Loading...
HomeMy WebLinkAboutREP FC 005 2019/01/08 2018-2020 REPORT OF THE COMMITTEE ON FINANCE DATE: January 8, 2019 Re: Comm. No. 1165/Bill No. 210 PLACE: Council Chambers (2016-2018 Council Term) Hilo, Hawai`i TIME: 10:29 a.m. Council Chair and Members Hawai`i County Council Hilo, Hawai`i 96720 Your Committee on Finance,to which was referred Bill No. 210, reports as follows: Bill No. 210, transmitted by Finance Director Deanna S. Sako, via Communication No. 1165 dated October 30, 2018, amends Chapter 21, Article 4, of the Hawai`i County Code 1983 (2016 Edition, as amended), relating to sewer service charges. This bill increases sewer fees incrementally on March 1 for three years beginning in 2019, as follows: Single Unit Residential: $12, $7, and $6; Multi-Unit Residential: $12, $7, and$6; Nonresidential: $17, $9, and $6; Private Haulers: $15, $10, and $5; and Gang Cesspools: $0, $6, and $3. The Department of Environmental Management requests these increases to eliminate the need for the General Fund subsidy and increase funding for facility repairs. The bill was first heard by Your Committee at its meeting of November 19, 2018. At that meeting, Mayor Harry Kim came forward to address the members. He commented that during a short period of time the Administration has been coining to the County Council for various a tax or fee increases. He emphasized that the fuel tax has not increased for 30 years, which presents the Council with the task of playing catch up, a difficult position to take to the public. This sewer fee increase is'the same situation where there has not been no increases since 2002. In this situation however, laws have since been passed regarding sustainability. William Kucharski, Director of Environmental Management (DEM) provided a PowerPoint summary relating to the proposed sewer fee increases and noted that Hawai'i County's sewer rates are the lowest in the State, adding that the Environmental Protection Agency(EPA) requires construction and maintenance of sustainable sewer operations that are financially independent. He then went on to explain that the increase would be spread over a period of three years becoming effective on March 1, 2019. This would achieve DEM's goal to reduce the subsidy from the General Fund bringing it to zero at the end of the period. At the end of the three years with the sewer systems being financially self-sustaining, they would continue to be the lowest in the State of Hawai`i. FC Report No.: 5 FC-5 Page 2 January 8,2019 Mr. Kucharski went on to list upcoming sewer system needs. He mentioned that in 2020 the Kealakehe facility will require additional operators to manage the distribution of the recycle-reuse water. He further stated that the Big Island has an aged sewer system requiring an increase from $500,000 to $1.3 million for repair and replacement of systems. He also noted the increase will fund ten new positions including sorely needed project managers. The Director continued, stating the rate increase will not fix all the deficiencies but will be a good start. He commented that he is a member in a state cesspool conversion working group and they are taking a look at methodologies to close, replace, and upgrade cesspool systems in a sensible manner. The last time there was a sewer rate study was along with the fee increase in 2002. Ms. O'Hara commented that since a centralized sewer system is hard to justify in rural areas and may not be the solution, and inquired what other alternatives were being explored. Mr. Kucharski answered that there are a number of new rural area pollution technologies, and methods that deal with small sub- regional systems of four to five homes for example, which together would spread infrastructure costs over several users such as in subdivisions with homeowner's associations. Mr. Richards asked what it would cost to put sewer system management in place for 50 percent of the population. Mr. Kucharski considered Hilo and Kona and the varying types of rural and condensed communities such as Puako, Ali`i Drive in Kona and up to Hamakua, and said his best estimate would be in the $800 to $900 million range. Mr. Chung commented that only a small percentage of homes are sewered throughout the island. He feels the issue is whether the county should continue to subsidize the present program with General Fund monies. He stated he would favor smaller increases over a longer period of time, tied to DEM program plans in the near and far future. He will be voting against the bill at this time. • Mr. Kucharski responded to an inquiry by Ms. O'Hara, stating he would not go to the general public until such time that the council has moved this forward or rejects it. He feels this is the respectful approach. DEM has not had any meetings or outreach with the public. Raising sewer fees will pose hardship on some people and will be inconvenient to others. Despite that, it is something that needs to be done to protect the environment of the county. In closing, Mr. Kucharski clarified that the gang cesspool fee is to maintain the systems, not to treat them. He noted if there is a blockage in the system or the line breaks, the department is required to go out and make the repairs until such time the gang cesspool is closed. That is the purpose of that fee. Pursuant to Section 2-207, Hawaii County Code, Committee Chair Maile David entertained a motion to refer Bill 210 to the Environmental Management Commission and the Department of Environmental Management for review and recommendations. The motion was made by Ms. Lee Loy, seconded by Ms. O'Hara, and unanimously carried. 1 FC-5 Page 3 January 8,2019 On December 3, 2018, the newly elected council members for the 2018-2020 term, took office. Communication 23, dated December 11, 2018 from Director Kucharski and Communication 23.1, dated December 4, 2018 from Mr. Richard M, Bennett, Environmental Commission Chair, both submitted favorable recommendations for passage of Bill 210. Bill 210 was placed on the agenda again for consideration on January 8, 2019. At that meeting, Mr. Kucharski expressed his opinion that the increase is a reasonable request and urged the council to push the bill forward favorably. He reiterated the purpose and reasons for the request as stated at the November 19, 2018 hearing. Ms. Eoff asked how much the increases would relieve the General Fund. Mr. Kucharski answered that it would be approximately$1.4 million in the upcoming fiscal year, reducing the subsidy from approximately$2.9 to $1.5 million. Answering an inquiry from Mr. Richards, Mr. Kucharski stated that the Wastewater Divisions budget is approximately$13 million per year. Mr. Richards asked about the poor state of repair for the facilities and whether funds are currently used for maintenance and repair of facilities, or only for operations. Mr. Kucharski replied that maintenance and repair is part of operations. There is an equipment replacement fund of$500,000 and DEM is proposing to increase that fund to $3 to $3.5 million. Mr. Richards stated that if something is not done about the fiscal health of wastewater management, the county is setting itself up for bigger problems. Council Member Villages understands the situation, and that the increase does have the potential of really affecting people. However, the county must identify priorities while becoming more fiscally responsible. It appears that sewer systems have never been a priority and the county has got away with no increases due to having very small communities. Now with the increase in population it has become more prominent. It's more evident globally too, in that where waste ends up affects the health of ecosystems and people locally, statewide, nationally, and all over the world. Mr. Chung stated that he is not necessarily against raising the sewer fees and understands the need for it. He feels all households should be on the sewer system. People who are on the sewer system are paying to help protect the environment. Those not on the sewer system do not have to pay. It should be spread out evenly. Mr. Chung is not against raising fees, but would like to proceed a little more cautiously. Ms. Lee Loy commented that it boils down to equity and fairness. Protecting the shoreline is everyone's responsibility, but this fee is going to be on the backs of just a few. She would like to hold off for a little while and see what is out there with the legislature or maybe explore other options with taxes on all properties. FC-5 Page 4 January 8,2019 Ms. Eoff stated that there doesn't appear to be a request from the committee to for alternatives when this matter first came up on November 19, 2018. Mr. Kucharski confirmed that there was no discussion about alternatives,just a unanimity that an increase was necessary in order for the department to - function as it is supposed to. He also stated the cost of putting constructing sewer systems is not covered by this rate increase. This is just to operate and maintain existing systems. Your Committee on Finance is in accord with the purpose and intent of Bill 210, and recommends its passage on first reading. • • dmm • AYES NOES ABS EX Respectfully submitted, CHUNG X DAVID x COMMITTEE ON FINANCE EOFF X KANEALI`I-KLEINFELDER X �• �_ • KIERKIEWICZ X / i c) - LEE LOY X POINDEXTER - x MAILE MEDEIRDS DAVID, CHAIR RICHARDS X FC REPORT NO.: 5 VILLEGAS x ADOPTED: FEB 0 5 2010