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HomeMy WebLinkAbout12/01/2011 Regular Council MeetingCOUNCIL MEETING December 1, 2011 The Council Meeting of the Council of the County of Kauai was called to order by the Council Chair at the Council Chambers, 4396 Rice Street, Room 201, L11hu`e, Kauai, on Thursday, December 1, 2011 at 9:11 a.m., after which the following members answered the call of the roll: Honorable Tim Bynum Honorable Dickie Chang Honorable ICpuKai Kuali`i Honorable Nadine K. Nakamura Honorable JoAnn A. Yukimura Honorable Jay Furfaro Excused: Honorable Mel Rapozo APPROVAL OF AGENDA. Mr. Bynum moved for approval of the agenda as circulated, seconded by Mr. Chang, and unanimously carried. Chair Furfaro: I would like to share with you and for those that are here for the items on the Hawaii Legislative Package, we will refer to some dialog but since we have had four (4) hours and ten (10) minutes of testimony when it was in the Committee of the Whole, then it was referred to the IGR Committee, Mr. Kuali`i, we had another four and a half (4 %) hours of testimony on the Legislative Package. My intention is to only allow people who haven't spoken on those issues since they are consistent with the two (2) previous Committee Meetings. I will be passing out or may I ask the staff to pass out a summary of the public testimony on both November 16 and November 23, so you can reflect on what I'm sharing with you. We have had a total of seventy -eight (78) written correspondence but anybody who is willing or wanting to testify on those items as new testimony, you'll be given a chance today but we have had a lot of dialog on the fourteen (14) items in the one (1) legislative proposal, so I'm circulating some summaries. I would like to now go into the minutes and the summary of the vote. Mr. Watanabe: approval. Minutes of the following meetings for MINUTES of the following meetings of the Council: Council Meeting of September 21, 2011 Special Council Meeting of September 27, 2011 Council Meeting of October 5, 2011 Council Meeting of October 19, 2011 Special Council Meeting of November 7, 2011 Special Council Meeting of November 14, 2011 Special Council Meeting of November 21, 2011 Public Hearing of November 16, 2011 re: Bills Nos. 2420 and 2421 Ms. Yukimura moved to approve the Minutes as circulated, seconded by Mr. Chang, and unanimously carried. 2 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Before I go into the Consent Calendar, let me make note that I have been requested to have the farm worker housing bill heard at 1:30 today which I am willing to accept based on the fact in separate dialog with the County Attorney, I have had an opportunity to review some action taken back in 2006 particularly on some wetlands dealing on the North Shore that I would like to have the time also to submit previous action to the group. Is there anyone in the audience wanting to give testimony because I'm moving that to 1:30, you are allowed to do that at the consent calendar but obviously you can also come back at 1:30 on the Farm Worker Housing Bill. Going into the Consent Calendar, we have four (4) items on the Consent Calendar, plus anyone who wants to testify on any item now will be given the opportunity for three (3) minutes. CONSENT CALENDAR: C 2011 -313 Communication (10/25/2011) from the Housing Director, transmitting for Council information, the final copy of the County of Kaua`i's Consolidated Annual Performance and Evaluation Report (CAPER), reporting period July 1, 2010 through June 30, 2011: Mr. Kuali`i moved to receive C 2011 -313 for the record, seconded by Mr. Chang, and unanimously carried. C 2011 -314 Communication (11/10/2011) from the Chief, Building Division, transmitting for Council information, the Monthly Report on Building Permit Information for the Month of October 2011, which includes the following: 1) Building Permit Processing Report 2) Building Permit Estimated Value Summary 3) Building Permits Tracking Report 4) Building Permits Status Mr. Kuali`i moved to receive C 2011 -314 for the record, seconded by Mr. Chang, and unanimously carried. C 2011 -315 Communication (11/02/2011) from the Planning Director, transmitting for Council consideration, the Public Access, Open Space & Natural Resources Preservation Fund Commission's recommendation to amend Chapter 6, Article 14, Kauai County Code 1987, as amended, to improve the Commission's operational efficiencies and to bring the scope of the Commission's duties and responsibilities into alignment with the citizens of the County of Kauai: Mr. Kuali`i moved to receive C 2011 -315 for the record, seconded by Mr. Chang, and unanimously carried. C 2011 -316 Communication (11/22/2011) from the Council Chair, transmitting for Council consideration, a Resolution establishing the County of Kauai Reserve Fund and Reserve Fund Policy which was included as a provision within the Operating Budget Ordinance (No. B- 2011 -732) for Fiscal Year 2011 -2012: Mr. Kuali`i moved to receive C 2011 -316 for the record, seconded by Mr. Chang, and unanimously carried. Chair Furfaro: We'll go now to communications. Mr. Watanabe: First communication is C 2011 -307. 3 COUNCIL MEETING DECEMBER 1, 2011 COMMUNICATIONS: C 2011 -307 Request (11/09/2011) from the Office of the County Attorney for authorization to expend additional funds up to $10,000.00 to enable special counsel's continued representation in Kathleen M. Ah Quin vs. County of Kauai, Department of Transportation, et al., Civil No. CV08 -00507 JMS BMK, U.S. District Court, and related matters. Mr. Watanabe: Chair on this item we have an Executive Session scheduled for this item, it's ES -513 so perhaps we should move this to the end of the communications? Chair Furfaro: Repeat that number again. Mr. Watanabe: Executive Session ES -513. Chair Furfaro: Can I have a motion as such? Mr. Bynum moved to defer action on C 2011 -307 to the end of the agenda, seconded by Mr. Kuali`i, and unanimously carried. Mr. Watanabe: Next communication C 2011 -308. C 2011 -308 Communication (11/10/2011) from HSAC President Mel Rapozo, transmitting for Council approval for inclusion in the 2012 Hawaii State Association of Counties (HSAC) Legislative Package, proposals approved by its Executive Committee as follows: (3) Proposed Bill for an Act Relating to Food Labeling (Requires the labeling of genetically engineered food products; County of Maui Proposal) (9) Proposed Bill for an Act Relating to Collective Bargaining (Creates a new bargaining unit for Water Safety Officers employed by the State or Counties - City and County of Honolulu Proposal) (12) Proposed Resolution urging the United States Department of State, the Department of Homeland Security, and the United States Attorney General to ease Visa restrictions for the People's Republic of China (City and County of Honolulu proposal) Mr. Kuali`i moved to approve C 2011 -308, seconded by Mr. Bynum. Chair Furfaro: Thank you very much. Is there anyone in the audience that wants to give new testimony on this item that hasn't been submitted before on any of these items? Mr. Watanabe: We have one (1) registered speaker, Cindy Goldstein. There being no objections, the rules were suspended. 4 COUNCIL MEETING DECEMBER 1, 2011 CINDY GOLDSTEIN: Chair Furfaro, Vice Chair Yukimura and members of the Council. Thank you very much for the opportunity to give testimony, my name is Doctor Cindy Goldstein with Pioneer Hi -Bred. I know that we had extensive discussion on this topic already, so I will summarize testimony and then be happy to take any questions that you may have. I have studied up on the topic. If there are specific questions you have, I'll do my best to address them. Pioneer Hi -Bred is located here on Kauai with both a research operation in Waimea and current seed operation in Kekaha. We're talking today about the labeling of foods. In the U. S. we focus our labeling of foods based on the food and drug administration's requirements, and labels are meant to provide nutritional information for consumers and point out any potential health hazards. We've all seen the references to potential allergens in peanuts for instance in packaging. I have given example in the testimony that often times when we look at a label, we are looking at a label to gather information. We want to know that the apple juice we are buying is made from apples or is it in fact pear juice, sugar and other fruit flavorings. This is a science based assessment, we look at the health and safety of foods and USDA is tasked with the - oversight: I'd like to point out that FDA reviews and takes into consideration any new scientific information that would influence the policies, so they do revisit policies and their judgment on particular topics is revisited. The way that the biotech foods have been evaluated is based on a concept of substantial equivalents, so what is done is a chemical compositional analysis and they look at the chemical composition of vitamins, minerals, fatty acids, amino acids, a lot of individual chemical components, to compare the genetically engineered with its none genetically engineered counterpart. So that is how substantial equivalence is done; it's chemical compositional evaluation and when this has been done, evaluation shows biotech whole foods and foods with genetically engineered ingredients are substantially equivalent, and they have consistently been shown to be safe. I gave example of labeling that's based on a particular food product. Labeling is based on, not on the process, so not whether it's genetically engineered, not whether a salmon is grown in a farm or whether is fresh caught ocean salmon, we don't label on the process by which something is produced, we label based on the product itself. I have given example of oil. When oil is produced, the process of making corn oil or soy bean oil, in the process the DNA and the protein is removed. The protein is destroyed during heating, and during the processing you lose DNA and the protein. So if you were to take organic soil... Chair Furfaro: Excuse me, Cindy. That's your first three (3) minutes but you have an additional three (3) minutes. Ms. Goldstein: So if you were to compare those two (2) types of oils, you would not find DNA or protein in it, so you would not know if it came from an organic soy bean or a genetic engineered soy bean. You would have to in fact trace where it came from, and when a food manufacturer is making a particular food product, they're not just getting their soy beans from one (1) farm or one (1) source... you know one (1) month it's from one (1) lot, another month is another lot and the way that this could then play out is you have food products labeled this may contain a genetically engineered ingredient or this may be genetically modified. The factory may be putting various products through and to give themselves protection, they may just label and say this may contain. We already do have a way for consumers to identify foods that do not have genetically engineered material in them, organic foods are not allowed to have that content, and it's very easy to differentiate the organic foods and organic food ingredients because organic farmers COUNCIL MEETING DECEMBER 1, 2011 label if they have organic certification. Even if they don't have organic certification, they don't have to get organic certification, and they could still put this is GMO free on a label so that consumers know this. While I don't know what path labeling would take, what conclusion I come to when I think this through is if the majority of products on the shelf say this product may contain GMO ingredients, what we will find is that consumers that wish to avoid these products will still go back to buying organic and products that are labeled organic or GMO free because a large proportional package of processed foods would likely have a label that says does contain or may contain GMO products. Thank you for the opportunity to provide testimony and I'd answer questions if there's questions from today or from questions that were asked and you didn't have satisfactory answers to those. Chair Furfaro: Cindy again are you, you are one (1) of the people that submitted seventy -eight (78) written testimonies and you do know that I'm not required to read those? Ms. Goldstein: Sure. Chair Furfaro: But you summarized that... let me see if there's any questions from members. Mr. Bynum, you had your hand up. Mr. Bynum: Ms. Goldstein: Good morning. Good morning. Mr. Bynum: Thanks for being here. I heard your testimony that you don't object to food being labeled GMO free? Ms. Goldstein: A food manufacturer or a company that sells food can label their salmon as ocean caught or wild salmon, an individual at the Farmer's Market can put up a sign that says GMO free. I will say that I've looked into what FDA has suggested about labeling GMO free but there's nothing that would prevent or discourage at this time any manufacturer, food or a farm at Farmers Market to put a GMO free label. Mr. Bynum: So you don't object to that? Ms. Goldstein: I think consumers sometimes do want to know what a product is and for the GMO free, I don't believe it should be required but I don't believe it should be disallowed. Mr. Bynum: Are you aware of any efforts of the seed industry to disallow manufacturers from labeling their products GMO free? Ms. Goldstein: That's not a place for the seed industry, it's a place for the grocery manufacturers and the processors of the foods themselves to decide, and it's not something for another industry to decide. Mr. Bynum: Are you aware of any efforts of the seed industry to do that? Ms. Goldstein: Not specifically, no. 6 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: So you mentioned that... you know we all know what food labels look like, they have a whole bunch of ingredients right? Ms. Goldstein: Yeah. Mr. Bynum: And I think more and more consumers look at that and may be trying to avoid (inaudible) corn syrup or they may be trying to avoid a number of things... Ms. Goldstein: Mr. Bynum: trans... Trans -fats, these days. Trans -fats or... you know... consumer Ms. Goldstein: Sure and I read labels closely so I have a pretty good sense on what's on them. Mr. Bynum: So what's the harm if the label says may contain GMO or does contain... what's the harm? Ms. Goldstein: That the majority of products will be labeled as such and it will just be... the individuals that are interested in avoiding the foods are still going to seek foods that don't have that content because many of the foods do, it will just be an innocuous label and individuals that wish to avoid these foods are still going to be buying the organic foods because the processed foods and packaged foods are largely going to contain the label. The other consideration is that when we see something labeled and this is... I'm going back to references that FDA have put forward, that when an individual sees that, they wonder well is there some... is this a warning? Because we see a label that says for allergens this product may contain allergens as something that an individual that's concerned about health and safety of the food product would say as a warning for people that have an allergic reaction to peanuts. By putting that, you're questioning or suggesting to a consumer that it's a warning. The basis of the scientific evaluation show that the health and safety of these products have been well studied and the scientific evidence shows them to be safe. Mr. Bynum: You know I don't understand that argument at all because when I look at the ingredients label, some of the ingredients are flour, sugar, corn, peanuts... I mean they're food stuffs, so if in that list it said may contain GMO or do contain GMO; I don't see what the harm is. Ms. Goldstein: I think it's looking at whether we re- evaluate the way that we label foods according to process. For instance most of the pasta today, the wheat that is used in pasta was developed using mutagenesis. There was an error when a lot of mutagenesis was done in plant breeding, so then do we go back and where it says wheat, since we're going to label by process now, we say wheat or we say flour derived from (inaudible) wheat. Because if we're going to do that for these foods, there are other food products that in the plant breeding process we've used other methodologies, biotechnology and genetically engineering is a tool and a methodology to do plant breeding. So do we label wheat because the process involved was mutagenesis of the materials? COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: I think that the question in my mind is you know... harm is in the eye of the beholder. Currently I can see whether a product contains cane sugar or corn syrup. To some people sugar is sugar, they don't care. Other people, they really care about that. Ms. Goldstein: Yes and it's important. Mr. Bynum: And so they have an informed, an opportunity to make an informed choice. I think that's what this issue comes down to an opportunity to make an informed choice. And then I would like to ask one (1) more question? Ms. Goldstein: Sure. Mr. Bynum: In the testimony I heard from the industry I've heard repeatedly if you don't want GMOs, buy organic. Organic foods... in your experience, do organic foods have a cost premium? Ms. Goldstein: They have a cost premium and in looking at organic production, organic production can be more expensive because of hand labor for weeding because of losses due to insect damage or fungal damage and small size farms on the scales of those farms and the economy of those farms. Yes, organic foods tend to be more expensive and it goes back to the production practices that cause it to be more expensive often times, not always, but often times more expensive because of the actual process of farming. Mr. Bynum: And just coming from the perspective of consumer choice and consumer advocacy, I would love to go into the market and buy all organic but I can't afford to. I mean you can just go into a market that has just an organic produce section and look at those apples versus the non - organic apples and you know there's a very substantial... if I had time I would have looked up the research, a very substantial cost difference for organic. If foods were labeled, it would give consumers just another method by which to determine whether their foods contain processes or products that they are uncomfortable with and just for myself the argument that you can check out organic, a lot of people don't have that options because of economics. Ms. Goldstein: My sense on this and none of us really know how this will plan out, my sense of this is if foods are labeled, they're likely to say this product may contain and in the end is this really informing the consumer in a meaningful way because will you know which of those items listed in the ingredients was from an genetically engineered plants initially and if the label says may contain, then that is not informing a consumer to any great extent and if it doesn't label by individual ingredient, the consumer still doesn't have additional knowledge that helps them make a decision about nutritional healthy eating. Mr. Bynum: If I go into the store and I pick up five (5) boxes of spaghetti and I look and they all say may contain then maybe I'll go buy the organic higher price alternative. But if I pick up five (5) boxes of spaghetti and the third one doesn't have that, that's the one I'm going to choose if I want to avoid GMO food. Thanks for engaging in this dialog, to me this isn't about making a statement about the safety of GM foods, it's an attempt to allow consumers to make an informed choice. Thank you very much for your testimony. COUNCIL MEETING DECEMBER 1, 2011 Ms. Goldstein: Thank you. Chair Furfaro: Vice Chair Yukimura do you have any questions? Ms. Yukimura: I do. Chair Furfaro: You have the floor. Ms. Yukimura: Thank you Cindy. Your example of oil is a helpful one and what I'm drawing from it that it's going to pretty much end up in or result in most of the oils saying may contain GMO, is that... Ms. Goldstein: That would be my sense again we don't know where this would go but especially in the case of oil because you cannot take that oil and find DNA or protein in it unless you know the chain of custody essentially from the farmer to the processing place to make oil and the sale of the oil to a food manufacturer or processer. There would have to be almost a chain of custody of information behind it to know whether it came from a genetically engineered plant, an organic plant or a conventional plant. Ms. Yukimura: So that means... I mean how would you enforce this labeling requirement? Ms. Goldstein: That's an unknown. If a state entity requires labeling but FDA does not require as the Federal agency, it's unknown. Ms. Yukimura: Well I mean... okay if they require it, then how would you enforce it? Ms. Goldstein: There would have to be knowledge as the... Ms. Yukimura: The chain of custody? Ms. Goldstein: Yes along the way. And in Europe, I looked into animal feed is biotech; most of the animal feed in Europe especially the soy bean animal feed is biotech. And what they've done in other jurisdictions is determine a percent allowable biotech content because zero in biology is a very difficult number to achieve in anything to do with a biological organism. For instance even in Europe, the standard isn't zero, it's you know some percentage greater than zero that it has to be below. Part of this would be setting up what would the testing be, how would it be done, who would pay the cost of the testing, what would an allowable limit be, there'd be a number of mechanisms that would need to be in place to have a labeling system. Ms. Yukimura: Yeah I mean if it's hard to determine zero, I mean how do you even determine percentage? Ms. Goldstein: Well you can. You test for the presence of protein or you test for the presence of DNA to determine if there's any content from a genetically engineered food product or ingredient. So you can for instance take a taco chip or a corn flake, a few of them, grind them up and probably find some x COUNCIL MEETING DECEMBER 1, 2011 protein that would indicate it did come from a genetically engineered plant. But there's other food products where you would not be able to detect one way or another. Ms. Yukimura: Like oil? Ms. Goldstein: Like oil. Ms. Yukimura: And so in those cases you would need to require a chain of custody which if from batch to batch it changes... Ms. Goldstein: Yes. Ms. Yukimura: It will be a pretty large tracking requirement? Ms. Goldstein: Yes it would be for instance as I mentioned that I do check food labels quite often myself and if you start looking, you'll see products that say may contain canola or soy bean oil or may contain a blend of the oil. Especially with oils, often times they're not sourcing from a single source and it depends on the supply and obviously the cost of any particular oil in the market place at a particular time. And so for many products that contain oils that would be difficult. Ms. Yukimura: So what would that do to the cost of food? Ms. Goldstein: Again this is something that we don't know for sure but some foods might just not be available and somebody would absorb the cost, so a food manufacturer could decide just not to send food to a certain jurisdiction because they don't intend to label. We don't know who would absorb the burden of the cost of the tracking and the labeling but my guess as a consumer and this is just speculation and thinking through it, is that the consumer in the end is going to... the cost would be passed on to the consumer regardless of where in that chain the responsibility lays for developing the label, determining what the threshold would be and what the tracking system would be. Ms. Yukimura: So when you say some foods may not be available that's what you mean that some people... or some producers of food, manufacturers of food would not... would choose not to sell because they wouldn't label as required? Ms. Goldstein: I can't speak for other entities but when I sit down and just ponder through this that would be a possibility. Ms. Yukimura: Is that what you meant when you said some foods may not be available? Ms. Goldstein: Yes. Ms. Yukimura: Okay. When you say conventionally or up to now the purpose of labeling has been either nutritional content or food safety, what is the definition of nutritional content? 10 COUNCIL MEETING DECEMBER 1, 2011 Ms. Goldstein: When it lists the vitamins that are present, when it lists how much transfat, saturated fat, that's nutritional information for the consumer. Ms. Yukimura: words? So there's a definition for nutrients in other Ms. Goldstein: I would suspect there is. I've taken a look at some of the concept of substantial equivalence and what is actually tested and there are more than just vitamins and minerals. But when we look at a food label, it typically tells us what vitamins are in that food product and what percentage of the recommended daily allowance it contains. It also tells us something about fat and fiber, I don't know if fiber... I think of fiber in terms of healthy eating, I don't know that I think of it as nutritional but I think the concept of nutrition is looking at the components and knowing what a healthy diet consists of and how well does that food product give us what is considered a healthy diet. Ms. Yukimura: Well my line of questioning is because I'm wondering how if at all GMO fit into the framework of nutritional. Ms. Goldstein: It does not when you look at the way that FDA has traditionally evaluated foods. A process, if the genetic engineering process changed the nutritional value so let's say we were developing sorghum with higher amino acid content to make it more nutritional complete which is in fact something a project that Pioneer is working on with funding allow with Bill and Melinda Gates Foundation for Nations in Africa, if that product sorghum with higher vitamin "A" and higher amino acid content to make it more nutritionally complete or have a higher level of nutrients needed in the human diet, something like that would likely require labeling because you have increased the amount of vitamins and increased the amount of particular amino acids and that has changed the nutritional content. Ms. Yukimura: But that would be reflected in the standard nutritional line items of fat and so forth. Ms. Goldstein: Right now according to FDA if you actually alter the amount of a vitamin, let's say to enhance vitamin "A" you would be asked to label that because you have purposefully increased the... compared to the conventional line that you would compare it to, the closer genetic line that was not genetically engineered, it would have a distinctly different and higher vitamin "A" content and that would require labeling. Ms. Yukimura: different? A labeling that says the process was Ms. Goldstein: The labeling would indicate that the vitamin content was different. Ms. Yukimura: Content was greater... Ms. Goldstein: And again I have not seen anything that specifically describes what that label would look like, what the label would say. It's just that the understanding is that if you were to do something to enhance or 11 COUNCIL MEETING DECEMBER 1, 2011 increase the amount of a nutrient, it would be required that you indicate that this is different. Ms. Yukimura: But what if you decrease the nutritional content as I think happens often. Ms. Goldstein: Well we do substantially equivalence testing and in fact show for instance the papaya, the genetically engineered papaya, they looked at a number of components, vitamin "A', vitamin "C ", other vitamins and it's within the same range compared to the non - genetically engineered. So this is done now that the substantially equivalence is tested now and... Ms. Yukimura: So if it's less than what? Then what, they label it or they don't allow it to be called papaya? Ms. Goldstein: If somebody wanted to go to market with a product that was significantly different then they would have to assess whether they want to go to market with it and then I imagine there would be discussions with FDA about how you go about... what you would say for that product but there hasn't been a case where this has been done, so there's no precedence to know exactly what the path would be. Ms. Yukimura: Okay, thank you. Chair Furfaro: Other members, do you have questions for Cindy? Cindy thank you for your testimony. Ms. Goldstein: Great, thank you for the opportunity. Chair Furfaro: Ken, you submitted written testimony but did you want to speak? Come right up. We have no other signed up registered speakers? Okay. KEN TAYLOR: Chair, members of the Council, my name is Ken Taylor. First of all I am a little disturbed about some of the earlier testimony because first of all the manufacturer has the ability to make a decision on whether he buys a GMO product or not and so he can upfront make a decision as to how simple it is for him to label his product. Most of the seed industry from grower to final destination there's tracking numbers and activity that takes place and so even if you were buying a seed from a number of sources, you can track that seed. There were... a couple of years ago, some problems with beef and they were able to track the beef back to where the calves were born. I don't think this tracking process is that difficult, it's in place for almost everything and they do it for many reasons but we see recalls from food products often and they're able to track that stuff all the way back to where it comes from. If a product shows up with a too high of an insecticide in it, it can be tracked right back to the farm that produced the product. Tracking is really not an issue, I don't believe and it gets down to manufacturers making a decision as to what kinds of products... if I'm going to go out and buy a hundred tons of wheat to make pasta, I decide I don't want to have a GMO product, I certainly don't go out and buy GMO wheat and then try to figure out how I'm going to achieve my end product. I just think that this whole process is crazy and I think it's important that everybody when they go to the market, they have an opportunity to make a clear decision as to whether they want a GMO product or not 12 COUNCIL MEETING DECEMBER 1, 2011 and it has nothing to do with whether they're safe or not safe or anything like that. It's a matter of choice, it's like we know cigarettes are bad for you but I have a choice, I can go to the market and buy cigarettes or I can stay away from them, same with consumption of alcohol and so many other things that we take on a regular basis. Choices are a very important part of our life and I see this as no other situation and another choice, so thank you very much. Chair Furfaro: Questions for Ken? No questions of Ken. We have Danita Galvin. Danita just so you know, I made mention earlier and I know this is your opportunity to speak again to the full Council but we have received your written testimony, we're not required to read it, if you want to give us a new expanded testimony, go right ahead. DANITTA GALVIN: Thank you so much. Good morning and thank you so much for this opportunity because there's nothing like the power of a word in person, so I'm here. I'd like to start with and not to sound redundant but to me there's only one (1) issue here, the human rights issue. It's a human rights issue. Democracy is not always easy, not always practical, you know we're concerning ourselves with how it's going to be implemented that to me is irrelevant. At this point the Federal government has failed to protect the rights of people and what a great opportunity you have before you. I envy you. I wish I could be there because it is really a powerful message that you are sending. I'd like to pull something from article twenty -five (25) of the constitution; everyone has the right to the standard of living adequate to the health and wellbeing of himself and his family including food. Now this can be and it goes on but including food. If you will indulge me, my interpretation of this is not just sufficiency of food; it's what kinds of food will be adequate for the health and wellbeing of myself and my family. Now how can I make a decision on food if I'm not giving full disclosure? They have named these foods you know, they have been given a name BT corn, (inaudible) ready, alfalfa whatever... genetically engineered, there's a name for them. Why are they so reluctant to put it on? Okay, there are issues with how expensive it will be... none of those issues should be concerning us at this point. At this point it's really about the human right of knowing what it is, of seeing what the accurate full disclosure of something. And that's really basically it and anything else is relevant. Again I just want to say I'm here because I feel this is important, I am here in person because we have been deprived of this full disclosure for over a decade with all kinds of reasons why not and I say to you and I submit to you, that you should not concern yourselves with those. You have an opportunity to show that the State of Hawaii cares about what people think and what people... what rights people have. How it's going to be implemented, that will come. How it's going to be done, that will come because again democracy is seldom easy but democracy is really what made this Country great and why I'm living here. Chair Furfaro: That was your first three (3) minutes you have an additional three (3) minutes. I will extend it to you now. Ms. Galvin: Actually I think I've made my point. And again I just want to say I urge you to consider my words and hear my voice. Thank you. Chair Furfaro: Thank you. Ms. Yukimura: I have a question. 13 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: One moment, we have a question for you Ms. Galvin: Oh yes, I'm sorry. Ms. Yukimura: So Danita, your testimony is based on your assumption or belief that all GMO foods are dangerous? Ms. Galvin: No it is not. Ms. Yukimura: Okay. Ms. Galvin: Safety I think I said if I may expand... Ms. Yukimura: Yes. Ms. Galvin: Safety is not what I consider a relevant issue at this point. Only are these foods different. Ms. Yukimura: Well okay... so if it turns out that it does affect the cost of food and that for some people in certain income levels, it is a problem of access to food, don't you think it needs to be balanced with whether it's dangerous and which... or in somehow harmful versus you know the cost that might make food less accessible? Ms. Galvin: Well I suspect they are dangerous but I don't have... you know the independent studies have not come in. That's why I've not focused on that. Do I think and again I have to say if it's more expensive and I don't believe it's expensive but if it is more expensive, I still feel that it's a human rights issue. Ms. Yukimura: Well you know a democracy is difficult because the issues nowadays are so complex. Ms. Galvin: Sure. Ms. Yukimura: And that a lot of times when we make decisions, they create unintended consequences. Ms. Galvin: Okay. Ms. Yukimura: So we don't know what the labeling cost will require. From State to State if it's done that way but it is our responsibility as decision makers to try to understand that. Ms. Galvin: Okay. Ms. Yukimura: So we don't have unintended consequences such as the... I mean already food prices are a problem for some families, so you know it often is decision making is a balancing act. I'm just asking these questions to understand what your advocacy is... Ms. Galvin: Full disclosure. 14 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: Ms. Galvin: Ms. Yukimura: Ms. Galvin: Ms. Yukimura: Ms. Galvin: No matter what cost? Absolutely. Okay, I understand your position. Yes, full disclosure. Thank you. If I may add? Chair Furfaro: You need to address me if you want to expand? Ms. Galvin: Oh yes thank you. Chair Furfaro: And I will give you your additional three (3) minutes now so you can add narrative. Ms. Galvin: Sure. Chair Furfaro: That's fair and it's in our rules. Ms. Galvin: I think that a lot of times there is and I appreciate what Councilmember Yukimura has brought up however I feel that in democracy we cannot simply say this is better for you or this is cheaper for you. We know what we're doing, you don't need to know because it will cost too much, that again it allows many open doors with the idea that you're doing it for the common good. Ms. Yukimura: So, may I ask you then? Chair Furfaro: Excuse me Vice Chair, I would like you to continue anything you wanted to add and then I will allow questions again. Ms. Galvin: Okay. Chair Furfaro: Because it's your time and I have given you your other three (3) minutes. Ms. Galvin: Thank you. Chair Furfaro: Continue with your narrative. Ms. Galvin: Okay. So in other words when you start thinking about justifications for not giving full disclosure of what a food is giving it the name that gives it its true picture, then you're treading in very dangerous territory. For the good of the common man, for the good... you don't need to know all because it's too expensive. We are keeping your best interest in mind by not letting you know all. It is far too costly in business to allow the full truth to come out, I'm sorry I will have to insist that even though I understand your concern, we 15 COUNCIL MEETING DECEMBER 1, 2011 still must move forward and say the truth must be seen, full disclosure. Full disclosure of what it is that's on the shelves, period. Thank you. Chair Furfaro: Now I'm going to ask if members have any questions. Vice Chair Yukimura. Ms. Yukimura: Okay so if there are all these oils hard to detect whether they're GMO or not, therefore in order to comply with the rules people say may contain GMO even though they might not and those requirements raise the cost. So a family comes then not wanting to buy GMO products, so that they don't buy any of the oils that say may contain GMO and the organic oils are far too expensive, then what? Ms. Galvin: Well that would be... may I reply? Ms. Yukimura: Yes, that's a question. Ms. Galvin: That would be a right for the... for each person to decide "a" and "b" it is a reflection of what's already been done that's all wrong. That should never have been allowed. Ms. Yukimura: What should have never been allowed? Ms. Galvin: The industry... the genetically engineered industry to go ahead and put out their market... put out their products in the market without being very careful about labeling and... Ms. Yukimura: But what if in that particular product it's not dangerous? Ms. Galvin: Well you know you're talking about something very specific and in that particular point... you're making a choice. You're making a decision... Ms. Yukimura: No, no. I'm just talking about the different possible scenarios. Ms. Galvin: There's a possible scenario that that may be however the decision would be up to the family. They can decide medical cost later in case it turns out to be or they can decide no I will... I'm going to pay more for the organic oil, that's their decision. Ms. Yukimura: They may not be able to... Chair Furfaro: Hold on just a moment please. Ms. Galvin: Yes, yes. Chair Furfaro: Our rules, we've given you your six (6) minutes. Ms. Galvin: Thank you. 16 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: The Vice Chair can pose a question for you which doesn't allow you to do more than answer the question. Ms. Galvin: Right. Chair Furfaro: You cannot then go and expand into medical issues and... Ms. Galvin: I apologize. It's a very emotional issue for me. Chair Furfaro: I sense that but I just want to make sure she may pose you questions and you may answer that question. Ms. Galvin: Okay. I'm not sure that I answered that completely. Chair Furfaro: You still have the floor to answer that. Ms. Galvin: Okay. Ms. Yukimura: I think I have the answer. Ms. Galvin: Thank you very much. Chair Furfaro: Is there anyone else in the audience that wants to testify 308 item three (3)? Okay, seeing no one. Again for the members, I want to remind you that this is a single communication that has four (4) items on it and so I'm going to go to the next subcategory that is... is there anyone in the audience that wants to speak on 308 number nine (9) which deals with bargaining units for the Water Safety Department of the State and Counties? Seeing no one, I'm going to go to item twelve (12). Is there anyone wishes to speak here on the items referencing the Attorney General lifting some restriction Visa's for the People's Republic of China for a visitor Visa, is there anyone to talk on that? No? Okay. Very good. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: A reminder to those in the audience and those listening that this is a HSAC requirement from President Mel Rapozo to find which items would be included in our package that goes and meets the standards of all the Counties for inclusion of the State Legislation. On that particular note, members are there any discussion here? Councilmember Bynum. Mr. Bynum: I'm going to support this package, all three (3) items. I kind of gave some of my rationale and dialog with Cindy but I want to address very briefly this cost, if we label this, it's going to cost more. There have been lots of changes in labeling over the last few years and as consumers, they wanted to know what kind of fat they were having in their products. You know how many calories are in the product, all of that requires the manufacturer to some cost, to determine those and to place them on a label and so I don't think that has a real 17 COUNCIL MEETING DECEMBER 1, 2011 strong argument. This is an issue for me again about informed consumer choice and so I'm supporting this package. Thank you. Chair Furfaro: Okay, Vice Chair Yukimura, you had comments on the package? Ms. Yukimura: Yes Mr. Chair, I would like to request an Executive Session for information and consultation with attorney about a legal issue related to food labeling. Chair Furfaro: Do you see that as a future discussion item or it's something that you think we want to have discussion today before we vote? Ms. Yukimura: It's related to information on the decision that we are being called to make today. Chair Furfaro: Okay. Ms. Yukimura: And the item is already posted but it is and I think it falls within the Executive Session posting on page nine (9) which talks about where we can hold an Executive Session on an agenda item without any public notice if Executive Session was not anticipated in advance. Chair Furfaro: May I ask the County Attorney to come up please? Vice Chair Yukimura, I'm going to leave the floor with you so you can pose those questions to the County Attorney. There being no objections, the rules were suspended. Ms. Yukimura: Yes, can you introduce yourself for the record. JENNIFER S. WINN, DEPUTY COUNTY ATTORNEY: Deputy County Attorney, Jennifer Winn. Ms. Yukimura: Thank you. I guess my question is if we want to consult with you on a legal question regarding the issue of food labeling, would that be allowed under our conventional posting here? Ms. Winn: I believe it can Vice Chair under HRS 92 -7 subsection "a" if it's unanticipated meaning that you weren't planning on asking a legal question ahead of time, it would be warranted so long as it's about a current agenda item. Which I believe this is. Chair Furfaro: (inaudible) Any members have questions for the County Attorney's Office? No? Thank you very much Jennifer. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Vice Chair do you want to go into Executive Session? 18 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura moved to convene in Executive Session to discuss C 2011 -308 item (3), seconded by Mr. Bynum. Chair Furfaro: Discussion? Mr. Kuali`i. Mr. Kuali`i: Mr. Chair, I'm wondering if this is even necessary because all we're considering is the Legislative Proposal for the HSAC Package. We are not considering any ordinance for this County, so if the State which I assume we all know is true is the body that would make a statewide law for GMO labeling, if that was to be... is the appropriate body then all this body is doing through HSAC is making a recommendation that they consider it. So this body is not taking action to even pass a Resolution or an Ordinance at this time so I don't understand why... what legal opinion would tell us not to take that action which we're not taking, whether we should or should not take the action of this county which we're not doing, I don't believe. That's just my thoughts. Chair Furfaro: Thank you. Other members, is there other dialog? Ms. Yukimura: Yes Mr. Chair. Chair Furfaro: Go ahead. Ms. Yukimura: We're advocating the message of a law and in that... in taking a stand, we need to know the legal issues surrounding it and the more information we have as long as it doesn't... I mean this is like a regular part of data gathering or understanding what the issues are before we take a vote. So I think it's an important for full information, it's an important thing to do. Chair Furfaro: Is there anymore discussion here? If not, I'm going to call for the vote to go into Executive Session and again I want to make it a point that it's been my practice as the Chairman when we vote for Executive Session, we do it by a roll call. The motion to convene into Executive Session to discuss C 2011 -308, item three (3), was then put, and carried by the following vote: FOR EXECUTIVE SESSION: Bynum, Nakamura, Yukimura, Furfaro TOTAL — 4, AGAINST EXECUTIVE SESSION: Chang, Kuali`i TOTAL — 2, EXCUSED & NOT VOTING: Rapozo TOTAL — 1. Chair Furfaro: We have four (4) votes for Executive Session, unfortunately we need five (5) according to our rules, am I correct? Mr. Watanabe: Yes. Chair Furfaro: That is our rules and I guess we'll go back to item 308. Mr. Bynum. Mr. Bynum: I just want to say for the record, I'm surprised that the vote that just happened. If any member on this Council asked for an Executive Session on an item to make an informed choice and our County 19 COUNCIL MEETING DECEMBER 1, 2011 Attorney says it's not inappropriate... and that we're legally obligated, I would support that. Chair Furfaro: Thank you very much. Again as the Chairman there's four (4) of us that were in support of an Executive Session, we needed five (5) according to our rules, we will not be going into Executive Session. I will now ask the County Attorney... I'm sorry... I will now ask the County Clerk, I am going to ask for an individual vote on these items if they're included or not included into the Legislative Package for the County of Kauai and I would like to start with 308 communication item twelve (12) dealing with the Attorney General's issuing Visa. Excuse me for one (1) moment... The item was everything. Is that what you're saying? Mr. Watanabe: Yes sir. Chair Furfaro: Okay well then the item was everything, I'm sorry through the previous Committee agenda and through the previous Committee of the Whole which is governed, we voted individually but the motion was made to vote on the whole package. I need to recognize that piece. Let's go with the roll call then if there's no further discussion. Oh, we've got further discussion, Mr. Bynum. Mr. Bynum: Can I request a short recess? Chair Furfaro: Let's take a ten (10) minute caption break. There being no objections, the Council recessed at 10:13 a.m. The Council reconvened at 10:25 a.m., and proceeded as follows: Chair Furfaro: We're back from our brief recess, on that note I recognize Vice Chair Yukimura. Ms. Yukimura moved to reconsider the Council's vote to convene in Executive Session, seconded by Mr. Bynum. Chair Furfaro: motion has a right... Ms. Yukimura: Chair Furfaro: Ms. Yukimura: Chair Furfaro: Ms. Yukimura: Chair Furfaro: to go into Executive Session; we reconsider, in our rules a motion Okay. I would like to say that the prevailing The majority? The prevailing majority, okay... Oh... Let me finish my comments Vice Chair. Okay. I would appreciate that. We had a 4:2 vote need a super majority which is five (5) votes. To we just need a majority of those that voted with 20 COUNCIL MEETING DECEMBER 1, 2011 the prevailing... although the prevailing is questionable here, so I will ask the County Attorney to come up. May I have the County Attorney up? There being no objections, the rules were suspended Chair Furfaro: Two (2) questions for the County Attorney. ALFRED B. CASTILLO, COUNTY ATTORNEY: Good morning Council Chair. Chair Furfaro: My interpretation of our rules, it is a majority for a prevailing reconsideration. The second one is that I'm not absolutely sure Vice Chair Yukimura can make the motion because she was the maker of the original motion. Mr. Castillo: Okay first of all, good morning Council Chair, Councilmembers, Al Castillo, County Attorney. You do have your Council rules on this matter and I would direct your attention to rule number six (6) on motions, number six (6) subsection 'T' for reconsideration. Chair Furfaro: Okay before you go any further. Mr. Castillo: Yes. Chair Furfaro: For the purpose of making sure that we clearly communicate, I would like to wait until I have all the members at the table. Mr. Castillo: I will wait. Chair Furfaro: Thank you. We are waiting for... Mr. Morimoto, we are waiting for Vice Chair Yukimura so we can hear a definition from the County Attorney. I will so allow other discussion after that but let's get an interpretation that is again what I've said if the majority vote was four (4), our rules only say a majority for reconsideration but I don't if Council Vice Chair Yukimura could be qualified to make that motion. Two (2) questions. Mr. Castillo: It says here that when a motion has been made and carried in the affirmative or negative, only a member who voted with the majority may move and it does say at the same meeting. So that is what your rules state. Your rules do not state... well let me just say that is what is exactly what it states so according to this rule if you were to apply it, then she could make that motion. Chair Furfaro: Okay so her making the motion I hope there's all members that clear... that were fine with that and the other piece is, it is a simple majority in our rules. Mr. Castillo: Yes. Chair Furfaro: Mr. Kuali`i do you have a question for the County Attorney? 21 COUNCIL MEETING DECEMBER 1, 2011 Mr. Kuali`i: Mr. Chair it might say the majority but clearly in a democracy, it's about the prevailing side. In this case, it took five (5) votes for that to succeed, they only got four (4), so the two (2) votes is the prevailing side. Now the side that did not prevail, they can come and reconsider? It should be the side that prevailed to change their mind to reconsider. Chair Furfaro: Very appropriate question, thank you Councilmember. Mr. Castillo: It is an appropriate question and your Council rules are limited to what I can see right here so it's hard for me to opine otherwise. I can see the logic of what Councilmember Kuali`i is stating whether or not that logic is contrary to this rule, I cannot make... I don't make legal opinions on the fly. So that's to this extent, I'm just repeating to you what your rule for reconsideration basically states and the specific facts that I see them... that I saw before me. Chair Furfaro: Vice Chair Yukimura, you have a question for the County Attorney? Ms. Yukimura: If it were to be Councilmember Kuali`i's interpretation then someone who was in the negative vote could then move either way? Mr. Castillo: What I think... what I would like to do is because the opposite or the way that I'm looking at it and if you're looking at the prevailing party and if you were to adopt the prevailing party in this instant or the facts that I know them to be was Councilmember Kuali`i and Councilmember Chang then if the rule is the prevailing party should be the party that makes that determination then either Councilmember Kuali`i or Councilmember Chang would be allowed to make that motion for reconsideration. However all of that I'm saying is that we have your Council rules and if you want... if I am allowed time to look into parliamentary procedure as it relates to your Council rules then I might... then I would be able to report back to you what the legal opinion would be. Chair Furfaro: Vice Chair Yukimura then Mr. Bynum. Ms. Yukimura: I appreciate this discussion very much and when you think about the rationale of a reconsideration vote and how... because rules are set up that way based on certain reasons, I think Councilmember Kuali`i's position is correct because it means that someone may want to change the vote, that someone in the prevailing vote may want to change. I'm okay with... to be safe to have Councilmember Chang, if he's willing, make the motion to go into... oh to reconsider. Mr. Castillo: Yes but whether or not, I'm here trying to give you a legal opinion... Ms. Yukimura: Well. Mr. Castillo: ...on this and the question is that I have in my mind right now is... does parliamentary procedure conflict with the rules that have been promulgated by the Council and that question I still have that question 22 COUNCIL MEETING DECEMBER 1, 2011 and that question needs to be answered. You do have the Council rules and it's silent on your factual pattern. Your Council rules basically say when it's silent upon the factual pattern then you resort to Robert's Rules. I do not know exactly what Robert's Rules say regarding the factual pattern that's presented to me. And that's where I stand on this issue because I can see what the Council is right here. Ms. Yukimura: So... Chair Furfaro: Excuse me let me recognize you first Councilwoman and I want to make sure I understand... are you asking for a little more time? Mr. Castillo: Yes, I would need more time because what I'm being asked right now is to say that it is okay for Councilmember Chang to make the motion for reconsideration and the answer to that is, it's not stated here in your Council's rules whether or not it's contrary or similar to Robert's Rules, I cannot tell you right now. Chair Furfaro: Okay well then I'm going to suggest that we take a ten (10) minute recess. Mr. Castillo: Okay. Chair Furfaro: To give you some time. Before we do, Mr. Bynum it would be better to let them have an opportunity to have some discussion and come back. Mr. Bynum: May I ask one (1) question? Chair Furfaro: Yes but understand where I'm coming from. Mr. Bynum: I do. I find this amusing that a previous speaker talked about how democracy is not always easy and then we have this example because... so my question is... Council rules to me maybe need to be changed because I don't disagree with Councilmember Kuah'i but in our reading the majority was a four (4) votes and so... but if we allowed Councilmember Chang to make the motion if he chose to... could he get a seconded from anybody? So I just wanted to ask that question in case you needed to drop that into your recommendation. Mr. Castillo: Thank you that's a good question and hopefully we can come back in ten (10) minutes with answers. Chair Furfaro: And I want the interpretations, I clearly understand what our rules say, I understand when our rules are silent, we reflect on Robert's Rules of order. Let's take a break but each member here had an opportunity to pose the question for you starting with Mr. Kuali`i's question. Mr. Castillo: Thank you. There being no objections, the Council recessed at 10:36 a.m. The Council reconvened at 10:49 a.m., and proceeded as follows: 23 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: We're going to continue with the County Attorney getting some clarity as to our rules and at what point do our rules be interpreted silent and reference to Robert's Rules of Order, I think that's how we posed the last question to you. You have the floor Mr. Castillo. There being no objections, the rules were suspended. Mr. Castillo: Thank you. Do I have to say for the record again? Maybe I should, I see Councilmember Chang there... Al Castillo, County Attorney. Council Chair, Councilmembers thank you for the time in allowing us to research Robert's Rules and it is correct that in this case where the prevailing party would be Councilmember Kuali`i and Councilmember Chang and it would be either one of them, it would be appropriate for either one of them to make a motion for reconsideration and upon a motion being made, a second could be made from of the members. Chair Furfaro: Regardless of what side they vote? Mr. Castillo: Regardless whether or not they belong to the prevailing party. Chair Furfaro: Okay, thank you for that. Mr. Castillo: You're welcome. Chair Furfaro: Mr. Clerk, we're at a point where the previous motion to reconsider was inaccurate so do we need to in fact show anything in the record as such? Mr. Watanabe: It would be all part of the minutes of the proceedings. Chair Furfaro: So the minutes and the comments we got from the County Attorney would be sufficient? Mr. Watanabe: Correct. Chair Furfaro: For that being invalid, I'll open the questions. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Members, I'm looking for a motion from what was the prevailing side either Mr. Chang or Mr. Kuali`i and this is regarding going into Executive Session. Mr. Chang, you have the floor. Mr. Chang moved to convene in Executive Session to discuss C 2011 -308 item three (3), seconded by Mr. Kuali`i. Chair Furfaro: Any further discussion members? Mr. Chang. 24 COUNCIL MEETING DECEMBER 1, 2011 Mr. Chang: Thank you Chairman. First of all I totally agree with Councilmember Kuali`i because I believe that we've had a lot of discussion. We showed the island of Kauai and I believe the State that we had a seven (7) to zero (0), unanimous to move it on to Honolulu and I felt that we had enough discuss so I do feel that we had... we didn't need to go into Executive Session and I would like to commend KipuKai Kuali`i, my fellow Councilmember because I totally agree with him but I would also like to commend him for allowing me to make that motion and he in the spirit of unity and aloha seconded and you know when a Councilmember asks to go into Executive Session, out of consideration, I think that's what it's all about. Council Vice Chair Yukimura as you know I have a lot of admiration and respect and when you had asked at that particular point in time, I felt that my decision was made and I don't want to make like I changed or flip flop; however, I do out of respect know that there's something you may want to ask that's going to be relevant and very essential to this body. I wholeheartedly change my decision and support going into Executive Session. Thank you Chairman. Chair Furfaro: I want to make sure that we have your motion for reconsideration, we have a second from Mr. Kuali`i. I want to make sure we understand this is a motion only for the reconsideration, we get to the reconsideration, and I need a new motion for the Executive Session and a second as well. Vice Chair Yukimura did you have something? We're dealing with that reconsideration. Ms. Yukimura: Just to clarify that the motion was to reconsider the Council's vote, right? And I do want to express my appreciation to both Councilmembers Kuali`i and Chang for the courtesy to just clarify certain information that's relevant to this subject matter so that we can have as much information as we can before we take the final vote on the issue of labeling. Chair Furfaro: Mr. Kuali`i. Mr. Kuali`i: Thank you Mr. Chair. I just wanted to say that... Chair Furfaro: Excuse me; we've got a feedback Council Vice Chair Yukimura. Mr. Kuali`i: That my previous decision that we didn't need to go into Executive Session was that we do have our documentation and the opinion from the County Attorney that Vice Chair Yukimura asked for and so I did.. it was just two (2) pages, I read the opinion and I assumed that we were going to talk about this opinion and I didn't think that was very necessary because it's pretty straight forward and clear. But in understanding that a Councilmember may need the consideration to ask some other question that wasn't already asked, and isn't already in the opinion then of course the courtesy shall be granted and in which time to any Councilmember. I do believe and hope based on the opinion that we already have, that we can go into Executive Session and come back out fairly quickly and get on with our continued business because we have a long agenda today. Thank you Mr. Chair. 25 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Any further discussion? I'm going to ask for the vote on the motion to reconsider and seconded by Mr. Kuali`i and I wanted to do it by roll call please. The motion to reconsider the motion to convene in Executive Session to discuss C 2011 -308 item three (3), was then put, and carried by the following vote: FOR RECONSIDERATION: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST RECONSIDERATION: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Mr. Watanabe: Six (6) ayes. Chair Furfaro: Okay, now I'm looking for a motion from the group. Mr. Chang moved to convene in Executive Session to discuss C 2011 -308 item three (3), seconded by Mr. Bynum, and carried by the following vote: FOR EXECUTIVE SESSION: Bynum, Chang, Kuali`i, Nakamura, Yukimura, Furfaro TOTAL — 6, AGAINST EXECUTIVE SESSION: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL — 1. Mr. Watanabe: Six (6) ayes. Chair Furfaro: Thank you. We are going to break for an indefinite time to go into Executive Session. There being no objections, the meeting was in recess at 10:56 a.m. The Council reconvened at 11:16 a.m., and proceeded as follows: Chair Furfaro: We're back in session and what we've had, we've had a motion to reconsider the vote, after the motion to reconsider the vote, we've had a motion to go into Executive Session and having a vote pending that briefing and that is where we're at. Ricky, we are going to vote on the package item now but I want to remind the members that when we're voting on the package, we're voting on all three (3) items at the same time. I do want to share with honoring the individual vote request when this first came up in my Committee and then honoring it again in the IGR so I'm a little concerned that the same courtesy wasn't given to us as it came back to the full Council as being able to vote individually on those items. Ms. Yukimura: Mr. Chair? Chair Furfaro: I just wanted to make my statement. Ms. Yukimura: Yes... and I think you have the discretion, we've done in seriatim. 26 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: I don't want to discuss what discretion I had and so forth. Ms. Yukimura: Okay. Chair Furfaro: I just wanted to make it clear that we're voting on all three (3) items... Lifeguard contracts, Visa for China and this position for the State Legislature for GMO labeling, so any further discussion? None? Okay, we'll ask for a vote by roll call. The motion to approve C 2011 -308 was then put, and carried by the following vote: APPROVAL: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST APPROVAL: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Chair Furfaro: My vote was silent and it will go with the majority of the body. Mr. Watanabe: So noted. Six (6) ayes. Chair Furfaro: Thank you. We are going to go into the next item. Mr. Watanabe: The next item is C 2011 -309. C 2011 -309 Communication (11/10/2011) from HSAC President Mel Rapozo, transmitting for Council approval, Resolutions from the Hawaii State Association of Counties (HSAC), approved by its Executive Committee, to be considered by the State House and Senate during the 2012 Legislative Session as follows: (2) Resolution requesting that the Hawaii State Department of Health amend Hawaii Administrative Rules, Title 11, Chapter 62, §11- 62 -06, General Requirements, to establish up to a ten -year exemption period to connect to a public or private sewer system after installation of an individual . wastewater system (County of Hawaii proposal). Mr. Kuali`i moved to approve C 2011 -309, seconded by Ms. Yukimura. Chair Furfaro: Is there anyone in the audience that wishes to speak on this? If not, I'll call the meeting back to order. Members, is there any dialog here. I would like to let you know that this piece came over from the Big Island and quite frankly for myself, I'm not in support of giving grace up to ten (10) years to make the appropriate assessment for the proper health and wellness of a subdivision as it relates to designing and implementing a waste water system. I will not be supporting this. Any further discussion? If not, let's call for a roll call vote. The motion to approve C 2011 -309 was then put, and failed by the following vote: APPROVAL: Bynum, Kuali`i TOTAL — 2, 27 COUNCIL MEETING DECEMBER 1, 2011 AGAINST APPROVAL: EXCUSED & NOT VOTING: Mr. Watanabe: Chair Furfaro: Mr. Watanabe: Chang, Nakamura, Yukimura, Furfaro Rapozo Four (4) no's. TOTAL — 4, TOTAL —1. Thank you members. Next communication. C 2011 -317. C 2011 -317 Communication (11/03/2011) from the Fire Chief, requesting Council approval to accept the donation of three (3) All Terrain Vehicles (ATV) and three (3) Rescue Sleds valued at $27,146.66 from the Kauai Lifeguard Association: Mr. Kuali`i moved to approve C 2011 -317 with the appropriate thank -you letter to be sent, seconded Mr. Chang. Chair Furfaro: Any discussion members? If not, all those in favor... Mr. Chang: Mr. Chair? Chair Furfaro: Yes Mr. Chang, you have the floor. Mr. Chang: I wanted to thank the Kauai Lifeguard Association spearheaded by Mr. Andy Melamed and long time advocate for water safety Monty Downs and their staff for doing a tremendous fundraiser and to create awareness around the island for the residents as well as the visitors alike. They work very, very hard on this fundraising effort to help out our lifeguards to do their . work the best that they can, so I just wanted to make mention to the hardworking staff of our Kauai Lifeguard Association. Thank you very much. Chair Furfaro: Thank you. Any further discussion? The motion to approve C 2011 -317 with the appropriate thank -you letter to be sent was then put, and unanimously carried. Chair Furfaro: Next item Mr. Clerk. Mr. Watanabe: C 2011 -318. C 2011 -318 Communication (11/04/2011) from the Director of Parks & Recreation, requesting Council approval to accept a donation of one hundred dollars ($100.00) from Sam Lee to fund activities at the Kekaha Neighborhood Center: Mr. Kuali`i moved to approve C 2011 -318 with the appropriate thank -you letter to be sent, seconded Ms. Yukimura. Chair Furfaro: Any discussion members? Go ahead Vice Chair. Ms. Yukimura: I'm guessing this is to teach bonsai to the seniors and I just want to say what a wonderful thing that is and how Mr. Lee, I wanted to acknowledge him for giving so generously of his time. 28 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Thank you for that recognition. Ms. Yukimura: And money. The motion to approve C 2011 -318 with the appropriate thank -you letter to be sent was then put, and unanimously carried. Chair Furfaro: Thank you very much. Next communication please. Mr. Watanabe: C 2011 -319. C 2011 -319 Communication (11/08/2011) from Theodore Daligdig, III, Civil Defense Manager, requesting Council approval to receive and expend $600,000.00 from the U.S. Department of Homeland Security, via State Civil Defense, for the following programs: • FY 2011 State Homeland Security Program: Continue to enhance the capability of State and local units of government to prevent, deter, respond to and recover from threats and incidents of terrorism involving the use of chemical, biological, radiological, nuclear and explosive weapons and cyber attacks, in addition to day -to -day all - hazards scenarios ($575,075.00). • FY 2011 Citizen Corps Program: Continue to provide support to Citizen Corps Councils with planning, outreach, and management of Citizen Corps programs and activities such as Community Emergency Response Teams and Neighborhood Watch ($24,925.00). Mr. Kuali`i moved to approve C 2011 -319, seconded by Ms. Yukimura. Chair Furfaro: Any discussion? Is there anyone in the audience that wishes to speak on these Civil Defense items? Seeing no one, Vice Chair Yukimura. Ms. Yukimura: I just wanted to point out that part of this funding is going toward the CERTs or the Community Emergency Response Teams who are volunteers that train and are available before and after emergencies and they are really important and extension of government ability to respond to natural disasters and other emergencies. I'm glad that our Civil Defense Department is working with these citizens in developing this part of our program. Chair Furfaro: Anymore discussion? If not... Oh, Councilwoman Nakamura. Ms. Nakamura: I have asked several questions in writing and I don't need to get it answered here but some of the questions I had was you know will there be future funding in this direction anticipated for Kauai and what are the uses of these funds. What are the outcomes of this large pot of funds for Kauai? What do we really want to get out of this, close to six hundred thousand dollars worth of Federal funding and I hope to get that in writing. Chair Furfaro: Get the answer in writing or submit the question in writing? 29 COUNCIL MEETING DECEMBER 1, 2011 Ms. Nakamura: Both. Chair Furfaro: Both. Okay. Thank you very much. Any further discussion? The motion to approve C 2011 -319 was then put, and unanimously carried. Chair Furfaro: Next item Mr. Clerk. Mr. Watanabe: C 2011 -320. C 2011 -320 Communication (11/18/2011) from the Mayor, requesting Council approval to accept a donation of a piece of artwork valued at $3,000.00 by Mr. Blaise Domino, a renowned artist of historical maps and a Hawaii County resident: Mr. Kuali`i moved to approve C 2011 -320 with the appropriate thank -you letter to be sent, seconded by Ms. Yukimura. Chair Furfaro: Any discussion? I do want to say of course a very big mahalo for the art that is being contributed. The motion to approve C 2011 -320 with the appropriate thank -you letter to be sent was then put, and unanimously carried. Chair Furfaro: Next item. Mr. Watanabe: C 2011 -321. C 2011 -321 Communication (11/21/2011) from the Prosecuting Attorney, requesting Council approval to apply, receive and expend federal funds for the Cold Case Unit in the amount of $96,500.00, and approval to indemnify the State of Hawaii, Department of the Attorney General. Grant funds will be utilized to create a Cold Case unit with the Kauai Police Department. The program will commence on January 1, 2012 to December 31, 2012: Mr. Kuali`i moved to approve C 2011 -321, seconded by Ms. Yukimura. Chair Furfaro: Any discussion members? Council Vice Chair Yukimura. Ms. Yukimura: It's my understanding that these grant moneys are going to be used to follow up on unsolved cases that are considerably old in age. I know that our community has been concerned about several of these cases, so I'm very happy to see this particular program being activated and I hope it can resolve in some justice being done and some resolution for families of victims. Chair Furfaro: Thank you. Mr. Bynum. Mr. Bynum: When this was last on the agenda the Police Department and the Prosecutor were here and I... because it's a new program, I thought we were going to have some dialog about it. KPD is not here, staff? 30 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: No. I understand that the work plan is considered confidential through discussions I had with the Police Department, so that's the only answer I have for you right now. Mr. Bynum: Okay, thank you. Chair Furfaro: Mr. Kuali`i. Mr. Kuali`i: Thank you Mr. Chair. I just have a quick comment, so according to the correspondence it's approval to apply, so they're going after a grant to do this program and I just think in the back of our minds we should think about if this is something that we think need to be done, we leaving it dependent on whether they get the grant or not. So on the next budget cycle if indeed this is something this Council think is important, we should also look at funding. Chair Furfaro: Thank you. Any further discussion? The motion to approve C 2011 -321 was then put, and unanimously carried. Chair Furfaro: Next item. Mr. Watanabe: Next item is C 2011 -322. C 2011 -322 Communication (11/25/2011) from the Intergovernmental Relations (IGR) Committee Chair, requesting Council approval for the following Proposals approved by the IGR Committee on November 23, 2011, relating to the listing of Hawaii County of Mayors (HCOM) carry over bills that were taken in seriatim to be included in the 2012 Kauai County Legislative Package. 1. A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM (ERS Segregation of Teachers — HB589 and SB 1104) 2. A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT SYSTEM (County Representation on ERS Board of Trustees — HB 174,HD 1 and SB 1029) 3. A BILL FOR AN ACT RELATING TO THE EMPLOYER - UNION HEALTH BENEFITS TRUST FUND (County Representation on EUTF Board of Trustees — HB175,HD2 and SB 1030) Chair Furfaro: Mr. Kuali`i if I may pass this on to you to go through since I was traveling at three o'clock to the Big Island and it came out of IGR, so may I give the floor to you. Mr. Kuali`i: Thank you Mr. Chair so it indeed was taken seriatim at the IGR Committee and these three (3) of the five (5) from the HCOM package was approved. I think we can have a motion for the entire package. Ms. Yukimura moved to approve C 2011 -322, seconded by Mr. Bynum, and unanimously carried. 31 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: CLAIMS: We'll go to claims. C 2011 -323 Communication (11/17/2011) from the Interim County Clerk, transmitting a claim filed against the County of Kauai by Christy Michioka for damage to her vehicle, pursuant to Section 23.06, Charter of the County of Kauai: Mr. Kuali`i moved to refer C 2011 -323 to the County Attorney's Office for disposition and/or report back to the Council, seconded by Ms. Yukimura, and unanimously carried. C 2011 -324 Communication (11/17/2011) from the Interim County Clerk, transmitting a claim filed against the County of Kauai by Michael G. Sheehan for damages to his property, pursuant to Section 23.06, Charter of the County of Kauai: Mr. Kuali`i moved to refer C 2011 -324 to the County Attorney's Office for disposition and/or report back to the Council, seconded by Ms. Yukimura, and unanimously carried. Chair Furfaro: Mr. Watanabe: your Committee on Planning. COMMITTEE REPORTS: Planning Committee: Where do you take us next Mr. Clerk? Chair let's do Committee Reports. From A report (No. CR -PL 2011 -06) submitted by the Planning Committee, recommending that the following be received for the record: "PL 2011 -03 Communication (10/13/2011) from Committee Chair Nakamura, requesting agenda time for Garrett Johnson, IT Analyst, to present and discuss the use of The County of Kauai Geographic Information System (GIS) within the Planning Department," Mr. Chang moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. A report (No. CR -PL 2011 -07) submitted by the Planning Committee, recommending that the following be approved on second and final reading: "Bill No. 2420 - A BILL FOR AN ORDINANCE TO AMEND CHAPTER 8, KAUAI COUNTY CODE 1987, RELATING TO THE COMPREHENSIVE ZONING ORDINANCE (Clarifying farm worker housing permitting requirements)," Mr. Chang moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. (See later for Bill No. 2420) 32 COUNCIL MEETING DECEMBER 1, 2011 A report (No. CR -PL 2011 -08) submitted by the Planning Committee, recommending that the following be approved on second and final reading: "Bill No. 2421 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 8, ARTICLE 24 OF THE KAUAI COUNTY CODE 1987, AS AMENDED, FOR THE IMPOSITION OF CIVIL FINE AUTHORITY FOR THE COUNTY OF KAUAI PLANNING DEPARTMENT," Mr. Chang moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. (See later for Bill No. 2421) Economic Development & Renewable Energy Strategies Committee: Chair Furfaro: Next item Mr. Clerk. Mr. Watanabe: From your Committee on Economic Development and Renewable Energy Strategies, Committee Report EDR 2011 -08. A report (No. CR -EDR 2011 -08) submitted by the Economic Development & Renewable Energy Strategies Committee, recommending that the following be approved as amended on second and final reading: "Bill No. 2415, Draft 1 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 5A, KAUXI COUNTY CODE 1987, AS AMENDED, RELATING TO EXEMPTIONS FOR COMMERCIAL ALTERNATIVE ENERGY FACILITIES," Ms. Yukimura moved for approval of the report, seconded by Mr. Chang. (See later for bill No. 2415, Draft 1) Chair Furfaro: Any discussion? Anyone in the audience wish to speak on this? Is that you, Mr. Taylor? Yes, come right up. KEN TAYLOR: Chair, members of the Council, my name is Ken Taylor. When this Bill first came to the floor, we were told that we needed to do this in order to encourage alternative energy and yet we've heard testimony from some individuals that wanted to move forward with solar projects that this was going to be a financial hindrance not a benefit. I'm really concerned that after looking at the solar projects that are out there that this is being done for one (1) individual parcel, one (1) individual project and I'm really concerned about that. I realize that there's more to it than just solar but I still don't believe because most all of these projects will end up on agricultural land, I think that if the Ag zoning stays in place and the current property tax stays in place, there's plenty of benefits for anybody wanting to move forward with a project from Federal benefits to State benefits. There's absolutely no reason that we need to change the zoning if we agree that these facilities are compatible on Ag land, then that's where it should be and stay. I just feel that this is just absolutely ridiculous to put all this extra monkey business in place and I really feel that it is monkey business. As I said earlier, I really believe that it's being done for one (1) particular property owner and I don't think that that's good law making and I think there's ethical moral issues that come from with the Administration. I believe this has started at Administration and came over here, if I'm wrong correct me but it doesn't read well 33 COUNCIL MEETING DECEMBER 1, 2011 and I think it's very, very sad for you folks to participate in ethical moral issue that is not right. I just hope that you would put a stop to this at this point in time and there's... I mean tell me in the community... Chair Furfaro: That's your three (3) minutes; you have your second three (3) minutes. Mr. Taylor: Just tell me in the community why this is so important? We know that we have all of the solar projects in the pipeline now that need to... what KIUC will accept and it (inaudible) projects... we have in the future some possibility of some new hydro projects, they're all going to be on either State land or private lands that are zoned agriculture now or open space and there's no reason to move forward with this. Thank you. Chair Furfaro: Mr. Bynum has a question for you. Mr. Bynum: I'd like to... I heard you testify in opposition to this Bill and I meant to have some one on one dialog with you but you posed a question now for the community that I would like to answer to the best of my ability. I actually think that this bill which I'm hoping will pass today is a great example of democracy at work. You may not be aware of it but there are some critical needs and I actually was surprised at your testimony because you've been so strong or advocate of alternative energy proposals, you know, educating us about peek oil issues over the years that you've been participating in our democracy and so... you know democracy worked really well. The Administration put a Bill up here specific concerns came up that came from different elements of the alternative energy proposal and the Council worked through those with some amendments because some of the concerns that the solar folks came up with was that without this law, the Tax Department is taking actions that we think is detrimental to our business and what do you do in the democracy when the Administrative part is creating issues, you bring it to the Legislative body and see if there's a way to work that out. This bill is not a solar bill it's for all alternative energy. It provides an important incentive primarily by exempting the plant or the improvements that are made. For solar, some of them chose to move forward without this and we've been able to clarify and give an option in the law that meets their needs better than what was happening without there being a law. For other types of energy like hydro or biomass, without this exemption, those projects will not happen on Kauai. This was a good initiative from the Administration in my opinion, it was overdue because it ended up getting filtered through these individual things but this Council worked out amendments that in the long run, you don't see a room full of these folks because we were able to address those issues. I would love to talk with you more about this in the future but I understand your concern and I think we need to share some more information with you to understand that this is critical to move us forward with alternative energy provisions on Kauai. Chair Furfaro: Anymore questions for Ken Taylor? Ken, thank you very much. We obviously need to approve this particular renewable energy strategy that was submitted from the Committee and obviously I have made my comments to try to get a better understanding on the overall strategic plan for energy. The motion to approve CR -EDR 2011 -08 was then put, and unanimously carried. 34 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Next item please. Mr. Watanabe: From your Committee on Public Safety & Environmental Services, Committee Report PSE- 2011 -11. Public Safety & Environmental Services Committee: A report (No. CR -PSE 2011 -11) submitted by the Public Safety & Environmental Services Committee, recommending that the following be approved as amended on second and final reading: "Bill No. 2419 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 15A OF THE KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO THE KAUAI COUNTY FIRE CODE," Ms. Yukimura moved for approval of the report, seconded by Mr. Chang, and unanimously carried. (See later for Bill No. 2419) Chair Furfaro: Next Committee. Mr. Watanabe: Intergovernmental Relations Committee. Intergovernmental Relations Committee: A report (No. CR -IGR 2011 -03) submitted by the Intergovernmental Relations Committee, reporting that the motion to approve the following for inclusion in the 2012 Kauai County Legislative Package, failed: "IGR 2011 -04 Communication (11/17/2011) from Council Vice Chair Yukimura, requesting agenda time regarding a Proposed Bill For An Act Relating To Gallonage Tax on Liquor (amends Chapter 244D, Section 244D- 4) for consideration and inclusion in the 2012 Kauai County Legislative Package," Mr. Kuali`i moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. A report (No. CR -IGR 2011 -04) submitted by the Intergovernmental Relations Committee, recommending that item (3) be approved, item (5) be received for the record, item (9) be approved, and (12) be approved for inclusion in the 2012 HSAC Legislative Package: "C 2011 -308 C 2011 -308 Communication (11/10/2011) from HSAC President Mel Rapozo, transmitting for Council approval for inclusion in the 2012 Hawaii State Association of Counties (HSAC) Legislative Package, proposals approved by its Executive Committee as follows: (3) Proposed Bill for an Act Relating to Food Labeling (Requires the labeling of genetically engineered food products; County of Maui Proposal) 35 COUNCIL MEETING DECEMBER 1, 2011 (5) Proposed Bill for an Act Relating to Gallonage Tax on Liquor (Amends Chapter 244D, Section 244D -4, Hawaii Revised Statutes, relating to increasing the gallonage tax on liquor; County of Hawaii Proposal) (9) Proposed Bill for an Act Relating to Collective Bargaining (Creates a new bargaining unit for Water Safety Officers employed by the State or Counties - City and County of Honolulu Proposal) (12) Proposed Resolution urging the United States Department of State, the Department of Homeland Security, and the United States Attorney General to ease Visa restrictions for the People's Republic of China (City and County of Honolulu proposal)," Mr. Kuali`i moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. A report (No. CR -IGR 2011 -05) submitted by the Intergovernmental Relations Committee, recommending that item (2) be received for the record; item (3) be approved; and items (4) and (5) be approved for inclusion in the 2012 Kauai County Legislative Package, and reporting that item No. 1 failed to be approved. "IGR 2011 -03 Communication (11/15/2011) from the Managing Director, transmitting for Council information, a listing of HCOM (Hawai`i County of Mayors) Carryover Bills as follows: 1) Appointment of County Liquor Administrators (HB587, HD2 and SB1102) Authorizes each County's liquor commission to appoint and remove their respective liquor administrator, unless otherwise prescribed by their respective county charter. 2) Appointment of County Personnel Directors (HB588 and SB1103) Authorizes the Counties to appoint their respective personnel director pursuant to their respective charter. 3) ERS Segregation of Teachers (HB589 and SB1104) Segregates teachers from all other employees for determination of employer normal cost, accrued liability contributions, and annual contributions by the State and Counties. 36 COUNCIL MEETING DECEMBER 1, 2011 4) County Representation on ERS Board of Trustees (HB174, HD1 and SB 1029) Increases the number on the ERS board of trustees from 8 to 10; Establishes County representation on the ERS board of directors. and 5) Representation on EUTF Board of Trustees (HB175, HD2 and SB 1030) Requires one of the members of the EUTF Board of Trustees to be appointed by agreement of the Mayors of the four Counties and approved by HSAC; Permits the Governor to fill the vacancy should it not be filled within sixty days," Mr. Kuali`i moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. A report (No. CR -IGR 2011 -06) submitted by the Intergovernmental Relations Committee, recommending that the following be approved for inclusion in the 2012 HSAC Legislative Package: "C 2011 -309 Communication (11/10/2011) from HSAC President Mel Rapozo, transmitting for Council approval, Resolutions from the Hawaii State Association of Counties (HSAC), approved by its Executive Committee, to be considered by the State House and Senate during the 2012 Legislative Session as follows: (2) Resolution requesting that the Hawaii State Department of Health amend Hawaii Administrative Rules, Title 11, Chapter 62, §11- 62 -06, General Requirements, to establish up to a ten -year exemption period to connect to a public or private sewer system after installation of an individual wastewater system (County of Hawaii proposal)," Mr. Kuali`i moved for approval of the report, seconded by Ms. Yukimura, and unanimously carried. Chair Furfaro: Next item. Mr. Watanabe: Committee Report from your Committee on Finance, Parks & Recreation, Public Works Programs, CR -FPP 2011 -15. 37 COUNCIL MEETING DECEMBER-1, 2011 Finance /Parks & Recreation/Public Works Progjams Committee: A report (No. CR -FPP 2011 -15) submitted by Finance /Parks & Recreation/Public Works Programs Committee, recommending that the following be received for the record: "FPP 2011 -07 Communication (9/30/2011) from Committee Chair Bynum, requesting the presence of Larry Dill, County Engineer, to provide: (1) An update on the County's FY 2011 -2012 CIP projects; (2) Discuss the effectiveness of the Project Initiation Document (PID's) system; and (3) Provide an overview of how CIP projects are currently being "tracked and managed," Mr. Kuali`i moved for approval of the report, seconded by Mr. Chang, and unanimously carried. Chair Furfaro: Any further discussion? Mr. Bynun. Mr. Bynum: You know these Committee Reports are on our agenda every week, they rarely generate any changes and these were items that I thought in the future might appear on the consent calendar to save time. Today we actually did have some testimony which would have been accommodated under the consent calendar, so I just wanted to make that comment. Ricky? Chair Furfaro: Any further commentary? Resolutions now Mr. Watanabe: Yes Chair. Resolution 2011 -77. RESOLUTION: Resolution 2011 -77, RESOLUTION ESTABLISHING THE COUNTY OF KAUAI RESERVE FUND AND RESERVE FUND POLICY: Mr. Bynum moved to approve Resolution 2011 -77, seconded by Mr. Chang. Chair Furfaro: Mr. Bynum: available to discuss this? Chair Furfaro: Mr. Bynum: Chair Furfaro: scheduled meeting at 11:30? Any discussion? Yes. Mr. Chair, is the Finance Department Well we can call for them. Okay. I have an amendment. (inaudible) in responded they have some Mr. Bynum: Actually I just got handed a memo if I had' two (2) minutes, we can proceed if you... Chair Furfaro: Oh, I thought you were requesting their presence here. You have the floor. 38 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: that was just given to me. Chair Furfaro: I need two (2) minutes to read this memo Let's take a five (5) minute recess. There being no objections, the Council recessed at 11:43 a.m. The Council reconvened at 11:54 a.m., and proceeded as follows: Chair Furfaro: We're back from our ten (10) minute break and I had recognized Mr. Bynum but before we get too far down the channel, I'd like to go up to the podium and make a presentation to you folks and then we can have dialog after that. How's that sound? Sounds good? Okay. Again on this piece, I just wanted to say that I introduced this Resolution not for it to be more than some guidelines and parameters on the financial picture as it relates to a reserve account. I think many of you know that six (6) of my years on the Council, I was the Finance Chair and certainly during that period I often wanted to find a new way to recognize our reserves rather than this term of surplus and that we should have with the general accounting funds association, we should in fact have a little bit more transparency for the public as to what do we have in the way of a reserve during these very challenging economic times. You know the global economic picture is one that from almost month to month, year to year we see different influences coming over the global economy I guess I would say, especially we see in the Federal and on the State. Before I make this presentation, I would in fact like to turn over the Chairmanship to Vice Chair Yukimura so that I can start my presentation. Chair Furfaro, the presiding officer, relinquished Chairmanship to Ms. Yukimura. Chair Furfaro: Chairwoman, the way I'd like to start is first to have my Resolution read so that you folks can see that it is consistently reflective of the proviso we put in last year's budget and the proviso I put in the year before but we still haven't come out with a basic Resolution. Ms. Yukimura: Yes. Chair Furfaro: On that note, I ask for you to have that read. Ms. Yukimura: Thank you Chair. I certainly appreciate this follow up that you're doing. I think we're moving in the right direction and I'm really glad to see we're moving toward implementation. With that I'd like to ask the Clerk to read the Resolution. EDDIE TOPENIO, DEPUTY COUNTY CLERK: This is a Resolution establishing the County of Kauai reserve fund and reserve fund policy. WHEREAS, the County of Kauai has determined that it is in its best interest to establish a clear financial policy of maintaining a targeted unrestricted fund balance in the General Fund in the range of 20 -25% of the previous year's actual operating general fund expenditures, encumbrances and general fund transfers to other funds, as identified in the most recent Comprehensive Annual Financial Report (CAFR); and 39 COUNCIL MEETING DECEMBER 1, 2011 WHEREAS, it has been determined that the County of Kauai should establish a Reserve Policy and create a Reserve Fund; and WHEREAS, the Reserve Fund Policy has been established based on industry best practices and recommendations set forth by the Government Finance Officers of America; and WHEREAS, the County of Kauai needs to retain sufficient funds for County operations; and WHEREAS, the second largest revenue source to the County of Kauai, the transient accommodation tax (TAT) is controlled by the State of Hawaii and not the County of Kauai; and WHEREAS, the County will need to fiscally buffer impacts of revenue reductions within the County, such as real property taxes and miscellaneous other taxes and fees; and WHEREAS, the County has experienced economic volatility as a result of local, state, national and world economic events and natural disasters and must sustain adequate levels of services through these periods; and WHEREAS, the County has and will need to continue to mitigate State or Federal Government budgetary actions and unfunded mandates that affect County revenues and expenditures; and WHEREAS, the County has experienced multiple years of revenue reductions attributable to declining real property values; and WHEREAS, the County has experienced two significant weather events in the last thirty (30) years that had a significant impact on the County budget and delivery of services and needs to be able to absorb initial emergency and disaster related costs; and WHEREAS, the County's economic base is not as large or as diversified as other city or county governments; and WHEREAS, the County will need to be able to absorb liability settlements and deductable costs; now, therefore, BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF KAUAI, STATE OF HAWAII, that the County of Kauai establish this Reserve Policy and create a Reserve Fund. BE IT FURTHER RESOLVED, that the Reserve Fund is intended to be used for non - recurring costs and is based on the following estimates and apportioned categories: Operations: Cash Flow/Working Capital 50% Economic Fluctuations: Budgetary Stabilization 25% Significant /Extreme Events: Initial Disaster Response 15% Risk Management: Non - Insured Losses 10% 40 COUNCIL MEETING DECEMBER 1, 2011 BE IT FURTHER RESOLVED, that the utilization of the Reserve Fund should be made via ordinance and for the specific purposes listed above. BE IT FURTHER RESOLVED, that the Reserve Fund should only be used to provide a short -term solution to maintaining necessary services until revenue growth and/or expenditure reductions are instituted to balance the budget and normalize cash flow. BE IT FURTHER RESOLVED, that in the event that funds from the Reserve Fund are utilized, the County Council and County Administration shall timely propose and approve a financial plan to replenish the Reserve Fund to prescribed policy levels. Depending on the circumstances, strategies to replenish reserves could include accessing budget surpluses, reducing expenditures and adoption of revenue enhancement measures. Revenue measures may include but is not limited to: long and short -term financing; adjusting real property tax rates; fuel taxes; vehicle weight taxes; and various other established fees for services. Effort should be made to restore necessary funds to required policy levels within one (1) year. If one -third (1/3) or more of the Reserve Fund is utilized, a longer termed plan to replenish the reserves may be considered. However, the replenishment of the Reserve Fund should not exceed three (3) years. BE IT FINALLY RESOLVED, that a copy of this Resolution be forwarded to Mayor Bernard P. Carvalho, Jr., and Wallace Rezentes, Jr., Director of Finance. Ms. Yukimura: Thank you Mr. Clerk. Chair Furfaro: Thank you. Ms. Yukimura: With that, Chair Furfaro do you want to proceed? Chair Furfaro: Yes. Thank you very much. So again what I'm presenting to you, there's a couple items that the narrative was reflected in the Resolution. We are at a point I think with some very challenging situations I'm going to say, I'm understanding now as I'm following the Federal issues back in Washington. We could be looking in 2012, 13 maybe... Federal Housing programs being cut by as much as fifteen percent (15 %). We need to be... stay the course we for housing at the present time. We have a transfer there dealing with our normal repair and maintenance of our roads and you see a transfer out up there about sixteen... a million six of which a million four is the third year of road activities that are earmarked for a normal repair and maintenance and I hope in January to have Mr. Larry Dill back to give us a little more exposure on our road plan as we get into the spring and summer. But more importantly I've taken a hundred and eighty -five million that is off to your right as we see it on the financial sheet for the County breaking down the various departments. I then take that same a hundred and eighty -five in operating line items and I break it down a little bit more detail rather than have this term with the fifty -three thousand... fifty -three million as the surplus, twenty -five million of that is actually caught up in the reserve account. Which year to year need to be replenished but we need to establish that account as a reasonable percentage and I believe that reasonable percentage there represents about twenty -two and a half percent of which the Administration has agreed with us that that number should be somewhere between twenty and twenty -five percent of the general fund amount. More importantly as I pointed out in housing and 41 COUNCIL MEETING DECEMBER 1, 2011 roads, other programs that we currently get grant money from including some of our old staffing positions, if we want to keep a level that we currently have, we need to have it pretty well thought out reserve policy. Now I learned yesterday that we're hoping to have a Special Meeting on the 15th to review the CAFR but we are somewhat handicapped as we go forward for the first five months of the year because we're still waiting for the month to month reconciliation of the operating accounts which we haven't seen yet. But I want to put something in place that is not perfect, that sets the parameters that we discussed in previous budget sessions as we get close to the next Legislative session. We've gone from fifteen point two million in TAT tax down to thirteen million and everything right now we see, we need to be very, very cautious with the State's financial challenges going into the next year. Especially focused on things like land, water, as we look for alternative sources, expanding agriculture... getting our economy back in motion on jobs, you know we took a very proactive position with not following in line with the other Counties on the five percent cut, we felt that was extremely important for us to be consistent with the income levels of our people. At the same time through planning, we are getting ready to go into the General Plan update, the one (1) mission is maintaining our rural character as we work into the IAL and at the same time provide moneys like for water on facility expansion and upgrades. So we really need to have this reserve set aside in a policy statement at this point which we're introducing in this Resolution versus what could be as I said in the narrative, eventually covering more detail in an ordinance. I would think that that would be very appropriate for us to be thinking about, actually having an ordinance on the reserve. I'm not looking at this being the final parameters or guidelines, I'm just looking for... we're coming to the end of the year, let's have a very transparent picture of what we do have to maintain our current level of services, items in the General Plan and certainly our facility operations. Now, I call this a budget reconciliation, don't mix it up, this is not a balance sheet. This is just about cash accounts in the budget. A balance sheet would take in to consideration our level of assets but we have some money set aside for Kapaia Bridge, we have some money set aside for road repair and maintenance as I mentioned. My biggest concern is that without the reserve and some of the things that are being red flagged in the Federal Government level include some of the positions we have for staffing, housing issues that might see a shrinkage in money coming our way, and we need to have a strategy that at least over a three (3) year period, we have a reserve that we can tap until we are able to build it later out of tax pieces. So that's the Resolution, it kind of fulfill things that we put in the proviso for the last two (2) years and I don't think it's the final piece, I think it's just a good follow through on a policy statement that we made at budget time. That makes up my presentation that supports the Resolution. Ms. Yukimura: Thank you. Are there questions of the Chair? Councilmember Chang. Mr. Chang: I don't actually have a question for the Chair but do we have a copy of the Resolution? Ms. Yukimura: It is attached to your agenda. Chair Furfaro: I will be passing out this summary to you folks... that are not in the package but I will be getting that to you soon so you'll have it. I think it's consistent with the email that was shared with Mr. Bynum in 42 COUNCIL MEETING DECEMBER 1, 2011 Finance, you know they said between twenty and twenty -five percent, what you see there is actually twenty -two and a half percent so it's right in the middle. Ms. Yukimura: Is it possible to maybe get copies right now? Chair Furfaro: Yes, I have that. I'll get copies made right now. Ms. Yukimura: Councilmember Nakamura has a question. Ms. Nakamura: Thank you Council Chair, I think this lays it out clearly. I had one (1) or two (2) questions. One (1) had to do with the section that talks about what these funds would be used for and the percentage breakdown. Because it's a reserve, is it... I guess the question was, do we have to include those percentages, is it necessary? Chair Furfaro: Well I think for us to have some general guidelines of how that money would be immediately tapped for an emergency for example, you know when we went through those big rains March of 2007 I guess it was, there was even an understanding that any federal money, support money that we would get from the State or the Federal Government may have taken some time to get to us, so we earmark a percentage that a Council can work directly with the Mayor. Knowing that there is some money available like an emergency response, that's how it's been broken down in the past but they can all be revisited through an ordinance type event. Ms. Nakamura: What happens if we need more money for example, if we have a natural disaster and yet we have included fifteen percent to be used for a natural disaster, does this then limits us? Chair Furfaro: No. It's saying that we have this earmarked reserve before we get any FEMA response or any other money, we have money to work with. Ms. Nakamura: So you could use up to the twenty -five million or whatever is in there? Chair Furfaro: Yes because it's earmarked in the policy as a reserve specifically for a quick emergency reaction. Ms. Nakamura: What would be an example? One of the criteria is economic fluctuations budgetary stabilization, what would be an example of that? Chair Furfaro: I think a very good example of that would probably be something related to... let's say we had a fuel crisis and all of a sudden we had a huge drop off of visitors count and our hotels found themselves laying people off that perhaps we could look at some eighty -nine day activities that would at least put people back in some kind of emergency situation. Off the cuff, that's one of the things that I'm thinking of that we earmark that money for. Ms. Nakamura: Okay. 43 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: You know fuel crisis, some of us remember in the seventies (70) when you had an odd and even gas use based on your license plate so... something like that Councilwoman. Ms. Nakamura: Okay and then the plan would be to... when funds are tapped from the reserve fund that it be replenished, that you come up with a plan to replenish? Chair Furfaro: Yes. Ms. Nakamura: Within one (1) to three (3) years? Chair Furfaro: (inaudible) you'd need to come up with a budget plan to replace it especially if you use say something more than thirty -three percent of the earmark. So thirty -three percent of the twenty -two with Waianae math is... so we spend about seven million of that reserve, we need to start thinking how we're going to replenish it. Ms. Nakamura: Okay and that can be done over a multiyear period? Chair Furfaro: Over a multi period of budget processes and filing for other grants to replenish the fund. Ms. Nakamura: Okay, thank you very much. Chair Furfaro: Okay. Ms. Yukimura: Other questions of the Chair? If not... oh yes Councilmember Kuali`i. Mr. Kuali`i: Aloha and mahalo, thank you Mr. Chair for I think the narrative on this especially is really good but my question is in that Councilmember Nakamura was talking about and I had the same questions actually but to go one step forward, these percentage breakdowns they come from some kind of standard? Chair Furfaro: Very good question. I studied three (3) municipalities' policies on reserve fund. The one (1) that I wasn't too impressed with came from municipality in Southern California but this one (1) is reflective of is the City of Denver. I can make that available to you so... you know there was discussion through their City Council as it relates to some challenge that they had in airport issues, transportation issues for the City and so forth, emergency responses to snow storms, things of that nature so it's pretty well lined out. I had an opportunity to review three (3) municipalities with our Audit Department and the one of Denver Colorado is the one we modeled ourselves after. Mr. Kuali`i: The other part is when she asked you gave an example of the economic fluctuations budgetary stabilization and the largest one is the operation cash flow slash working capital. What's the obvious example of that? 44 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Well here's one of the examples I think is important... we are coming up on the IAL lands and one of the things to make agriculture grow in our community is the restoration of all the (inaudible) and irrigation systems that have deteriorated. If Economic Development came up with an investment plan for us to try and manage irrigation systems for Ag lands better, we have some money on the side that can be used for that. That would be one of the examples, I would have more detail as we get closer to finalizing the important Ag lands but without managing the water systems, you know we have some great support from the Kauai Watershed Alliance and so forth but there's going to be a time that we're going to have to stand up and invest if we wanted to see that as a long term economic benefit. Mr. Kuali`i: So at fifty percent this is the largest chunk of the reserve. I would imagine then there's the largest different uses, would this amount of money come into play if the County's revenues forecasting was so off and we had so much less money and now we're looking at furloughs again... I mean in a sense it's kind of like a rainy day fund or reserve money available to potentially avoid furloughs? Chair Furfaro: I would say it could be used for those but obviously anything in the reserve fund requires Council approval. Mr. Kuali`i: Thank you. I'm happy to support this Resolution; I'm looking forward to working on the ordinance too. Thank you so much for the work. Chair Furfaro: Again I just want to have a template, other things can be done in the Finance Committee but I thought... I didn't want to get to the end of another year without at least having some framework that shows transparency for the public. Ms. Yukimura: Thank you Chair. Any other questions of Chair Furfaro. If not, I guess... I'm I supposed to handle this until the end of the issue? Chair Furfaro: I think till the end of the issue, we give you the floor. Ms. Yukimura: Okay so then. Chair Furfaro: My testimony is finished, I can return back. Ms. Yukimura: We have a motion pending to approve and I think Councilmember Bynum has an amendment, so please Councilmember Bynum. Mr. Bynum: I just wanted to start by thanking the Council Chair for bringing this to the agenda as it says in that... you know this is a recommendation that started from the Government Finance Officers of the America in 2002 and updated in 2009 encouraging communities to set these policies outlining the parameters and the Chair's proposal follows those parameters and recommendations to the letter. I want to read that recommendation because it's related to the amendment that I'm going to circulate. The recommendation says 45 COUNCIL MEETING DECEMBER 1, 2011 Government Finance Officers Association recommends that government establish a formal policy on the level of unrestricted fund balance that should be maintained in the General Fund. Such guidelines should be set by the appropriate policy body and should provide both the temple framework and specific plans for increasing or decreasing the level of restricted fund balance if it's inconsistent with the policy. As I said the Chair's Resolution follows those guidelines in terms of the earlier dialog, if this was an ordinance, I would be concerned about the guidelines and the specific percentages that we were talking about but it is not an ordinance, it's a guideline. Having those in there, I think is useful because we're not tied to them so if we had a natural disaster and we needed to spend more than that guideline, there's nothing that would preclude us from doing that. My Resolution addresses the other side of this. The Resolution talks about what do we do if there's a decrease. Many communities are dealing with that right now, they have tapped into their fifty percent thing here because they've had decreased revenues, they've cut services but they don't want to cut services further doing the economic downturn or you know have to increase taxes and so they dip into their reserve fund with the intention that when the economy returns and revenues rebound that they will be able to make up that... so it's very much a rainy day fund in terms of general, that fifty percent thing. The Resolution that I'm introducing has an additional be it further resolved and I'd like to read it... be it further resolved, that in the event that the unrestricted fund balance exceeds 30% of the previous year's actual operating general fund expenditures, encumbrances, and general fund transfers to other funds, as identified in the most recent CAFR, the County of Kauai shall expeditiously take actions to reduce the Reserve Fund balance to the 20 -25% levels as specified earlier by following the priorities below, number one (1) tax refund, number two (2) debt reduction, and number three (3) targeted capital improvement projects CIP for community economic development or CIP that improve County service. And so a reserve fund, the GFOA has recommended that there would be a policy when the fund falls too low what you do and that there'd be a policy for when the fund goes too high. This amendment is an attempt to follow that guideline fully by having a policy about what we do when the fund exceeds even five percent above the height of the target or thirty percent. I also thought it was also important that we were clear with one another in our CAFR what that baseline figure is and that was the memo we received just before the break and I was in agreement with the Finance Department. I wanted to make sure that my looking at the CAFR that the Finance Department agrees with it and we both were interpreting it the same. I'd by open to any questions and then I think this is important because we currently, our reserve currently exceed the recommendation substantially. Ms. Yukimura: So do you want to move this amendment? Mr. Bynum moved to amend Resolution No. 2011 -77, as shown in the Floor Amendment which is attached hereto as Attachment 1, seconded by Mr. Chang. Ms. Yukimura: Councilmember Bynum has put forth a proposed amendment, are there questions or comments? Chair Furfaro. Chair Furfaro: I understand fully what Mr. Bynum's intent is here and obviously I'm just following up on the nine (9) years of being on the Council where we said we're going to have a policy. I have no objections to this 46 COUNCIL MEETING DECEMBER 1, 2011 amendment but I also want to say that I think we are really close to seeing the new CAFR. Mr. Bynum: Today, hopefully. Chair Furfaro: Which should be today depending if all the work is done. This is probably fairly reasonable and we should have the Resolution in place by the time we start studying the CAFR. Ms. Yukimura: Okay. I know Councilmember Bynum, you mentioned a report or memo that we received, I don't know if anybody has gotten copies of it. Chair Furfaro: I think you're the only one that got a copy. Ms. Yukimura: So can we make that available? Mr. Bynum: I'm sorry... you know this is the CAFR from last year and these terms are all very specific to the CAFR and I just wanted to... the Resolution identifies what the baseline figure that we calculate the reserve. I just wanted to make sure that Finance agreed with my reading of the CAFR of what that baseline figure is and we did agree and so hopefully we'll pass that out. I didn't want to say this is the baseline figure if I was misinterpreting it so, I didn't think I was and I appreciate the confirmation from... Ms. Yukimura: Finance. Mr. Bynum: Finance. Ms. Yukimura: Councilmember Nakamura, you have a question? Ms. Nakamura: Yes. This is regarding the amendment. I wanted to find out in what case would the reserve fund exceed thirty percent if the guideline is for it to twenty to be twenty -five percent, set at that level. Mr. Bynum: If the fund balance exceeds thirty percent of the general fund expenditures plus encumbrances and transfers out... then you'd be in excess and we calculate that every year at our CAFR. Our reserve balance is reported in the CAFR each year. Ms. Nakamura: But at the time that we are working on the budget, when we're deciding how much to put in the reserve fund, wouldn't we have the CAFR information from the previous year? Mr. Bynum: Yes. Ms. Nakamura: So we would then decide, we would look at the General Fund expenditure line item and then calculate twenty to twenty -five percent of that amount and that's the amount that would be in the budget line item? Mr. Bynum: That's correct. 47 COUNCIL MEETING DECEMBER 1, 2011 Ms. Nakamura: So at what time... are you saying during, throughout the year we would be checking to see if there are fluctuations? Mr. Bynum: That's a great question... let's say during the course of the year we fall below, and then we would come below the twenty -five percent. So if twenty -five percent is our target and we fell below twenty -five percent, we only had like... I believe the Big Island right now is like ten percent, we would as a body say hey we've depleted some of our fund... are we in a position this year where we can take measures either cutting expenditures or increasing revenues to start building that fund up. On the converse side, if we come into budget and we say hey we have a excess in this fund, our fund balance is much higher than the twenty -five percent we've agreed on, then we would say how and what measures are we going to take to bring the fund as the GFOA recommends to bring it within the... Ms. Yukimura: I think we have some terminology issues and I think the Chair wants to get involved in the conversation. Councilmember Nakamura do you mind if we get Chair Furfaro involved? Chair Furfaro: The critical path on this would be while we get a draft of the CAFR in December of the year, we get a final report mid - December before we break... so we get the CAFR at the end of the year first in a draft form which should be due today and then a final document on the fifteenth. The reason we wait for the final document is... you know we have to roll the Water Department into our financial picture and this is one of my arguments and I want to share it again, we should be using the same audit firm to do both audits so that the work is coordinated, then as you suggested we start to do our wishful thinking in February in advance of the budget submitted by March. But the Administration will have a clear picture of where the CAFR is as far as any surplus that might be able to roll in, for example our operating budget general fund hundred and seventeen million dollars, thirty percent of that is when we get to a point that we see that we have more than thirty -four million dollars as the reserve then that triggers some other things in the... for us to ask some questions. What you got to be careful of is in that period from December fifteenth to March fifteenth, you have no real understanding of what the Administration would transfer to some of these sub accounts for projects that are going on. We have a hundred and eighty -seven CIP projects going on right now, only eighty -one of them are funded by bond money. The balance of a hundred and three or hundred and six, I'm sorry... are actually transfers from the General Fund to Water and so forth but that gives us that window to look and that's when the red flag should go up from the Administration. So there's a reasonable sequence that you know we can follow. Ms. Yukimura: I know we're getting close to a lunch break... it seems to me that this process is more a mid - budget year process, is it not? When we get the CAFR information which is about December? Isn't that right? Chair Furfaro: Well yeah... you should look at it more like an inventory control; it's a FIFO, first in, first out. We're going to get our cash balance from the year end which starts our new year, so that's our picture you should have. 48 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: So actually you're talking... in Councilmember Bynum's amendment, it may be more that you're talking about when the fund balance exceeds thirty percent. Chair Furfaro: Correct. Ms. Yukimura: Rather than the reserve fund. Mr. Bynum: (inaudible) Ms. Yukimura: Your questions were leading to that, in the amendment proposed by Councilmember Bynum in the first line where it says in the event the reserve fund exceeds thirty percent. I think what we're talking about is in the event that the fund balance exceeds thirty percent that and you were honing in on that contradiction so to speak. So you know in order that we do a timely lunch break, do you mind if we break right now and maybe even use... do you want to pose your question... Mr. Kuali`i: I can ask my question after lunch. Ms. Yukimura: After lunch, that's okay? Chair Furfaro: I only have one (1) comment on that, I think after we see the CAFR, we might want to refine this a little bit for the upcoming ordinance versus to try to change some of the picture now before we see the CAFR in two (2) weeks, so that's my only comment. Ms. Yukimura: Well you know a lunch break will give us some time to digest this discussion and I think it's been a good one. Hopefully one doesn't interfere with the other so if everybody's okay, we'll recess this meeting and come back to this... oh, we're coming back to the farm worker housing and then we'll resume this after the farm worker housing issue which I hope won't take too long. There being no objections, the Council recessed at 12:33 p.m. The Council reconvened at 1:43 p.m., and proceeded as follows: Chair Furfaro: Aloha everyone and welcome back to our session for today's Council Meeting. I believe I have made an announcement that at 1:30, I wanted to treat the agenda item that really dealt with the second reading bill for the farm worker housing bill so I'd like to shift gears and go to that particular item. Can the Clerk read the item? Mr. Watanabe: BILLS FOR SECOND READING: Bill for second reading Bill No. 2420. Bill No. 2420 - A BILL FOR AN ORDINANCE TO AMEND CHAPTER 8, KAUAI COUNTY CODE 1987, RELATING TO THE COMPREHENSIVE ZONING ORDINANCE (Clarifying farm worker housing permitting requirements): Mr. Kuali`i moved to approve Bill No. 2420 on second and final reading, and that it be transmitted to the Mayor for his approval, seconded by Ms. Yukimura. 49 COUNCIL MEETING DECEMBER 1, 2011 There being no objections, the rules were suspended. Chair Furfaro: Does anyone in the audience that would like to testify? Do we have a list of anybody signed up? Mr. Watanabe: None. Chair Furfaro: Do we have any written testimony? Mr. Watanabe: No written testimony. Chair Furfaro: Okay this is the last call for any additional testimony. If not, I'm going to call the meeting back to order. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: We'll take some narrative from the introducer of the amendments, Vice Chair Yukimura. Ms. Yukimura: Thank you Chair. At our last meeting there were some issues that were raised in a Public Works memo and Planning Department has responded with a memo back to us, I'd like to call your attention to that memo, it's dated November 30. Mr. Hull, Kaaina Hull is on his way over here to answer any questions we might have. Chair Furfaro: Okay I just wanted to clarify; this is the response in my meeting with the Planning Department. Ms. Yukimura: Okay. Chair Furfaro: Okay, got it. Ms. Yukimura: Yes and I guess you did address the very issue that had been raised in the meeting? Chair Furfaro: Ms. Yukimura: second paragraph... actually... Chair Furfaro: to the back page. Yes. So I think the main explanation is in the It's carried over in the third paragraph over Ms. Yukimura: Actually we should make this available to the members of the public as well please. Mainly it says that the issues will be addressed at the level of the use permit. Chair Furfaro: Yes I think it's very clear to me that the questions that were posed will be addressed at the use permit level and in paragraph two (2) they also indicate that... you know they have similar concerns on the CPR subdivision process but also implied to me, like on the Big Island, going 50 COUNCIL MEETING DECEMBER 1, 2011 forward we could do legislation that subject future CPRs to some subdivisions regulations. Ms. Yukimura: Yes... I wish Mr. Hull was here but I think the other item that was mentioned to me by Ian Jung is that the farm worker housing has a different status from a dwelling unit. The farm worker housing is thought of or should be thought of as primarily an accessory use to a farm and so it's not an outright as of.. standalone right as a dwelling unit but in fact is a privilege through a use permit that is very restricted. I think that addresses that issue and we can wait until... I think Mr. Hull is on his way. The other issue was whether in fact we had required Ag dedication be done as of the date of the passage of the original farm worker housing ordinance and that is the case on page two (2) in section 8 -7.9 "c" as applied to CPR units. It did come to our attention that it doesn't... the Ag dedication date does not apply to lots of record and actually I have an amendment to just make the requirements uniform. I think Mr. Morimoto is coming forth with that. Chair Furfaro: So your amendment is being worked on right now? Ms. Yukimura: Yeah. Chair Furfaro: Okay. Ms. Yukimura: That covered the issues that were raised in Committee. Are there any questions of me? Chair Furfaro: Go right ahead. Ms. Nakamura: This is a written document that I received that was submitted after our Committee Meeting and I think some of the Councilmembers may have received it. This is the one from Makaala Kaaumoana. Ms. Yukimura: I haven't seen it. Ms. Nakamura: Okay... this is regarding asking us to provide an analysis of potential impact of pending farm worker housing in the agricultural lands in Hanalei Valley. Chair Furfaro: I actually have something to share with all of you folks on that so... Ms. Nakamura: Thank you. Chair Furfaro: May I take the floor from you? I'm going to pass out to you folks something that addresses the Kaaumoana questions about the wetlands in particular in Hanalei. I think what I'm going to share with you, you may be somewhat privy to because we shared time on the Council on this workshop that I had and I think it was 2006 maybe December, Mr. Bynum had just come on the Council so he may be aware of it as well. I'm going to pass out to you folks the entire package on the background dealing with the value of the taro lands in Hanalei. The fact that it is a flood zone that fact of the matter is there raises a number of other questions for those lands about handling particular issues with 51 COUNCIL MEETING DECEMBER 1, 2011 wastewater and so forth. After talking with our attorneys, I'm going to bring everybody up to date on these parcels that deal with the Valley. You're going to have minutes, copies of those minutes, summaries from the three (3) conferences that were held. Joanne Ventura, Laurie Ho, all participated in the facilitating of these meetings. The historic overview of the Valley and the culture value of those wetlands with testimony and pieces associated with them but according to the County Attorney's Office, I'm going to need to actually introduce a separate piece of legislation that for Waipa, Hanalei and the three (3) major landowners there that farm worker housing in these aquatic lands not be included in this scope of the farm worker housing bill. I cannot make an amendment to this bill because this bill is dealing with CPRs and the foundation of farm worker housing where this is dealing with our position on wetlands, so that is my intention but it's pretty complete and addresses many of the concerns that were raised by Makaala. It actually got a public hearing in 2006 here at the Council, so I made copies for all of you that I think addresses Makaala's concerns, if you can pass that down. I have one (1) copy for the Planning Department, if anybody wants notes from this in the past that in fact they can get an OIP question to me. That is my plan to issue something that exempts the red line areas that and I think you might have been on the Council when we did this... Mr. Bynum: I recall this. Chair Furfaro: It was your first year... I hope that answers Makaala's questions. Ms. Nakamura: Can I say something? Chair Furfaro: Yes. Ms. Nakamura: Makaala's concerns had to do with impacts on the watershed and the pollutants that would impact the taro lands there, wetlands. So I think this is a good path to try to pursue. thank veu_ Chair Furfaro: You're welcome. Vice Chair Yukimura. Ms. Yukimura: I could have sworn that we had in this bill a statement that all requirements and laws, all other requirements and laws needed to be met and therefore if the wastewater treatment laws are not being met, they would be prohibited but I can't find that provision right now. Chair Furfaro: amendment. Well sounds like you could have a second Ms. Yukimura: Yeah I mean that's important as well. I think also the use permit would... process would cover that but I can't... that was a very clear line in our law. Chair Furfaro: Shall we take a recess while these amendments are being worked on? Ms. Yukimura: Well we have the Planning Department here so perhaps we can just complete the issue with respect to Public Works? 52 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Okay, that's fine. May I suspend the rules and ask the Planning Director and our Planner who's been working on this for maybe two (2) years now. Ms. Yukimura: Four (4). Chair Furfaro: Four (4). There being no objections, the rules were suspended. Chair Furfaro: Did you get your copy of the series of issues regarding wetlands? Good you have, thank you. MICHAEL DAHILIG, PLANNING DIRECTOR: Good afternoon Council Chair and members of the Council, Mike Dahilig, Director of Planning with Kaaina Hull with the Planning Department. Ms. Yukimura: At the last Committee Meeting there were questions asked based on Public Works... Mr. Dahing: Yes. Ms. Yukimura: ... Communication during the Planning Commission process. Mr. Dahilig: Specifically there was a question that Councilmember Rapozo raised in Committee concerning a CZO section 8- 3.78(1) specifically related to the traveling distance from a public thoroughfare specifically 600 feet and other I guess specific requirements concerning the siting of housing near public infrastructure with respect to residential units. Per the Council Chair's request, we've provided a memorandum dated yesterday which we transmitted this morning answering the question and this is in consultation with the County Attorney's Office and it pretty much outlines that the concerns that Councilmember Rapozo raised really still that this section of the CZO still would apply to these units as part of the use permit process. So when the plans are reviewed, compliance with other sections of the CZO would remain in force and in effect as we would go through, so there would not be a conflict of law situation that rose during the Committee portion of the bill's passage. Ms. Yukimura: Well I mean my concern is that that provision and that requirement will not also be a bar to farm worker housing where it's a legitimate farm worker housing or incur additional cost upon the farmer that are onerous. Mr. Dahilig: I think in the broader context of the discussion the bill's intent specifically was to address the density and should issue concerning CPR units. The application of this portion of the CZO still remains the same with or without this particular change to the farm worker housing law. Again it wasn't addressed either as a bar or as a conflict of law situation and it was understood that this particular section as well as other sections within the CZO still remain in force and effect. 53 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: It's my understanding that where there is already a dwelling unit that additional requirement for driveway access are not going to be imposed. Because it's an accessory use to a dwelling unit. KAAINA HULL, PLANNER: It wouldn't be so much of an accessory use but working in conjunction with the farm operations occurring on the property. The existing driveway will be able to serve that. The first thing that the comments brought up was the distance of a parcel from the public thoroughfare. Quite frankly that has nothing to do with the permitting of the structure itself, it has to do with the subdivision of parcels and that process occurs during subdivision process, during the subdivision of the property. Mr. Chang: Kaaina can you state your name for the record? Mr. Hull: Kaaina Hull on behalf of the Planning Department. Ms. Yukimura: Okay, thank you. Chair Furfaro: Are there any other questions in here of the Planning Department's since we have both gentlemen here? On that note, I appreciate you coming over, I hope you will stay in the audience should we have other questions on this subject matter? Mr. Dahilig: We'll do Chair. Chair Furfaro: Thank you. Okay we are anticipating I guess from the dialog I followed the possibility of at least two (2) amendments? Ms. Yukimura: One (1). Chair Furfaro: One (1) amendment. Is there any further discussion because I think we're going to have to break for its completion? Mr. Bynum. Mr. Bynum: I'll just... seeing how we're cruising, I just want to thank the Planning Department for responding to these and confirming the assumptions I made when we went through this, so thank you for this. Chair Furfaro: Since I gave my deadline, I guess I should thank them too to responding to my questions. Thank you. And I don't necessarily think we're cruising, we can find some time to break here so that Councilwoman can look about her amendments process. So we're in recess for ten (10) minutes. There being no objections, the Council recessed at 2:01 p.m. The Council reconvened at 2:33 p.m., and proceeded as follows: Chair Furfaro: This Council is back in session. We went out on our recess for the processing of an amendment which is to be introduced by Vice Chair Yukimura. Vice Chair Yukimura, you have the floor. 54 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: Thank you Chair. Ms. Yukimura moved to amend Bill No. 2420 as circulated, as shown in the Floor Amendment which is attached hereto as Attachment 2, seconded by Mr. Kuali`i. Chair Furfaro: I'm going to give you the floor so you can go through the particular underlined items. Ms. Yukimura: Yes, thank you. This is a minor amendment that just aligns the treatment of CPR units with the treatment of lots of record as regarding farm worker housing. Already in the bill is a requirement that the CPR unit be dedicated to Ag as of the date of passage of the original farm worker housing law. It came to our attention that it wasn't a requirement for lots, so we're just adding that as a lot and then there's one (1) technical amendment where we added the CPR letters to limited common element as we have everywhere else in the bill. Chair Furfaro: Okay. Ms. Yukimura: And just for procedural purposes I'd like to ask that the rules be suspended so that the County Attorney can confirm something for us. Chair Furfaro: Fine. There being no objections, the rules were suspended. Chair Furfaro: May the County Attorney come up, introduce yourself and perhaps address some of the narrative in this amendment that Vice Chair Yukimura has presented to us. IAN JUNG, DEPUTY COUNTY ATTORNEY: Good afternoon Chair, Councilmembers, Deputy County Attorney, Ian Jung for the record. The proposed amendment does align certain issues within the bill and it kind of brings the lot versus CPR limited common element into consistency, so I don't see this as a substantial change. Chair Furfaro: Is there any questions of the County Attorney based on the amendment that has been given to us by any member? None? Councilmember Nakamura, go right ahead. Ms. Nakamura: August 16 date. Just a question on the significance of the Chair Furfaro: That was the date of the original passage, I believe it was ordinance 903 when it became effective. Ms. Nakamura: Okay, thank you. Chair Furfaro: Anymore questions of Mr. Jung? None? Thank you young man. Mr. Jung: Thank you. 55 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Excuse me... thank you. Council Vice Chair Yukimura. Ms. Yukimura: Yes, I just wanted to elaborate on that August 16, 2010. We put that in there so that somebody wouldn't have to go and research what the date of approval of the ordinance was. That was the language originally, so we're just trying to make it more user friendly. Chair Furfaro: Okay so we have an amendment being circulated, we had discussion with the County Attorney, the rules are still suspended is there anyone else that wants to speak particularly to this amendment? Seeing no one. We have a motion to approve the main bill, do we not? Mr. Watanabe: Yes. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Okay. And did we approve that? Mr. Watanabe: We need to approve the amendment, we have a motion and a second for the amendment. Chair Furfaro: Okay. I would like a roll call on the amendment please. The motion to amend Bill No. 2420 was then put, and carried by the following vote: FOR AMENDMENT: Bynum, Chang, Kuah'i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST AMENDMENT: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL — 1. Mr. Watanabe: Chair Furfaro: Any further discussion? Ms. Yukimura: Chair Furfaro: Six (6) ayes. Thank you. Now we're on the main motion. Yes Mr. Chair. Council Vice Chair. Ms. Yukimura: Again I just wanted to thank everybody that's been part of this law making process and I want to say that I think the work is very helpful now and will be helpful into the future as we deal with important Ag lands, so this is very valuable work. The most valuable hopefully will be evident when we see some of the farm worker housing actually erected and used to promote farming on our island. Chair Furfaro: I'd like to concur with that, I think it's very appropriate for us to be able to set some parameters on farm worker housing as we get closer to what is going to be finalized in the important Ag land. It's better for us to have a position statement versus having something mandated to us by the, State. 56 COUNCIL MEETING DECEMBER 1, 2011 I think this work has great value and puts us in a very good place with the County as we see the IAL on the horizon. Any further? I'm going to ask for a roll call vote on the Bill No. 2420 as amended. The motion for adoption of Bill No. 2420 as amended, on second and final reading, and that it be transmitted to the Mayor for his approval, carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST ADOPTION: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Mr. Watanabe: Six (6) ayes. Chair Furfaro: Thank you very much. Thank you to the members of the audience that had been here working through this. We're going to go to our next item which is being handled by Vice Chair Yukimura since I gave testimony and she is filling in for me on the reminder of this resolution. Ms. Yukimura: Thank you Chair. We were looking at Councilmember Bynum's proposed amendment and realizing that perhaps what was meant in that amendment was about fund balance rather than reserve fund. I don't know if you wanted to withdraw that amendment and... Mr. Bynum withdrew his Floor Amendment, and Mr. Chang withdrew his second. Mr. Bynum: And we have the correct language circulated, I believe... if it could be circulated. While we're getting that, I want to just say that... as I said earlier that GFOA makes these recommendations, this amendment is consistent with those recommendations. I'd also like to say that in their policy papers they say that government should... they recommend a five to fifteen percent reserve fund but acknowledges there are reasons why communities would want to do more and we meet a lot of those criteria. Having a not diverse of economy and these are mentioned in the Resolution earlier that Council Chair Furfaro that we're subject to the legislature in terms of what our revenues are. We can have hurricanes or military incursions that impact our primary industry and so we're twenty -five percent reserve is one of the highest I've ever seen but it is appropriate for our community, and is reflective of a long term conservative fiscal management that this County, has done through several Councils and several Mayors much to our community's benefit. On the other hand if the reserve actually goes greater than thirty percent, it's appropriate to have policies about how to bring as a GFOA says, bring it back into the range recommended by the policy. Staff has prepared an amendment with the proper language and if we can circulate that now. Chair Furfaro: Could I get a definition of the proper language because I don't think my Resolution is improper. Mr. Bynum: No, no, no. Chair Furfaro: So please give me a definition. 57 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: I meant that the initial one that got circulate had improper language, the amendment. Chair Furfaro: Very good, thank you. Mr. Bynum: Not the Resolution and that was just an error. So what this says... be it further resolved, that in the event that the Fund balance exceeds 30% of the previous year's actual operating general fund expenditures, encumbrances, and general fund transfers to other funds, as identified in the most recent CAFR, the County of Kauai shall expeditiously take actions to reduce the Reserve Fund balance to the 20 -25% levels as specified earlier by following the priorities below, one (1) tax refund, number two (2) debt reduction and number three (3) targeted capital improvement projects CIP for community economic development or CIP that improve County services. Mr. Bynum moved to amend Resolution No. 2011 -77 as circulated, as shown in Floor Amendment which is attached hereto as Attachment 3, seconded by Mr. Chang. Ms. Yukimura: Are there any questions or comments? Councilmember Kuali`i. Mr. Kuali`i: Thank you Vice Chair Yukimura. When I was looking at this further and when I was going to ask about the one (1), two (2) and three (3) and how it's prioritized and how the moneys are allocated to those areas but now that I look just to the basics of this, I don't understand why... the first part is the fund balance and then the second part is the reserve fund. This Resolution is about the reserve fund and the reserve fund policy, so... and the reserve fund policy, the reserve fund is being set by this Council during the budget process early on in the budget process I'm assuming. Based on the information we get from CAFR, the CAFR and we are going to follow that we will set it no higher than twenty -five percent and so in the range of twenty and twenty -five percent. There should be no time when the reserve fund that we establish is greater than the twenty -five percent. So now we're thinking... we're considering the fund balance which is a separate matter, we're considering the fund balance to address the reserve fund when the reserve fund is not what's over the twenty -five percent. So I don't see this as making sense. Ms. Yukimura: Councilmember Bynum. Mr. Bynum: I may have caused a confusion by mixing these words but the fund, the reserve fund is a fact that we get and I have a sheet here that shows what it's been for the last ten (10) years that comes from the CAFR. At the end of the year when we balance the books and when we look at all of our expenditures and all of our revenue, we come up with a fund balance, how much money is left in the bank. We're setting a policy that says we want to make sure that that balance stays in the twenty to twenty -five percent range, that our reserves are twenty to twenty -five percent. GFOA says if your reserve goes below that, you should have a policy about how to replenish the fund and get them back in line. It also says you should have a policy of what you should do if that reserve goes above the target of twenty to twenty -five percent and what you're going to do to bring it back in. Some circumstances it might be too low and we need to look to bring it up but if it's too high, we need to look to bring it down. In essence the County of Kauai 58 COUNCIL MEETING DECEMBER 1, 2011 is carrying too much of a reserve, too large of a reserve and that does happen. Right now our reserve is far exceeds thirty percent and that's not our money. That money belongs to the people of Kauai and there's no justification through governmental accounting standards for municipality to keep an excess amount of dollars around just sitting in the bank. I hope that answers your question, I'm following the recommendations that were laid out by GASB and GFOA to have a policy that addresses overages and underages. Mr. Kuali`i: Overages and underages of the fund balance? Mr. Bynum: That's correct. Ms. Yukimura: I think... Mr. Kuali`i: When this happens at the fund balance, we're going to make a change over here in the reserve fund, but the reserve fund is not where the overage is. You say it is there now and maybe it is there now but when we come up on the next budget process, then we should fix that and make sure we stick in line with this twenty to twenty -five percent range. Once we do that regardless of what shows up in the balance fund as a surplus or whatever, if the reserve fund is below twenty -five percent and we needed moneys from that surplus we would replenish the reserve fund. But if the reserve fund was at twenty -five percent then what you're talking about is some policy that deals with the fund balance. What do we do with the surplus fund balance, now if we wanted to make a policy and Resolution about that to me that's something separate, what we're talking about today is the reserve fund and that it should be limited to that twenty and twenty -five percent range and as a Council at the beginning of our budget process we will ensure that. We will put the right amount of money like what Councilmember Nakamura was saying earlier, it's our call. So upfront we will reserve no more than twenty -five percent. Now on the flipside if the fund balance is more than the amount that we think is right, I'm not sure what that thirty percent figure is there for the fund balance then we have to deal with that money, that surplus. I don't think this apples and oranges thing is confusing and I don't think it's appropriate to include it in this reserve fund and reserve fund policy. That's just how it seems to me. Ms. Yukimura: If I may as someone Chairing this session, I want to say that we need to clarify our semantics before we go any further. I think the "g ", "o "... what is it? Government Finance... GFOA, the GFOA policy that you're looking at probably is using reserve fund to... as synonymous with the balance, the fund balance. It appears that the fund balances is a mid budget process because you don't get real figures on the fund balance until mid year, mid fiscal year. And so if the fund balance comes in at mid fiscal year is generous then you're deciding what to do with those moneys midyear. Now and I'm speaking somewhat in a vacuum because I'm not as knowledgeable as Chair Furfaro or you are in terms of municipal finance. But I think we're not too different in what we're trying to talk about so... if you take into account what Councilmember Kuali`i is saying because we are talking about designating a portion of our budget is what we're calling a reserve for some specific unexpected needs. And then we're saying if we have some extra money beyond that, how are we going to use it midyear. Mr. Bynum: How are we going to bring the fund balance into the range that we have determined by policy? 59 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: Sorry, repeat that again. Mr. Bynum: How are we going to bring the fund balance into the range that we set as a policy of twenty to twenty -five percent? Ms. Yukimura: Right. Mr. Bynum: So what I'm saying is if the percentage goes to thirty percent, then we should apply a policy to bring it down. Maybe this would help, let's cross this off. Ms. Yukimura: Well I think... go ahead and pass your information out but we still have to be really clear about what we're talking about in terms of a fund balance and a reserve fund. Mr. Kuali`i: Two (2) separate things. Mr. Bynum: Yes. So let me... may I try it one more time? Ms. Yukimura: Go ahead. Mr. Bynum: I'll read the... and maybe it was the break for lunch... the recommendation from GFOA, the government finance officers association recommends that government establish a formal policy on a level of unrestricted fund balance that should be maintained in the general fund. Such guidelines should set by the appropriate policy body which is the Council and should provide a temporal framework and specific plans for increasing or decreasing the level of the unrestricted fund balance if it is inconsistent with the policy. Ms. Yukimura: Councilmember Nakamura. Ms. Nakamura: I think you hit it right on the head by reading that to me now it's clear to me that these are two (2) separate policies. The unrestricted fund balance policy is separate from a reserve fund policy. I see it as two (2) separate fund policies and you may not but that's the way I'm reading it. I think we should have a separate unrestricted fund balance policy. Mr. Bynum: Yes. Ms. Nakamura: That is separate and apart from what's before us today. Mr. Bynum: I'm lost. Ms. Yukimura: Unrestricted fund balance is actually what... Mr. Bynum: Is same as the reserve. Ms. Nakamura: No, it's not. 60 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: No, it's what you're calling the general fund balance. It's what you're calling the general fund balance or maybe it's also called an unappropriated surplus. Chair Furfaro. Chair Furfaro: Yes, you know... I think I said this in the beginning and I would like to say it one more time, the intent of the Resolution today was to set some parameters for establishing what we agree is the need for a reserve. I would also like to say that one big element that we have not addressed in this and I support the concepts of what Mr. Bynum is reaching for but I would like to see it in a different format. Because if you haven't checked your CAFR lately, this County owes one hundred seventy million dollars in debt. The question is very simple to me, if you have a surplus, the best step that we can do is increase payment on our debt service and that debt service is four point seven million dollars a year for the eighty -one bonded projects that I spoke about earlier. So I understand where Mr. Bynum is going but my goal today was to set a Resolution up that sets some parameters and if I ma, acting Chair, just pass out some things that have to be considered as we move forward on the review of the CAFR. I have written that number on the side four million, seven hundred and five thousand dollars of debt service paying on... before I went to San Francisco with the Mayor and Mr. Rezentes to float and refinance our bond, the debt was a hundred seventy million dollars. Very simple to me what we need to do say is, if we have more surplus, we should pay down debt. We pay down debt, we can eventually reduce property tax income. Ms. Yukimura: So... Chair Furfaro: There's a lot of moving parts which I would like you to consider and for right now, I don't think I'm prepared to do more than support the original Resolution and I would like to see in the Finance Committee more dialog on this. Thank you. Mr. Bynum: Ms. Yukimura: Can I? Mr. Bynum. Mr. Bynum moved to refer Resolution No. 2011 -77 to the Finance Committee for further discussion. Chair Furfaro: The Resolution? Mr. Bynum: Yes. Chair Furfaro: Okay, I will vote against that as well. Ms. Yukimura: Is there a second? Okay, motion dies for a lack of a second. I sense a lot of agreement in long term. I don't know if the Council as a body will choose only to reduce debt and when we talk about the unrestricted balance or the general fund balance, we still kind of have to define all our terms. Chair Furfaro: Absolutely. Ms. Yukimura: But I think Councilmember Bynum, there is a lot of support for the idea that we would have a policy or process for dealing with 61 COUNCIL MEETING DECEMBER 1, 2011 the excess beyond the reserve fund, what is being defined as a reserve fund, and we need to just straighten out our definitions and perhaps it is done by two (2) separate Resolutions that are related. One option and I'll get to the Chair in a minute... one option is to pass this Resolution as focused on a reserve fund and then develop a Resolution that is focused on... and I'm not sure how we're going to call it but either a GFOA calls it, unrestricted fund balance or I'm not sure if that's our unappropriated surplus or whatever proper name we agree to and work on that. I think you will get the essence of what you're proposing in your amendment. Mr. Bynum: May I suggest that with the room full of these kids, we would take a recess and then I would like to return to this issue. Ms. Yukimura: If there's no major objection, I'd like to... Oh yes Chair. Chair Furfaro: Major objection. Ms. Yukimura: I was going to get to you. Chair Furfaro: I thought I was in front of Mr. Bynum. Ms. Yukimura: I'm sorry, you have the floor. Chair Furfaro: I'm not trying to establish Mr. Bynum's piece on crediting tax versus paying debt first, okay? But that is a meaningful discussion, why in this economic time we owe it to ourselves to make sure we protect the best credit rating any County has in the State of Hawaii and so it's worthy of a discussion, not push forward right now. I've already stated that I understand Mr. Bynum's points but all I wanted to accomplish today was a Resolution that sets some parameters about what we set in the budget seven (7) months ago. Ms. Yukimura: And so I think we still need some discussion to complete and decide where we're going to go on this issue. Let's welcome the young people we have with us and their adult support and then come back to this. There being no objections, the Council recessed at 2:59 p.m. The Council reconvened at 3:44 p.m., and proceeded as follows: Chair Furfaro: We're back from a very nice presentation with the keiki from Kamehameha School and I'm not sure I know what's going on, would somebody tell me. Ms. Yukimura: We're back to the issue of the reserve fund and so I guess I'm acting Chair. Chair Furfaro: You're the acting Chair because I made a presentation. Ms. Yukimura: Right and there's one school of thought that Councilmember Bynum's amendment is separate from this reserve fund and I think we left off with Councilmember Bynum wanting to make a comment. COUNCIL MEETING Chair Furfaro: Mr. Bynum: Ms. Yukimura: Mr. Bynum: Ms. Yukimura: 62 DECEMBER 1, 2011 Or presentation. I'm hoping that... Oh is this a presentation? I'm going to direct some things up there. Okay. Mr. Bynum: This is... and I'm going to hope that third time is a charm. Because the terms are very important, that's where I started the day to make sure that we are all using the same terms, so I'm going to start from the beginning. We have an unrestricted fund balance that shows up in the CAFR every year. This policy is about setting a reserve based on expenditures and encumbrances and transfers out. Now this is from our CAFR and it has ten (10) years of the fund balance, so if you look at the top general fund... don't look at the other government funds because this is about the general fund, okay, the categories are committed, assigned, and unassigned. GFOA and this document says the unrestricted fund balance comprises committed, assigned, and unassigned fund balances, so that total general fund is the unassigned fund balance because if you look at that restricted line there's nothing in it. That entire total general fund balance is the unrestricted fund balance under accounting terms. It wouldn't be if we had something in the restricted area but we don't, right? Is everybody with me so far? So if we look at this over ten (10) years, for years this County had between fifteen and seventeen percent unrestricted fund balance. If you look in 2001 it was fourteen million, twelve million, fourteen, seventeen, eighteen... and then if you could move this over to get into the more recent years, during our economic downturn when we had difficulties, our unrestricted fund balance has ballooned. Last year it was sixty -eight million; we're setting a reserve policy to determine what's the proper level of that unrestricted fund balance and we are taking a very conservative approach which I agree with and making that target twenty to twenty - five percent, okay? What GFOA says is a policy should address what do you do if you fall below your target and what do you do if you fall above. My amendment is to address what do if we go above the fund balance. So if you could put this one up Scott? We agree that our unrestricted... we agreed with Finance this morning what our baseline number was to determine that unrestricted... proper unrestricted fund balance. So the baseline which in the policy says is the actual expenditures, encumbrances and transfers out to other funds... what do we... and that total we agreed was seven... last year was a hundred seventeen million, seven, eighty- three, so twenty -five percent of that or the high end of our range that we're targeting in this is twenty -nine million, four, forty -five. My amendment says hey the high end of our target range is twenty -five percent or twenty -nine million in this instance from last year, what if we go above that? Not twenty -six percent, twenty -seven percent... my amendment says if you go even five million higher to thirty percent then you should say hey we're holding too much outside of our targeted range, what is our policies about to bringing that down? I think that's a very important part of the complete policy and GFOA agrees with me, they say we recommend that you have a policy that addresses when it goes under and when it goes over. Right now thirty percent is thirty -five million, if you take that from our unrestricted fund balance, we are over by thirty -three million dollars. That I think is a very serious problem because we went and we built that up, you saw from the previous thing over the last four, five years. We were at fifteen to twenty percent for a long time and then it 63 COUNCIL MEETING DECEMBER 1, 2011 ballooned and it ballooned at a time when we were charging increased taxes and fees to the people who live here. And so what are our priorities if we have too much, my first priority personally would be to reduce the amount that we're taking from the people who live here, to give a tax refund or rebate or lower the taxes. Now Councilmember Furfaro talked about the second priority which I agree with, reduce debt. Why are you sitting on a bunch of cash. when you're paying interest on debt? And those three (3) priorities are not Tim Bynum's idea, those are recommendations about communities what they should do if they're holding too much cash. I think it's very inappropriate for our County to hold too much cash especially when people are hurting. As I mentioned earlier look at the fund balance that the Big Island or City and County has, it's under ten percent, they have spent their reserves down to keep from increasing taxes and fees on people and to keep the level of services up. We've strained our level of services, we've reduced budgets over the last few years, we've reduced the level of services, the amount of employees we have, but our fund balance has ballooned and we've increased taxes on local people and we've put fees on them. I want our policy to do what's recommended, have a policy for when it goes too low, we need to make it up in a timeframe, that's the temporal issue that's here. And when it goes too high like it is right now, we need to have a policy to bring it down. We're in the bring it down phase right now and the general accepted ways to bring it down for Counties is one (1) give it back to the people where you got the money in the first place, it's not our money, it belongs to the people of Kauai. We should have not been taking that much money from them and making a thirty - three million dollar over what is a very healthy reserve. I believe my amendment fits all of these generally accepted terms and policies and our policy will be incomplete if it doesn't follow all of the elements of this recommendation. What Councilmember Furfaro has brought forward follows the recommendations to a 'T' it just doesn't include that portion that they recommend for decreasing the level of the unrestricted fund balance. Now I may have caused a confusion by putting the wrong words in there and I apologize for that and I may not have articulated this well because I've said this a lot of times, when I get on a roll and get interrupted, I lose my train of thought. But I think I just articulated it pretty well now. This is our current situation, we have thirty -three million dollars more than thirty percent so we're already... you know we're at fifty... around sixty percent. I would strongly encourage serious consideration of this Resolution, I don't know why we wouldn't. to me it's not a complete policy that follows these recommendations unless it has both elements. Thank you. Ms. Yukimura: Thank you. Any comments for questions? Chair Furfaro. Chair Furfaro: I want to make sure we all understand that my statement is in two weeks we're going to see a new CAFR. This is June 10, June 30, 2010, this in two weeks we're going to see a new CAFR that represents December of 2011. Under no circumstances do I agree that we haven't been adding staffing. We've expanded the bus, when I got on the Council, we had nine hundred and sixty county employees, today we have a hundred and eighty - three, that's in the audit too. A thousand eighty- three, but what I'm saying is... you make good decisions when you have good information. In principle I think I'm agreeing with Mr. Bynum in some items, I just have a different approach. I think if we have money, we should try and pay down debt to keep our bond rating. Now I would also suggest at this point, do we have a second on the amendment? If we don't, I'd like to call for the vote. 64 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: May I? Ms. Yukimura: Let me just say where we are as I understand and correct me if I'm wrong staff, we have a motion to amend with a second and that's what we're discussing right now. Councilmember Bynum. Mr. Bynum: As I said earlier the third time is the charm, I'd like to withdraw that amendment because I put in the word unrestricted. I showed you that our total fund balance and unrestricted fund balance are the same. But to make sure the language is absolutely correct, so I'd like to withdraw my motion so the previous amendment and I said this is the third time is a charm... Ms. Yukimura: And will you withdraw your second? Mr. Bynum withdrew his Floor Amendment to Resolution No. 2011 -77 and Mr. Chang withdrew his second. Ms. Yukimura: Okay so... Mr. Bynum: And then I'd like to move to amend as it's currently being circulated... Ms. Yukimura: And is there a second for discussion purposes? Mr. Bynum moved to amend Resolution No. 2011 -77 as circulated, as shown in the Floor Amendment which is attached hereto as Attachment 4, seconded by Mr. Chang. Ms. Yukimura: Mr. Bynum. Mr. Bynum: I'd just like to respond to what the Chair said, I actually believe that the Chair and I are in agreement, I just think we need a policy that follows all of the recommendations that are put here, out. I think that this is an appropriate one, I hope that we move to address this overage and I'd be very open to the idea of doing that for debt reduction which is part of this recommendation. But if we need... I don't need the new CAFR to see that, we saw what it's been for the last ten years and if we need a new CAFR to decide whether we should have the policy over, we need it to decide if we should have a policy under, so if we need to wait two weeks, we should defer this for two weeks. We have waited several years to have a policy but I'm not going to support a policy that allows us to make sure we keep a minimum but then allows us to keep a huge amount of money that isn't ours. Ms. Yukimura: Any other discussion? Chair Furfaro. Chair Furfaro: I think Mr. Bynum is correct. I started writing this proviso for this budget two and a half years ago. Now I'm introducing a simple Resolution as based in the statement of the proviso from the last budget. I think it's prudent that we see the CAFR that we know exactly where we're at especially since quite frankly we hadn't had the opportunity nor I've been able to make a comparison for you on the operating statements for the last five (5) months. I think it's just prudent. Now this deferring of this Resolution, I just like to get to a 65 COUNCIL MEETING DECEMBER 1, 2011 point we call for the vote. I've stated from the very beginning that all I'm trying to do is set up a policy guideline until we get the new current CAFR. Ms. Yukimura: Just a... Chair Furfaro: So I'd like to call for the vote. Ms. Yukimura: Let me first clarify that in terms of semantics we were struggling over, in reading the first whereas paragraph it's become clear to me that unrestricted fund balance is the same thing as a reserve fund. You'll see that whereas the County of Kauai is determined that it is in its best interest to establish a clear financial policy of maintaining a targeted unrestricted fund balance in the general fund in the range of twenty to twenty -five percent which then makes sense to me why the government finance officers association is talking about that language. So it is not two things, it's one. We have an amendment pending before us, what's appropriate is a discussion on the amendment, there has been a request for a question but if there's more discussion, I want to allow it. Chair Furfaro. Chair Furfaro: I'm just trying to make sure we all understand that we get the CAFR the 15th of December, we're talking about numbers that are 13 months old but by Charter the Mayor and the Administration has to have the certified balances to us in January. All I wanted to do is get a policy lined up, we're going to get the undesignated, unappropriated surplus if we follow the Charter in January, we're five weeks away from this. But all I'm trying to accomplish is a basic guideline and I've stated in the beginning that if a member wants to do an ordinance which I prefer, it would be better to do an ordinance when we have all the pertinent facts that are current. Ms. Yukimura: Thank you. Any other discussion? Oh... Councilmember Kuali`i. Mr. Kuali`i: I do... when I saw the numbers up there I was fine with all the numbers except that the sixty -eight million dollar figure and then... that comes from June of 2010 like the Chair said it wouldn't be prudent to be making decisions on this number when it's not the correct number. I still believe that it is two separate things and the reason we can see it as two separate things is that we haven't had a reserve fund in the past and so all that was the unrestricted surplus... unappropriated surplus was there and then rolled into the next budget or whatever. But now that are establishing a reserve fund, that's a fixed amount. So now we still... it's a fixed amount which is of that unrestricted moneys and that part that is not... we're not allowing to be in the reserve because the reserve will only max out at twenty -five percent, is that other amount that we have to deal with in a different way and what you're talking about is not the reserve fund because the reserve fund is maxed out at twenty -five percent. It's the unrestricted moneys that we haven't dealt with in the past but this next budget cycle obviously we're going to have to because now we have reserve fund and then if everything is good, this unrestricted amount of money that we still also have to deal with. But we don't even know what that is unless we at least wait for five weeks to find out. I think it's a separate matter that we should deal with and set up a separate Resolution, a separate policy. In the end maybe the ordinance can address both but and that they do relate but it's two separate items. 66 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: Okay. Before I go to Councilmember Bynum, you know we really have to look at the first sentence in the... in the first whereas cause... it's to establish a clear financial policy of maintaining a targeted unrestricted fund balance in the general fund. To me that's... the reserve fund is the unrestricted fund balance. I'm going to... Chair Furfaro: I would like to point out a procedural thing, I have asked twice to call for the question. Ms. Yukimura: And I have used the discretion of my Chair to allow discussion to continue but you can challenge the decision of the Chair and we can vote on it. Chair Furfaro: Then I challenge the decision of the Chair. Ms. Yukimura: Or you can move the previous question. Chair Furfaro: I challenge the decision of the Chair to call for the question. Ms. Yukimura: Okay. I'll take that as a motion for previous question which means to close debate. Mr. Kuali`i: Second. Ms. Yukimura: There's been a motion and a second. I believe there's discussion allowed on it about whether we should close debate. Councilmember Bynum. Mr. Bynum: I'd like to continue the discussion. Ms. Yukimura: Okay, any other comments? If not, are we ready for the vote? Like earlier today I just wanted to say closing debate is a very serious cutting off so if there's other's who want to speak? Ms. Yukimura: Oh, you need a five minute break to change the tape, I'm sorry. There being no objections, the Council recessed at 4:03 p.m. The Council reconvened at 4:11 p.m., and proceeded as follows: Ms. Yukimura: We have a motion for previous question to end debate and a second, is there any further discussion? Chair Furfaro: Yes. Ms. Yukimura: Yes go ahead Chair. Chair Furfaro: I regret that you use the term that we should take closing this dialog as a serious matter, I take it as a serious matter but if you read the first paragraph here... we are expected from the Administration by Charter an idea to get a clear financial policy, a target unrestricted fund balances in 67 COUNCIL MEETING DECEMBER 1, 2011 the general account a range of twenty to twenty -five percent. We're going to have a current piece to us... Mr. Bynum: Point of order. This is.... Ms. Yukimura: State your point. Mr. Bynum: You're continuing discussion on the matter when you're at the same time trying to shut down discussion. You're not discussing the thing that's before us, for closure and call for the question. You're discussing your opinion about the fund balance while you're trying to keep me from having further discussion. Chair Furfaro: You had plenty of time Mr. Bynum. Ms. Yukimura: So I'm going to allow the Chair's comments to continue. Chair Furfaro: I appreciate that. Ms. Yukimura: Go ahead Chair. Chair Furfaro: So if you read that in the front paragraph, and I have said all along, if the Finance Department wants to come back with a new Resolution or even an ordinance after we have current facts in front of us, obviously we can make even better decisions. Ms. Yukimura: So I'd like to say that in the break discussion with staff there's really a lack of clarity about definitions. We see that in our budget ordinance alone we have a reserve fund which is different from the unrestricted fund balance and one option that I'd like to suggest is that we defer this matter and take the time to define the terms so that we all know what we're talking about. Chair Furfaro: Okay, I understand your point, we're sitting here five months into the year, we do not have any P &L statements from the Administration that I have reconciled constantly as my six years on the Finance Committee. Making sure that we put something two years in a row as requesting a policy we have not received anything from the Administration. I'm attempting to send a very serious message that we need some parameters in a Resolution, I would like to go to the next step in an ordinance but I would like to do that when we have current financial information which is about to hit us by Charter in the unappropriated surplus and which is about to hit us with the CAFR. Ms. Yukimura: Okay Chair it is true that you are discussing the merits of the Resolution and that's okay as long as others get to continue the discussion but I would like to suggest that a policy would work no matter what the figures are from... what figures we would... because the policy says if they're higher than this, we move in this direction. If they're lower than this, we move in this direction. So it's not really dependant on any figures at this time. Chair Furfaro: May I respond to that? 68 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: So is there any further discussion? Sure, Chair Furfaro. Chair Furfaro: That's why we have an email that was responded to that they are okay with the amount between twenty and twenty -five percent of whatever that number is. My Resolution points to the twenty —two point five, it's a happy medium but let's be serious about having a reserve policy. Ms. Yukimura: Okay. Councilmember Bynum. Mr. Bynum: I started the day by saying thank you Council Chair for bringing us a reserve policy because as a Council, we have not had these discussions as well as we've been able to with you as Chair. I agree with Councilmember Yukimura that's what I said earlier, what if the CAFR comes in two days and it's up ten million then we have a bigger fund balance. What if it's down ten million, then we have a smaller fund balance. Either way this is a policy saying what do you do when it's too much, what do you do when it's too little? The policy is great and it follows all the terms, now I also agree with Councilmember Yukimura that getting the terminology correct is important and there are standard accounting terms that mean what they say. I know that in this policy the footnote says unrestricted fund balance comprises, committed, assigned, and unassigned fund balances, that's from the Committee that advises counties on their accounting. Our total fund balance is made up of those three pieces, this is a policy about how big the unrestricted fund balance should be. We all agree that it should be as high as twenty -five percent but the policy here says that your policy should include both, what if it's too high and what if it's too low. All I'm trying to do is say, let's have a policy that says what do we do when it's too high because right now it's too high and no matter what the CAFR says next time, it's not going to come down thirty -three million, I'll guarantee you that. It's going to be too high. Ms. Yukimura: Okay... Mr. Bynum: So why not have a policy that addresses the recommendation. Ms. Yukimura: Any further discussion on the motion for previous question? Mr. Kuali`i: Vice Chair? Ms. Yukimura: Yes Councilmember Kuali`i. Mr. Kuali`i: I'm all for having a policy on the unappropriated surplus that is too high after we get the certification from the Mayor, but that is a separate matter from the reserve fund. The reserve fund we establish as a Council, we haven't... you know we're in our first year now, the reserve fund in essence is like designating that money, so now after that... that's the money you're talking about that is unrestricted or not accounted for that we need to determine what we're going to do with that either refund taxes or pay down the debt but that's not the reserve fund. The reserve fund is a fixed amount that we determine needs to be there for these purposes that we talked about right here in this Resolution about the cash flow, the budgetary stabilization, the disaster, and then risk management and uninsured losses, that's what the reserve fund is. I 69 COUNCIL MEETING DECEMBER 1, 2011 think it's pretty clear and if we don't at least accept that we're establishing a reserve fund to put moneys aside for this particular purpose and when it has a limit of twenty -five percent and that's it, that's the reserve fund and now when we go back to the whole budget issue and whether there's unappropriated surpluses and there's all this money that you know we didn't spend in this year, the Administration didn't spend and we cannot just roll it into the next year's budget and let them spend an additional thirty million, sixty million, whatever it is that now we have a policy to address that unappropriated surplus. Yes, let's do that, this is not the reserve fund. Ms. Yukimura: So I hear that your definition of a reserve fund is like a rainy day fund that we... Mr. Kuali`i: That's the Finance's... that is what it is. Why is it established separately in the budget as it is, as a fund? Ms. Yukimura: Well you're right we can make it that particular reserve fund if we could make it clear that's what we're defining here. Mr. Kuali`i: It is what it is. Ms. Yukimura: Well it is what you say it is but other people are saying other things. Mr. Kuali`i: Then maybe we should be having this with Finance here because it's kind of wasting our time. Ms. Yukimura: Yes it would be useful to have Finance here. Mr. Kuali`i: But Finance put this together so... Ms. Yukimura: Okay. So we are on the motion for previous question, is there any further discussion? If not, all those in favor? Mr. Kuali`i: Wait, what are we voting on? Ms. Yukimura: Motion for previous question to limit debate but then go to vote on main motion as amended. Mr. Chang: Excuse me. Ms. Yukimura: Yes. Mr. Chang: Can we have the County Clerk... can he tell us what the question is so there's no confusion. Ms. Yukimura: Do you want to do that or I can. Mr. Chang: Please. Ms. Yukimura: Okay. We have a motion to close debate, previous question which was seconded, so that's what we're going to vote on now. If 70 COUNCIL MEETING DECEMBER 1, 2011 that motion passes then we're going straight without any further debate to a motion to amend by Councilmember Bynum. Chair Furfaro: I want to point out one thing that you... I'm trying to give an interpretation to her... Mr. Bynum: I'm sorry were you recognized by the Chair? Chair Furfaro: I thought I was but... Ms. Yukimura: Okay I do recognize Chair Furfaro. Chair Furfaro: Thank you very much. I think one explanation you forget, the call for the question, it has to be a 2/3 vote. Ms. Yukimura: Oh, that's right. Thank you for reminding me. Chair Furfaro: Thank you, I hope I clarified that. And excuse me Mr. Bynum if I was out of order and not knowing that the acting Chair recognized me for protocol interpretation. Ms. Yukimura: Well that was a very helpful comment, thank you. So are you clear Councilmember Chang? Mr. Chang: Can you repeat that please? Ms. Yukimura: We're on the motion to close debate and as the Chair pointed out it requires a 2/3 vote. If that passes then... Mr. Kuali`i: Just do one at a time, explain the other next and take the vote. Ms. Yukimura: Are you okay? Mr. Chang: I'm okay. The motion to end debate was then put and carried by a vote of (4:2:1) (Mr. Bynum and Ms. Yukimura voting no) (Mr. Rapozo was excused) Ms. Yukimura: Motion fails for lack of... wait a minute... Chair Furfaro: Four to two. Ms. Yukimura: Motion passes and we'll go now to the motion to amend. Yes the motion to amend. The motion to amend Resolution No. 2011 -77 was then put and failed by a vote of (2:4:1) (Mr. Chang, Mr. Kuali`i, Ms. Nakamura and Chair Furfaro voting no) Ms. Yukimura: Motion fails by a 2:4 vote and now we go to the main motion which is the motion to approve the Resolution, and discussion? 71 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: I would like if the staff could put that up again. I want to point out that without this amendment passing, we're passing a Resolution that I support, every word of it I support, but it's not complete, it doesn't follow the recommendation that GFOA made. These are not opinions, they're facts, they're right here and you know I was elected Finance Chair by this body, I've spent many hours educating myself on these issues, on these finance terms, I've talked to the GASB people in D.C., I've talked to the finance people in Denver because the Chair and others pointed them as having a policy that is worth looking at. We desperately need to get our terminology correct. I don't know why Finance wasn't here today on something that's fundamental as this. This morning I've asked staff and I've tried to get clarity to make sure that we were in agreement on the baseline numbers because these terms gets messed up. Right now as of the end of our last fiscal year, we had by this policy that I think we're about to adopt, we had thirty - three million dollars more than the target and we accumulated that in the last three years as homes were being foreclosed and unemployment was high and we were raising fees on our citizens that average of two hundred dollars a year and increasing their property taxes when everybody else, all of the people that do business here, people that own homes from other States, people who run vacation rentals who may live here or elsewhere have gotten twenty -four million dollars worth of tax relief and we just keep building our surplus. We will know in a couple of days if that surplus grew or it shrunk; I pray that it shrunk. Because it's unconscionable for the County of Kauai to accumulate a sixty -eight million dollar unrestricted fund balance that is thirty -three million have than any reasonable amount that we would keep. To do that in an era where people are hurting in our community and we're taking money from them to put in the bank. I believe Councilmember Kuah'i in the statements he made, I agree with the sentiments, I don't think he has the and in all due respect that it was accurate but he said hey if it goes over the twenty -five percent, we'll deal with it at budget time. Well that means we need to do something with thirty -three million dollars, I didn't think we would do it all at once, it took several years to build it up. I think it needs to take time to build it down but I've waited for this policy for a long time, I want to support it but without... with only addressing what do we do when we fall below and not address what we do when we have huge budget surpluses over above any justified reason to keep that kind of money while we're increasing taxes for local people, charging increased fees for them, it's just unconscionable. It's not a balanced policy. Everything in here is great but it doesn't have everything it needs. Ms. Yukimura: Chair Furfaro. Chair Furfaro: Perhaps I can revisit my presentation back when I started I recognized, not 68 but I recognized fifty -three million. I want to remind us since June of 2010 we had allocated some of those moneys that are being referenced as of having now. Mr. Bynum has indicated that he has waited a long time, well I voted for him for Finance Chair because I do think he's capable of doing the job and he's quite capable of doing some of the things that I'm suggesting now with this Resolution. But there is some serious comments being made here about what we need to do for some financial responsibilities and having a very transparent reserve. We have some critical dates coming up to us for the CAFR and then for the certified unappropriated amounts and I have restated myself from the very beginning once we get that and the Administration knows we are very serious about having a policy, that I would encourage the Finance chair to introduce an ordinance because I don't think a Resolution is the final outcome here but I'm delighted to see the Finance Director here and make sure we answer some of these 72 COUNCIL MEETING DECEMBER 1, 2011 particular questions. I want to make sure that I was the Finance Director for six years prior to being the Vice Chair of the Council and I depend on some of these numbers, I want them to be accurate to the best of our ability and then I want also the Administration to understand that for two budgets in a row, we're very serious about having a reserve policy. We're initiating something in a Resolution that after the 19th of January it could actually be a new ordinance. Mr. Rezentes is here and if you choose to call him up, that would be delightful. Ms. Yukimura: forward. I hear a request for Wally Rezentes to come There being no objections, the rules were suspended. WALLACE REZENTES, JR., FINANCE DIRECTOR: Good afternoon Wally Rezentes Jr., Director of Finance. Ms. Yukimura: just answer questions? Mr. Rezentes: Ms. Yukimura: Councilmember Nakamura. Chair Furfaro: CAFR by December 15? Mr. Rezentes: deadline, yes. Do you want to begin with a statement or I prefer answering questions. Okay. Chair did you want to start and then Am I correct that we should see the final That's my understanding of the present Chair Furfaro: Do I also understand that there is by Charter a provision for mid - January for the Mayor to sign off on what could amount to a unrestricted surplus amount. Mr. Rezentes: report, yes. And that would be in the CAFR within that Chair Furfaro: Did you have an opportunity to study and I guess you have, based on what I saw from your commentary in (inaudible) the assumptions that we have made... WE Check your mic. Chair Furfaro: I'm sorry... the assumptions that we have made for this Resolution is in fact concurrent with the guidelines that we originally intended in the previous two budgets? Mr. Rezentes: I'm sorry, say again. Chair Furfaro: We had two (2) budgets passed. Mr. Rezentes: Correct. 73 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Which we actually have a proviso written in about a reserve policy. Mr. Rezentes: Correct. Chair Furfaro: And those include an emergency reserve portion, other unanticipated pieces for capital improvements and so forth but are you still in agreement with what was in the proviso that I'm not trying to put in the Resolution. Mr. Rezentes: Yes. Chair Furfaro: Okay. Is the Administration open to the fact that after we've completed the CAFR and the uncertified... Mr. Rezentes: Fund balance? Chair Furfaro: Unreserved funds, that you are prepared to work with the Finance Department on designing an ordinance above and beyond just the Resolution? Mr. Rezentes: We could assist with one if that's what the Council desires, yes. Chair Furfaro: I'm leaving that to the Finance Chair. Mr. Rezentes: Okay. Chair Furfaro: Okay and then let me ask along that line, as we looked up of June of 2010 in your best estimates we have transferred a number of those funds into other accounts and is the surplus expected to be close to that number again? Mr. Rezentes: Is the number... Chair Furfaro: CAFR... Mr. Rezentes: The number in 2010? Chair Furfaro: Yeah. Mr. Rezentes: The number in 2010. Chair Furfaro: The one that's coming up in the CAFR is it expected it to be similar to what we saw in 2010? Mr. Rezentes: It will likely be reduced. Chair Furfaro: It likely be reduced? Mr. Rezentes: Yes. 74 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: So it would be prudent of us to revisit especially if we're going to create an ordinance from basic dialog with you folks. Mr. Rezentes: And the good thing is that we should have the final numbers very soon. Chair Furfaro: Okay. But are our final numbers and I want to ask you, are they contingent on merging the Water Department's audit with our audit? Mr. Rezentes: No. Chair Furfaro: Okay. Do you anticipate any issues that might affect that ad hoc body as it relates to our financial picture? Mr. Rezentes: Chair Furfaro: Ms. Yukimura: Ms. Nakamura: Mr. Rezentes: No. Okay. Thank you. Councilmember Nakamura. Good afternoon Wally. Hello. Ms. Nakamura: I have a couple of questions, the first one is have you had a chance to review this Resolution before the Council? Mr. Rezentes: Yes. It's very similar to what was included in the budget proviso for this current fiscal year, yes. Ms. Nakamura: Didn't the language raise any red flags for you or is it pretty consistent with what... Mr. Rezentes: It's consistent with what was established by the ordinance proviso. Ms. Nakamura: And in your mind is the reserve fund different from the unrestricted fund? Mr. Rezentes: Okay... the... how do I best explain that? The reserve fund, the amounts that were set aside in the reserve fund basically specifies and restricts a portion of the unassigned fund balance for a specific purpose. Ms. Nakamura: Okay. Mr. Rezentes: And as the Chair mentioned it was laid out as far as what percentage or what the purpose was for, intended for. Ms. Nakamura: So because we... Mr. Rezentes: And it's labeled like on our... 75 COUNCIL MEETING DECEMBER 1, 2011 Ms. Nakamura: Mr. Rezentes: balance. Okay. On our books right now as a restricted fund Ms. Nakamura: So as a result the fund balance is reduced because we set aside this substantial reserve fund? Mr. Rezentes: The unassigned fund balance is reduced because of the restriction that was added with that reserve policy. Ms. Nakamura: Very good. So then how... so this policy the way I see it, this reserve fund policy just deals with the creation and the set aside of that reserve fund. Mr. Rezentes: Yes. Ms. Nakamura: And then there's still that unassigned fund balance? Mr. Rezentes: There could be, yeah, there could be funds outside of what is reserved or what is restricted that would be available for appropriations. Ms. Nakamura: I believe that that is a separate policy in how we deal with those numbers, do you see that as a separate policy? Mr. Rezentes: Yes. And basically what that policy is, you know we cannot, we the Administration cannot touch those funds. Ms. Nakamura: Okay. Mr. Rezentes: Without coming to this body and getting approval via a money bill, an ordinance basically. So any funds that is unassigned, we cannot assign it to any purpose, we have to come to this body and get your approval. Ms. Nakamura: And that's what I understood happened last year when we added to the bus service and extension, that all came from that... Mr. Rezentes: That pot of funds, correct. Ms. Nakamura: ...unassigned, fund balance and so it's really at the direction of this Council that we set the policies on how those funds are best used whether it's to reduce debt or return it to homeowners... Mr. Rezentes: You are correct. Ms. Nakamura: That's our policy and we can set that... provide that direction. 76 COUNCIL MEETING DECEMBER 1, 2011 Mr. Rezentes: Yes. I'm not an attorney but that's the way... Ms. Nakamura: Well that really helps to clarify this for me, thank you Wally. Ms. Yukimura: Councilmember Bynum and then Councilmember Kuali`i. Mr. Bynum: Wally, I don't know how you say it's something different because you said you read this Resolution? Mr. Rezentes: The Resolution that was prepared, yes. Mr. Bynum: The first sentence of the Resolution says it's in the best interest to establish a clear financial policy of maintaining a targeted unrestricted fund balance, right? Mr. Rezentes: proviso. Chair Furfaro: Mr. Bynum: about this policy. Mr. Rezentes: proviso that was approved. I mean I can probably get a copy of the Here's one for you. I'm not asking about the proviso, I'm asking No but to compare it. To compare the Mr. Bynum: Because this policy follows the recommendations of GFOA and it establishes what the unrestricted fund balance should be. We can't use these terms interchangeably and we can't use terms that don't follow generally accepted that accounting principles. Mr. Rezentes: The paragraph looks verbatim to me. I'm looking at the paragraph it looks... you're referring to the first paragraph of the Resolution? Mr. Bynum: Mr. Rezentes: policy? Mr. Bynum: unrestricted fund balance. Mr. Rezentes: Can I just walk there... Ms. Yukimura: Yes. Versus the first paragraph of the reserve We're targeting... maintaining a targeted Maybe if I can go up there and show you. Wait. May I? Chair Furfaro: Take a recess. 77 COUNCIL MEETING DECEMBER 1, 2011 Ms. Yukimura: Okay short recess. There being no objections, the Council recessed at 4:39 p.m. The Council reconvened at 4:50 p.m., and proceeded as follows: Ms. Yukimura: The meeting will come back to order and I believe Councilmember Nakamura has an amendment to offer? Ms. Nakamura: Yes thank you Vice Chair. I really want to move this discussion along and one of the things that I like to clarify, let's see... do we have copies of the amendment? I just wanted to clarify the language, the amendment would read whereas the County of Kauai has determined that it is in its best interest to establish a clear financial policy of maintaining a Reserve Fund within the General Fund in the range of 20 -25% of the previous year's actual operating general fund expenditures, encumbrances and general fund transfers to other funds, as identified in the most recent Comprehensive Annual Financial Report (CAFR); and... Ms. Yukimura: Would you like to offer a motion? Ms. Nakamura moved to amend Resolution No. 2011 -77 as circulated, as shown in the Floor Amendment which is attached hereto as Attachment 5, seconded by Mr. Chang. Ms. Yukimura: Discussion? Chair. Chair Furfaro: I just want to make it very clear that the verbiage that's in the Resolution is the exact verbiage that we had in the proviso when we voted on it in the budget. But I'm fine with this. Ms. Yukimura: Councilmember Bynum. Thank you. Any further discussion? Mr. Bynum: The verbiage that was in the Resolution is the verbiage that is standard and that is meaningful in government accounting; if we change this language, we're using terms that are not standard in government accounting. I will dust say this is this best practices, 2011. It's essential that government maintains adequate levels of fund balances to mitigate risk and provide a backup for revenue shortfalls. The adequacy of the unrestricted fund balance in the General Fund should be assessed and it goes on and on but the terms that they're using... the unrestricted funds balance is the reserve. It is the reserve in the way GFOA is looking at it and it's defined by standards terms. The footnote to unrestricted fund balance says unrestricted fund balance compromises the committed, assigned, and unassigned fund balance categories. The thing I put up from the CAFR, those are the terms that we use. Unrestricted fund balance, committed, assigned, unassigned and so why would we want to change the language to the language that's not standard accounting terms? Even if it's saying the same thing and my fear Councilmember Nakamura is that the Administration is going to want to say, okay you established this reserve in the general fund but now we want even more money held in reserve for other purposes. That's my fear because the memos that they sent us earlier in the year asked us to do the reserve policy based on unassigned fund balances which would be different than any other community. 78 COUNCIL MEETING DECEMBER 1, 2011 This stuff is really complicated, it took me a while but we have resources, we have the GFOA and we have GASB which has great websites with position papers and talk about this at length and so I think Councilmember Furfaro wrote an outstanding reserve fund policy that used all the terminology that are generally accepted and use the terminology of GFOA. The only point I made today is that the recommendations says you should also have a portion of your policy because what do you do when the reserve fund is too high? And see I'm using the reserve fund and unrestricted fund balance interchangeably because they are the same thing. Now, he disagrees but that's fine because you know we are all smart people, we can go read the GASB documents, we can go read the GFOA, these terms changed in 2009 or 2008 when GASB 54 came in, right Wally? Yes. I think your amendment doesn't change the meaning of this but it doesn't use the terms that are recommended. Ms. Yukimura: Yes Councilmember Nakamura. Ms. Nakamura: I have a question for Wally. There being no objections, the rules were suspended. Ms. Nakamura: Wally, I think I asked you earlier and I'm just going to ask you one more time, do you believe that the unrestricted fund balance is synonymous with the reserve fund? Mr. Rezentes: The unrestricted fund balance is moneys that is available for appropriation that does not have any strings or future commitments or uses. It's moneys that is available for appropriation by this body, the County Council. Funds that are restricted cannot be used for that purpose unless this body unrestricts that fund, that amount and so I mean... I guess that's the best way that I can explain it. It may not be expended, it's moneys that's restricted by ordinance, by law but it can be quote / unquote unrestricted with action from this body. Ms. Nakamura: Bynum's definitions? same? Mr. Rezentes: Ms. Nakamura: Mr. Rezentes: Ms. Nakamura: Mr. Rezentes: Ms. Nakamura: Ms. Yukimura: Mr. Bynum: So you disagree then with Councilmember I don't know what Mr. Bynum's definition is. That they were synonymous. That the reserve fund... And the unrestricted fund balance was the Yeah, I disagree with that. Okay, thank you. Councilmember Bynum. How are they different? 79 COUNCIL MEETING DECEMBER 1, 2011 Mr. Rezentes: The reserve fund is amounts that are set aside and are restricted. Unrestricted fund balances is balances that are available for appropriation and not restricted. Mr. Bynum: And you're just making my point. If we put this in the budget and call it restricted, then you're going to want to have additional funds... Mr. Rezentes: Well I don't... that's the part that I don't get... what you said is the Administration is going to want to secure more funds or set aside more funds, I mean... Mr. Bynum: Okay if we... Mr. Rezentes: ... that's your authority to do. We cannot say we're going to reserve money on our side of the house, it's your body that makes that call. Mr. Bynum: So when we place the reserve fund in the budget it becomes restricted? Mr. Rezentes: You guys have the first strings. If you say I want to create a reserve fund of "x ", that money becomes restricted. Right now on our books... Mr. Bynum: And how do we do... Mr. Rezentes: Right now on our books we have twenty... what is it... twenty -five million, three hundred eighty -seven thousand, seventy - seven dollars as restricted fund balance on the books right now because that's what the policy that this Council enacted approved. Right now as we speak, we have that amount as restricted. Mr. Bynum: But that was... so that... so we won't see that until this CAFR? Mr. Rezentes: That was done in this current fiscal year, not last fiscal year. The CAFR you're going to get in a few weeks is for fiscal year end June 30, 2011. Mr. Bynum: You know this whole... Mr. Rezentes: So the reserve policy was created July 1, 2011. Mr. Bynum: And what's the purpose of putting it in the budget if you still require an ordinance to spend it? Mr. Rezentes: Because you're saying... the motion of the Council is to restrict the moneys from being expended, from being appropriated and setting it aside for the purposes that you had intended. That's what it is. Put it this way... if we did not create the reserve fund, reserve policy, if we did not create 80 COUNCIL MEETING DECEMBER 1, 2011 the reserve policy that moneys would be sitting there unrestricted available for appropriation. Mr. Bynum: So this whole discussion the last five minutes comes down to semantics? Mr. Rezentes: I don't know, it's wordsmything everybody has a different perception or they read into things a little differently than others. I mean in my mind the intent of the reserve policy was clear and I think we carry it out with the right intentions. Ms. Yukimura: Okay, any other questions? Thank you Wally. There being no objections, the meeting was called back to order, and proceeded as follows: Ms. Yukimura: We are on a motion to amend as circulated from Councilmember Nakamura. Any further discussion? The motion to amend Resolution No. 2011 -77 was then put, and carried by a vote of (5: 1) (Mr. Bynum voting no.) Ms. Yukimura: Motion passes. Now we're on the main motion for the Resolution as amended. Is there any further discussion? The motion for adoption of Resolution No. 2011 -77 as amended was then put, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST ADOPTION: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Ms. Yukimura returned the Chairmanship to Chair Furfaro. Chair Furfaro: Thank you very much for handling that item. May we have the new item from the County Clerk Office? BILL FOR FIRST READING: Proposed Draft Bill (No.2423) — A BILL FOR AN ORDINANCE TO AMEND CHAPTER 6, ARTICLE 14, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO THE PUBLIC ACCESS, OPEN SPACE AND NATURAL RESOURCES PRESERVATION FUND: Mr. Chang moved for passage of Proposed Draft Bill N. 2423 on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 11, 2012, and that it thereafter be referred to the Planning Committee, seconded by Mr. Bynum. Chair Furfaro: Any further discussion? Anyone in the audience wishes to speak on this item? 81 COUNCIL MEETING DECEMBER 1, 2011 The motion for passage of Proposed Draft Bill No. 2423 was then put, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kuali`i, Nakamura, Yukimura, Furfaro TOTAL — 6, AGAINST PASSAGE: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Bill No. 2415, Draft 2 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 5A, KAUXI COUNTY CODE 1987, AS AMENDED, RELATING TO EXEMPTIONS FOR COMMERCIAL ALTERNATIVE ENERGY FACILITIES: Mr. Bynum moved for adoption of Bill No. 2415, Draft 2. Chair Furfaro: Is there anyone in the audience that wishes to speak on this Bill? This bill is up for second reading. There being no objections, the rules were suspended. KURT BOSSHARD: Kurt Bosshard, Kapa`a Solar. Thank you for the opportunity to speak, Chairman Furfaro, members of the Council, staff... I come to speak in support of the Bill which you may find surprising but you have given me every opportunity to state my case which I appreciate, I did the best that I could. I know that what you're doing is going to be supportive of people that aren't here and the industry in general which I think is a good thing and that's what I said my primary purpose was. I'm not going to comment about anything other than I think generally the Bill is a good idea. There were a couple of things that were not specifically addressed about solar which I had hoped for and is going to be cause for some interpretation of the Tax Office. I had discussed wanting to have it clarified that the area to be assessed as industrial would be just the area under the panels. I believe that that's the policy that they're going to follow rather than the broad area of the leased area or the owned area of the lot because the lots are often bigger than the area where the panels are located. There's also the matter of having to make a request for exemption before the end of the year which I couldn't do for 2011 because there wasn't a policy on it but I understand that they'll be waiving that requirement because I could not have done it. There was a impossibility to that for me to have done that by December 2010 because there was no policy or any ordinance at that time but I understand that that doesn't need to be written into the Bill. Because I wouldn't have been able to do that as it were. If that's not the case then of course then I would ask that that be put in the Bill but I believe that that's the way it will be interpreted. With that, I would again say thank you for taking all the time to discuss this issue as well as the other issues that you have to consider and I know it's... there's conflict and it's not easy and you do the best that you can and I appreciate that. Chair Furfaro: Thank you. Are there any questions for Mr. Bosshard? Mr. Bynum. Mr. Bynum: I just want to make sure I heard you correct... you're in support of the Bill now? Mr. Bosshard: That is correct. 82 COUNCIL MEETING DECEMBER 1, 2011 Mr. Bynum: And then I wanted to thank you for persevering, for you know stepping out and taking a risk and doing our first significant alternative energy project here. Regards to some of those issues that you and I have discussed, if it doesn't work out right and I'm going to keep tracking it because I contemplated some amendments to address your concerns, basically was told... don't worry, we're not going to implement it at that fashion right. We're going to meet these concerns and I'm sure you'll let me know if that's not the case. Mr. Bosshard: Yes I will. Mr. Bynum: Thank you. Mr. Bosshard: And I know you'll listen as everybody else has on the Council. Everybody had their focus on doing this and I appreciate that. Mr. Bynum: Thank you. Chair Furfaro: Anymore questions for Kurt? Councilmember Nakamura. Ms. Nakamura: I just wanted to thank you for coming out to all of our hearings on this subject and giving us your insight and suggestions, I think it was very helpful along the way. Thank you. Mr. Bosshard: Well if you have to deal with it, I should certainly have to because it is my business so I should be here with you, I think. Chair Furfaro: Very good observation. Mr. Bosshard: I get to leave after mine is done though... I'm only going that far. Chair Furfaro: That's right. Are there any more questions for Mr. Bosshard? Thank you very much and I sincerely mean that and your testimony have been greatly appreciated. Mr. Bosshard: Thank you. There being no objections, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Members any further discussion? Councilmember Chang. Mr. Chang: Thank you Chairman. I just wanted to say thank you to all Committee members and the entire Council for all the diligent work and a lot of effort and just testimonies and I think it's going to be an exciting time for Kauai. Thank you. Chair Furfaro: Mr. Kuali`i. Mr. Kuali`i: As I did when we voted in the Committee, I just wanted to say that I will be voting in support but with reservations. I am not 83 COUNCIL MEETING DECEMBER 1, 2011 clear... I'm not convinced that this is necessary the right tax rate but I know... I would imagine we have an opportunity to relook at the taxes each year as is our responsibility and I will be asking the Real Property Tax folks to work with me and doing the analysis next year and possibly revisiting this. I will support it at this time and I will make my point again as far as solar goes, I think we have enough projects in the pipeline already that it's not necessarily requiring so much of an incentive and that we will saturate our solar market hopefully within the next few years. Then again there's the other renewable energy alternative as well and so I will support with reservations. Chair Furfaro: Is there anymore discussion before I make comment? I also will be supporting this with some reservations and my reservations are based on the fact that these financial agreements are negotiated over a twenty year period. If the goal is ultimately is to reduce operating costs through alternative energy sources, I would have thought there was at least a window set... all tax payers could look at opportunities to see their kilowatt charges reduced, but I will be supporting the bill. It would have been nice to have a look say every seven years as we expand alternative energies. On that note... The motion for adoption of Bill No. 2415, Draft 2, on second and final reading, and that it be transmitted to the Mayor for his approval, was then put, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuah'i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST ADOPTION: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL — 1. Mr. Topenio: Six (6) ayes. Chair Furfaro: Next item please. Mr. Topenio: Next item is Bill No. 2419, Draft 1. Bill No. 2419, Draft 1 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 15A OF THE KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO THE KAUAI COUNTY FIRE CODE: Mr. Chang moved for adoption of Bill No. 2419, Draft 1, on second and final reading, and that it be transmitted to the Mayor for his approval, seconded by Mr. Bynum, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST ADOPTION: None TOTAL — 0, EXCUSED & NOT VOTING: None TOTAL — 1. Bill No. 2421 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 8, ARTICLE 24 OF THE KAUAI COUNTY CODE 1987, AS AMENDED, FOR THE IMPOSITION OF CIVIL FINE AUTHORITY FOR. THE COUNTY OF KAUAI PLANNING DEPARTMENT: Mr. Chang moved for adoption of Bill No. 2421, seconded by Ms. Nakamura. 84 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: I believe we have an amendment being introduced now that we have a motion and a second. Mr. Kuali`i, you have the floor. I believe your amendment is being circulated and I will recognize you to give us some narrative on the amendment. Mr. Kuali`i moved to amend Bill No. 2421 as circulated, as shown in the Floor Amendment which is attached hereto as Attachment 6, seconded by Ms. Nakamura. Mr. Kuali`i: The basic amendment you'll see in the highlighted yellow area was on the amount of the civil fine, instead of, of $1,000 not to exceed $10,000 and then for the daily fine, instead of a fine of a $1,000, it would be up to $10,000 per day. So I was able to run this amendment by the Planning Director and his only initial concern had to do with whether it was allowable for him to have such authority. He did determine that that was fine and he did say that he was okay with the amendment. The primary reason for this is to allow the diverse type of violations that may come from a small infraction to a really large and serious infraction and to give that discretion and that authority to address violations. Chair Furfaro: Any discussion on the amendment? Mr. Bynum. Mr. Bynum: I just have a question for Councilmember Kuali`i, was this reviewed by the County Attorney's Office? Mr. Kuali`i: No. Just by the Planning Director. Chair Furfaro: Is it possible that the County Attorney would consider looking at this amendment as we take a short recess? I'm sorry, I'm going to ask for a ten minute recess, this was reviewed by Planning... Oh take a caption break at the same time? Thank you. There being no objections, the Council recessed 5:13 p.m. The Council reconvened at 5:32 p.m., and proceeded as follows: Chair Furfaro: We're back from our break. We also have an Executive Session this evening as well but what is the next item? Mr. Topenio: We're still on Bill No. 2421 Chair on the amendment. Chair Furfaro: Did Mr. Bynum have the floor for the discussion or are we still on you sir? Mr. Kuali`i: I believe Councilmember Bynum asked the question on whether I had asked the Attorney and I did have a conversation with the Attorney on the break. I did not ask him directly, the Planning Director when I asked him... when staff and I checked with the Attorney. Chair Furfaro: Is it our intent to ask the Attorney to come up? 85 COUNCIL MEETING DECEMBER 1, 2011 Mr. Kuali`i: Yes we can if that's what Councilmember Bynum wants. But he did see no problem with it. Chair Furfaro: Go ahead Mr. Bynum. Mr. Bynum: No, I had an opportunity and it was just a straight forward question, I want to make sure our legal folks feel comfortable with this. Changing the fine from a thousand to not to exceed ten thousand is a very significant change but with no objection from the Planning Department and the County Attorney, I can support this. Chair Furfaro: Okay. Any further dialog? Ms. Nakamura: I think I'm going to support the amendment as well. Mainly because it gives the Planning Director discretion to go below one thousand dollars for minor infractions and for major infractions with health and safety considerations, it gives him flexibility to fine a higher end fine. So I will be supporting this amendment. Chair Furfaro: Any more discussion? Mr. Kuali`i, I will not be supporting your amendment and I want to share to you, my opinion is the fact that we need to do some general enforcement first in such a way that I think if some of you let a fine go for thirty days, that's a thirty thousand dollar fine but it has to come with some enforcement. For that reason I'm putting the emphasis on actually going out and citing people versus what the amount is. On that note, we need to vote on the amendment. Can we do the amendment by roll call? Mr. Watanabe: It would be just a voice vote. The motion to amend Bill No. 2421 was then put, and carried by a vote of (5:1) (Mr. Furfaro voting no). Chair Furfaro: Mr. Bynum. Mr. Bynum: This Bill for the first time gives some enforcement authority to the Planning Department for zoning violations and in the past, zoning violations were handled... they could refer it to the Prosecutor's Office although until recently it hasn't been a high priority for that Office and so to be able to have another mechanism and tool in the Planning Department is a positive thing. I'm going to support this Bill. Chair Furfaro: Council Vice Chair Yukimura. Ms. Yukimura: I believe also that it's a necessary framework for a Planning Department rather than having to go to Court for every violation. This is a good way to be able to handle things more quickly and more cost effectively. It does put discretion in the hands of the Planning Director and as I think the Chair alluded to, there is a lot of work to be done in terms of professionalizing and improving the system of enforcement. This will be a challenge and charge I think to the Planning Department to do the job well and with wise discretion and hopefully this will be the result of this and other efforts to do proper enforcement in the Planning Department. 86 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Any further comments before I make a comment? My comment is a follow up to the piece we had in front of us with the GIS system and Planning. I really wanted to see the emphasis with the technology we have identify various parcels, whatever tax district they're in and so forth... you know the bottom line we're going to see a violation, a building code issue and so forth and we're going to be able to document it and go out and cite them. I want to see that kind of results as what is the net benefit of our investment and the GIS system. For that, I hoped I clarified why I'm focusing more on the actual enforcement versus the consequences or the penalties. On that note, there's no further dialog. The motion for adoption of Bill No. 2421, as amended, on second and final reading, and that it be transmitted to the Mayor for his approval, was then put, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuali`i, Nakamura Yukimura TOTAL — 5, AGAINST ADOPTION: Furfaro TOTAL —1, EXCUSED & NOT VOTING: Rapozo TOTAL —1. Mr. Watanabe: Five ayes, one no. Chair Furfaro: Thank you very much. I believe the next item is a request for us to go into Executive Session. Mr. Castillo will you introduce yourself for the record again. There being no objections, the rules were suspended. ALFRE B. CASTILLO, COUNTY ATTORNEY: Council Chair, Councilmember, Al Castillo, County Attorney, good evening. Next matter for your consideration is ES -513, Pursuant to Haw. Rev. Stat. § §92 -4 and 92- 5(a)(4), (6) and (8), and Kauai County Charter section 3.07(E), the purpose of this executive session is to provide the Council with a briefing on Kathleen M. Ali Quin v. County of Kauai, Department of Transportation, et al., Civil No. 08 -00507 JMS BMK, U.S. District Court, and related matters. This briefing and consultation involves consideration of the powers, duties, privileges, immunities and/or liabilities of the Council and the County as they relate to this agenda item. There being no objections, the meeting was called back to order. Ms. Yukimura moved to convene in Executive Session to discuss ES -513 respectively, seconded by Mr. Chang. Chair Furfaro: Mr. Castillo may I ask you will we need to come back as a group at this point or is this... Mr. Castillo: I don't think we need to come back. Chair Furfaro: We will not be back, okay. Mr. Chang. Mr. Chang: I was just going to ask before we conclude if I could have a moment of personal privilege. 87 COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: After we finish this item, I'll give you a moment of privilege. Mr. Bynum. Mr. Bynum: I thought earlier in the day, we moved something to the end of the agenda to have the Executive Session (inaudible)... Chair Furfaro: That's what I was wondering. Mr. Bynum: ...whether we have to come back into open session or not. Mr. Watanabe: Chair, we have one open session item after the Executive Session item. Chair Furfaro: Oh we do, very good. BC, you heard? We're going to come back. There being no objections, the meeting was called back to order, and proceeded as follows: The motion to convene into Executive Session to discuss ES -513 was then put, and carried by the following vote: FOR EXECUTIVE SESSION: Bynum, Chang, Kuah'i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST EXECUTIVE SESSION: None TOTAL — 0, EXCUSED & NOT VOTING: None TOTAL — 1. There being no objections, the meeting was in recess at 5:40 p.m. The Council reconvened at 5:56 p.m., and proceeded as follows: Chair Furfaro: This Council meeting is called back to order and we have one unfinished item. Mr. Topenio: Yes Chair communication on page two (2) of the Council's agenda, communication C 2011 -307. C 2011 -307 Request (11/09/2011) from the Office of the County Attorney for authorization to expend additional funds up to $10,000.00 to enable special counsel's continued representation in Kathleen M. Ali Quin vs. County of Kauai, Department of Transportation, et al., Civil No. CV08 -00507 JMS BMK, U.S. District Court, and related matters. Ms. Nakamura: I'd like to move to approve but amend the amount, so do I... do we do the first motion to approve then amend? Ms. Yukimura: I think we can just... based on the discussions in the Executive Session... Ms. Nakamura moved to approve C 2011 -307 and amend the amount from ten thousand dollars ($10,000.00) to fifteen thousand dollars ($15,000.00), seconded by Mr. Chang, and unanimously carried. COUNCIL MEETING DECEMBER 1, 2011 Chair Furfaro: Any further discussion? If not, I would like a roll call vote on the amount now identified as fifteen thousand dollars ($15,000.00). Mr. Topenio: Roll call vote in the amount of fifteen thousand dollars ($15,000.00) for communication 2011 -307. FOR APPROVAL: Bynum, Chang, Kuali`i, Nakamura Yukimura, Furfaro TOTAL — 6, AGAINST APPROVAL: None TOTAL — 0, EXCUSED & NOT VOTING: Rapozo TOTAL — 1. ADJOURNMENT. The meeting was called back to order at 5:58 p.m., and there being no further business, the meeting was adjourned. Respectfully submitted, RICKY WATANABE Interim County Clerk /ds ATTACHMENT 1 (December 1, 2011) FLOOR AMENDMENT -2 Resolution No. 2011 -77, Resolution Establishing the County of Kauai Reserve Fund and Reserve Fund Policy INTRODUCED BY: Tim Bynum Amend Resolution No. 2011 -77 by inserting a new paragraph 18 to read as follows: "BE IT FURTHER RESOLVED, that in the event that the fund balance exceeds 30% of the previous ,year's actual operating general fund expenditures, encumbrances, and general fund transfers to other funds, as identified in the most recent CAFR, the County of Kauai shall expeditiously take actions to reduce the Reserve Fund balance to the 20 -25% levels as specified earlier by following the priorities below: 1. Tax refund 2. Debt reduction 3. Targeted Capital Improvement Project (s ) (CIP) for community economic development or CIP that improve County services." (Material to be deleted is bracketed. New material is underscored.) (VAcsofficefiles \amendments\FA Reso No. 2011 -77- TB- reserve fund policy (ss- lc).Doc.) ATTACHMENT 2 (December 1, 2011) FLOOR AMENDMENT Bill No 2420, Relating to Farm Worker Housing INTRODUCED BY: JoAnn A. Yukimura Amend Bill No. 2420, by amending Section 8 -7.9 in Section 2 to read as follows: "Sec. 8 -7.9 Special Standards For Issuance of Farm Worker Housing Use Permits. (a) For the purposes of this Section, the following definitions shall apply: "Commercial Farm" means an operation or enterprise in operation for at least one year whose owner has filed a Schedule F form with federal income tax filings with the Internal Revenue Service. The core function of the commercial farm shall be: (1) the commercial cultivation of fruits, vegetables, flowers, foliage, crops for bioenergy and forage (but excluding timber and turf farms); or (2) the raising of livestock, including but not limited to, meat and dairy cattle, pigs, goats, sheep, poultry, bees, fish, or other animal or aquatic life that are propagated for commercial purposes (but excluding the husbandry of horses for recreational or hobby purposes unless the farm complies with the guidelines set forth in §RP- 2- 3(a)(1) of the County of Kaua`i's Department of Finance Real Property Tax Division's Agricultural Dedication Program Rules as of April, 2010). "Exclusive residence" means the real property that is the person's only home or residence. If the person has more than one home or residence, then the person does not have an exclusive residence. "Farm worker" is a farm owner, employee, contract worker or unpaid intern in a program that qualifies under the Fair Labor Standards Act who works no less than nineteen (19) hours per week in farm - related operations on a commercial farm. For the purposes of farm worker housing, a commercial farm owner may qualify as a farm worker only when he can demonstrate the following: (1) that the proposed farm worker housing will be the farm owner's exclusive residence, and (2) that the affected lot has been subject to a condominium property regime (C.P.R.) and the respective C.P.R. [unit] limited common element does not qualify for any allowable permanent density. "Farm worker housing" means the use of a building or portion thereof designed and used exclusively for the housing of farm workers who actively 1 ATTACHMENT 2 and currently farm on the land upon which the housing is situated. Farm worker housing may also be used to house the immediate family members of the respective farm worker. (b) The Director shall not deem an application for a farm worker housing use permit complete unless the applicant can demonstrate that: (1) the commercial farm has generated at least thirty five thousand dollars ($35,000.00) of gross sales of agricultural product(s) per year, for the preceding (2) two consecutive years for each farm worker housing structure, as shown by State general excise tax forms and Internal Revenue Service Schedule F forms; (2) the owner has dedicated the [property] subject lot or C.P.R. limited common element or portion thereof upon which the farm worker housing will be located [(hereinafter the "subject property ")] to agricultural use pursuant to Section 5A -9.1 of the Kauai County Code as of August 16, 2010; and (3) the owner or lessee of the [subject property] subject lot or C.P.R. limited common element or portion thereof upon which the farm worker housing is being proposed has provided a commercial farm plan with staffing needs outlined to the Planning Department that demonstrates the feasibility of the respective farm's commercial agricultural production. (c) The owner of a condominium property regime or [unit] a limited common element in a condominium property regime may not apply for farm worker housing unless, as of [the effective date of this ordinance] August 16, 2010- (1) the condominium property regime has been registered with and received an effective date for the final public report from the Real Estate Commission of the State of Hawaii and the declaration has not been amended subsequent to August 16, 2010; and (2) the [unit] subject CPR limited common element or portion thereof has been dedicated to agricultural use pursuant to Section 5A -9.1 of the Kauai County Code. (d) No use permit for farm worker housing shall be approved unless: (1) The application meets the use permit standards established under Section 8 -20.5 of the Kauai County Code; (2) The Planning Commission finds that based upon the type of agricultural activity, size of the commercial farm, and farming methodologies, the applicant has demonstrated a clear and compelling need for farm worker housing and the number and size of structures applied for; and (3) The subject [property's] lot's maximum residential densities, as established in Section 8 -7.5, have been permitted and constructed. If the applicant can demonstrate that the subject 2 ATTACHMENT 2 [property is a unit in a] lot has been subjected to a condominium property regime (C.P.R.), and that the maximum allowable residential density for the applicant's respective C.P.R. [unit] limited common element has been permitted and constructed, the Planning Commission may waive the requirements of this provision. (e) In addition to conditions of approval that the Planning Commission may impose pursuant to Section 8- 20.5(b), a use permit for farm worker housing shall be subject to the following conditions: (1) The farm worker housing shall be used exclusively for the housing of farm workers and their immediate family; (2) [A maximum of three (3) farm worker housing structures may be built on the property that is the subject of the permit.] The Planniny Commission may issue a maximum of one (1) farm worker housing use permit per lot or, if the lot has been developed as a C.P.R., per C.P.R. limited common element. Each permit may allow the construction of a maximum of three (3) farm worker housing structures. The total floor area of all structures combined shall be limited to 1,800 square feet and no structure may exceed 1,200 square feet of floor area. For the purposes of farm worker housing, the total floor area shall mean the sum of the horizontal areas of each floor of a building, measured from the interior faces of the exterior walls. The total floor area shall include enclosed attached accessory structures such as garages or storage areas, but it shall exclude unenclosed attached structures such as breezeways, lanais, or porches; (3) The structures shall have post and pier foundations. No concrete slabs shall be used in constructing the farm worker housing; (4) The structures shall be located on a plot plan approved by the Planning Commission; and (5) The owner or lessee of the [property] subject lot or C.P.R. limited common element or portion thereof shall not charge the farm workers or their immediate family members for rent or electricity. (f) The land upon which the farm worker housing is located shall not be subdivided to create separate lots for the farm worker housing and the commercial farm. A farm worker housing use permit shall be subject to revocation if the farm worker housing and the commercial farm are designated as limited common elements of separate condominium units. (g) The owner of farm worker housing shall annually certify to the Director of Planning that the Farm Worker Housing meets requirements and conditions set forth in Sections 8 -7.9 (a) through (f). If any interest in the jproperty] subject lot or C.P.R. limited common element or portion thereof that is the subject of the use permit is transferred, conveyed or sold, the successor in interest shall immediately notify the Director of Planning of such change in ownership. (h) Prior to the issuance of the building permit, the applicant shall demonstrate to the satisfaction of the Planning Director that the applicant 3 ATTACHMENT 2 has recorded in the Bureau of Conveyances or the Land Court, as the case may be, the requirements and conditions set forth in Sections 8 -7.9 (a) through (g) respectively." (Material to be deleted is bracketed. New material is underscored.) 0 ATTACHMENT 3 (December 1, 2011) FLOOR AMENDMENT -3 Resolution No. 2011 -77, Resolution Establishing the County of Kauai Reserve Fund and Reserve Fund Policy INTRODUCED BY: Tim Bynum Amend Resolution No. 2011 -77 by inserting a new paragraph 18 to read as follows: "BE IT FURTHER RESOLVED, that in the event that the unrestricted fund balance exceeds 30% of the previous year's actual operating general fund expenditures, encumbrances, and General fund transfers to other funds, as identified in the most recent CAFR, the County of Kauai shall expeditiously take actions to reduce the Reserve Fund balance to the 20 -25% levels as specified earlier by following the priorities below: 1. Tax refund 2. Debt reduction 3. Targyeted Capital Improvement Project (s )(CIP) for Community economic development or CIP that improve County services." (Material to be deleted is bracketed. New material is underscored.) (V: \csofficefiles \amendments \FA Reso No. 2011 -77- TB- reserve fund policy (ss- lc).Doc.) ATTACHMENT 4 (December 1, 2011) FLOOR AMENDMENT Resolution No. 2011 -77, Resolution Establishing the County of Kauai Reserve Fund and Reserve Fund Policy INTRODUCED BY: Tim Bynum Amend Resolution No. 2011 -77 by inserting a new paragraph 18 to read as follows: "BE IT FURTHER RESOLVED, that in the event that the Reserve Fund exceeds 30% of the previous year's actual operating general fund expenditures, encumbrances, and general fund transfers to other funds, as identified in the most recent CAFR, the County of Kauai shall expeditiously take actions to reduce the Reserve Fund balance to the 20 -25% levels as specified_ earlier by following the priorities below: 1. Tax refund 2. Debt reduction 3. Targeted Capital Improvement Project(s) (CIP) for community economic development or CIP that improve County services." (Material to be deleted is bracketed. New material is underscored.) (V: \csofficefiles \amendments \FA Reso No. 2011-77- T13-reserve fund policy (ss- lc).Doc.) ATTACHMENT 5 (December 1, 2011) FLOOR AMENDMENT Resolution No. 2011 -77, Resolution Establishing the County of Kauai Reserve Fund and Reserve Fund Policy INTRODUCED BY: Nadine Nakamura Amend Resolution No. 2011 -77 by amending paragraph 1 to read as follows: "WHEREAS, the County of Kauai has determined that it is in its best interest to establish a clear financial policy of maintaining a [targeted unrestricted fund balance in the General] Reserve Fund within the General Fund in the range of 20 -25% of the previous year's actual operating general fund expenditures, encumbrances and general fund transfers to other funds, as identified in the most recent Comprehensive Annual Financial Report (CAFR); and (Material to be deleted is bracketed. New material is underscored.) ATTACHMENT 6 (December 1, 2011) FLOOR AMENDMENT Bill No. 2421, Relating to the Imposition of Civil Fine Authority for the County of Kauai Planning Department INTRODUCED BY: Kipukai Kuali`i, Councilmember Amend Bill No. 2421 by amending Sec. 8 -24.2 in Section 2 of the bill to read as follows: "Sec. 8 -24.2 Civil Fines. (a) If the Director of the Planning Department determines that any person, firm or corporation is not complying with a notice of violation, the Director may have the party responsible for the violation served, by mail or delivery, with an order pursuant to this section. The order may require the party responsible for the violation to do any or all of the following: 1) Correct the violation within the time specified in the order; 2) Pay a civil fine [of $1,0001 not to exceed $10,000 in the manner, at the place, and before the date specified in the order; 3) Pay a civil fine of [$1,000] up to $10,000 per day for each day in which the violation persists, in the manner and at the time and place specified in the order. (b) The order shall advise the party responsible for the violation that the order shall become final 30 days after the date of its delivery. The order shall also advise that the Director's action may be appealed to the Planning Commission. (c) The provisions of the order issued by the Director under this section shall become final 30 calendar days after the service of the order. The parties responsible for the violation may appeal the order to the Planning Commission pursuant to its rules. The form of this appeal must conform to the Planning Commission's rules. However, an appeal to the Planning Commission shall not stay any provision of the order. (d) The Director may institute a civil action in any court of competent jurisdiction for enforcement of any order issued pursuant to this section. Where the civil action has been instituted to enforce the civil fine imposed by said order, the Director need only show that the notice of violation and order were served; that a civil fine was imposed; the amount of the civil fine imposed has not been paid; that either the order has not been appealed or that if appealed, the order was sustained by the Commission and /or any Court action." (Material to be deleted is bracketed. New material is underscored)