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HomeMy WebLinkAbout2010-11-03 Cost of Government Commission Minutes COST OF GOVERNMENT COMMISSION c/o Office of the Corporation Counsel, 101 Aupuni Street, Suite 325, Hilo, Hawai‘i 96720 MINUTES Wednesday, November 3, 2010 – 10:00 a.m. Department of Liquor Control Conference Room 101 Aupuni Street, Suite 230 Hilo, Hawai‘i 96720 CALL TO ORDER MS. NICHOLSON: All right I’d like to call the meeting to order. It’s 10:02. Present:Excused: Kenneth Armour Patricia Provalenko Glen Matsuda Also present: Eileen O’Hara Marilyn Nicholson Gloria Wong Kathy Garson William Takaba, ex-officio Emarie Carvalho ShanellSarsuelo Guests: SandyArriola Mike Okumoto Deanna Sako Stan Sitko Ivan Torigoe Molly Lugo STATEMENTS FROM THE PUBLIC: MS. NICHOLSON: Do we have any statements from the public? No statements from the public. APPROVAL OF MINUTES: MS. NICHOLSON: Our next order of business is Approval of the minutes, which we’d like to defer until our next meeting because we don’t have those minutes to review right now. So we can go right into Correspondence. CORRESPONDENCE MS. NICHOLSON: This is Comm 2010-142 from Barbara Bell. Do you have any comments or discussion or a motion on this communication? Hawai‘i County is an Equal Opportunity Provider and Employer MOTION:MS. WONG: Move to file. Accept to file. MR. MATSUDA: Second. MS. NICHOLSON: We have a motion to accept and file. Any discussion? If not I call for a vote on the motion. All those in favor, aye. ACTION ON MOTION: All: Aye. MS. NICHOLSON: Oppose? None. MS. NICHOLSON: We will accept and file that communication. DISCUSSION, AND QUESTION AND ANSWER SESSION WITH REAL PROPERTY TAX, TREASURER, DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, CORPORATION COUNSEL, AND FINANCE REGARDING REVENUE ENHANCEMENT AND COLLECTIONS, AND ANY ISSUES WITH PURCHASING AND CONTRACTS MS. NICHOLSON: We’re moving directly into Agenda Item 5, which is Discussion, and question and answer session with Real Property Tax, Treasurer, Department of Environmental Management, Corporation Counsel, and Finance regarding revenue enhancement and collections, and any issues with purchasing and contracts. So for those of you who are here on those topics, if you would come to the table and introduce yourselves. If you could introduce yourself and tell us what department you are, your name and we’ll get started. MR. OKUMOTO: I’m Mike Okumoto. I’m the Treasurer for the Treasury Division. MS. SAKO: I’m Deanna Sako, Deputy Director of Finance. MR. SITKO: Stan Sitko, Real Property Tax Administrator. MS. NICHOLSON: Have you prepared any remarks for us? I’m not sure what the contact was with you so. MR. OKUMOTO: I was told to do a five minute summary. MS. NICHOLSON: Okay. We’re ready for your five minutes. MR. OKUMOTO: Treasury Division is the gathering point where all of the county’s revenue are found in a place on the county’s books to treasury receipts. I have a copy here for you to look at. If cash or checks are brought into our office, then we make a bank deposit for that agency. We manage all funds for liquidity and make investments with the remaining funds. We communicate with agencies such as the Department of Water Supply and Housing to fill out their cash needs. The other major core function is to arrange financing for infrastructure. This is done mainly through short term notes or long term bonds. We have done seven new money bond issues over the last 10 years. 2 This involves putting together an offering document. As an example of our document that we distribute to the bond investors it’s called an official statement. We do the documentation and the quotes issue and the administration. We also do financing for localized benefits through improvement districts and community facilities districts. Currently we are managing two improvement districts.Shortly we’ll be working on sewer connection loan program and during the past year we have looked at numerous proposals with different types of financing such as economic development bonds, energy bonds, and other CFPs. We have a staff of six, which includes three clerks, two accountants and myself, the Treasurer. We do are own bank reconciliation, improvement district administration and other inaudible calculations. That’s it for me. MS. NICHOLSON: Before we proceed, would any of the commission members like to ask questions of the Treasurer? Or do we want to hear? MR. TAKABA: I just need to ask Mike to explain how interest rates have affected revenue feature as well as our expenses. MR. OKUMOTO: As you know, interest rates are vey low right now. We take the idle funds and we put it in various types of investments. And depending on when we need the funds we set the term for when we need it. Maybe four years ago, we earned about $12 million off of the interest. Now, you can get rates maybe like 25 basis points which is like a quarter percent. I don’t think we’re going to break a million. So that’s a juristic change in our situation as far as investment income. MS. NICHOLSON: Any questions? MS. O’HARA: You mentioned the sewer collection loan program. Could you describe it a little bit more. MR. OKUMOTO: This is new program that we’re implementing for the Honokaa closure of the large capacity cesspools. This involves working with the local financial institutions and the county will guarantee loans to those who would not otherwise qualify. So it would inaduible the financial institutions to go ahead and make the loans knowing that the county will stand behind the loan. MS. O’HARA: And this is the hook-up to the sewer that the county has hooked up in Honokaa? MR. TAKABA: We were required to hook up. MS. O’HARA: I’m a little familiar with that. So there’s of course some risk in guarantee to your own inaudible, these loans? MR. OKUMOTO: Yes. MS. O’HARA: The county has assessed that and feels comfortable with that? 3 MR. OKUMOTO: Well, actually we don’t know how many loans are going to be declined, therefore they asked to guarantee the loans, so it’s kind of question mark right now. MR. TAKABA: They have to go to the bank first and get turned down. If you get turned down which is kind of risky in our perimeters. If they get turned down there’s probably a reason they got turned down. So they would come to the county and borrow from the bank actually, the county would guarantee the bank loan, similar to what FHA does. They don’t actually come up with money. It’s like an insurance that they place on the loan. MS. NICHOLSON: So what is the collateral? Their home? MR. OKUMOTO: Yes. If they choose to participate in the program, the financial institution will put a mortgage on it at the time of closing. MR. TAKABA: And this is something that is set to an ordinance. It’s part of the County Code so it’s not they didn’t make the decision. It’s like we have to by Code, unless the Code is changed. We have to insure guarantee. MS. O’HARA: 100% guarantee? Mr. OKUMOTO: Yes. MR. MATSUDA: What is the loan ceiling? MR. OKUMOTO: The code doesn’t address that so we were planning to go to council to make a proposal. We’re doing research right now. MS. O’HARA: What is the general cost of hookup? MR. OKUMOTO: The engineers say between 5 and 30,000 but it could go higher. MR. TAKABA: It depends on how far they are from the road and how deep the well is. MS. O’HARA: And this only applies to the Honokaa situation? MR. OKUMOTO: Well right now they’re the only ones that are in this situation. MS. O’HARA: We have other gang cesspools that are being converted? Do you have any other? MS. SAKO: There are but they’re not mentioned in the County Code as a project that can apply for this program. MR. MATSUDA: Is there a deadline for the loan application? MR. OKUMOTO: Yes. There is a deadline. The notice to initiate the connection is estimated to be in February and they have six months to hook up or else they’re going 4 to get fined by EPA. So within that six month period they start doing the applications with the county. MR. MATSUDA: So February 2011? MR. OKUMOTO: Right. MR. MATSUDA: So the sewer is already running? MR. OKUMOTO: Well, the lines are installed but right now they’re upgrading the plant. So, we can’t have increased capacity. Until that happens then, about February, then they’ll be required to hook up. MS. NICHOLSON: On a different topic, you said about several years ago the county got about $12 million in interest, and this year it’s going to probably be less than one. Was the county budget for this year partially based on a certain budget figure for that interest? And is there a shortfall? MR. OKUMOTO: Well we adjusted the budget every year according to what we think the interest rates are going to be. MS. NICHOLSON: So you budgeted like on a million this year? MR. OKUMOTO: Right. MS. NICHOLSON: And next year is looking like? Because you’re starting to work on the budget already? MS. SAKO: We have begun the initial processes, but we’ll continue to update it as Mike has more information. MR. OKUMOTO: I think we hit bottom. MS. WONG: We have three subcommittees on the commission. And this is for everyone. One committee is Operations, budget and consolidation. The second committee is Revenue enhancement and collections. And the third committee is Technology, recommendations and adoptions. Mike, is there a way in your department, anything that you could recommend for revenue enhancement? Whether it be by going somewhere else for interest or any other thoughts that you have for revenue enhancement? MR. OKUMOTO: Last year we did expand the financial institutions that we deal with. We had a resolution passed that allowed us to do business with mainland institutions. Previously we were restricted to instate institutions. So we do have a broader range of products that now we can access. But the whole interest rate environment just affects all types of investment. Although it gave us more flexibility and more products to look at, just the whole interest rate environment is just overwhelming our ability to increase our yield. With investments you really don’t want to be trying to maximize yield too much because then you’re gonna have increased risk. So after a certain point, it’s not 5 worth it. We should be looking for other sources of revenue rather than trying to maximizing yield. It’s kind of like I’m satisfied with what we have right now. So, as far as in my division, we’re a small division. The other departments looking at their revenue streams and how it can maximize or enhance those that they control. You can look it up in all types of revenues that we have. As far as my agency, my division, it’s not going to make a huge impact. MS. WONG: Thank you. MS. O’HARA: I just have one last question. As Gloria pointed out, we have these three subcommittees for our Cost of Government Commission, is your division using micro fische? MR. OKUMOTO : No. We’re on the scanning system. MS. GARSON: You mean Laserfiche? You don’t say micro fische anymore. MS. O’HARA : Laserfiche, I’m sorry. MR. OKUMOTO : Yes, we are scanning. MS. NICHOLSON: Any other questions? MR. TAKABA: How does interest rates affect expenses? Your interest expense. MR. OKUMOTO : On the flip side, we’re not getting much revenue from our investments but we’re getting very good interest rates for our bond floats. The last one we did in July, we’re at an all time low. So in that respect we’re saving money from that side. MR. ARMOUR: Will you be refinancing any of the old bonds? MR. OKUMOTO : We have one issue that is getting to that sweet spot, so we’re looking at that. Right now we have some savings but we want to get it so that, what we’re dealing with is that we’re advanced refunding which means there is a 10 year call point with no penalty which we call it for 10 year point. So we want to be close to that 10 year point because if you’re calling before, its called an advance refunding, you have to put this maturities that are before the 10 year call point into an escrow and they earn interest. But interest rates are so low, so it takes away from the portion that after the 10 year point. So kind of like one of the closer to the 10 year call point and then do the refunding. MS. NICHOLSON: Okay shall we move through. Who would like to go next? We have two new people who have joined us. If you could introduce yourselves and say what department you’re with. MS. LUGO: I’m Molly Lugo from the Office of the Corporation Counsel and I handle collection work. 6 MR. TORIGOE: Good morning. I’m Ivan Torigoe, the Deputy Director of Department of Environmental Management. MS. NICHOLSON: So, who would like to go next? MR. SITKO: My name is Stan Sitko. I’m a Real Property Tax Administrator. The Real Property Tax Division as it name implies deals with almost every facet of levying and collecting real property tax which classically is between 55 to 60% of the budgeted revenues of the county. I don’t have any handouts but then again I don’t think you folks want a bill at this point. The best way to define our core functions would be to describe it. We have five sections within our division. We have 48 total authorized positions, three of which are unfunded at this particular moment. One of our larger sections is the Appraisal section. We have 14 appraisers, 12 field appraisers, two commercial and condominium or specialized appraisers and one appraisal supervisor. That’s roughly comes out to about 10,000 parcel per appraiser, which they have to review annually and set a value on. Fundamentally what they do is they have to discover taxable real property, either by permitting or by other hence clue subdivisions. They then have to list the property and set a value on an annual basis on that property. One of the functions that we do is set the assessments. We do not get to set the rate. That is the council’s issue. The next section that comes into play would be the Clerical section who then assists the appraisers in putting information into the system. They then also apply and all and administering all exemptions that may exist. The next section that should be mentioned is our Abstracting section. We do not handle the actual physical mapping. That’s handled in Planning. But we do abstract the information that we get from the Bureau of Conveyances in order that we send the bill to the correct person, the owner, to make sure we have all owners. And the final section is our Collections section which actually collects the revenues. We bill twice a year. They collect the moneys, send it over to Mike. We also enforce, after three years if someone has not paid their real property tax, we do the foreclosure process and we auction off the properties. We typically have two sales a year. The last and final grouping obviously is the Administrator, and we have two people, both positions are unfunded, who are called the Evaluation Analysis. They usually function as multipliers. They’re specialists in either market modeling or working on issues that the appraisers need to be work on. Currently those two, because of the budget crunch and everything else, those duties are being handled by myself and the assistant administrator, having been in that position prior. In a nutshell, that’s what we do. MS. NICHOLSON: I have a feeling we’ll have some questions. Yes? MR. TAKABA: So your evaluation analysis that you unfunded, how do those positions affect revenue or does it? MR. SITKO: Directly, no, they don’t show up in something that you quantify. They’re multipliers for the appraisers. What they do is they help set up the tables that assess the properties. We have to assess the properties at a 100% of value within a coefficient dispersion of roughly 15%. What they do is they assist in making the appraisers more accurate. They set up the tables. They look at the impact of various legislative proposals. The ag specialist, there are two positions. One actually works more with real property evaluation and modeling. And the other one works with agricultural 7 programs. We have a preferential assessment that we give to agricultural properties on the island, which is very considerable. Sometimes it’s 1% of the market value. They’re getting taxed at just what they would be expected to get as farmers for that property. Well, the ag specialist monitors this program. Makes sure that nobody is cheating. Make sure that they are in fact really doing some agricultural production. Unfortunately right now those duties have divulged back onto the field appraisers so that when they go out to check, if they go out for permits they go to check and see if the ag is in place. So, how do they augment? In the case of the one evaluation analysis position, he prevents fraud or lost of revenue due to improper application of the agricultural preferential assessment. In the case of the other evaluation analysis, he would assist in more accurate assessments and therefore save money as far as appeals. Obviously everybody has the right to appeal their assessment. If we’re accurate, we do not lose those cases. In effect, they’re multipliers. They make all the other fourteen people more effective. MS. NICHOLSON: Any questions? MR. TAKABA: You assess the penalty if they have a late payment? Can you explain the penalty? MR. SITKO: By ordinance, there is a 10% penalty for the amount due on the two payment due dates. Normally they are February 20 and August 20. But if you’re a day late, you’re going to pay a 10% penalty. Thereafter, at the first of each month we have a 1% interest that is applied. MS. WONG: Does your department go after that delinquency or is it another department that goes after it? MR. SITKO : No, we go after, after three years if they are in arrears and in three years we put the property for tax foreclosure sale. We do send out interim bills. We do also try to work with people. Obviously the tax foreclosure sale is a last resort. We don’t like to do that but classically, we do two sales a year. We start with about 200 properties and we generally boil it down to about 50 to 80 that we actually have to sell. Because in most cases people will rearrange their affairs to pay off their taxes. MR. ARMOUR: When you have a tax sale and lets say there’s $20,000 going against the property and it sells for 90,000, where is the extra money going. MR. SITKO: It is returned to the owner. The surplus, our cost, our penalty, our interest and the base tax come back to the county. However, any surplus over those amounts goes back to the owners if we can locate them. MR. ARMOUR: And they have one year to reclaim the property? MR. SITKO: Yes. MR. ARMOUR: Another question if I may, how do you get the ag designation on your property? 8 MR. SITKO: There are actually three separate programs that we are administering at this moment. One is a 20-year dedication which is slowly being phased out. The other is a 10-year dedication. In both cases you have to make an application and commit yourself to being in this agricultural production for that period of time to get the benefit. The other one is called the non-dedicated, which you can go in and out of on an annual basis. There are differences. The longer the term you commit, the lower the rate that is applied to your land. The non-dedicated program once again, you apply, you have to be an agricultural production as of the first of January preceding the tax year that you’re going get the benefit for. MR. ARMOUR: What is the penalty if somebody applies and doesn’t do any ag? MR. SITKO: We maintain both the market value and the preferential rate on the land and you would be liable for what is called the roll back tax for the period you have received the benefit. It depends on what part or how long you’ve been in the program. It can go back as much as five years. And you’d pay the difference between the benefit you receive and what you would normally pay plus a 10% penalty. MS. O’HARA: Just following up on those questions. What type of documentation do you require to demonstrate agricultural activity? Do you require tax statements? MR. SITKO: At this time no. Only field inspections. This is why the ag evaluation analysis specialist was very helpful. He was a trained agricultural specialist and he could visit the properties. Our field appraisers are doing that work right now. Now the ordinances do not call for any specific documentation to be submitted outside of the native forest program, which is kind of a side shot where you have to have a report from the forester. MS. O’HARA: Would that possibly resolve some of the need to have staff physically inspect properties if you had required it through financial data? MR. SITKO: I would like that, but that has not been the wish of the council at this point. MS. O’HARA: Another question with regard to your appraisers. They must be using some type software or inaudible to conduct these. And I understand that you defunded these two positions that help you come up with the current monthly values. So is there any improvement in technology devices that might assist your appraisers in doing their job or licenses to outside information data basis that would provide the type of information that your unfunded position would provide? MR. SITKO: Real estate by its very nature is local. So fundamentally most of the outside data basis that I can tap, I’m already tapping one way or the other, such as the home mortgage amounts. The point of the evaluation analyst is one of their duty was to collect the data, be it agricultural data or evaluation data. So right now, the assistant administrator and I are doing as much as we can, and doing that. As far as software concern, yes our software is 13 years old but it’s still functional. There are improvements but at this point I don’t see – there are newer and nicer programs, let me put it that way. But I don’t see any gain for the amount that would have to be spent at this moment. This is something that we are probably going to be looking at within three 9 to four years. By that time the software we’re currently using will be 15 years old which is Jurassic in computer terms. MS. O’HARA: One last question, it had been practiced, and I don’t know if it still is, that one was able to get a homeowner’s exemption on an unpermitted residence. Is that still the case? MR. SITKO: That is currently the case. We’ll also tax the property. The ordinances just tell us to go out there and tax whatever we find. And that’s what we do. MR. TAKABA: If somebody is living in a bus, will that be taxed? MR. SITKO: If it is permanently affixed to the ground, yes. I actually do have somebody cemented the wheels of the trailer into the ground. I have pictures of it. And have a shed at the other end of this thing. They are living in it. They fulfill the requirements of owning the land, having a permanent structure affixed to the ground and owning it as of a certain date. So they get the exemption. MR. TAKABA: So in some cases by getting the exemption, they actually pay less than if they just didn’t have anything on the property? MR. SITKO: Definitely. In addition to the lower rate that you get as in the homeowners class, you also have an exemption amount on there. And considering the value of some of these structures, it’s minimal, so you already have what would normally be attributed to the land, is being reduced. MR. TAKABA: So even if you added value to the property, you pay less in taxes? MR. SITKO: Fundamentally, yes. Let’s say if you were on an agricultural parcel you’d paying $9.85 per thousand. On the land, let’s say the land is $100,000, they put up a framed utility shed that they’re living in. We just maybe we’ll assess at a nominal 10,000 or something. But now if they’re in a homeowner’s class, first we exempt at least 40,000 plus 20 %, then we apply $5.55 per thousand, so I think you can see the math. You would wind up actually paying less. MS. O’HARA: Just my observation would be that this would encourage unpermitted buildings to proliferate through the county. MR. SITKO: I can’t speak to that. My job is to tax unless fundamentally MS. O’HARA: But the county would be making greater revenue if they didn’t recognize these structures if it MR. SITKO: If it was unpermitted, yes. But that would require a change in the ordinances at this time. MR. ARMOUR: Is there any requirements for the real estate agents to turn in people that they have represented their property as ag when they’re really not ag property? 10 MR. SITKO: No requirements whatsoever. MR. ARMOUR: An example was we were looking at some property. It was seven and a half acres of ocean front property and in the ad and the sales person represented it as ag property, only $100 taxes. At one time it was listed as $2.5 million, and now it’s down to about $1.5 million. I looked at all of the taxes that would pay $100 taxes for several years. MS. O’HARA: Is it conservation land? MR. SITKO: Yes. The minimum tax and they were probably in one of the ag programs as pasture. So if you have seven acres, it’s $60 an acre. That comes down to below the minimum tax amount. We have a minimum tax of $100. MR. ARMOUR: The neighbor next door we know them, and they said, well they told us if we put a fence we would qualify for ag so we fenced one side of the property. And I said have they ever done ag on it? He said no, they put a fence on, they molded it when they put the fence and that’s the last time they done anything. MR. SITKO: Once again, we have to be reactive. So if somebody does inform us at this point, because we don’t have the ag specialist, we would be sending him out there to go confirm this. Right now it has to be done with the zone appraiser who covers that zone will have to go check. At that point, when you’re dealing with pasture, yes the whole property has to be fenced in. There has to be water for some animals there. But very honestly, you can run two goats on a property and they’d qualify. MS. O’HARA: So the livestock doesn’t even have to be present for the inspection? MR. SITKO: Not necessarily. MS. O’HARA: And I just wanted to get back, you said the real property tax revenues contribute 50 to 60% to the county’s revenue? MR. SITKO: Yes. MR. TAKABA: Do you think the ag values that are placed right now, if somebody is in ag, do you think it’s just right? Too low? Too high? MR. SITKO: They’re unrealistic. I don’t know when exactly the last time they were recalculated. Our ag specialist before we lost them to USDA again, had recalibrated what more reasonable rates would be. I am going to say that for pasture, they really didn’t move much. But for truck and gardening, orchards and others, yes they went up considerably. They will have to be submitted to council and actually also by ordinance, we have to rework them every five years now. MR. ARMOUR: One last question, is there any ordinance against it? Are you guys considered, when someone owes $100 for ag or very low property tax, to consolidate that into one bill instead of allowing two payments? 11 MR. SITKO: We’ve discussed it and we’re looking into that at this moment. I think Nancy is a big proponent of just sending out the minimum tax once a year and possibly putting a coupon on there for the second payment or just asking for the whole payment. That would require an ordinance change though. MS. O’HARA: How successful is the Real Property Tax Office in ordinance changes with the County Council? MR. SITKO: You want to answer that? MS. SAKO: I don’t think we’ve asked recently. It depends on the whole program and how it’s presented to them. MR. TAKABA: Minimum tax. MR. SITKO: No. Try not to do that one again. MR. TAKABA: That’s the one that the administration submitted one to make the minimum tax $100. But there are some, although we call it the minimum tax, there are some who pay less than the minimum tax. Their houses are less than the structure. MR. SITKO: Let me put it that way. The unpermitted shed with the trailer attached to it, would probably pay a $25 minimum tax. It’s a step tax. Now we requested that that be $100, made $100. We didn’t quite get through with that one. MR. TAKABA: The problem is that they had the veterans attached to that bill. MS. NICHOLSON: Glen, do you have a question? MR. MATSUDA: Yes. Because the county’s budget basically is like you said is 55 to 60% which comes from real property taxes, what is the amount of delinquencies? We’re talking about those parcels that are three years in delinquent and if you were to put a value to it, about how much are we talking about, total in valuation and revenues per se? MR. TAKABA: The delinquency, not the ones in foreclosure? MR. MATSUDA: Correct. MR. TAKABA: The delinquency rate would be about 5-6%? MR. SITKO: As of last year it was $15 million in delinquencies out of $215 million that was projected to come in. MS. O’HARA: That’s significant. MS. SAKO: This was accumulative though for the three year period. MR. SITKO: This goes back, in some cases. 12 MS. O’HARA: With values as they are now if these properties go to foreclosure and are sold on the auction block, are you recovering the delinquencies? Are you getting enough from in sales? MR. SITKO: So far we have been selling almost every property we’ve put up for the tip amount which is our cost plus everything. I will have to be very honest. We do look very carefully at a property before we put it up for sale. We have a lot of delinquency amounts which are minimal, but they deal with lava lands which we’re never going to be able to sell. And we’re looking at other ways to deal with getting what basically is an unsellable parcel off the books or back into paying some tax on them. MR. MATSUDA: So even if you look at the property and you put it up for sale, from all the parcels that are sold, well, not from all the parcels that are sold, not necessarily all the parcels that are put out for bid or auction are sold at that auction. Am I correct? MR. SITKO: Yes. Not necessarily. Somebody may not bid on a parcel. We had a couple of sales go, we had a couple of large parcels that during the boom would have gone almost immediately, but they did not sell. What happens then is we recycle them and we put them up at the next sale. MR. MATSUDA: Thank you. MS. NICHOLSON: Can we move on to our next speaker so everybody gets a chance and we keep going here. MS. WONG: I didn’t get a chance to ask a question. MS. NICHOLSON: Okay. One last question. MS. WONG: I look back on our minutes to see why we had asked particularly you folks to come in. The focus was on contracts, procurement, delinquencies and the whole procurement flow. So that’s what we’re kind of looking at. And sort of related to her question, technology. I understand that you folks were looking at some software or data programming system or pre RFP to assist in appraisals and I think along that lines, is that correct? MR. TAKABA: It’s the Building Department. MR. SITKO: I think you’re mixing us up with permitting at this moment. MS. WONG: But does that not affect also what Real Property does? MR. SITKO: To a small extent. The permits obviously are one source of triggering a visit by an appraiser to get into a property and pick up taxable value. But beyond that, no. 13 MS. WONG: Just to end my question, are any of the companies that made that presentation, I think it was four, and I think you were there last week, would any of those programs help what your division is doing? MR. SITKO: I actually was impressed with some of them. We can actually probably piggy back some of our functions. I was looking at this latest one which I believe is excella. I appreciated their ability to handle stuff online and to take applications. That would be probably the major extent of my interest is to be able to put information out for the public so that they can come back in via the web instead of having to come in to our offices. MS. WONG: So would that be a cost saving to your division predicament? MR. SITKO: I don’t think so. It would be better service. I don’t think it would cost us extra, but it would be a better service to the public. MS. O’HARA: Would it help to compensate for some of the unfunded positions that you’re currently dealing with? MR. SITKO: No. MS. NICHOLSON: Okay. Next person who would like to speak. MS. SAKO: I can summarize Finance real quick. Both Stan and Mike, we’re all part of Finance. So we do have the largest revenue source. Mike’s job is more just facilitating, getting the money to the bank. All the other revenue sources that you see in the monthly report in the CAPHR are all handled by other departments. So we just help facilitate that as well as we do every other month we meet like this collection committee to try to see if there are ways that we can enhance our collection effort and the areas and revenue sources. Of which Molly is one of the members. MS. NICHOLSON: So maybe Molly, we should just move right into you. MS. LUGO: Sure. What I do is pretty straight forward. When the various county departments have exhausted their efforts to collect on a bill, they’ll refer it to my office. I’ll try to make contact with the party. Usually we negotiate some sort of payment plan and if they aren’t responsive to that, then my next step would be to file a complaint in court, and hopefully obtain a judgement. I can give you some numbers. In 2008, we collected about $2.7 million. In 2009, about $1.6. And this year, around $200,000. The reason for that 2008 and 2009 was so large had primarily to do with one particular solid waste hauler who was about $3 million delinquent. So they paid in really large chunks. The decrease isn’t a reflection of decreased efforts, but just having to do with that one hauler. Most of my collection cases are for unpaid solid waste tipping fees with about 40 open cases. I have five unpaid water bills, four wastewater accounts, two property damage cases and six miscellaneous. The usual method for collecting is through a payment plan. And for example, last fiscal year, out of 200, and 2000 collected. $31,000 of that was in judgements. So we try to avoid going to court if possible. I try to work with the debtors because understanding their situation, if we can 14 get a little bit at a time, that’s better than going to court, getting a judgement and still not seeing any return on it. MS. O’HARA: Do you have those numbers broken down as percentage of delinquencies? What percentages of delinquencies did you receive payment for in those years? MS. LUGO: As a percentage of the total amount that’s delinquent? MS. O’HARA: Yes. MS. LUGO: I don’t have that information, but I can get it to you. MR. TAKABA: At what point do you write it off? Is there like a magic number? MS. LUGO: Well if it’s beyond the status of limitations to collect, which is if there hasn’t been any activity on the account or a response over six years. Or a lot of our write offs is because the account is under the name of a corporation that has dissolved and so there is no longer any legal entity that we can go after. Or the person has just disappeared and we’ve exhausted all efforts to try to locate them. MS. SAKO: We have some that have moved to the mainland. Those are usually the smaller ones that we’re trying to collect. MS. NICHOLSON: Glen, you have a question? MR. MATSUDA: In regards to the collections, because the individuals you first try to work out and get a pay plan with them, is there any particular length of time that you wait before you any kind of action is taken? Because you have a pay plan with them, now they’re delinquent two, three, four, five, six months before any kind of legal action is taken? MS. LUGO: You mean if we agree on a payment plan and then they default on the payment plan? MR. MATSUDA: Correct. And they’re still delinquent. MS. LUGO: I generally would give them a few months. Try to make contact with them again and if there’s no response then go ahead and file legal action. MR. MATSUDA: So, the period of time, maybe about six months? MS. LUGO: Yes. MR. MATSUDA: So they got a free six months. MS. LUGO: Not generally six months. More like maybe three months. Depends. If they are making contact with me and couldn’t make their full payment that was owed 15 that month, then I might give them a little more leeway. If they are in contact with me and saying, okay, I really tried to keep up with the payment plan. MR. MATSUDA: If they pay a little money and something like that. MS. LUGO: Right. MR. TAKABA: When do you cut them off from using the landfill? MS. SAKO: That would be a question for Ivan. That would not be Molly’s call. MS. O’HARA: One last question and this is for Deanna. The topic that we are focusing on here is not only collections but also revenue enhancement. Would you be able to recommend any places where the county might be able to implement or increase user fees and other ways of collecting revenues that aren’t currently being done? MS. SAKO: Both the last couple of years as we went through the budget process we have recommended various rate increases, inaudible fees to the department. And some of them have gone ahead and implemented them. But everything, pretty much all the rates either require public hearings because it’s set by rule or ordinance change before the Council. MS. O’HARA: The county operates that lava viewing area is that correct? MS. SAKO: Yes. MS. O’HARA: And we currently do not charge for parking at that area? MS. SAKO: We do not. I think that has more to do with the liability or risk that we would be assuming. We are held to a higher level of protection. If we would start to collect fees for it then by just – Enter at your own risk – and pay a donation fee. MR. TAKABA: How do donations come in? MS. SAKO: Well, there were a few. MS. O’HARA: It just seems like a huge revenue source for us. MS. SAKO: No, and we did look at that. I think previously, the last time we did it, fees were collected at that point. This one is a little different. It’s also on private property that we’re helping to facilitate so it’s a little different so to speak. MS. O’HARA: It still seems like there would be insurance available to cover the risk and it would still be here and that’s an asset to the county. MS. SAKO: I cannot imagine what it would cost to get a policy to protect us from someone falling in a collapsed tube. 16 MS. WONG: Deanna, we’ll be discussing later after you folks leave, the meetings that we had with you and Nancy. Part of what I recall is that I asked if there was one recommendation that you folks might think. And you said IT for matters be it Laserfiche, or along that line. Could you elaborate a little bit more on that? MS. SAKO: I think people get frustrated when they cannot do their jobs quickly. And so, Stan, speak to it more, having been in Kona before they got the fiber optic cable connection but when you can’t do your job quickly and you’re constantly waiting for the computer to feedback data to you whether it’s a county records or other information then it’s lost time. MS. WONG: Is it mostly hardware or software, or both? MS. SAKO: I think some of it is the hardware, but not necessarily the pcs themselves, but the connections and networking. And Data Systems is aware of it, and they are working at trying to speed that up. MR. TAKABA: Will the new building be more efficient? MS. SAKO: In West Hawai‘i? MR. TAKABA: Yes. MS. SAKO: That’s my understanding. MR. TAKABA: Is that going to solve your problem? MS. SAKO: That may solve parts of it, but you still have to communicate between Hilo and Kona. MS. NICHOLSON: Okay, shall we go to our last presenter? MR. TORIGOE: Just to give you an overview of what Environmental Management does. Basically people look at the Environmental Management Department and think of it as a relatively simple thing where you throw away your trash in the dump. Or you’re flushing your toilet. If you’re environmentally conscious you go to some recycling events. On the surface that’s what it is but underneath it’s really a very highly technical department. When you go to the dump you go to an engineer waste disposal facility. And it’s highly regulated by the state and EPA. Similarly when you flush your toilet all that stuff has to go through our wastewater treatment plants which again are highly technical. We have engineers that run these facilities. And again highly regulated by EPA and Department of Health. So it is really a very complex operation one which requires 24/7 attention, 365 days a year. As far as Wastewater Division, it’s approximately 90 miles of sewers that are maintained.There are four wastewater treatment plants and about 54 positions that take care of all of this. This past couple of years you may be aware of the EPA large capacity cesspool closure requirements. Basically Wastewater Division has had a lot of their resources siphoned off closing the various large capacity cesspools that the county is either directly responsible for. During the past few months they’ve finishing Komohana Heights. They finished doing 17 the Honokaa project and they just finished the Queen Liliuokalani project in Kona. That one is especially is interesting because when it was first spec out, the Q of E project had about 18 lcc’s in it. By the time they were done, they had 38. So it shows how difficult it is to really get a grip on some of the problems that Environmental Management has to deal with. Solid Waste Division operates and maintains all solid waste collections, disposal facilities including 20 transfer stations around the island along as well as the two landfills. And to close landfills which, and when we close the landfill that doesn’t mean it goes away. You still have to spend millions of dollars over the lifetime of that heap to take care of it. Solid waste division has about 108 funded positions and handles about 800 tons of solid waste a day. Back to Wastewater, they’ve got about 11.2 million gallons of capacity per day also. There is also a derelict and abandoned vehicle disposal program which comes under Solid Waste Division. That’s got two funded positions civilly funded through the county’s vehicle disposal fund. There is also various recycling programs that are run by the Solid Waste Division. In those three, you think they’re fairly simple, but really it is extremely difficult as our mayor knows. Largely because what you’re doing when you’re dealing with recycling is you’re dealing with the psychology of people who are out there. You got to get them convinced that this is a good thing to do, rather than throwing everything in the landfill which is also expensive. The landfill is something which we have a very limited capacity for. And the sooner we run out of the capacity, the sooner we’ll have to do something else with that rubbish, which is going to be expensive. The recycling area is also very difficult because basically once you get the recyclables into your hand, then you gotta do something. And that means you’re interacting with live markets out there. You’re becoming a market participant. Very, very difficult. And government as you know, it’s not terribly nimble when it comes to buying and selling things. In order to try and just figure out how you’re going to deal with the market, whether you’re doing it as a government or whether you’re dealing with a private contractor, it’s a very complex proposition. Those are the basic functions that the Department of Environmental Management deals with. Basically our task is to try to protect the unique environment of Hawai‘i from the solid and liquid waste hazards that we as the users inhabit this place produce. And the financial difficulties are, at the Wastewater division basically subsists solely on the sewer fund which is basically just the sewers fees that they’re able to collect. Solid Waste division collects tipping fees, but also has a certain amount of subsidies from the General Fund. But our funding is limited in that respect. We’ve had some challenges in terms of collections obviously in the past few years. We are making steps right now. We’ve been talking to our business services people. We would have some things that we are intending to move on as soon as possible. Just real general, I think what we need to do particularly with the Wastewater Division is to get going on generating late and final notices better than we have been. And to get a better grip on where all of our delinquent accounts are so we can make more timely referrals to the Corporation Counsel, the collection agency. We also need to get a new collection agency contract online. All of these are things that we are in the process of inaudible. The question was asked if we could ever cut people off? In terms of Solid Waste, in the past there has been many times where somebody is seriously delinquent in their solid waste tipping fees. We’ll issue basically a notice telling them that you’re not allowed to come and tip anymore unless you work out a payment plan or pay off your debt. We are moving in that direction again. Before we do that, obviously, we have to make sure that our 18 system is up to that task and making sure that people that we cut off are truly delinquent. And also we need to make sure that the tipping community is informed of this before it happens. In terms of the Wastewater side, we do not have really have any way to keep the public from flushing their toilets. In most jurisdictions, how that’s handled is that the wastewater and the water bills and billings are combined. So if somebody is delinquent in either of those than the water can be shut off. That is not something that has been agreeable. MS. SAKO: Has it passed through Council? MR. TORIGOE: Understandably the Water Department is not really thrilled to go in that direction. That generally is the hammer that’s used. Other than that, and I said we’re working on trying to retune our collections systems in-house. That includes looking at some new software. It’s going to be a little while before we can get that online. We are looking at something that is, hopefully we’re going to integrate better both the billing side and the incoming side so that when somebody comes into the landfill, they pass through a weight station. Than that information, hopefully, we’ll be able to put into an integrated software that will be available to not only the people who are monitoring what comes in, what’s being charged, but also people who then bill and collect on. And hopefully, for instance that our billing people will be able to get on that system and get real time information about what a particular hauler is owing us at that point . And then hopefully we’ll also get to generate, make notices that goes from that system. Again, a little bit complicated. A lot of work to be done, but we are moving in that direction. MS. SAKO: I’d like to add something real quick. They also hired a Collection Clerk. It’s the first time they actually had somebody full time in that position. And this person has only been on staff for a few months and has actually more than paid her salary already by doing those calls quicker and more timely. And is very effective especially I think for the sewer receivables, the homeowner type, the smaller sewer receivables that are very small. It takes many, many, months and years work to get it up to a large enough delinquency amount, where it would make it effective for Molly to go after them. MS. O’HARA: On the technology side, you say you’re working on this scale house software integrating it into billing, this been worked on for many, many years. What is the hold up? MR. TORIGOE: That’s a good question. I’ve been in the department for one year and eight months now. And all the time that I’ve been there, basically there’s been staffing difficulties within the accounting and business service section. Sometimes you just get a perfect storm where, I can’t go into details obviously about personnel matters, but for most of the time that I’ve been here, we have been down one to three accountant positions as well as we had account clerks leave. The Collection Clerk position was filled and it didn’t work out. We were fortunate to get this other person. It’s just been a very, MS. O’HARA: But shouldn’t the design and integration of that software be in the hands of either a consultant contract or other divisions in the county? Is it been dealt with internally by your account clerks? 19 MR. TORIGOE: Well, it’s something that the business management to inaudible had their heads together and were able to get some recommendations to work with the IT people. It’s been, and frankly it didn’t pass a couple of years because of the economic difficulties that the entire county has been facing. Imagine trying to be in a position of writing the business services when your staff is in turmoil. You got a bunch of open positions. You got furloughs. You got departments that cut costs, cut your budget. Basically every thing, as I said, it’s kind of internal perfect storm in terms of the business section. It’s not just speech, it’s just a fact. MS. O’HARA: I know. It’s something of the history of that department. But it would be nice to see it turn around. We’re talking technology fix here. I mean other regions use these technologies in software per scale houses and integrating it into the billing. So it’s not new age or anything so it would be nice to see that developed. I have another question though, and it’s about the sewer. You described it and we have the new facilities now in Honokaa, and Liliuokalani that had been added to our capacity. But in terms of capacity, most of the people who flush their toilet on this island it doesn’t go into our sewer system. It goes into individual septic systems and your cesspools. Is that correct? Would that be a correct assumption? MR. TORIGOE: At the top of my head, I couldn’t tell you truly whether most is correct, but yes, a great many. MS. O’HARA: A great many. Do we, as a county, regulate our septic and grease haulers in any way? Do they have to be licensed? In other counties there is a licensing fee. MR. TORIGOE: Are you talking about just grease haulers? MS. O’HARA: Septic and grease haulers. And I think pumping truck services. MR. TORIGOE: There is permit required. MS. O’HARA: A permit required by the state, DOH. But the other counties require permit which is fee with inaudible. It also helps to regulate those services. MR. TORIGOE: Private haulers are required to have a valid permit from Wastewater Division to discharge the wastewater into municipal facilities. MS. O’HARA: So you do collect the permit fee? MR. TORIGOE: Yes. MS. O’HARA: Do you know what the rate of that is? MR. TORIGOE: I want to say it’s somewhere in the neighborhood of $30 or something like that. MS. O’HARA: Annually or one time? 20 MR. TORIGOE: I would really need to check on that. MS. O’HARA: I was curious because that’s a potential revenue source. And it could lead to other things. MS. NICHOLSON: Other questions? MS. WONG: I’ve got three. I’ll just ask them all at one time. Are you working with the Green Team? Two is, are you looking at any waste to energy program? And three, does your department write any grants? Or request any grants from federal sources or other sources? MR. TORIGOE: Do we work with the Green Team? Yes. We do have people who are involved in the Green Team particularly on the recycle side. I don’t know real specifics on that. Is there anything particular that you had in mind? MS. WONG: No, just, because I think they’re going to be building up what they’re doing and I wanted to make sure that they’re working in your area, cause I think that it’s an area that could really get the Green Team involved, the county’s Green Team. And waste to energy? MR. TORIGOE: As far a waste to energy is concerned, that is something that we’re keeping an open mind on. We see almost monthly and there are people who seek this information on various technology options. We are keeping track of what is coming in. And as we look at ongoing projects, we are on the look out for something that might work. We're also very wary that, we want to make sure that if we start seriously pursuing such a project, it’s something that has to have a track record within the United States that’s recognized who in terms of it’s technology as well as it’s regulatory feasibility. That’s always a big deal to make sure that EPA and the Department of Health will be able to support when we move in that direction. At this point, we don’t have anything that we feel is worth the county investing it, but as I said, we’re keeping our eyes open. In regard to grants, yes, the Wastewater Division received $7.5 million in ARRA funds to do a lot of these season projects and we are looking at other ARRA federal funding opportunities. MS. WONG: And does someone in your department write the grant proposals or do you hire out, or do you write it? Who writes it? MR. TORIGOE: Basically, I think we’ve been handling it pretty much in-house. MS. SAKO: They receive other state funding as well. MS. WONG: So, one of your staff people does their job and writes the grant? MR. TORIGOE: Yes. MS. SAKO: It’s like every place else in the county. MS. NICHOLSON: : Other questions? Ken. 21 MR ARMOUR: How much revenue do you get from the HI5? MS. SAKO: Just under a million dollars. MR ARMOUR: That’s based on sales in the county and then you get a certain percent of that? MS. SAKO: I’m not sure how the state calculates it, but then part of that money goes back into the program. I think you guys contract with inaudible, or part of it at least to manage the sites and the collection. MR ARMOUR: When you have the recycling bins at the transfer stations, I know in ours, you go over to glass, you dump the glass in, and there’s probably 50% of it is beer bottles which are a nickel each. Do you sort that out to get your nickel back? Or is it just crushed and dumped? MR. TORIGOE: Public waste containers that are out in the street MR ARMOUR: The ones at the transfer station. MS. O’HARA: The recycle bins are segregated glass and everything else, and so sometimes people throw HI5 containers in the glass bins, is what you’re saying? MR ARMOUR: They throw it in the other one. And that would be harder to sort. Our transfer station there might be 10 cases of beer sitting on the ground. And I’ve seen the guard, for lack of a better word, taking and dump them into the bins and throw the cardboard back into the recycle boxes. The truck comes and picks up all the glass. And sometimes I’ve gone there and there’s somebody inside the dumpster taking out all the bottles. And I was just wondering if the county does anything or if it’s just hauled away crushed. MR. TORIGOE: Frankly I don’t know of the top of my head. I have to check on that. That sort of thing is contracted out to haulers so I don’t have nuts and bolts knowledge of exactly what they do there. MS. O’HARA: To answer your question, cause I do know. It is contracted out. They all do recycling at the transfer stations. So, it goes to the contractor’s site and they actually can sort out quite a bit of that out of the glass stream and even out mixed goods stream. So, it is probably not to the county’s direct benefit. MS. WONG: One more question. I went online and looked at the Legislative Auditor’s web page, and there was a follow up review of the 2006 audit of the Department of Environmental Management’s Recycling and Diversion Grants Program. And then on October 15, in the Hawai‘i Tribune Herald, Colleen Schrandt was quoted as saying, the county’s Parks and Recreation, Environmental Management and Public Works Department will face the Legislative Auditor’s scrutiny this year. Twice your department is in, so are you aware of what they’re looking at?And are you addressing those issues, Legislative Auditor’s issues? 22 MR. TORIGOE: We haven’t received any direct communication from the Legislative Auditor’s office. But we expect that they will be looking again at the collection performance. And that’s something, as I stated earlier, we are already working on. MS. WONG: Okay. MS. NICHOLSON: : Other questions? MR. TAKABA: I think in 2006, did you say 2006? MS. WONG: 2006 and there was a follow up on March 2009. MR. TAKABA: I’m not sure that at that time there was a Legislative Auditor doing the same kind of a role as they are now. I think she did a study once at the request of one of the council members. But to study the contracts, the recycling contracts. It was like a special request from the council. It wasn’t brought on upon themselves. 2008 is when we started, we actually had a legislative body for doing auditing. MS. O’HARA: Yeah. He’s right. The 2006 audit was at the request of one particular council woman. MS. WONG: I have just one more open ended question to anyone here. We’re the Cost of Government Commission, is there anything that you would like to recommend or suggest besides IT to improve your departments or improve the county cost or efficiency or revenues, operations? Open ended question. Besides giving all of you a raise. MS. O’HARA: What about the concept of pay as you throw? This is an unusual county in that residential rubbish hauling, you can self haul to the transfer station and get rid of your rubbish for free. I’ve lived in many places in the U.S. and it doesn’t operate that way anywhere else. It also makes it very difficult to put incentives in place for recycling, since it’s all free. So, if there’s no incentive to reduce the amount of rubbish that you haul to the landfill. This has been something that’s been battled around for years in the county. Where does the department stand on that today? MR. TORIGOE: That is a concept that has been discussed and the department has made some proposals along those lines, but it’s going to probably take a good deal of interaction with the public to see if that is really something that will be acceptable. There’s been some real questions raised regarding it. MR. TAKABA: Another program discussed, the proposal that was discussed was tacking on a fee on the property tax bill. We checked with Stan on that. Stan said we do have the capacity to do that but we have to really look at specifically who we charge. MR. SITKO: It would require us to redesign our bills section. 23 MS. O’HARA: Well that’s good because as I understand it, the allocation to each of the departments that comes out of the 50 to 60 percent of the revenues that come into property taxes. Is it by a percentage basis, more or less? MS. SAKO: It’s on a as need basis. Obviously the highest percentage of General Fund goes to Public Safety, Police, Fire, Prosecutors, and then the special fund, the special revenue funds such as sewer and solid waste can request subsidy assistance from the General Fund during the budget process. MS. O’HARA: So it, is that the case that a particular percentage is directed at say, Department of Environmental Management or Solid Waste? MS. SAKO: Right. We don’t have preset percentages. It’s as needed basis how they justify their budget. MS. NICHOLSON: Did any of you want to respond to the question that Gloria had? The open ended question. MR. SITKO: Outside of an improvement in the economy if you can arrange that. MR. TAKABA: You’re expecting revenues to go down? MR. SITKO: I’m unfortunately expecting it. I do know there going to be going down at leas two percent. I unfortunately have to wait till the end of the year before I can set what the assessed evaluation is going to be for the upcoming fiscal year. If I could see that far in advance I would probably even not be working here. But at this point I’m predicting about 8%. MR. TAKABA: 8%? This year was 5%? MR. SITKO: No, we went down 10% this year. MS. NICHOLSON: Well if you have any other comments that you think of after you’ve left, we would be happy to receive them. You can communicate through Kathy’s Office. So, if anything comes to mind and thought, I should have mentioned this, we would be more than anxious to hear what you have to say. So, thank you all for coming and speaking to us this morning and leaving us a little bit more informed about things and some more provocative questions for us to ponder. Thank you so much. Would you like to take a quick break? MS. O’HARA: I just wanted the chair to understand that I can’t stay much pass 12. Sorry. BREAK – 11:25 – 11:30 MS. NICHOLSON: Okay, we’re missing Bill, but I think we could probably go ahead and move ahead, because Eileen has to leave around noon. So we want to speed through this and not have a meeting like our last one that Kathy missed. Okay, so we 24 actually can’t discuss anything from the folks that we just heard from. Is that correct? Or can we stay on this agenda item and see if we have anything we wanted to discuss from. MS. WONG: It says discussion. MS. GARSON: You know, I think you can. MS. O’HARA: It would be easier to do so as it’s in our memory now. MS. NICHOLSON: Yes. MS. GARSON: But if you’re going to, obviously if it’s going to be something that you want to take action on, then I would ask that you put it on another agenda. MR. MATSUDA: But just discussion we can? MS. GARSON: Yes. MS. NICHOLSON: Okay, so we’re still on item 5. Anyone have any comments or observations or anything that they would like to maybe further discuss from the presentation we just had? MS. O’HARA: I think some really important points came up in the Real Property Tax discussion. The fact that agricultural exemptions are not being properly monitored. And they have no requirement for financial documentation that a portion of the owner’s income is coming from ag makes it real easy for that program to be abused. And that costs us all in terms of tax revenues. I also think the issue with homeowners exemptions are unpermitted building is costing the county a significant amount as well. I think both of those things are something that council could take action on. And that would increase our revenues. That’s my response of the tax office. I’m sorry to hear that DEM is still working on new software solution to coordinating collection and fill tip fees, scale house fees with their billing, as that has been an issue that has been in front of them for at least six years to my knowledge. And it would be great to see that resolved. That would help in collection of delinquencies and overall collections as well. I would recommend the department look more closely at regulating the septic and grease haulers because a good portion if not the majority of Hawai‘i county is discharging waste into septic systems and they do need to be pumped regularly and we do not have any oversight at the county level on those services. And by charging higher registration fees we might be able to provide more regulatory implements over that whole industry. MS. WONG: So at some point in the future, your committee will be making a recommendation? MS. O’HARA: No, I’m just saying those are points that I observed. 25 MS. NICHOLSON: I don’t think they’re necessarily tied to a committee. Some may be, some may be tied to other committees, but I think at this point the kind of comments that she just made are ones that we should capture because we may want to put it in our draft of recommendations to discuss at some future point. And they may not fall within one of our particular committee’s purviews. MS. O’HARA: Which is my response to what I heard in terms of areas where we cold possibly increase revenues and/or improve collection of delinquencies. MS. NICHOLSON: Anything else that you want to kind of capture so that we can… MS. WONG: One of the things, and I don’t know that it would be towards any of these, but Environmental Management and I’m recently keen on recycling and preventing waste, and so one of the things I thought of when I asked about the Green Team was how can you prevent more things flowing into the landfills, into the sewage, that we can use it for more productivity. I wasn’t hearing that that’s going on, but I don’t know, but if it can be done about at this time, so I’m keen on looking for something like that. I asked a question on grants because I thought that especially that department could very well use grants in several ways. And I don’t think it should be someone who has a particular job and taking on another added functional of brain for grants. MS. NICHOLSON: Glen. MR. MATSUDA: I’m just glad to hear that there is someone writing for grants and got ARRA funds for the DEM. And not to say that there aren’t no grant funds available, but there are a lot of grant funds available because they’re gaining $7 million in ARRA grants. I’m glad to hear that they are. And it’s some kind of relief as far as revenues. Regarding this area where you’re talking about the Green Team, I think, what I heard was that, I think they basically trying to wait to see whether if there are any U.S. cities or communities out there that has already applied or have a project that’s already been applied, and it’s something that’s feasible. I think that’s the reason why they’re holding back on doing such an ongoing Green Team solution or waste to energy solution because they don’t want to start, be the one to start it. That’s what I heard. MS. NICHOLSON: Ken, do you want to summarize anything for the record? MR. ARMOUR: I think they identified a lot of the problems. It’s just that they don’t tools to implement them or solve it. And it sounds like they’re doing a little better on collections by hiring the one clerk. I think they’re aware a lot of the problems but just either don’t have the time or the money to address it. MS. NICHOLSON: Bill, what we’re trying to do is capture anything that we might want to consider as a future recommendation and make sure we capture it now so that we can bring it up again. So, anything you wanted to add? MR. TAKABA: I’m still not sure as far as the collection with solid waste, the commercial collection, I’m not sure if I really understand why they don’t just cut them off. I know there’s going to be negative consequences if they cut people off because than their businesses will, they could be dumping the garbage on the side of the road or 26 whatever it is. For someone to be a million dollars or more delinquent, I think that’s pretty extreme. I’m just wondering why someone like that, a commercial hauler can get away without having any consequences. MS. O’HARA: It sounded though from their explanation, a lot of it has to do with technology. They don’t have the operations as a scale house software with the billing to be able to stop – I mean a garbage hauler that goes three million dollars doesn’t have just one truck load. They have many. And they’re coming in at the scale houses in both sides of the island. So you would have to have that integration to be able to police it within the department is my understanding. I think that’s what is preventing that and I had said before you came back in the room. MR. TAKABA: Or maybe a hauler could be licensed. I’m not sure what they do now, but maybe if the hauler had an annual renewal fee or a renewal process that they have to go through, and part of it is making sure they’re in good standing. MS. O’HARA: Yes, I agree. I made the same suggestion about wastewater side. MR. TAKABA: Then at least the most you go is one year delinquent. MS. O’HARA: Right. And it provides a source of revenue to deal with the regulatory side. MS. WONG: The most stunning fact that I heard was $15 million in delinquencies. And I started trying to wonder where can we find that money. My guess is that a lot of these delinquencies are senior citizens or people that lost their jobs or something. For some reason, they’re not paying. Some just don’t want to pay. So, if there are reasonable reasons why they’re not paying, perhaps they’re ill, perhaps they’re all of these. That could be funding that we could find to supplement them so that it could get paid. Off hand does anyone know of anything? MS. O’HARA: I don’t think that’s the cause of that. MS. WONG: What do you think it is? MS. O’HARA: It’s the foreclosures that are moving into the market. MS. WONG: But why are they foreclosing? They don’t have money. And why do they not have money? MS. O’HARA: The bills are not being paid. The county legally has to sit on it for three years before they can foreclose on it. But in terms of what’s happening to the real estate market nationally, foreclosures are flooding the market and it’s because people are not able to make the payments, and are not paying taxes. MS. NICHOLSON: And so that figure will probably go up. MS. O’HARA: It will and it’s going to continue for another three to four years before we clear that from the economy. 27 MR. MATSUDA: What I should have asked is, is there any other kind of legal process other than taking them for judgement. Like I’m used to slapping on liens on some taxes or fees that are owed. I didn’t ask them but there probably is a, they’re resources is probably only the judgment action. And I think Bill’s suggestions of having them keep up with their registration fees, you had contractors, they have to pay up all their taxes first before they get renewed. And I think that would be the best way at this point, at this level to keep these individuals, these people, in business and current or so called current, with the county whether it be through a pay plan cause that would be the other alternative should they not be able to make the full payment current, they would have some kind of implement that’s what Molly was mentioning. That’s all I have to say. MR. TAKABA; And I’m not sure if the departments have set up some kind of delinquency rate that they can deal with. For instance in banking, you have loans that you make. An acceptable level of delinquency might be about three percent. At any given time, I don’t think we even know that, and I’m not sure, or if we track where. The question came up a couple of times today. I’m not sure if we actually track delinquency rates except Real Property I know and that’s part of the CAPHR grant. But we never really used that as a way to collect on delinquencies or how aggressive we get on collecting. We don’t look at that except maybe at the end of year when the CAPHR comes up we look at it, and could we do something about it if it’s going up. There are trends. Because a few years ago, I remember the delinquency rates for property tax collections was about 12%. And the property tax office really did a good job in trying to bring it down. Actually I think at a low, it may have gone down five percent or four percent. And with the economy today, I’m sure it’s higher than that. We don’t use that to manage things that we do. If delinquency on solid waste is at 10% then what is the acceptable level going to be? Should it be around four percent? So, what are we going to do to bring it down? We’re not using that as a tool to judge where we are or now aggressive we should be collecting. MS. NICHOLSON: So that would be a county wide policy or one that would vary from department to department? MR. TAKABA: Or if you track it for one. I’m not sure how we’re tracking it, who could be tracking it. MS. SAKO: They are. MR. TAKABA: But we track it, but do we have like a MS. NICHOLSON: A mechanism to take an action? MR. TAKABA: Something that we can say is acceptable in industry standard. MS. O’HARA: I’m curious since Deanna is still with us, maybe she can answer the question about the loan program for sewer hookup, the guarantee loan program. How much of that guarantee does the county have to have on hand? Or do we have any dollar amount that we have to keep in that percentage? 28 MS. SAKO: It’ not clear in the County Code, however we have in the current year budget set aside, is actually two different guarantee programs. And actually if your credit is so bad, the bank, even with our guarantee, will not loan you the money, then we have to loan you the money. And so there are two separate funds, and each one I think we assign $50,000 in a current year, which is not a significant amount. Some of the, it’s not all homeowners, but homeowner businesses in the Honokaa area, a couple of them I think have started and are working on that. We’re trying to get the cost figures. I guess some of them flow down, some go up, and there’s all those different pumps and levels of difficulty getting those placed in. Part of the problems I think the cesspools are in the back and the sewer is in the front. So there is a lot of changes that have to take place. But we’re hoping that by knowing that we’ll get a lien on your home if you default, that hopefully it would encourage payment to the banks will be willing to accommodate them. MS. O’HARA: Would there be grant funds available to fund that program? MS. SAKO: We’ve been looking, maybe we’re looking in the wrong place, but we haven’t found any yet. MS. O’HARA: That seems like that might be a grantable type of fund. MS. NICHOLSON: Any other discussion? MR. ARMOUR: The only other comment I have is delinquencies on property, at least the county has something they can go to. There’s tax liens, and sell it at a tax sale. For all of the other delinquencies they can disappear, if the person dies or moves, or the company is out of business, so the real property ones may not be aggressive as is the tipping fees and things like that when you disappear quickly. The county is getting 12% on the real property delinquencies and most of the property selling, you collect 12% per year, so that’s better than getting at the bank. MS. NICHOLSON: I just want to make sure we are capturing all these points so that we can pull them out again. DISCUSSION OF SUBCOMMITTEE REPORT PRESENTED AT OCTOBER 22 MEETING MS. NICHOLSON: Okay we’re on to discussion item 6. MS. GARSON: May I make a suggestion. Because it’s getting closes to the noon hour, if you have reports from the subcommittees which is item 7, perhaps you want to present them now so that we can be sure that you can discuss what’s in those reports at the next meeting. Because if you don’t get there, then you’re two meetings away from being able to discuss it. MS. NICHOLSON: Okay. I have a question relevant to that. If for instance the technology subcommittee, if we put together a report from the meeting we had this morning, and sent it to you rather than distribute it at a meeting, could it then go on the 29 agenda for the next meeting so it could be distributed as a communication so that there’s not this, all this lag. So we receive a report but we can’t talk about it. MS. GARSON: Generally, probably not. It’s even questionable for OIP whether or not you can get the report with the communication prior to a meeting because that, in and of itself is a serial communication. MS. O’HARA: So for instance, we met this morning. We can make a verbal report? MS. GARSON: Right. MS. O’HARA: But if we were to make a verbal report and then follow up with a written report that still couldn’t be under discussion at the next meeting? It would have to wait. MS. NICHOLSON: Till the following meeting after that. MS. GARSON: Well, if it’s the same thing that’s in the verbal report, I don’t think that the fact that you reduce it writing makes any difference. So I would suggest you make a verbal report. And if you want to memorialize something than just includes the things you discussed, I don’t think that’s a problem. MS. NICHOLSON: Otherwise the minutes are the record of that. MS. GARSON: Correct. There’s no requirement for a written report. REPORTS FROM SUBCOMMITTEES MS. NICHOLSON: So we’re skipping agenda item 6 for right now and moving to agenda item 7. If any of our subcommittees have written reports. MR. MATSUDA: Operations, Budget MS. NICHOLSON: They would like to file? MR. MATSUDA: Yes. MS. NICHOLSON: So, starting with Operations and Budget. MR. MATSUDA: Operations, Budget and Consolidation committee, we don’t have any report. MS. NICHOLSON: Revenue Enhancement and Collections? MR. ARMOUR: We have no new reports. MS. NICHOLSON: Technology Recommendations? MS. O’HARA: The chair and I met this morning with Data Systems. I’m trying to remember they’re names. 30 MS. NICHOLSON: James Kiley and Burt Tsuchiya and Martha Rodillas from Corporation Counsel. MS. O’HARA: It was a very good meeting. Bill was also present. We learned a lot about the status of Laserfiche with the county. And we learned quite a bit about the video conferencing capabilities of the county. These are two comments that came up frequently in these questionnaires that we sent out. In addition, we talked about the ability of having to have a county wide technology plan that goes beyond Laserfiche and video connectivity. Also it would include how they purchase computers, how departments request electronic equipment, how that equipment is purchased or leased and we also looked at other areas of technology that need to be improved upon for the county such as the virtual county interface with the ability for the public to acquire and fill out and submit forms and request through a county website. These are all issues that Data System folks have considered. They have not had internal resources available to complete a county wide technology plan. They see the value in it. They have the capability in-house but as with most of the departments in the county right now, they are a little bit stretched and short staffed. We also discussed the possibility of perhaps a more centralized a data department that included some of the data systems that are currently independent such as the systems with the Office of Aging, Prosecutor’s Office, the Police and whether or not that would add benefit to save money for the county. So we discussed all of these issues. They are going to follow up by submitting to us through Bill, their comments, list of recommendations, things that they’ve considered so far in developing a county wide technology plan. And give us more specific information on the availability of certain technologies within the county and how they’re being used. And another issue that came up is changing culture. Some of the technology challenges are not just acquiring equipment but also the changing culture that it requires for the county to begin using this and the training that is necessary. So we also had discussions on that. I think that summarizes it. Marilyn, do you have anything to add? MS. NICHOLSON: That summarizes it pretty well. And if anyone would like to ask any questions, specific questions about that, especially how it might it relate to your subcommittee, and then we could address it right now while we’re on that topic. MS. GARSON: Well, actually, this is the report. MS. NICHOLSON: But we can talk about it when it’s in the minutes. MS. GARSON: Right. Next meeting. MS. NICHOLSON: Okay, so the document that we are going to get from the gentlemen we met with this morning will then go to Bill, and that will probably become a report that we will distribute then we’ll discuss it two weeks after that. MS. GARSON: We’ll put it on as a communication. It will be a communication. 31 DISCUSSION OF SUBCOMMITTEE REPORT PRESENTED AT OCTOBER 22 MEETING MS. NICHOLSON: Okay. So when Bill gets it then he’ll have to give it to you as a communication. So, no we’re back on agenda item 6, which is discussion of the subcommittee reports that we got at the last meeting and we did get a report from, actually everyone had something, not necessarily reports to discuss, but we did have some discussion items from Operations, Budget and Consolidation subcommittee. MS. WONG: Since she needs to leave at noon, which is in three minutes, do you want to take hers first? MS. GARSON: Actually when she leaves you will lose quorum. MS. O’HARA: They can’t have discussion? MS. GARSON: No. MR. ARMOUR: We should probably move to the next agenda item and future meeting dates. Skip to the end. ITEMS TO BE PLACED ON NEXT AGENDA MS. NICHOLSON: Okay. Yes, we should actually move right to the agenda for the next meeting if we can do that. So we’re going to skip to item 11, Items to be placed on next agenda. What is our pleasure in terms of what we want to put on our agenda for the next meeting? Is there another department that we wanted to meet with? We have discussed someone. MS. CARVALHO: You folks requested Scott Leonard and he agreed to come. MS. NICHOLSON: Okay so Scott Leonard will be our speaker at the next meeting. Anyone else that we would like to hear a little bit from? Scott Leonard is from the Planning Department as I recall. Anything else relating to Planning? Yes, Eileen. MS. O’HARA: This isn’t related to Planning, but it’s related to our meeting this morning and the communication that we anticipate receiving from Data Systems. It might be good to ask James Kiley to come because the rest of the commission was not present at our subcommittee meeting this morning. He might be able to explain better recommendations that come through in our communications. MS. NICHOLSON: So we would like to invite him specifically to address their communication to us? Which hopefully we would receive by then. So this has to do with Data Systems, which I know you guys have also talked about some data issues. Is that speaker you would be interested in hearing from? MS. WONG: I would not necessarily. I think that both of you can surmise what was stated unless it was so impressive that. 32 MS. O’HARA: I think it was fairly impressive in terms of ideas that he has to bring forth for modifications to how the county deals with technology. MS. NICHOLSON: I think it might be better to wait until we see what they’re communication looks like. MS. O’HARA: That would be fine. MS. NICHOLSON: Other than Scott Leonard, that would be all. And at our next meeting we will also probably be then discussing what we now have as item 9 on the agenda. So we’re going to carry that forward which is Discussion on sending letter to the mayor at the end of the year. A lot of the agenda items will carry forward. The other thing MS. WONG: Can we go through number 6? MS. NICHOLSON: Yeah, we’re going to pick that up, but I also, rather than picking up number six, I’d like to jump to number eight before Eileen leaves. We are so out of order. DISCUSSION REGARDING APPROACH TO TAKE TO TIMELY ACCOMPLISH MANDATE OF THE COST OF GOVERNMENT COMMISSION MS. NICHOLSON: Discussion regarding approach to take to timely accomplish mandate of the Cost of Government Commission. I’d like to see if there’s anything else anyone else would like to add at this time. I, in light of the election last night, we have new county council people and as you all recall, we didn’t get responses from county council people to our letter that we sent out. Well, and I’m thinking that we might, now that we are more comfortable on our path, we might want to think about drafting a different communication that we send to county council members that is requesting their input. And maybe we want to discuss that at our next meeting. I think they have some good insights or thoughts, and in a way it might be good to get some thoughts from some fresh folks. MS. WONG: At our last meeting, did we not say that Bill would be asked to contact the county council members as well besides the people here? No? MR. TAKABA: I don’t think so. MS. NICHOLSON: No, but since we have some new county council people, of course they won’t be sworn in yet. When do they get sworn in? MR. MATSUDA: December 6. MS. NICHOLSON: Is it appropriate for us to question the new people who are not MS. O’HARA: It would hard to actually send them a communication at this time. But along that same line, we did send a communication to the council member Yagong. 33 MS. NICHOLSON: Requesting a report. MS. O’HARA: Did we get any response? MS. CARVALHO: He did not respond. MS. O’HARA: Would you be willing to contact him about that? A response to that communication? MS. NICHOLSON: To the report that they had done, which was actually from council member Enriques staff person, is the one who had informed us. MS. O’HARA: Okay. Yeah. If you could follow up it would be very nice for us to get the benefit of those responses. MS. NICHOLSON: Well, my understanding, and it was a report that council member Yagong had put together on MR. TAKABA: It might be better if either the chair or the vice chair do it because he might think it’s coming from the administration if I call. This is not an administration request, it’s more from the commission. MS. O’HARA: Yeah. MS. NICHOLSON: So, we want to have a follow up letter to him requesting it. MS. GARSON: Do you want a follow up letter to come out now so we’ll draft it and it will be sent out before the next meeting for a signature by the chair? MS. NICHOLSON: Right. Requesting a copy for all of us of that report. And then if we receive it of course we’ll want to discuss it. DISCUSSION REGARDING FUTURE MEETING DATES MS. NICHOLSON: So we are actually, do you have to leave right away? MS. O’HARA: I have a little bit of leeway. MS. NICHOLSON: Okay, so let’s move to dates. 10 - Discussion regarding future meeting dates. And I believe at our last meeting, we went ahead and did set our meeting dates into February. So we have our next meeting date as you see on the agenda is to be held November 17, 2010, 10:00 a.m. at the Puna Conference Room, 25 Aupuni Street, Suite 1501. So that’s why we have these parking permits. Where is the Puna Conference Room? MS. ARRIOLA: It’s at the old county building, right across of the county council. The State building end. 34 MS. NICHOLSON: So, that’s November 17. We do have a meeting scheduled for December 10, which is our only meeting in December. So if we’re going to send anything to the mayor, we really need to work it on it next meeting. Then we have a meeting set for January 14. One for January 28 at which Ken will be unable to attend. Hopefully we’ll have a quorum. And I believe we went ahead and confirmed February 11 and 25. We didn’t move into March. Do you want to move into March? So those are our upcoming meetings. So we will have to defer Agenda Item 6, as well as the minutes from the last meeting and Item 9, but we already said that would be on the agenda for the next meeting. Anything else? ADJOURNMENT MS. NICHOLSON: So at that, anyone want to call for an adjournment? MOTION:MR. MATSUDA: So moved. MS. WONG: Second. MS. NICHOLSON: I think we’re adjourned. Meeting adjourned at 12:05 p.m. Respectfully submitted, Sandra Arriola 35