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HomeMy WebLinkAboutComm No 0003.01.01 - Ad hoc committee Report - PONC fund and maintenance fundREPORT TO THE 2018-2020 HAWAII COUNTY CHARTER COMMISSION SUBMITTED BY Ad Hoc Committee on Public Access, Open Space, and Natural Resources Preservation and Maintenance Funds October 1, 2018 Comm. No. 3.1.1 Douglass Shipman Adams Chairperson Jennifer Leilani Zelkko-Schlueter Vice Chairperson October 1, 2018 2018-2020 HAWAII COUNTY CHARTER COMMISSION Honorable Douglass Shipman Adams, Chairperson and Members of the Hawai'i County Charter Commission County of Hawai'i 25 Aupuni Street Hilo, HI 96720 Dear Chairperson Adams and Commission Members: William Carthage Bergin Michelle Galimba Paul K. Hamano Kevin D. Hopkins Bobby Jean Akane Leithead Todd Sarah H. Rice Christopher John Imiloa Roehrig Marcia A.K. Saquing Donna Mae Springer Your ad hoc committee on sections 10-15 and 10-16 of the Hawai'i County Charter, relating to the Public Access, Open Space, and Natural Resources Preservation and Maintenance Funds, has completed its investigation and respectfully submits its report. This report details the Committee's activities, its findings, and recommendations. Thank you for the opportunity to serve the Commission in this regard. Sincerely, Christop Ch iter Paul K. Hamano Member 2--- ____. niloa Roehrig /9/4a kale Donna Mae Springe� Member Jennifer e', ani Zelko-Schlueter Member Hawai'i County is an Equal Opportunity Provider and Employer REPORT TO THE 2018-2019 HAWAII COUNTY CHARTER CONIlVIISSION I. BACKGROUND A. Scope of Investigation During its August 10, 2018 meeting, the Charter Commission voted to create an ad hoc committee "for the purpose of investigating and bringing forth recommendations for amendments to Charter Sections 10-15 and 10-16." (Minutes, August 10, 2018, pg. 57.) Section 10-15 relates to the Public Access, Open Space, and Natural Resources Fund and section 10-16 relates to the Public Access, Open Space, and Natural Resources Preservation Maintenance Fund. B. Members and Staff Commission members Christopher John Imiloa Roehrig, Paul K. Haman, Donna Mae Springer, and Jennifer Zelko-Schlueter were appointed to the committee with Mr. Roehrig agreeing to serve as Chairperson. The following staff assisted the committee during its investigation: Jon Henricks, Commission Analyst; J Yoshimoto, Commission Attorney; Shannon Magnuson, Commission Secretary; Leslie Chow, Legislative Specialist, Legislative Research Branch. Deanna Sako, Director of Finance, and Hamana Ventura, Property Manager, attended all of the ad hoc committee's meetings. Maurice Messina, Deputy Director of the Department of Parks and Recreation attended the September 20 and September 26, 2018 meetings. Roxcie Waltjen, Parks and Recreation Director, and Reid Sewake, Business Manager attended the September 26, 2018 committee meeting. These administrative staff answered questions and provided information about the two PONC funds. II. ACTIVITIES A. Meetings The ad hoc committee met on August 20, 2018, August 30, 2018, September 20, 2018, and September 26, 2018. A meeting scheduled for September 12, 2018 was cancelled and rescheduled due to Hurricane Lane. All four members attended all meetings, except for Ms. Zelko-Schlueter who did not attend the August 30, 2018 meeting. B. Information Provided to the Committee 1. Section 92-2.5(b), HRS, the Sunshine Law's provisions relating to permitted interaction groups. Jon Henricks and J Yoshimoto, Commission Attorney, reviewed the provisions of section 92-2.5(b), HRS, of the Sunshine Law, relating to permitted interaction groups. Handout: Quick Review: Who Board Members Can Talk to and When (Part 3) (August 8, 2018) -1- 2. Public Access, Open Space, and Natural Resources Preservation - Legislative Context. A) History of sections 10-15 and 1 0-1 6 of the Hawai`i County Charter. Jon Henricks, Commission Analyst, discussed the history of sections 10-15 and 10- 16. He provided the committee with copies of ordinance 11-94, that initiated an amendment to section 10-15 of the Charter to create the Public Access, Open Space, and Natural Resources Preservation Fund and ordinance 12-16, that initiated an amendment to the Charter to add a new section creating a Public Access, Open Space, and Natural Resources Preservation Maintenance Fund. B) Charter and Code Provisions Relating to Public Access, Open Space, and Natural Resources Preservation - From the Counties of Hawai `i, City & County of Honolulu, Kauai, and Maui. (August 2018) A summary of provisions relating to PONC funds or their equivalents from the Counties of Hawai`i, City & County of Honolulu, Kauai, and Maui prepared for the ad hoc committee by the Legislative Research Branch. This summary showed a range of funding formulas, i.e. percentage of real property taxes, from the four Counties in Hawai`i: • Hawai`i: Public Access, Open Space, and Natural Resources Preservation Fund - minimum of 2% • Hawai`i: Public Access, Open Space, and Natural Resources Preservation Maintenance fund - .25% • Honolulu: Clean Water and Natural Lands Fund - .5% • Kauai: Public Access, Open Space, Natural Resources Preservation Fund - minimum of .5% • Maui: Open Space, Natural Resources, Cultural Resources, and Scenic Views Preservation Fund - minimum of 1% C) TABLES: Charter and Code Provisions Relating to Public Access, Open Space, and Natural Resources Preservation - From the Counties of Hawai '1, City & County of Honolulu, Kauai, and Maui. (September 20, 2018) Updates tables contained in the summary of provisions from the Counties of Hawai`i, City & County of Honolulu, Kauai, and Maui submitted to the ad hoc committee at their August 20, 2018 meeting. Provides additional information relating to fund balances, estimated real property tax revenue, whether there is a cap on the fand, and existence of requirements that lands acquired with these funds be held in perpetuity. Prepared for the ad hoc committee by the Legislative Research Branch, and includes information supplied by the Finance Department's Property Management Division. -2- 3. County of Hawail PONC and PONC Maintenance Funds A) FY 2018-19 approximate annual appropriations to the funds:* Public Access, Open Space, and Natural Resources Preservation (PONC) Fund: Over 6 million dollars. (D. Sako - 8130/18) Public Access, Open Space, and Natural Resources Preservation Maintenance (PONC Maintenance) Fund: Close to $800,000. (D. Sako - 8/30/18) *Annual appropriations to these funds will vary depending on the amount of real property tax revenues. B) Balances in the funds: Public Access, Open Space, and Natural Resources Preservation (PONC) Fund: $16,301,404 as of 7/31/18 (D. Sako) Public Access, Open Space, and Natural Resources Preservation Maintenance (PONC Maintenance) Fund: $2,598,208 as of 8/20/18 (H. Ventura) 4. Properties acquired with PONC funds A) "County of Hawai `i: Public Access, Open Space and Natural Resources Preservation Commission." Brochure provided by County Finance Department, Property Management Division - lists 13 properties acquired with PONC funds and shows their locations on a map. Also details commission members, purposes of the commission and preservation and maintenance funds, and website containing additional information. B) County of Hawaii: Public Access, Open Space and Natural Resources Preservation Commission - Completed Acquisition Report (as of August 28, 2018) Table provided by County Finance Department, Property Management Division - Adds an additional 14th property, Hale 0 Kaili, that was recently acquired with PONC funds. C) County of Hawai`i: Public Access, Open Space and Natural Resources Preservation Commission (PONC) - Ad Hoc Charter Committee Steward Grant (as of September 20, 2018) This table, provided by the County Finance Department, Property Management Division, indicates that seven stewardship grants have been awarded or are pending with respect to PONC acquired properties. The total value of grants, awarded or pending, is $306,894. -3 D) The following table includes some of the information about the 14 parcels acquired using PONC preservation funds from October 2007 through April 2018. No. TMK No. Property Purpose Stewardship Grant Purchase Date ::Acreage - Size 1 4-8-04:06 Waipi`o Lookout B Yes - Contract executed 10/07 1.804 2 9-5-17:07 Kawa A, B Yes - Contract executed 01/08 234.293 3 5-8-01:11, 19, 20, 24 Kaiholena A, B Pending 01/10 151.615 4 5-7-01:05 Pa`o`o B Pending 10/10 10.610 5 9-5-16:06, 25; 9-5- 17:05 Kawa Bay B Yes - Contract executed 10/11 550.871 6 7-7-08:21, 23 Kipapa Park A 06/13 6.012 7 5-8- 01:21,22, 25 Kaiholena A, B 06/13 76.615 8 7-3-09:04 `O`oma A Pending 12/13 217.566 9 7-7-08:20, 21, 23, 31 Kingman, White Sands A, B 02/12 10/14 16.787 10 5-5-15:42 HawT Banyan Trees B 02/15 .911 11 1-3-08:97 Pohoiki Bay A 11/15 26.762 12 9-5-12:05 Kahua Olohu B Pending 06/16 13.000 13 9-2-01:75 Kahuku A, B 11/16 3,127.950 14 5-3-07:22 Hale 0 Kaili B 04/18 22.082 TOTAL 4,456.878 Key to -Purpose Column Purposes of PONC acquisitions per subsection 10-15(c) of the Charter: A Access to beaches and mountains 13 Preservation of historic or culturally important land areas and sites C Protectionof natural resources, significant habitat or eco -systems, including buffer zones D Preservation of forests, beaches, coastal areas, natural beauty and agricultural lands E Protection of watershed lands to preserve water quality and water supply -4- Sources: 1) Table - County of Hawai`i: Public Access, Open Space and Natural Resources Preservation Commission - Completed Acquisition Report (as of August 28, 2018) 2) Section 10-15(c)(1), Charter 3) H. Ventura, Property Manager E) With respect to these parcels: Total Acreage Acquired: 4,450.8655 acres (approximately) Total Acquisition Amount (Escrow, Grants, PONC, Private): $39,327,839.75 Total Purchase Amount from PONC fund: $29,893,755.98 Total Property Taxes Removed from Tax Base: $121,818.30 -5- III. FINDINGS AND RECOMMENDATIONS During its first meeting, the ad hoc committee identified a number of topics of interest. The committee focused its investigation and discussion on these topics during its subsequent meetings. These topics and the committee's findings and recommendations with respect to these topics are as follows: 1. Subsection .10-.15(a) provides that a minimum of two percent of real property tax revenues shall be appropriated to the public access, open space, and natural resources preservation fund Is this an appropriate figure? Findings: A) County appropriations from real property tax revenues in the State of Hawai`i range from: Honolulu - 0.5% Kauai - minimum 0.5% Maui - minimum 1% Hawai`i County - minimum 2%. B) Hawai`i County's rate is by far the highest in the State. Recent fiscal challenges have demonstrated the need to consider the appropriateness of this minimum 2% rate. C) Fiscal Impact of Reduction of Hawaii County's PONC Rate Upon Core Services (Assuming FY2018-2019 RPT rates) Amount of Savings Core Services that could be funded with Cost Savings Example: Police Officers* 2%to 1.5%=0.5% $1,500,000 15 police officers 2% to 1.0% = 1.0% $3,000,000 30 police officers 2% to 0.5% = 1.5% $4,500,000 45 police officers *Numbers ofpolice officers was used to illustrate the impact on PONC appropriation amounts on one sector of core services. D) The FY 201849 real property tax estimated revenues of Hawai`i County ($317,000,000) and Maui County ($321,907,576) are comparable. Consequently, Maui County's rate of a minimum of 1% is worth considering. Recommendation: The ad hoc committee recommends that the Commission consider reducing the percentage of the real property tax appropriated to the PONC preservation fund from a '= minimum of 2% to flat rates of either 1% or 0.5%. Option 1: Three members of the committee endorsed a reduction to a fiat rate of 05%. -6- Option 2: One member of the committee endorsed a reduction froma minimum of 2% to a flat rate of 1%. A portionof this amounting to 75% of the 1% would be committed to the preservation fund and .25% of the 1% committed to the maintenance fund. This proposa is incorporated in the proposed revision to sections 10-15 and 10-16 contained in topic no. 5, on pages 11 to 12. -7- 2. Subsection 10-15(d) provides that moneys contained in the PONC fund shall not lapse at the end of any fiscal year and there is no cap on the amount of money that may be accumulated. (Per subsection 10-160(2), the PONC maintenance fund has a maximum limit of $3,000,000.) Should there he a cap on this fund? Findings: A) Acquisition amounts for the 14 PONC parcels range from $170,880 (Kahan Olohu) to $10,555,850 (Kaiholena - 7 parcels). There is presently approximately $16,000,000 in the fund. These funds may be expended only for acquisition of land or property entitlements, and unless spent for this purpose, shall continue to accumulate in the fund even if core County services, such as public safety or public works, are cut due to budgetary shortfalls. A cap on the fund would protect taxpayers by averting this situation. B) Alternatively, a mechanism allowing the appropriation to be reduced during times of unusual fiscal crisis would eliminate the need for a cap on this fund. Inclusion of factual circumstances that would trigger the ability to reduce the appropriation may reduce possibilities of abuse. ............ . Recommendations: The ad hoc committee was divided on this point. Option 1. Three of the members endorsed a cap on the fund in an amount equivalent to 2% of the annual real property tax revenues per year. Appropriations in excess of this amount would be returned to the County's general fund. Linking this cap to annual real property taxrevenues wouldassure that the balance .in this Rind would reflect the state of the County's economy Option 2: One committee member recommended providing for the option, of reducing the appropriation either when the combined balance of the preservation and maintenance finds exceeds 2% of the annual real property tax revenue of the fiscal year or during times of fiscal crisis. This would eliminate: the need for a cap. This recommendation is incorporated in the proposed revision to: sections 10-15 and 10=16 contained iii topic no. 5, on pages 11 and 12. -8- 3. Subsection 10-15(h) provides that lands acquired with PONC funds shall contain a restrictive covenant that requires such lands be held in perpetuity and may not be sold, mortgaged, traded or transferred. Findings: A) The provision that lands acquired with PONC funds may not be sold, mortgaged, traded or transferred and thus must be held by the County in perpetuity, creates at least two major barriers towards management of these lands: 1) It creates foiuiidable maintenance issues for the County. To date the program has acquired over 4,400 acres of land, with future acquisitions to follow. The County lacks the personnel and funds to absorb all of these additional parcels into the inventory of property and facilities that it maintains; and 2) Changes in title to even negligible portions of the parcels that are necessary to maintain the properties, i.e. for flood control, or to improve access, are foreclosed by this restriction. B) Code provisions from Kauai and Maui reflect a different approach that is worth considering. Subsections 6-14.3(c) through (e) of the Kauai County Code, allow moneys from their preservation fund to be appropriated to other governmental entities, nonprofit organizations, or even private owners to acquire interests in property, own or hold these lands, and manage them, as long as these actions benefit the public and the lands are protected in perpetuity. Section 3.88.070, Maui County Code contains similar provisions that authorize granting title to lands, purchased with funds from their open space fund, to land conservation organizations. Maui County protects the public's interest by way of perpetual conservation easements. These arrangements transcend the stewardship grants permitted by section 10-16(h) of Hawaii County's Charter and significantly enhance the prospects for maintaining and improving properties acquired via these special funds. Recommendation: The Committee recommended amending section 10-15 to remove impediments to rnaintaining and improving these lands, in a manner that assures that the lands will be preserved for their intended purposes in perpetuity. One Committee member suggested amending the Charter to provide the flexibility needed to accomplish the objectives of this program by authorizing the Hawai` i County Council to establish procedures for the administration and expenditure of the revenues in this fund. The proposed revision to sections 10-15 and 10-16 contained in topic no. 5, on page 12 incorporates this suggestion. -9- 4. Should section 10-16 relating to the PONC maintenance fund be changed? Findings: A) Section 10-15(c), of the Charter provides that moneys in the preservation fund shall be used to: "(1) Purchase or otherwise acquire lands and easements in the County of Hawaii for public outdoor recreation and education, including: (A) Access to beaches and mountains; (B) Preservation of historic or culturally important land areas and sites; (C) Protection of natural resources, significant habitat or eco -systems, including buffer zones; (D) Preservation of forests, beaches, coastal areas, natural beauty and agricultural lands; and (E) Protection of watershed lands to preserve water quality and water supply." In order to accomplish the purposes listed above, lands acquired through the preservation fund, must be maintained and improved. Significant financial and personnel resources are required to accomplish these tasks. B) Unlike the other Counties, Hawaii County has a separate PONC maintenance fund that is funded with .25% of real property tax revenue. Section 10-16(g) of the Charter extensively details permissible uses of this fiscal resource. Notably, this section prohibits use of these funds for new buildings, facilities, or infrastructure including roads, paths, ramps, etc. and for mitigation of Americans with Disabilities Act compliance issues for new buildings, facilities, or infrastructure. Prohibited uses for these moneys include construction of bathrooms, waterlines, parking, or even storage facilities for equipment used to maintain these properties by stewardship grantees. To the extent that such improvements are needed to effectuate the purpose of these land purchases, these restrictions hinder the progress of this effort. C) Insufficient fiscal and personnel resources make it difficult for the County and stewardship grantees to accomplish the purpose of the land purchases program. Recommendation: The ad hoc committee recommends that the Charter be amended to facilitate the maintenance and improvement of lands acquired with PONC funds -10- 5. Should sections 10-15 and 10-16 be revised to streamline and clarify its content? Finding: Hawai`i County's Charter establishes the County's executive, administrative, and legislative structure and organization. Language that goes beyond this framework is typically reserved for inclusion in the County Code or even administrative rules. Sections 10-15 and 10-16 should be revised to align their contents with the function and purpose of the Charter. Recommendation: One committee member proposed replacing sections 10 1.5 and 10.-16 with the following: "Section 10-15. Public Access, Open Space, and Natural Resources Preservation and Maintenance Funds. (a) In adopting each fiscal year's budget and capital program,: the council shall appropriate one percent of certified real property tax revenues, 0.75% of which shall be deposited into a fund known as the public access, open space, and natural resources preservation fund and the remaining 0,25% of which shall be deposited into a fund to be called the public access, open. space, and natural resources maintenance fund. The Council may by a two-thirds vote suspend this appropriation requirement Wen,._ (1) The combined balance of the preservation and maintenance funds exceeds 2% of the annual real property tax revenue of the fiscal year; or (2) The director of finance determines in writing that the suspension of this . appropriation is necessary to prevent a reduction in the:level of public services, (b) Moneys in the public access, open space, and natural resources preservation fund shall be utilized for purchasing or otherwise acquiring lands or property entitlements for land conservation purposes inHawai`i County. for: (1) Public outdoor recreation and education; (2) Access to beaches and mountains; (3) Preserving historic or culturally important land areas; (4) Protecting natural resources, significant habitats, or ecosystems, including buffer zones; (5) Preserving forests, beaches, coastal areas, 'areas of natural beauty, and agricultural lands; (6) Protecting watershed lands to preserve water quality and water supply; -ll- (7) Conserving land for the purpose of reducing erosion, floods, landslides, and runoff; and (8) Improving disabled and public access to, and enjoyment of, public land, open space, and recreational facilities (c) .Moneys in the public access, open space, and natural. resources maintenance fund shall be utilized to maintain and improve land or property entitlements for land conservation purposes in Hawaii County acquired pursuant to this section. (d) The moneys in each furid may: also be used for the payment of principal; interest, and premium, if any, due with respect to bonds issued for the purpose of this fund and for the payment of costs associated with the purchase, redemption or refunding of such bonds. (e)Any balance remaining in these funds at the end of the fiscal year shall: not lapse, but shall remain in the funds, accumulating from year to year (f) The council shall by ordinance estabhsh procedures forthe adi-rain stration and expenditure of the revenues in this fund -12-