY: Yeah, and I think—you have to taken in the whole context of this (f) paragraph, right? Is that, we don't want it to stick out, right? We wanted to enhance that facility, right? Page 38 FC -29 March 13, 2018 MS. RUGGLES: I see. I see, okay. Okay, thank you. MS. LEE LOY: A big billboard at Liliuokalani is not what we want to achieve. MS. RUGGLES: Right. MS. LEE LOY: We want to keep it all in context. I mean, earlier we heard conversations about how we want to keep certain communities in a rural character. It would be kind of community -driven. It would be in connection, and dovetailed into that particular facility and not stick out like a sore thumb. MS. RUGGLES: Great. Thank you. CHR. DAVID: Thank you, Ms. Ruggles. Mr. Chung. MR. CHUNG: Thank you. You know, I support this idea, and I'm going to voting in favor of it. I just have a few questions, and they relate to the fifth unnumbered Section 2, and subsections (b) and (c). Maybe, Joe, if you can come up? Page 3, under Sponsorship Agreement. (Note: At this time, Corporation Counsel Joseph Kamelamela and Deputy Corporation Counsel J Yoshimoto came forward to address the members of the Committee.) MR. CHUNG: Now, under this arrangement, Ms. Lee Loy has developed something, whereby the administrative head with the concurrence of the Director of Finance shall have the authority to enter into the agreement. And then later on it says, "All sponsorship agreements must be approved by the council by resolution." So maybe I should I ask Ms. Lee Loy first. Is this something where the agreement is entered into by the administration and then ratified by the Council, or approved by CouncilI mean, authorized by the Council and then entered into? What's first? MS. LEE LOY: Hammered out with the department, reviewed by the Finance Director. I guess the word is ratified. I'm going to look at Mr. Yoshimoto, who really helped me kind of craft some of this language. Yes, that was the intent. MR. CHUNG: Okay. MS. LEE LOY: What was—this agreement. MR. CHUNG: Right. MS. LEE LOY: I think, part of that too, was the expectation of the sponsor. Because the buy -in was so big, we wanted to ensure that what they were Page 39 FC -29 March 13, 2018 contributing to was enhancing that facility in a meaningful way. But they were actually getting recognition for that. MR. CHUNG: Okay. Well, maybe if I could just make a suggestion, okay? Go take a look at this over the next two weeks. Talk with Corporation Counsel. If this is what you want, I'm okay with it. But what causes some short-circuit in my brain is that it's an agreement entered into by a department head. There might be some other situations in the County, where we have department heads entering into agreement. But I know, specifically, you know, I have the County Charter here, and it specifically says that contracts will be signed by the Mayor unless otherwise authorized. But I'm assuming that otherwise authorized means something otherwise authorized within the context of the Charter. So why is it—and again, I'll support it whatever way you guys want, but why is it the department head that is entering into the agreement rather than the Mayor? MR. KAMELAMELA: Joseph Kamelamela, Corporation Counsel. Good afternoon, Chair and members of the Council. So anyway, I have my deputy here, who actually worked with Council Member Lee Loy. He's been hitting me, saying, "Let me answer this question." So, go right ahead. MR. YOSHIMOTO: Council Member Chung, that's an excellent question. So the expectation isoh, I'm sorry. J Yoshimoto, Deputy Corporation Counsel. Thank you, Council Member Kanuha. You think I would have gotten that one down, right? Okay. Anyway, Council Member Chung, the expectation isas you mentioned, the Charter specifies the Mayor would enter into contractual agreements, and so the expectation here is, that will continue to be the same. So maybe to make it clearer, we can add that language. Because that is in the Charter, like you mentioned, and so in thinking—in working through this process, that was already the presumption that's what we do with all agreements, where the Mayor would sign off on. But I think you raised a good point, and that since we're specifying the administrative head. And typically, you'll have the department sign off along with the Mayor, right, with agreements as well. So, this is no different. But I think, Council Member Lee Loy, just to be clear, we can add that language. MR. CHUNG: Because it specifically says here, the administrative head of the County department shall have the authority to enter into the sponsorship or a sponsorship agreement. I'm thinking, I could be wrong, maybe the best way of doing this is have it negotiated by the administrative head and then come to the Council for approval and then go to the Mayor for his signature, like we do with almost every other contract. But that's just food for thought. I'll support this no matter how you guys— MS. LEE LOY: Chair, yeah. Page 40 FC -29 March 13, 2018 CHR. DAVID: Thank you, Mr. Chung. Mr. Kanuha, go ahead. MR. KANUHA: Just trying to figure out how we currently go through sponsorships that are—like our County events, if somebody wants to donate money, and usually they'll put like a big sign somewhere, saying—no? They'll put their sign. It doesn't say sponsor by whoever? They'll put like a sign on the fence, saying that they'reI mean, it might be legal. But currently, you know, does thatI mean, I know I've seen it before. That happens. But is that allowable under—you know, they'll put their sign or whatever on the fence of a baseball game? It might not be enforced if that's not legal. But is that allowable? Is it? MR. YOSHIMOTO: Council Member Kanuha, I believe what you're talking about, and correct me if I'm wrong, are events that are specific in time. Say like a soccer game by any field, by a particular organization will put up their banner because it's related to the event. So it's basically saying, x, y, z, is having their soccer tournament. Is that what you're referring? MR. KANUHA: This is completely different, correct? MR. YOSHIMOTO: Right. So, they do that. They usually get permission, from usually it's from the Parks department, and the Park usually allows it because it's close it in time. It's not there for, like, years, right? It's there for a few years? MR. KANUHA: So this sponsorship would be there in perpetuity with the agreement, if the agreement is worked out that way? MS. LEE LOY: Thank you. You know, I'll let Mr. Yoshimoto weigh in. There are specific craft fairs at the tennis stadium. April 1 st through the 7th, right? Specific time, they get permission. This is something separate and apart for any County assets. We're focused on parks right now, but we've got a golf course. There's a number of other County assets, gyms, you know. This is something very separate and apart from just the tiny little snapshot in time in which they're advertising for an event in which they already got permission from. This is something with a large buy -in and then an agreement. I do want to comment on what Mr. Chung said. I really do actually appreciate that. I like when we kind of have a model already and get right back into that same train -of -thought so that there's an expectation. So that idea of negotiated, you know, Council, and thenI like that. I'll be working with Mr. Yoshimoto on that. MR. KANUHA: Thank you. Thanks for the clarification. I think this is a really unique way of trying to figure out some of this. You know, budgetary, you know, Page 41 FC -29 March 13, 2018 trying to enhance whatever it is that they might—where the money might be going to. Do any other counties, Honolulu, I'm assuming, is the legislation similar to that? If so, how well is that program working? MS. LEE LOY: Yeah, so we learned both the ups and downs of these sponsorship agreements. Maui County had something similar. And the Outdoor Circle, they're pushed back incredibly hard. But we have a sign ordinance here, which we identify in the sponsorship agreement, that is vey restrictive. We also have, even something like Kailua Village Design area. All of those safeguards stay intact, so that we don't turn into billboard city. The most recent model was the Honolulu Zoo, and they had enhanced a number of their exhibits. Whether it's the giraffes, or the turtles, or the snakes, they have a sponsorship agreement, kind of built around that exhibit, that really enhances them. So, I did—and I worked, I would say the better part of six months, with Mr. Yoshimoto, looking at all the different municipalities; what was working, what wasn't working; ensuring that the safeguards were in place for us, while still maintaining what is incredibly special to these County facilities. I'm going to call them "assets" because they are our public assets, and I gave a lot of thought to ensuring that. MR. KANUHA: Thank you. And really, you know, with the language here, we won't really know the full outcome of a particular agreement until it actually comes out, correct? Until it comes to the Council, we can see the impacts or the benefits or whatever it is, and then at that point and time then we'll have the—we'll go through that process. That'll be interesting to see. I'm actually hoping that somebody does this, I mean, if this thing passes. That additional conversation. Okay, thank you. CHR. DAVID: Thank you, Mr. Kanuha. MR. KANUHA: Thank you. CHR. DAVID: Thank you. Ms. Eof£ MS. EOFF: Thank you. My question is—well, I've seen, for instance, I think it was the Maui Arts and Cultural Center, which I think is a private -public partnership facility. But they have like a wall with—they're sort of like uniform -looking plaques, so people who donated to that facility have their name on the plaque. This is reallyI don't think designed to end up looking like that, but that in my mind, might be one way to keep it more consistent. Page 42 FC -29 March 13, 2018 The problem that I am kind of worried about isso for instance someone may decide to provide $20,000 to a County facility, and you said that rather than change the name of the facility, it might just carry their name as a sponsor. But then, what if the following year or even six months later someone else wants $20,000 to that? So do you keep adding their names, if that's what they want to be recognized for, or do we create sort of a uniform looking, I'm not sure what to call it, way of acknowledging these donations? Were you thinking of that, too? MR. KAMELAMELA: So can I just partly answer that? MS. EOFF: Yeah, sure. MR. KAMELAMELA: There is a section in here; if you look at theI guess it's page three. Well, it's not numbered. But if you look towards the middle, there's a subsection (c), so these sponsorship agreements can be exclusive or non-exclusive. As we work through the sponsorship agreement, you know, that's something that we can make a decision on, you know, right away. MS. EOFF: Exactly what the MR. KAMELAMELA: It's going to be exclusive, one, or non-exclusive, you know, that we add on. MS. EOFF: Like, for instance, if a sponsor wanted to buy a scoreboard for a gymnasium and that was $20,000, so I guess forever that scoreboard could carry their name somewhere on it as opposed someone who may contribute in a more general way. That might include multiple sponsors in the future. MR. KAMELAMELA: But I think the amount that we're looking at is something more than $20,000. MS. EOFF: The minimum is $20,000. MR. KAMELAMELA: Yeah, the minimum was $20,000. Yeah, not $10,000. MR. YOSHIMOTO: Great question. So that depends upon how the administration wants it and what the Council wants, to plan forward; meaning, if you're thinking about a big project like a big venue, then you would make it non-exclusive and you have a plan as far as lining up "x" amount of sponsors to raise "x" amount of money, right? So that would be a great idea for that. The other end of the scale, is like you mentioned that the scoreboards paid is $20,000, something to that effect. So this really is, I think, an excellent planning tool forward. Say we want a new area, or a sports field, or recreational area, or park, right, we can do that on a Page 43 FC -29 March 13, 2018 different scale, if we get public and private partnerships. Or, like you said, have the scoreboards, or the new nets for field, you know, things like that. MS. EOFF: Like, that was actually my next question, was how we could get multiple sponsors to contribute to an actual CIP proposal, correct? And I think that's what struck me, when I saw the Maui Arts and Cultural Center. Was, how did they do this? I mean, it's like a magnificent facility. And then, I found out that it was initiated by a private citizen but it turned into being a government, private partners, collaborative approach, and then they fundraised from various donors. I thought that was a unique possibility. And we haven't really explored yet, in this County. I don't think so. Well, thanks for your work on this. I haven't really digested all of it, but I'm just trying to seeI guess now it's really like many opportunities, not just one particular style. MS. LEE LOY: Chair, if I might follow-up to that? CHR. DAVID: Thank you, Ms. Eof£ Yes, go ahead. Go ahead. MS. LEE LOY: Thank you. Mr. Yoshimoto just framed it best. It is an incredible planning tool going forward. If, for example, a gym needs a new scoreboard, we could identify that in the budget, down the road, and invite partnerships for that, and then build our dollars, our tax dollars, around that. So we would actually enhance the facility in a very succinct and synergetic way. The other side of that, is Council Member Chung and I are looking at having to develop a skatepark in Hilo, right? Do we float a bond for that, or do figure out a way to develop partnerships, in which the users, a private entity, a sponsor, and the County collaborates together and use it as a planning tool and invite those monies and resources in a timely and phased way in which we now have another facility, but also how we care for it? Because now with a new facility, we have to take care of it. So, it's actually on both sides of that spectrum, Ms. Eof£ It could be either or; enhance and rehabilitate an aging facility or looking at opportunities for sponsorship for future ones. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Richards. MR. RICHARDS: Yeah, just a quick comment, and great conversation and great outside the box thinking. Councilwoman laughed, I don't want to get stuck in the weeds on it. The concept is great. The metrics, we've got to work those out a little bit. But that is what—suggestions from Councilman Chung has made already, and thought process of. I think it's a great idea. Whether it's in perpetuity, they buy a scoreboard, or if they sponsor a field for "x" to find time, it doesn't really matter. That's all we're worried about. The concept is what we're Page 44 FC -29 Vote on Bill 113 (Approved) March 13, 2018 trying to get going. I think it's a great idea. And we work out the details, when they come before us. So, great idea. Love the conversation. CHR. DAVID: Thank you, Mr. Richards. Anyone else? No? Well, I want to thank both of you, Mr. Kamelamela and Mr. Yoshimoto, for—okay, I'm thanking Mr. Yoshimoto more then. But I also want to say thank you to Ms. Lee Loy. I think the proposal from Mr. Chung, about the multi -layered oversight, I think, will bring a lot more participation on something that could be huge or, you know, something as small as a scoreboard, but the possibilities that I can see from the discussion is huge. So on that note you want to say something before I take a vote? MS. LEE LOY: Yeah. CHR. DAVID: Okay. MS. LEE LOY: Exactly, going forward, I'll work with Mr. Yoshimoto. Like I mentioned earlier, Mr. Chung's idea actually fits into so many other things that we already have. I always say this, I pride myself in listening to you folks and developing a policy that we can all support. So, with this, if we choose to move it forward, you can assure that I'll be working with Mr. Yoshimoto to refine that particular section of the sponsorship agreement: (a), (b), (c), and (d). And, look forward to the rest of my colleagues' support. Thank you, Mr. Yoshimoto; thank you so much for your time. Mr. Kamelamela, I do appreciate it. Thank you. CHR. DAVID: Alright, Council Members, all those in favor please say "aye." The motion to recommend passage of Bill 113 on first reading 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: I believe that this concludes our agenda for Finance. Page 45 FC -29 ADJOURN- MENT: Approved: March 13, 2018 There being no further business, at 12:51 p.m., Ms. Poindexter moved to adjourn the meeting. Seconded by Mr. Richards 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: Finance Committee is adjourned. Ms. Maile Medeiros Davi , hair (Date) Finance Committee MD/na Page 46