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HomeMy WebLinkAbout12-15-2010-Doc15847i COUNCIL MEETING December 15, 2010 The Council Meeting of the Council of the County of Kauai was called to order by Council Chair Jay Furfaro at the Council Chambers, 3371-A Wilcox Road, Lihu`e, Kauai, on Wednesday, December 15, 2010 at 9:09 a.m., after which the following members answered the call of the roll: Honorable Tim Bynum Honorable Dickie Chang Honorable Derek S. K. Kawakami Honorable Nadine K. Nakamura Honorable Mel Rapozo Honorable JoAnn A. Yukimura Honorable Jay Furfaro, Council Chair Chair Furfaro: Aloha, good morning, this is our final meeting for the year and I'm going to make a couple exceptions to the Communications section of our agenda today. And I want to say that before we actually call the meeting together, we have two requests to give testimony on item C 2011-07 during the communication because the prosecutor's office will be traveling today and we have Dr. Monty Downs here, who also wants to offer testimony, and their schedules have need of them to be in another location. If you don't mind, when we get to the actual... after the communication, we'll take other testimony, but these requests came to me by email this morning. APPROVAL OF AGENDA. Mr. Nakamura: First matter is Approval of the Agenda. Mr. -Rapozo moved for approval of the agenda as circulated, seconded by Ms. Yukimura, and unanimously carried. MINUTES of the following meetings of the Council: Council Meeting of November 10, 2010 Mr. Chang moved for approval of the minutes as circulated, seconded by Ms. Yukimura, and unanimously carried. COMMUNICATIONS: Mr. Nakamura: At this time, Mr. Chair, if we can have...on page one of the council's agenda i£..for receipt are Communications C 2011-04, C 2011- 05, and C 2011-06. C 2011-04 Communication (11/03/2010) from the Chief of the Building Division, Department of Public Works, transmitting for Council information, the Building Permit Reports for October 2010: 1) Building Permit Processing Report 2) Building Permit Estimated Value Summary 3) Building Permits Tracking Report 4) Building Permits Status Mr. Chang moved to receive communication C 2011-04 for the record, seconded by Mr. Kawakami, and unanimously carried. COUNCIL MEETING. - 2 - ~cember 15, 2010 C 2011-05 Communication (12/03/2010) from the Director of Finance, transmitting for Council consideration, a $1,571,001.00 appropriation from the surplus and appropriations estimated in the General Fund for Phase 1 of the upgrade to the County's 800 Mhz radio system to bring it into compliance with Project 25 (P25), as required by the Federal Government, and to qualify for future federal funding for additional upgrades: Mr. Chang moved to receive communication C 2011-05 for the record, seconded by Mr. Kawakami, and unanimously carried. C 2011-06 Communication (12/03/2010) from the Director of Finance, transmitting for Council consideration, a $2,767,592.00 appropriation from the surplus and appropriations estimated in the General Fund for the shortages in the Golf and Sewer Funds of $62,719.00 and $2,704,873.00, respectively: Mr. Chang moved to receive communication C 2011-06 for the record, seconded by Mr. Kawakami, and unanimously carried. Chair Furfaro: Councilwoman Yukimura? Ms. Yukimura: Mr. Chair, I do have a question about the 800 Mhz radio system. Is it possible to get someone from the police department here? Chair Furfaro: We will do as such. Ms. Yukimura: Thank you. (?): Thank you. Chair Furfaro: We'll do that when the bill comes up for first reading. Ms. Yukimura: Yes, thank you. Chair Furfaro: Just so that we both understood. Okay, could we read communication 2011-07? Mr. Nakamura: Mr. Chair, next matter for receipt is communication C 2011-07. C 2011-07 Communication (12/03/2010) from the Director of Finance, transmitting for Council consideration, a $2,328,554.00 appropriation from the surplus and appropriations estimated in various funds to provide funding to eliminate furloughs effective January 1, 2011. Chair Furfaro: Thank you. Mr. Rapozo: You want to start with a motion to approve? Chair Furfaro: Yes, please. Mr. Rapozo: I'll move to approve. Mr. Kawakami: Second Chair Furfaro: Receive. Mr. Bynum: Receive? COUNCIL MEETING ~ - 3 - ~cember 15, 2010 Chair Furfaro: Mr. Rapozo: Mr. Kawakami: Motion to receive. Check that, yeah, move to receive. Second. Mr. Rapozo moved to receive communication C 2011-07 for the record, seconded by Mr. Kawakami. Chair Furfaro: Thank you, Mr. Rapozo, second from Mr. Kawakami. On that note, I'm going to suspend the rules and Mr. Mickens, did you want to come up and share something with us? There being no objection, the rules were suspended. GLENN MICKENS: Thank you, Jay, for the record Glenn Mickens. Yes, Jay, I have some short comments on 06, 07, 08 and 09, which are also bills, 2388, 2389, 2390, and 2391. They're not very long, so i£..with your permission, I'll go ahead and give my testimony for those and won't have to come up again. Is that okay? Chair Furfaro: I don't have a problem with that, Mr. Mickens, but let me ask you again. I asked for the courtesies to hear from the prosecutor, who's going to be catching a plane... Mr. Mickens: ~ Okay. Chair Furfaro: ...this morning. Mr. Mickens: Sure. Chair Furfaro: And then Dr. Downs... Mr. Mickens: Right. Chair Furfaro: ...and then I'll allow you to come up. Would you yield the floor? Mr. Mickens: Oh, by all means. Chair Furfaro: Thank you (inaudible). Mr. Mickens: Especially for my friend Dr. Downs. Thank you. Chair Furfaro: Okay. We'll start with the prosecutor's office. SHAYLENE ISERI-CARVALHO, Prosecuting Attorney: Good morning, Council Chair Furfaro and other honorable members of the county council. 'It is a pleasure to be here. Chair Furfaro: Good morning. Ms. Iseri-Carvalho: Thank you. Thank you all for accommodating my schedule. I'm flying out this morning for the annual Hawaii Prosecuting Attorneys Association meeting on Oahu and appreciate your consideration. I have prepared written testimony for... so that we would be able to expedite my testimony in light of my scheduling conflict. We do have copies that we will prepare for the record. My COUNCIL MEETING ~ - 4 - ~cember 15, 2010 name is Shaylene Iseri-Carvalho, prosecutor. Dear Members of the Council, the office of the prosecuting attorney (OPA) hereby submits its testimony in support of the furloughs...of ending the furloughs as soon as possible and additionally requests that should furloughs be considered in the future, that the staff of the office of the prosecuting attorney be excluded. The furloughs imposed. on the office of the prosecuting attorney have had a tremendously detrimental effect on the safety and welfare of our community. While the county has saved roughly $66,000 as a result of placing the OPA staff on furlough, the savings simply do not justify the cost. Sixty-six thousand dollars represents less than one-half of one percent of the county's $147,000,000.00 budget for the 2011 fiscal year. However, as a result of the county's effort to save this extremely small percentage of the overall budget, justice has been unnecessarily delayed, criminals have been released, and many of our staff have been forced to the brink of financial ruin. As stated in the Charter of the County of Kauai, our office has the duty, as do all other county offices, to promote the general welfare, health, peace, good order, comfort and morals of our community. The furloughs represent an absolute contradiction to this directive by drastically reducing the number of working hours our office can utilize in order to perform its duties. A total of 1,384 work hours were lost to the furloughs, but this does not represent the total amount of the hours sacrificed in the name of meager savings to the county. Rather than focusing on the day-to-day operation of the OPA, our office's administrative personnel devoted countless hours to the scheduling and administration of the county's furlough plan, striving to reduce its overall impact on public safety. Different approaches were attempted, including implementing a complicated staggering system to ensure that our office was at least partially staffed on furlough Fridays. However, despite our best efforts and numerous hours spent designing a workable plan, we were unable to operate as effectively as we should have been when faced with the crippling effects of furloughs. As we anticipated, when the furloughs were proposed, criminals that might otherwise remain in custody have been released because of the strains of the furloughs on our office's resources. Unlike most other county departments, our office must comply with strict time standards imposed by law. When a person is arrested, the judge must review the facts of the case within 48 hours of arrest to confirm that there is probable cause to keep that person in custody. After this 48-hour probable cause determination, the court must then schedule an arraignment within 48 hours. If the defendant remains in custody after the arraignment, the defendant is entitled to a preliminary hearing within the next 48 hours. Each step in this time-sensitive process requires the OPA to generate significant amounts of court documents, locate witnesses, and conduct witness interviews. If the time requirement is violated at any point in this process, it is considered a violation of the defendant's constitutional rights, and the defendant is entitled to immediate release regardless of the nature of the charge. This unfortunate reality has become an occurrence during the furlough period because cur. office has lacked the resources to operate as effectively as it could have been. After doing a thorough evaluation of the furlough impacts, it is quite evident that furloughs should not have been imposed on county employees that are directly responsible for the safety of our community. Almost all of the employees of the OPA are classified as exempt for one important reason: Their absence has a direct negative impact on public safety. However, despite this classification, the decision was made to impose the furloughs without due consideration to their unique position. As a result, felons have walked free only days after their arrest and the safety of the community has been jeopardized unnecessarily. COUNCIL MEETING • - 5 - ITecember 15, 2010 As a further result of the furloughs, the OPA has seen a resurgence in the backlog of cases. The current administration took office in the middle of the 2008/2009 fiscal year with over 4,000 cases of unserved documents and case files left over from the previous administration. To address this problem, we created an investigator services unit and assembled a review team of law clerks and attorneys to specialize in different types of cases and prioritize the processing of the documents and case files based on the level of severity of the offense. We refined these efforts during the last fiscal year, disposing of over 500 felony cases and making significant progress toward eliminating this cumbersome backlog. As a direct result of the furloughs for our support staff, we have seen a dramatic increase in the number of cases that are put on hold pending further review. This increase indicates that the progress. in clearing the backlog has begun to reverse at an astonishing rate. Before the implementation of furloughs, our office had 366 cases...felony cases pending review. After the furloughs were in place, that number nearly doubled to 604 even though we received approximately the same number of incident reports from the Kauai Police Department during that same period. The significant increase in the number of cases pending review clearly illustrates the furlough's effect on our office's productivity. With office staff furloughed two days per month, there remains little time to focus on processing the enormous amount of cases that are beginning to amass. While public safety and productivity have clearly suffered, the furloughs have had an alarming impact on the personal lives of our personal support staff. The sharp reduction in salary has pushed many to the brink of financial ruin. Anxiety and the necessity of taking on a second job in order to adequately provide for their families have reduced both morale and productivity throughout the office. In speaking with the employees, although their commitment and dedication in serving the community have been unwavering, their increased stress level has caused an unprecedented number of sick leave hours to be taken every week, which compounds the problems caused by understaffing. We simply cannot afford to impose this kind of burden on the people that are directly responsible for the safety of the community. The economic crisis we are facing needs to be balanced with the safety and welfare of the community. With crime increasing at an astonishing rate, county offices directly responsible for the safety of the public should never be considered for furloughs. The minimal financial savings simply do not justify the overall negative costs. We should learn from the failures of the furlough system and the harm it has already caused to our community. If future economic hardships require county offices to implement a furlough plan, public safety should never be compromised in the name of financial savings. Thank you all for your consideration in support of ending the furloughs as soon as possible. Chair Furfaro: Thank you, thank you very much. I'm going to"see if we have other questions on your testimony at this point. Mr. Bynum? " ~ ~ ` '- Mr. Bynum: Good morning, Shaylene. Ms. Iseri-Carvalho: Good morning. Mr. Bynum: I want to thank you for being ~ here -today. As an elected official, you're in a position to be independent and speak your mind about furloughs and I appreciate that you have. Other department heads may not have that same latitude and you know, I think although a majority of the council COUNCIL MEETING ~ - 6 - ~cember 15, 2010 supported furloughs, I believe a majority of the council also wanted public safety to be exempt and felt like we had some assurances that that was the case. To me, that would have included your office, it would have included the HGEA employees at KPD, it would have included the lifeguards which I thought were going to be exempt and I'm hearing that maybe they weren't in the long run. And we didn't have an adequate discussion about the impact o£..on county services, be it public safety or community center, or you know, elderly programs. Because of the way the budget process came down, those questions were never entertained or even allowed. So, I appreciate your testimony today and I agree with it. I don't...I think...I'm hopeful that we move to end furloughs effective January 1St today or begin that process, and I know that the county auditor intends to do a follow-up audit about the impact of furloughs not only on county services and employees, but on the larger economy as this big section of the middle class had their pay cut 10-12%, and you know, I think that affected the larger economy. So, thank you very much for your testimony today and I appreciate it. Ms. Iseri-Carvalho: Thank you, Councilmember Bynum. I recall very vividly sitting here on April 20, 2010 when we were prepared to go forward with the evaluation of the furloughs and that was delayed, and we never were consulted and we never had that kind of discussion that we would have wanted to at that time. We had already been very open with the county council throughout the term of my administration in trying to bring forth the issues that the office had faced even prior to me being elected as the prosecutor. We are also in a unique position because the police department was not put on furloughs. In fact, they were still contractually...I believe the county obligated for atwo-year period, and so the...when the police department, and I don't know if this is common knowledge, but if the police department does all of their investigation, nothing will happen to that person until the prosecutor's office files a document in court holding that person and explaining all of the rights that the defendant is entitled to and making sure that we don't compromise those where we do have felons that are left on the street. And that was clearly a very unique position that our office was in because the police department came in with the same amount of reports that they had been doing because they were not subjected...the officers weren't subjected to the furloughs and yet our staff basically were .not able to comply with a lot of these time constraints simply because not only of our furloughs but the judiciary furloughs as well. So a lot of times there were hearings... although we have up until 48 hours in order to bring the case forward and to a hearing, a lot of times because the furloughs happen on Friday, if there was a person who was in custody on Thursday, the furloughs were on Fri...I mean on Wednesday, we would have to do the hearing in 24 hours, which would mean on Thursday because they were on furlough on Friday, and it was impossible. A lot of the victims were witness...I mean witnesses to testify at the preliminary hearings were those that came from off-island. There were a lot of visitors that were impacted that moved and we were unable to get to those witnesses within a 24-hour period. It caused, again, an extreme amount of stress on the employees because they are very dedicated to making sure that the community was safe or remained safe and yet we were really unable to accomplish what we wanted to do as far as public safety because of them not being able to work when it was clear that we needed their time to be spent at work. Chair Furfaro: Thank you, any more questions? Mr. Rapozo, go right ahead. Mr. Rapozo: And thank you for being here today. Even with the furloughs, I mean you've mentioned quite a bit of hours, and I did have the opportunity to work in your office, so I understand exactly where you're coming from, but how long will it take you to recover? Should furloughs be restored today, how long will it take you to recover? And the caseload is no fun at your office, and I COUNCIL MEETING • - 7 - ITecember 15, 2010 think it should be noted that in anticipation of a tough economic period, you restructured your office and actually had let some employees go, which is very uncommon in the county. And you had enjoyed a savings of...I forget what that amount was... it was substantial, and yet you still were required to furlough, which I thought was unfair. I think real simply, you know, to furlough education and public safety is really a crime, period. But how long do you think it'll take you to recover and at what cost to catch up to where you were pre-furlough? Ms. Iseri-Carvalho: It would be really almost .impossible to estimate because there have been cases that we actually have lost because of the statute of limitation, because of the time that we hadn't been able... and serious cases. We had a child pornography case that...because the case wasn't brought forward within a period of three years, which was the statute of limitation, a 490-count child pornography case was dismissed on a technicality because there was insufficient time or staff to review those reports. There are a lot of these horror stories. KPD shares -our pain in going through these steps because we consult on a daily basis with the Kauai Police Department, and that's the only way that we have been able to try to manage the lack of resources on both sides, the police department side as well as the prosecution side. So it would be, in answer to your question Councilmember Rapozo, it would be very difficult to estimate. We had been making a lot of strides, I believe, in overcoming the backlog and in fact we are...were, prior to the furloughs, probably about 300 cases behind and that was a good amount when we talk about the 4,OOO...and we're talking only about felony cases because we also have misdemeanor cases and traffic violations that are voluminous. But with respect to the serious felony cases, we had made great strides in addressing the backlog and as indicated by our numbers...I had asked our staff to pull from our database how really, in numbers, has the furloughs affected our office and clearly we are double behind where we were before the furloughs had started. And so, it's an alarming number and you know I just, again, am here, you know, really to shed light on the seriousness of the issue. The mayor, I believe, has had some indication from the community about the effects of the furloughs and effects on crime in general. They had just created, as part of us being on the committee, a mayor's crime task force that has already met, I believe, three times (two meetings and one initial meeting) because it was (inaudible) is made up of members from...business members from the community, as well as the police department and ourselves, to try to shed light on the issue and try to collaborate as to how best to handle the situation. Whenever the economy goes bad, clearly it has an inverse relationship to our office. It means that our office exponentially increases the workload and so to see this kind of dynamics in place and not having the ability to address them as competently as we would have wanted to is...(cell phone alarm) oops, I think my time is up. That's my...that's actually my alarm to go catch my flight. Chair Furfaro: Hawaii 5-0. Ms. Iseri-Carvalho: Thanks, Jay; 'so again, I appreciate the time in bringing forth the issues to the county council, and we're more than available to share with you, all of the data that we have. I realize there's going to be a public hearing and we'll be able to shed more light at that time because I realize there are new councilmembers that may not have been privy to a lot of the information that we had provided over the past year and a half. Chair Furfaro: Shay, I do want to thank you, especially for the written testimony, and I also do want to say that, you know, as Mr. Bynum mentioned, it was not the intent of this council at the time to really have these COUNCIL MEETING. - 8 - ~ cember 15, 2010 conditions placed on public safety, which is certainly the primary focus of government. I also acknowledge the fact that fire and police, their contracts are up this year and so they, in fact, were not affected. But we're here today because it was this council that put the provisos in for the Dec...to start the December 15th reviews, two provisos: one on the furlough and the other one as it relates to developing a clear reserve policy. So, I do want to thank you. I know you're on a time limit. The schedule shows the public hearing right now tentatively for the 12th of January, followed by a second meeting on the 19th of January. Hopefully we get it done by the 26th and then the mayor has five days to look at it. How he would want to approach the month of January based on the outcome, I'm not sure. Does he want to do something retroactive depending the way the council's moving or not, but your testimony is very much appreciated. We appreciate you getting here early so that we can take your testimony before you fly out. Have a successful trip. Ms. Iseri-Carvalho: Thank you and happy holidays to you all. Chair Furfaro: Same to you, merry Christmas. On that note, Dr. Downs, you're here to give testimony even though we're on...even just on the communication section? I can give you that time now. MONTY DOWNS, M.D.: Good morning, Chair Furfaro and councilmembers. I don't have a plane to catch, but I definitely am a busy man and I really appreciate you allowing me to give some testimony early in the meeting today. Reading the paper last week, it sounds like ending furloughs is a done deal, so I don't want to beat a dead horse and give you a lengthy testimony on something that sounds like it may be in the works. But on the other hand, I don't get too many opportunities to talk about our lifeguards and the importance they have to Kauai and to the visitor industry. I've given you two pieces of testimony. One is a written testimony pretty quick after the elections, in fact before you councilmembers were sworn in, and I hope you all got that testimony that was entitled "Time to Right a Wrong" which had to do with the lifeguards pay cut. They didn't get furloughed, but they did get a pay cut, and I want to make sure if we're ending furloughs that we also end the pay cut. I feel I need to shepherd that through. And the second testimony I brought with me today, it's just a couple graphs. These are generated by the State epidemiologist, the guy named Dr. Dan Galanis, and what they show is that for visitors, the overwhelming cause of catastrophic mishap is drowning, and to me, in that way that makes ocean safety a critical part of the visitor industry, which we all hang our hat on, so to speak. And this...these terrible numbers where drowning is so prevalent as the cause of death exists even despite the fact of having a good lifeguard service that thanks to the previous councils we've had tremendous evolution in our lifeguarding in the last 20 years. Despite that, it's still a terrible challenge. Our oceans here are very, very rough. You'll see that Kauai always stands gut like a sore thumb on the third chart compared to the other islands. For some darn reason no matter how much we try, we still end up having the highest drowning rate of all the islands, and I've thought about that. I think I know the reason...the reasons for it, couple reasons. One, we have a lot of unguarded beaches that guidebooks, unfortunately, tend to tell people how beautiful they are and places like Larsen's and Secret Beach, and Hideaways. I mean just the names alone mean that they're just what adventuresome visitors want and get in trouble there. The second reason I think is more kind of a weather reason. We have... the other islands all have their resort communities in lee areas when you think of the Kona Coast or Waikiki is lee of the Koolau mountains and on Maui you have Lahaina and COUNCIL MEETING ~ -~9 - ITecember 15, 2010 I~ihei that are in the lee. Here Po`ipu is sort of a lee, but the trade wind...if you look at the geography of Kauai, the trade winds definitely wrap around... the whole Coconut Coast is right there slam-dunk in the trade winds. In the summertime, Hanalei and other resort areas are fairly protected, but Po`ipu is our very big resort area and that's heavily impacted by the trade winds, and sometimes it looks calm for 30 yards offshore, but as soon as you get past that, the wrap is right there and people...people get in trouble there. So I think there are a couple factors which no matter how hard we try Kauai still stands out like a sore thumb. Mr. Nakamura: Three minutes, Mr. Chair. Dr. Downs: As far as our lifeguards themselves, I don't ask you for sympathy for them because every county employee took a pay cut. But I do ask you for respect and on the basis of what they do. We ask them to do two different things: not only be experts in the water, throwing themselves into conditions which would kill me in (cough, excuse me) literally a heartbeat, but also they have a second job, and that's to be ambassadors. We...part of our ocean safety message is please swim near a lifeguard and please ask a lifeguard where is the safest place to swim. So we expect that of them. So every day they're out there talking with people and we've documented...actually last year they had 248 rescues, but like 120,000 what we call preventions, and those are people coming up to them and asking them where should I swim. So they have to be both concierges and daring watermen who have done rescues that have been noticed around the world for their courage and intensity. 'Anyway, so they... in the letter that I wrote you, I kind of went through the very details of how I feel a wrong was committed to them. At one point they were in the budget for no furlough, which I had lobbied for quite hard and I believed in very strongly, so that happened. But all of a sudden out of nowhere behind some closed doors, it was decided well, okay guys,' you're not getting a furlough, but you're getting a pay cut, and that's been a pretty heavy morale hit. They're supposedly in the fire department and kind of had to watch as their fire department colleagues get a 4% raise because of their contract. In the face of that, not only did.our lifeguards not get the 4% raise that they had bargained for a couple years ago with HGEA, but they got a 5% cut. So... and all the while, of course, inflation going up. So they're kind of feeling, again, a little morale problem, which I think is wrong because I think they do an incredible service for Kauai and for the visitor industry. I'm there in the ER, I see two different things. One, I see the terrible cases, which is what got me involved in the first place, in ocean safety of these visitor tragedies that you're seeing and local tragedies. But number two, we see some unbelievable rescues that our lifeguards make on jet skis and the people come in alive, maybe need a couple of hours of oxygen, maybe need one night in ICU for oxygen and a pressure mask that we put on them, and they would have been dead were it not for all the resources that our councils and our mayors of the last few sessions have put together getting jet skis that can go to even these remote beaches and make incredible rescues. So anyway, if you take away furloughs, bottom line, please also take away the pay cut and don't let that slip by unobserved is what I'm asking of you today: Thank you. Chair Furfaro: Dr. Downs, as I told you privately in a meeting, by way... no means did the council negotiate this package on reducing the pay scale. That was certainly never our intent, as Mr. Bynum pointed out. We tried to exempt public safety which included the lifeguards, but I can reassure you that this money bill for $2.3 million is intended, in my opinion, to end furloughs and pay reductions. And I do want to point out, though, that the administration found themselves dealing with a third party and that third party wasn't this council in coming into COUNCIL MEETING • - 10 - ~cember 15, 2010 what they felt was continuity on those pay reductions. But clearly to me, the money bill is addressing furloughs and pay reductions, and I'll make sure we send a communication. I'll ask the staff to reconfirm that with the administration... Now, let me see if there are any questions for you, sir. Would anybody like to... Councilwoman Yukimura? Ms. Yukimura: Yes, thank you, Dr. Downs. As always, thank you for being here to inform us and keep us clear about what the needs are for water safety. You mentioned that there were 248 rescues this past year and you mentioned something about prevention and another figure? Dr. Downs: Yeah, I think it's 120 plus thousand, the lifeguards kind of document every time... Ms. Yukimura: They advise or counsel somebody? Dr. Downs: (Inaudible) Yeah, advise someone, yeah, yeah. So whether...how many of those preventions...even if it's a tenth of one percent, that's like 10 dead people a year or something, so a pretty big deal. Ms. Yukimura: Thank you. And then on your last map or page of your presentation which shows a map of the island and where the drownings occurred, you...they show that total island drownings are 378 and shoreline drowning are 76.7% of that, which is 290 drownings. Am I to assume that the other drownings are swimming pool and that type of drowning, so not along the shoreline? Dr. Downs: And streams and rivers... Ms. Yukimura: Yes. Dr. Downs: And even some boating accidents and...yeah. Ms. Yukimura: Okay. Dr. Downs: So some of those are included. Ms. Yukimura: Okay. Um... Dr. Downs: The... if I could interrupt you... Ms. Yukimura: Yes, sure. Dr. Downs: ...for a second, the part I kind of outlined in orange on the upper left shows a very unique thing where actually drowning is responsible for more deaths on Kauai than motor vehicle accidents, which is... and this isn't just with visitors, it's local people and visitors, so it's a rough ocean. Ms. Yukimura: Yes, it's very telling. You show that between 1990 and 2008, there were 144 traffic deaths and there were 166 ocean drowning deaths. So yeah, that's showing that ocean drownings are a bigger problem actually. Okay, well thank you very much and... so your basic request is to just stop into the future the drowning? I mean, excuse me, the furloughs and the pay cuts? Dr. Downs: The pay cuts. I would not object to retroactive, I'd have to admit. The... Ms. Yukimura: Because I thought there was your letter... COUNCIL MEETING ~ - 11 - 1Tecember 15, 2010 Dr. Downs: I think that was a wrong that happened back on July lst. We didn't really get a feeling for why it happened, but within the...in late June based on the fact that the Oahu lifeguards did not get a pay cut or a furlough, our lifeguards were led to believe in the budget that they were not going to get a pay cut and then something very clandestine happened that I still haven't quite been able to put a finger on where all of a sudden they got a pay cut. So to me if I was making the decision, I'd make it retroactive to July 1, 2009 (sic), but... Ms. Yukimura: Yes, so how is it that O`ahu...that on Oahu the lifeguards did not take pay cuts? Chair Furfaro: Are they not two different bargaining units? Dr. Downs: No, no, we're all in the same...all the lifeguards are in the HGEA. Chair Furfaro: Okay, they're HGEA. Dr. Downs: Yeah, so each island that's part of where...we're trying to work on that on a statewide level, getting all the state...the lifeguards in each county sort of together as one unit, but that's a whole other story. Ms. Yukimura: But it does sound like it varied from county to county, which means it was either the administration or the council... and/or the council that made those decisions. " Dr. Downs: The rumor that I heard was that Mayor Hanneman just strongly believed that lifeguards cannot take a pay cut and...just the way police and fire can't, that it kind of ... Ms. Yukimura: Well certainly the pay scales indicate that. Dr. Downs: Yeah, so I don't know, but I kind of heard some...when I asked the same. question how did they swing it on Oahu and we couldn't swing it here, I heard there was a certain point where the mayor just said hey, I'm sorry, lifeguards are off limits; they're too important. Ms. Yukimura: And what about the other counties of Maui and Hawaii? Dr. Downs: The other counties... Big Island has exactly the same thing we do and Maui has one furlough day a month. So every county, yeah...we're hoping to get...a large part of the problem is that lifeguards don't have a bargaining unit that supports them. They are part o£..because of things that happened way back in the '70s actually when you go back historically, there were just a few lifeguards and (inaudible) what bargaining unit should we put them in? Okay, that one. It was sort of a random choice, putting them iri°tlie bargaining unit with clerks, and it turns out years later the job description is totally different, and it's a very inappropriate bargaining unit for them to be in. So we're trying to work on statewide getting a separate bargaining unit for the lifeguards, but that's actually a huge undertaking that requires the legislature itself, the state leg to make a new law about it and it'll be, I'm afraid, years of lobbying before we can achieve that. Ms. Yukimura: Thank you. COUNCIL MEETING. - 12 - ~cember 15, 2010 Chair Furfaro: Thank you. You know, Mr. Downs, this is only the first reading and I've made some exceptions here because much... there are some variables that, you know, we will visit when we get to the public hearing portion. But since we've gone there, I will let Mr. Bynum pose another question. Mr. Bynum? Mr. Bynum: I mostly just want to thank you for your testimony because I didn't know that the counties had behaved differently and I think... Do .you recall that during the budget hearing this council was pretty adamant that lifeguards should be off limits? Dr. Downs: I do recall, yeah. Mr. Bynum: And... so, you know, I didn't know until I got your letter that this 5% pay cut was imposed, and then to hear that it didn't happen on Oahu and it happened to...you know, I'm very uncomfortable with that. So, thanks for bringing that to our attention. Dr. Downs: You're welcome. Thank you for your support. Chair Furfaro: Thank you, Mr. Bynum, and. Mr. Downs, it is something that we are researching. I don't...as you shared it as a...the Honolulu conclusion was based on the direction of the mayor there. Dr. Downs: I think so. I don't... Chair Furfaro: Okay, we need to do a little research ourselves because I think Maui County might have been in a different kind of compliance as well. So, we'll have that reviewed as we get to the public hearing and the public hearing will be on January 12 and then of course, there'll be a second reading and go into committee. So we -have some opportunities to really surface these challenges. But I just want to restate my earlier statement that as we review furloughs we're also reviewing those payroll reductions, who didn't get furloughed. I don't know how possible it is in our current financial (inaudible) to even look at anything going retroactive. But the money that has been allocated is in fact, in my opinion, for January going forward. Are there any more questions of Mr. Downs? Go ahead, Mr. Chang. Mr. Chang: Not necessarily a question, but again thank you for your testimony and on another note, your tubing program. Dr. Downs: Okay. Mr. Chang: You just had a really nice article written up at Kealia lookout. So it started off with a few tubes hanging on trees, but now they're very visible and you mentioned Lepeuli or Larsen's and I know that those were places that the tubes were used to actually save, I believe, two lives within the rip current area. So, thank you on that note for moving on and getting the community involved with sponsoring your tubes...the rescue tubes on the beaches. Thank you. Dr. Downs: Thank you. I appreciate it. Chair Furfaro: Thank you, Dr. Downs, and thank you for all you do in our community.- Thank you very much. Dr. Downs: Mahalo for sneaking me in here. Have a good day. COUNCIL MEETING ~ - 13 - ITecember 15, 2010 Chair Furfaro: Mr. Mickens, I'm going. to let you speak and then I hope to move on to the predetermined time for the auditors. GLENN MICKENS: Thank you again, Jay. Since we're on Bill 2389, I'll comment about that first. Then, with your permission, Jay, I'll shortly give you my... Chair Furfaro: I'll let you go right ahead, go right ahead. Mr. Mickens: Thank you very much. I certainly concur with everything Shaylene had to say about ending furloughs. But if my friend Dickie with his quote in the Garden Island about possibly losing $12 million in TAT funds is true, I believe his statement needs serious investigation. I haven't checked that out, but if we're saving in this furlough thing $2,328,544.00, but we do take a chance of losing $12 million, I don't think that trade-off is something that I think... and again, I'm highly in favor of cutting these furloughs. I don't believe anybody should have to lose money or as Dr. Downs said, I don't believe that the lifeguards should be taking any pay cut. But again, maybe Dickie can expand on that at his will whenever he wants to. Regarding that Bill 2388, are we going to perpetually subsidize the golf and sewer funds? That's $2,767, 592.00 this year. That's a lot of money. Or can't they be made to pay for themselves? I know that the golf fund-Jay you made reference to this-once supported itself, so where is the leadership to make it happen again? And why should the sewer fund be in the red for almost $3 million? Who monitors the rates charged and collections? Regarding Bill 2390, we are subsidizing the bus system enough already. I believe Jay said something like a half a million dollars or more, maybe it was...I don't remember the exact figure. Why not give the mass of the people who use their vehicles to commute a gas subsidy and help them out? Yes, the elderly and those who cannot drive need transportation, so keep the buses running or possibly have the county contract with a cab company to pick people up and take them to their destination and take them home. I understand that this method is used in other municipalities and works well. So it could be tried here. It could be cheaper than engaging a fleet of buses and it could be more efficient, but I would oppose spending $575,000.00 on more buses. People... any of you, as an example, will not abandon your vehicle for a bus or bike, JoAnn. So put these funds into making vehicle travel more economically possible and alleviate traffic. You people use your vehicles to move around and so do I and all my friends. So, please live in the real world and address the masses and not the minorities. Take care of the needy but direct your major efforts to the 99% who need it. And Bill 2391, since Kauai is trailing our other islands in tourism, it appears that our funding $1 million is going to the right... is not going to the right promoters. I applaud Sue, George, and Dickie for their hard work and efforts to get tourists back to Kauai with the marathon, etcetera, but I would suggest, 'as I have ... said before, that this -$200,000.00 and a'ny other funds appropriated for "KVB lie' directed to airlines as vouchers for air discount fares for Kauai only. Cheaper airfares will bring people to Kauai. I'd bet on it. Research has proven that airfares are the major factor in determining if, when, and where a person and their families will travel. Mr. Nakamura: Three minutes, Mr. Chair. Mr. Mickens: It can also let Kauai hotels and restaurants issue discount vouchers to join the effort to get people back to Kauai. In other words, I COUNCIL MEETING ~ - 14 - ~ cember 15, 2010 don't see that our efforts in the KVB are working that well, if you read the figures in the financial section of the paper. But I think we should try something else and I, you know, I haven't heard any opposition to try and get vouchers. They did have these a long time ago when I used to come over here on vacation, and people just suck them up, ahundred-dollar round trip airfares from the west coast here, you couldn't afford not to take those. So I think they would at least be worth trying. And lastly, Jay, we're spending $7,767,146.00 out of our general fund. We're using the above amount out of the... shouldn't these funds be appropriated in the budget? Couldn't we budget these things? I see that in 3-6-09, our general fund balance was $22,061,141.00 unencumbered, but I've heard you say before that I think, you know, basically it's there for emergencies, like hurricanes and things. You have to have a balance in that general fund to be able to take care of emergencies and things. But this $7,767,000.00, I don't think they're really emergency funds. I think they could be appropriated, you know, in the budget itself. Anyway, this is my testimony. I've said quite a bit, asked quite a few questions, and at your convenience maybe you can answer some of them. Chair Furfaro: Let me give you a quick summary before I ask some of the other councilmembers if they have questions for you. First of all, our county, and the auditors can confirm this in...because they're next on the list, we do not have a clear resolution on a reserve policy. A reserve policy is recommended for most municipalities so that in the event of a hurricane, an airline shutdown, any type of economic blast we should take, we have an identified reserve to adjust that. These recommendations that you'll see from many accounting firms go anywhere from 15% of your operating budget to 20% of your operating budget, okay. So, we're starting off with these money bills that you've given testimony on and the mayor is proposing spending about $7 million... $7.6 million I ,believe. This is for the expansion of the bus, this is for reinstating furloughs (sic), all of those particular pieces. We have approximately...or started the year with a $44 million what is called surplus. In reality, part of that should be earmarked as a reserve. And so we have a $150 million operating budget, and let's say the recommended reserve is 20% or at minimum at least two months of the operating cost for the county, which amounts to about 17%, but let's stay with the 20. So that means $30 million of what is labeled as a surplus should be handled in a resolution and called a reserve. So that puts $30 million in at the end of each year, and at the beginning of a new budget session that reserve is replenished and each new council should put in place a resolution that earmarks what that percentage is. So we have the $44 million we started with. We have spent $3.2 million in emergency programs in the first six months of this year. That brings us to $41 million. We then have a total $7.7 million of emergency request... a new request from the administration that we're going to be having public hearings on that amounts to $7.7 million. So that will bring our $41 million down to about $33.5 million. And in the proviso that we put into the budget, we're saying to the mayor we want a clear reserve policy so that it's not referred to as a surplus but rather as a reserve. If that's 20%, that's $30 million. So the real surplus we have only for the balance of this year should really anly be about $3.3 million. That's the quick accounting of it. Now, I know you have individual comments that I've heard in your testimony regarding the mayor's plan to expand the bus and so forth, but those are things that we can do because of our conservative approach to managing our money, and I just wanted to say that from the beginning here because now we're going to have a series of public hearings on those bills and your answers will come up in those public hearings. And I appreciate your testimony, but you know we're not through this yet. I think some of the answers you're looking for will come up in those public hearings. COUNCIL MEETING ~ - 15 - I.Tecember 15, 2010 Mr. Mickens: So the money you're saying in the general fund should be what percent of the total amount? Chair Furfaro: Depending... and we can pose this to the auditors, depending on the guideline set by other municipalities and I would keep this short because this is not an agenda item right now. It can be anywhere from 15% to 20% of our operating budget. ' Mr. Mickens: And the $30 million that you say will...well, I think... Chair Furfaro: The $30 million represents 20% of our current operating budget of $149.8 million. Mr. Mickens: ~ And you'd like to have that in basically a locked box so you can't just go ahead and use it for anything? Chair Furfaro: So that you see it as a line item called reserve. Mr. Mickens: Yeah, okay, I understand. Thank you, Jay. Chair Furfaro: Now let me see if there are any questions regarding your testimony. I just wanted to give you an oversight. Mr. Mickens: I appreciate it. Chair Furfaro: ~ Glenn, I think Councilwoman Yukimura had a question. Ms. Yukimura: Yes, thank you very much for your testimony. I am in agreement with you about the golf fund in particular, and in this particular...actually this is a bit uncomfortable because your testimony is on all item...three items. But for this particular request from the finance director it shows a $62,000.00 request, but actually in the budget already, the one that we would be amending, there is a much bigger subsidy, I believe, almost to the tune of a million dollars. Mr. Mickens: The golf and sewer funds you're talking about, right? Ms. Yukimura: The golf fund. They're two separate funds. Mr. Mickens: Yeah, right, exactly. The golf fund was $62,000. Ms. Yukimura: So, I do believe we should make it our goal to have the golf fund pay for itself and I hope we'll be able to ask questions of the parks department to see what their plan is for that. On your... ~' ~ ~' " "" ' Mr. Mickens: What about the...what about the sewer fund, JoAnn? Ms. Yukimura: Well, that... Mr. Mickens: Don't you think that should..: - ~ ~ - Ms. Yukimura: We need to look at that too. I don't think that is as easy because... 1 COUNCIL MEETING • - 16 - ~ cember 15, 2010 Mr. Mickens: It can be made to pay for itself, though, can't it? Any more than your water bill or anything because... Ms. Yukimura: Anyway, so my question to you is about your testimony about tourism, unless, Chair, you want us to bring that up later? Chair Furfaro: Let's do that later. Ms. Yukimura: Okay, but we will have a chance then, because Mr. Mickens has already testified, to bring him up again to ask those questions? Chair Furfaro: Well, again and I want to remind the councilmembers and perhaps I was a little broad. Mr. Mickens can be a little bit more flexible in his testimony. We need to be focused on the particular item. So when we come to that item, we'll visit the visitor stimulus and I hope... at that time I'm sure Mr. Chang will have answers for that. Ms. Yukimura: been better for Mr. M Chair Furfaro: Ms. Yukimura: Chair Furfaro: when we... Mr. Mickens: Okay, yeah and in actuality perhaps it would have ickens to come up at that time and testify. Okay. And in retrospect. Thank you. In other words, they're inviting you back to testify Okay. Chair Furfaro: The whole reason for taking this testimony on the communication was those individuals in front of you were either needing to get back to the hospital or catch a plane, so. Mr. Mickens: Sure. Chair Furfaro: You're welcome to come back. Mr. Mickens: I understand. Chair Furfaro: Okay. Mr. Mickens: Thank you, Jay. Chair Furfaro: Thank you. And for the general audience, I explained why we went to that item at this point, but we do have auditors here and may I call the meeting back to order and ask for a motion on item C 2011-07 dealing with furloughs? ~ . The meeting was called back to order, and proceeded as follows: Mr. Nakamura: We do... Chair Furfaro: Can we receive that item for right now? Ms. Yukimura: I believe there is a motion. COUNCIL MEETING Mr. Nakamura: Chair Furfaro: Mr. Nakamura: Chair Furfaro: Ms. Yukimura: Chair Furfaro: Ms. Yukimura: - 17 - • ember 15; 2010 Mr. Chair, we do have a motion and a second. Oh, we do have a motion and a second? Yes. Any discussion? Councilwoman Yukimura? No. No? Thank you. Chair Furfaro: Okay. Ms. Yukimura: Oh yes, Mr. Chair. Chair Furfaro: We're going to receive this and it's going to come up again later. Ms. Yukimura: Yes, we'll have a chance to speak at the time the bill is before us. Chair Furfaro: Yes. Ms. Yukimura: Then no discussion right now. Chair Furfaro: Okay. All those in favor for the receipt of this? Councilmembers: Aye. The motion to receive communication C 2011-07 for the record was then put, and unanimously carried. Chair Furfaro: Thank you. Mr. Clerk, since our auditors. are in the house, may we go to the audit item. Mr. Nakamura: Council Chair, we're on page two of the council's agenda on communication C 2011-11. C 2011-11 Communication (12/07/2010) from the County Auditor, requesting agenda time for R.C. Holsinger Associates to provide the Council with a report of the independent audit of the County's programs for the fiscal year ending June 30, 2010. Chair Furfaro: ~ Thank you and on that note, I'm going to suspend the rules so that our audit firm can have the floor. The rules are suspended and welcome. There being no objection, the rules were suspended. JOHN HOLT, President of RC Holsinger Associates: Mr. Chairman, thank you very much for your time to present the financial statements. ~ -- Chair Furfaro: Would you hold one second, John? COUNCIL MEETING • - 18 - ~ cember 15, 2010 The meeting was called back to order, and proceeded as follows: Chair Furfaro: I'll look for a motion to receive. Ms. Nakamura: Move to receive. Mr. Bynum: Second. Ms. Nakamura moved to receive communication C 2011-11 for the record, seconded by Mr. Bynum. Chair Furfaro: Thank you. I'll suspend the rules now. There being no objection, the rules were suspended. JOHN HOLT, President of RC Holsinger Associates: Thank you, Mr. Chair. We appreciate the opportunity to present the audited financial statements of the fiscal year ended June 30, 2010, and RC Holsinger is our accounting firm that has been retained to be the independent auditors. I am John Holt, the president of RC Holsinger, and I have with me Dr. Vivian Viar, who is the manager on the engagement that handles the day-to-day operations of the account. The report has been previously distributed and I wanted to point out three things that are new in the current year's report. In the prior year, we had... the County of Kauai had adopted the statements of GASB, statement 54, which would allocate out various fund balances. And one of the things that we do is GASB requires us to report budgetary amounts that are passed, that are enacted, and are reported in the CAFR. And one of the things they did this year, the department of finance felt that in the sense of better user friendliness of the statements, abetter transparency and accountability, was starting on page 37. What they added to the report new this year, which wasn't in the previous year's reports, is a breakout by project of all of the capital projects that are in place. And so starting on page 37 is all the projects for the general capital improvement fund. And then starting on page 40 are those projects that are in process out of the bond fund. And in particular why I started showing what's new in the report is just that so that you can see the additional reporting that is in place that is required. On page 42, the important thing to point out on page 42 right there in the middle is that you will see...that's where you'll see that's where we have $60 million of additional funds...of bond funds that were issued earlier in the year, in March of this year. The County of Kauai did this bond issuance, raised $60 million for capital expenditures and you can see on the far right-hand side the balance, what is remaining in the bond fund for those projects and for the use of those funds. So, as the county looks as to where is its fund balances, moneys that are being set aside and appropriated, this was just an example of the transparency and additional reporting that is being put into place to make sure that those funds are being accounted for and the public can track how those are being spent. One of the items to point out on these bonds, these bonds are under the federal stimulus program. They were issued under the Build America Bonds and they were also under the Recovery Zone Economic Development Bonds. It's an important item to point out because that makes these bonds, as far as the county is concerned, very cost effective. And what I mean by that is that the federal government, because you have issued bonds under these programs, they will reimburse you 35% and 45% of the interest expense that the county would normally incur. So, in the current year, none of the subsidy has been received because none 1 COUNCIL MEETING ~ - 19 - ecember 15, 2010 of the bond payments have been made by June 30. But in the current fiscal year, you will see that those moneys will be coming in and they'll be recorded as revenue to offset the interest expense on the bonds. So two of the items that are new is the fact that there's expanded reporting and accountability that is reflected in the financial statements. Another new item is just the issuance of these bonds and the economic impact that that's providing to the county. A third thing, which' relates again to the federal stimulus program, is that the County of Kauai was awarded $3.9 (sic) million of ARRA funds . ARRA funds are those that are issued under the American Recovery and Reinvestment Act or commonly referred to as the stimulus program. In the Single Audit, which is the smaller report that has been issued, that's where we need to delineate all of the federal funds and we need to audit the federal funds. One of the requirements of the ARRA funds is that 100% of the ARRA funds need to be audited, whereas with regular federal programs, we do sampling and do sampling techniques and we rotate through different programs to be audited. ARRA funds are required to be 100% audited. Of the $13.9 million that's been awarded, $9.4 million of those ARRA funds are in process or in projects that have been committed to and $1.8 million of those funds have been expended. Ms. Yukimura: Can you repeat that? Mr. Holt: Sure. The federal government had awarded $3.9 (sic) million of ARRA funds. Of those funds that have been awarded, projects totaling $9.4 million have been started. Of that $9.4 million that have been started, $1.8 million has already been spent by June 30, 2010. Ms. Yukimura: Wait, $3.9 million of funds received or authorized? Mr. Holt: Correct. Thirteen, I'm sorry, $13.9 million. Ms. Yukimura: Oh 13, okay, okay, and then so $9.4 million of that has been awarded and $1.8 million of that awarded has been expended? Mr. Holt: Correct. Ms. Yukimura: Okay, thank you. Mr. Holt: And just to help you out on page 6 of the report, page 6 of the small report, which would be the Single Audit Report, at the very first, at the top of the page, the very first section is where we have indicated where those ARRA funds are. The ARRA funds show the $9.4 million, that's in the program award amount. Okay, the total amount of the $13.9 million doesn't have a column, I guess, reported on yet. Those moneys are typically awarded as those projects are put into place. ~ - Ms. Yukimura: Okay, thank you very much. Mr. Holt: Yes. While on the subject of the Single Audit, one of the things that is different this year that I wanted to touch base on is the findings that have come out of the Single Audit. The county has, in previous years, worked down through its findings and has been having minimal findings, let's say for the last year. This year, because we have all this new ARRA funding, these are new programs, new reporting, guidelines, guidelines that were still being issued during COUNCIL MEETING • - 20 - ~'ecember 15, 2010 the year, and new reporting procedures that are being put into place. For example there's quarterly reporting and transparency that needs to be reported on the websites that reports back to the federal government. Any time you have new programs you usually end up with new findings. This year's report reflects an increase of findings and we have 17 different findings in our Single Audit. On the surface, that sounds like a lot of findings, but I can boil those findings down rather...rather quickly for you. According to federal reporting guidelines, each department that has a finding, that finding needs to be reported. So for example if we have a finding that a report wasn't filed timely, if two departments did not file timely, you have two findings, not one finding. We don't get paid based upon the number of findings, but we're required by the federal government to repeat that finding for each department. What they do on their side is they take the reports, they pull the reports apart and hand them to each one of the different departments to have it resolved. So that's why they ask for it to be repeated several times. So of the 17 findings, 16 of them related to ARRA. Of those 16 findings, we really only -have two different types of findings. One finding relates to the timeliness of the reports. And because there were new guidelines, because people were trying to figure out the process to get things reported, we found that at some times people might have reported for a March 31St date their spending on March 10th. Other people might have reported that on April 1St. So there wasn't a consistency on the time. If you're going to report on March 31St information, you need to report March 31St information. So there was a timeliness issue. We have talked to the departments and that issue has been resolved and they're filing their reports on a timely basis. The other problem that we had noted was that the expenditures were...that were reported on the reports were hard to reconcile back to the general ledger. And the key thing to point out here is that it was hard to reconcile them back to the general ledger. It's not that they were not appropriate expenditures because we had to audit the expenditures, we had to vouch the expenditures, we had to trace them back to the invoices and expenditures. So they were adequately supported and they were appropriately made, but if somebody files a report on March 10th at 2 o'clock, the general ledger doesn't get closed until 4 o'clock, and so therefore as auditors when we go back to look at those numbers, we cannot reconstruct the report that was actually filed. So in our auditing, we did not note any funds that were misspent, inappropriately spent. We just noted that reports were not timely filed and that trying to hit the cutoff of the reports on particular dates did not work. But as we audited as a whole, the numbers were there, the numbers were substantiated and the numbers we believe to be appropriate. It resulted in no questioned cost. So the 17 findings, 16 were related to ARRA, and there were basically two reports. We've discussed them with the departments and they have put steps into place to get those resolved. The 17th finding related to the housing agency, related to one particular report that was not filed. It was not filed due to some employee turnover and sometimes when you're trar~sit~c~nir~g, an employee is na longer there, and you're bringing in another employee, a report might fall through the crack and so one fell through the crack, and it has subsequently been filed. So that item has been resolved as well. So... and in summary there were 17 findings, 16 on ARRA, timeliness and reconciliation, and then the third finding was basically an untimely filed report due to employee turnover. So all of them have been resolved and none of them resulted in questioned cost. Any questions on the Single Audit before I move back into the financial statements side of this. COUNCIL MEETING Chair Furfaro: to the Single Audit and just to that basically indicated all of delinquencies in timing... Mr. Holt: - 21 - llecember 15, 2010 John, I'm going to ask that we keep the questions reconcile this...of the 16, you found an audit trail those issues were pretty much dealing with some Yes. Chair Furfaro: ... at this point? Okay. I'm going to go ahead and recognize Mr. Bynum and we'll stay focused on the Single Audit portion. Go ahead, Mr. Bynum. Mr. Bynum: Hi, thanks for being here today and... Mr. Holt: .Thank you. Mr. Bynum: You know over.the last several years our number of findings has decreased, right? Mr. Holt: Right. Mr. Bynum: And what I hear in your testimony, just to make sure I have it clear, that an increase in findings is almost entirely related to the ARRA funding and is to be expected given the nature of that ARRA program and its rapid rollout. Is that a fair summary? Mr. Holt: Correct. Mr. Bynum: But in terms of our record of decreasing findings in the regular operations of the county, we're still on target. Is that... Mr. Holt: Correct. As far as the regular ones would go, it was basically one finding due to some employee turnover. Mr. Bynum: Right and so you know...I know when Councilmember Furfaro was the finance chair, we very systematically looked at those findings and how we could prevent them from happening and you know, the administration responded really well, and so we're in really good shape with this issue. The findings that have come...it may appear like an increase on paper, but it's really about the ARRA funding and that's to be expected given this rapid rollout and... Mr. Holt: Right and as we deal with the various departments that we need to audit under the non-ARRA federal funding, we do see that there. is a very heightened sense of attentiveness, awareness and concern to make sure that things are being done properly and adequate documentation is there. And I could tell you all kinds of stories of them jumping through hoops to make sure that e"verything was there. ~ ~ ~ ~ ~ ' ' " ~~ ~ ` ° '° Mr. Bynum: Right and so I just want to make sure we frame that correctly. We're on a great course. Administration's responsive, 'the council's providing the proper oversight, and the situation in terms of findings has improved over the last five years. Mr. Holt: Yes, the situation has significantly improved as long as we've been involved the last three years. We've seen a steady decline. COUNCIL MEETING • - 22 - ~cember 15, 2010 Mr. Bynum: Thank you very much. Chair Furfaro: John, I do want to point out to you that although I've been working with you for the good part of the first three years of this contract, Mr. Bynum is the finance chair now. So he's your contact point at the council. Councilwoman Yukimura, you had a question? Ms. Yukimura: Yes, just a clarification about the Single Audit Reports. These are basically of federal programs, right? Mr. Holt: federal programs. Correct. The Single Audit reports only on the Ms. Yukimura: Okay and the new kid on the block is the ARRA funding? Mr. Holt: Yes. Ms. Yukimura: Okay and... all right, and then we will go subsequently to the larger, countywide audit after we're done with this? Chair Furfaro: After we're done with this piece, yes. Ms. Yukimura: Okay. Thank you, I have no more questions on the Single Audit. Chair Furfaro: Okay. John, I guess we'll go to the larger document and the financial report of the County of Kauai. Mr. Holt: Thank you. On the financial statements for the County of Kauai, the best place to start, in my opinion, is starting on page 27. Twenty-seven is traditionally the government funds that are broken out into various funds that the county maintains. One of the items that we see starting on page 27 is that we have an increase in our investments, and an increase in our investments is mostly related to the fact that we had received the $60 million worth of bond proceeds, and those funds, since they were just recently issued in March, weren't spent or haven't been paid out in repayment yet. So that's in the state of transition at this time. The bottom line of this page is when we get down to the fund balance. On the fund balance, as I mentioned earlier, last year the County of Kauai had adopted GASB 54, which is the allocation of the fund balances, and the fund balances get broken up into several different categories. And so I...because it's kind of new, I just wanted to reiterate it. There are items of the fund balance that are reserved for things that are non- spendable. The non-spendable items represent loans receivable. For example, you can't spend a loan because you don't have cash. It represents inventory; you can't spend a wrench ~or you know... something, and so those are all non-spendable, you have the asset that exists. Another item that you can't spend, for example, would be prepaid balances. If you prepay your insurance, well you can't...you can't spend that again, you've already spent it. So there are items that sit on the balance sheet that are non-spendable in nature and those are those categories because they mostly relate to loans and because they relate to inventories and prepaids. You mostly find that over in the housing and community and development revolving fund, and over in the other non-governmental funds. COUNCIL MEETING • - 23 - Ijecember 15, 2010 Restricted fund balances are those that are restricted from third parties, from outside sources. The largest non-spendable item that we see, is over in the third column on the solid waste fund and that $6 million... $6.6 million basically represents a portion of each bill that people pay that goes toward reclamation of the landfill sites, and' so that money is received, that money is restricted in that nature, and therefore can't be spent except for on that. The landfill's not full, it's not closed, so the money has... is being built up to cover some of that cost. Back in a footnote, we explain further what those total costs are anticipated to be. So, restricted is that which is restricted by a third party, an outside source. Our committed fund balance represents those items that we have encumbrances for. Items that we have budgeted in the current year but for various reasons are in process. We have let a purchase order, we are spending money within the budget, but the goods and services had not been expended yet. An example of that is usually our audit fee. We come in and audit at the end of the fiscal year, okay. It's not prepaid, but it's money that is in the budget to be auditing that year. The services have not been rendered fully because your books are not closed, but that's 'money that is committed to be spent. So that would be an example of committed and items that have not been spent. Assigned fund balances are those items that are... have been assigned let's say by a...the department of finance is able to assign that. The council is able to assign the fund balance and the largest portion of that assigned balance would basically be moneys that are being assigned to balance budgets for the next year. So it's money that action has been taken for the money to be reserved, for the money to be spent in the future. One of the things that I should do at this point, though, would be to have you turn to page 83 as I talk about our committed and assigned fund balances. I'll give you a moment to flip to page 83 on the report. What you'll find on page 83 is those fund...these Fund Balance Constraints, which is what this footnote is entitled, footnote 15 lists out for each of the major funds these commitments in these various categories. So, for example, on the Assigned Fund Balance which is down in that lower section, you would be able to see that $15 million of the fund balance has been assigned in order to balance next year's budget. By statute, the county has to issue a balanced budget and so from the surplus $15 million is being used for next year and that's just out of the General Fund. All the way over in the far right-hand column you can see a total of $21.9 million is being reserved for... is being assigned for balancing future budget shortfalls. One of the other things that is in the Assigned is the County of Kauai is self-insured to certain limits and so each year money is set aside for that self-insurance, and traditionally it has been $3.5 million that has been set aside for self-insurance provisions. Over on the Capital Projects Funds, certain funds have been also assigned and so this footnote here, page 83, will break out those assignments. So out of the fund balance, funds that aren't spent that are non-spendable, funds that aren't restricted by third parties...you can see 'there's ' a' hierarchy of accountability: ' ~ things that are non-spendable, things that ~ are''restir`icted' liy"third parties, items that are committed based upon actions or encumbrances, you know commitments, i.e. the budget. The other place that can be committed funds would be...these encumbrances are committed because council takes action to say we're going to fund the items that we've committed to, but we haven't spent, and so this is one of the areas of commitment. It takes an authoritative action to commit fund balances. And you do that - in two -ways, you do that once by doing your encumbrances and then the other thing you do is you do it later on your assigned balance. I believe you do that more in January of the year to get your balanced budget, and then your assigned balance. Things that don't fall into those categories COUNCIL MEETING • - 24 - ~7'ecember 15, 2010 fall into the unassigned category which is then available for action or for spending or for future needs. And of that amount in the general fund, we have approximately $43 million in unassigned balances. Chair Furfaro: I... so excuse me, John. Mr. Holt: Sure Chair Furfaro: Earlier you heard me recap that $43 million. Did you have anything to add? Mr. Holt: Yeah, I appreciate you asking the question. The unassigned balance, it is not just a, for the lack of a better word, a cookie jar to say let's go spend. Just because it is there doesn't mean that it's actually showing up in cash and is available, and that's just due to normal accrual accounting type of items. And so one of the things that the department of finance...that the administration is working on is, I believe, that you guys need to establish a policy, okay, so that people are aware of what that money is committed and used for. And yes, you had mentioned earlier that there's a lot of different things to cover that. Whether those are future shortfalls, whether those are for various claims, whether those are for natural disasters that do occur...have occurred here, those are items that need to be taken authoritative action to get them out of an unassigned into assigned because there are items that are out there that you have. Gosh, we can take a look at the current year. The current year, if I...I'm on a little digression, but I...will get to your point. If we take a look at the budget to actual for the general fund...if we...it starts actually on page 31 of the financial statements and it concludes actually on page 34. So I'll just have...I'm a bottom line type of guy and I'll just have you turn to page 34. On page 34, this is where we show the excess funds that might have been incurred in the current year. On a GAAP basis, if you look at the third column, the first two columns are the budget amounts. There's an original budget that gets passed early in the year and then there's modifications that occur during the year and you end up with the final budget. So we have the budget amounts and then we compare that to (1) the actual amounts, which is the third column. The actual amount reflects the items that are in the financial statements. And we can see that the actual amounts on a GAAP basis, the general fund had a surplus of $14.6 million. In a certain sense that's a little bit deceiving because we have $6.6 million worth of encumbrances that you have really committed yourself to. And that goes back to the comment that I made earlier, that gets reflected as... as a committed fund balance. So you look at the current year, then actually under that non-GAAP budgetary basis, the amount of surplus you could see in the current year would be about $8 million. As we looked at the financial statements, as we reviewed the activity of the County of Kauai, there are certain things that we noted that kind of contributed to the surplus. One of the things we had noticed was that out of your self-insurance fund based upon reserves that were put into place in the prior years, based upon settleme~`i; of large cases that were in play at the begir~ni:-~g of the year; because those were settled, our self-insurance fund...there were no payments that needed to be paid out. Therefore, that resulted in a $3.5 million worth of savings. So we can quickly see where some of these savings are coming from. Each of the departments are listed out on the budget to actual and so you can take a look at each one of the different departments to see where each department had contributed. We had noticed various cost-cutting measures that were in place. We also noted that there were various payroll positions that were unfunded and vacant account as well, and the unfunded or vacant positions is basically where the largest savings of that budget to actual came from. Other items that were. of note was...well, the County of COUNCIL MEETING • - 25 - December 15, 2010 Kauai was hurt the hardest out of the four major islands with their tourism dollars. The amount of tourism in Kauai had decreased significantly and so therefore, the amount of TAT that was budgeted to be coming in was less than what actually came in. The county had put into place certain development and tourism promotions and so therefore, we received about a million dollars more, 10% more than the TAT that was budgeted. So there are various things that are on the cusp here. One of the other items that was out there was the county did not move about $7.4 million that was originally budgeted to go to capital expenditures. And so if that $7.4 million was moved out and put into the capital expenditures, we would not have the surplus that is actually there. So that's part of why I say you can look at a number and yes, we have the surplus that is there on a budget to actual basis, but because we didn't transfer moneys doesn't necessarily mean that's still there. One of the things you did do was you did issue the bonds. One of the things you have received is some ARRA funds to be spending. And so that has allowed you to defer that and have the surplus to show up. So, what I'm trying to demonstrate is that last year we had a very similar issue where it looked from a GAAP perspective that we had a large surplus, but when we looked at the encumbrances that were in place, we actually had a very short budgetary shortfall. This year it looks as if we have a large surplus from the budget, but there were different things that have taken place during the year that weren't necessarily known. You know, gosh one of those other items that just wasn't known was I believe there were three different films... major films that brought, you know, influx of about $64 million o£..new dollars coming into the island that eventually show up in taxes or spending and revenue and other places. I mean that was new, that was different. So, it would be wise for the council for the County of Kauai with the administration to work toward figuring out what they want to do with that surplus. And yes, we heard testimony from several people today as to different places that could be used and I would recommend highly that you put into place some type of policy to commit or assign those dollars to various projects. Chair Furfaro: John, I'm going... at this point I'm going to take a few questions from Councilman Rapozo, Bynum and I believe Councilwoman Yukimura, if you don't mind? Mr. Holt: No problem. Chair Furfaro: And I didn't mean to divert you from that $43 million number, but I thought it was a good place to give some explanation. Mr. Holt: Yeah: Chair Furfaro: So, Mr. Bynum, i£..I'm sorry, Mr. Rapozo, if you can start first? Mr. Bynum and then .Councilwoman Yukimura, and I'm going to step °oiit for a second, if I can. Mr. Bynum, would you run the financial portion"of this until•~I ge't back? Okay: '~ ~ ~ • °~ ~~=~''' °~'' '~ Mr. Rapozo: Thank you and thanks for being here. I guess, you know, it's...we look at the...this is the June 30, 2010 balance sheet or financial statement, and me as a councilmember looking at a request for...to transfer about $7.5 million today in various money bills out of surplus, is there a way for the administration to be able to tell us from exactly which of these categories those funds would be coming from? Is that a reasonable question to ask the administration or is all of that $43 million sitting in unassigned... in an unassigned account? COUNCIL MEETING - 26 - ~ecember 15, 2010 Mr. Holt: That's a very good question. All the moneys would come from the unassigned, okay, because all the other fund balance is committed, assigned, is untouchable. So only the $43 million can be moved. So if they wanted to move $7.5 million for various spending that was being proposed, it would all come out of the unassigned. Mr. Rapozo: Okay, and then the other question is...I know you mentioned this was a unique year because of the ARRA funding and we had some other things happen, including a couple of movies...you know I was on the council for six years prior to a two-year break, but it seems like we've always had this problem. Whether we had ARRA funding or not, we've always ended up with quite a substantial surplus, and some will call it a reserve, but basically it's a surplus. And the example you give on the movie, I don't think that affects us because, I mean, they spend money in the community, but that money doesn't necessarily come to the county as far as taxes or anything because we don't really charge them as far as the county. So, I guess what I'm looking for is some guidance as to...we can set a policy, whether it's 20%, 15% as far as a reserve policy, but... and you've been doing this for three years now with the county. Mr. Holt: Correct. Mr. Rapozo: What's causing the...is it a tendency to over budget? Is it a tendency to fund positions that we don't fill? I'm trying to get a better grasp on how we as a council can get a more accurate budget passed so we don't end up with $40 million, $50 million and then you end up with the tendency to go out and spend it. And as I'm looking here today, I think this is just the .start of many more money bills as we approach the end of the budget year to get rid of some of this surplus. So was it apparent to you as you did your audit where, in fact, we're either over budgeting or you know, intentionally not spending budgeted funds to create this surplus? I need guidance on that. Mr. Holt: We have found during the auditing process that most of it is related to, as I said, personnel and positions, vacancies or some of that's just timing. Some of that is just kind of concern about where are the dollars going to be and will they show up. That's just something that you need to work through on the budget. The County of Kauai is conservative in its budgeting process, and I think that that does bode the county well when it does hit a tough economic time where, for example, one of the items that was a new regulation, so to speak, that came about was three years ago, the County early adopted the provisions for other post-employment benefits that are being paid out. And the county adopted that policy early and the county is fully funding those amounts that it has promised to pay to its employees as part of retirement packages. If you weren't in a surplus situation, then you wouldn't be able to fully fund that commitment that you've made to your people. You're funding that over a 30-year period and I mean that's costing you, I don't know, anywhere from $4 to $6 million more from apay-as-you- go to a fully funded basis. So, yes, I find the county conservative, but because it's conservative, they've been able to do things appropr+stely and .. honor its commitments that it's made, for example, to its employees. Mr. Rapozo: So I mean, I guess the bottom line is in your expertise and in your experience, is the way the County of Kauai budgets...the way we do our budget, is it an acceptable... industry acceptable standard or method of budgeting because yes, we prepaid a lot of our employee expenses up front. I think that was a wise choice because in the long run we make out quite a bit. But do we actually have a $150 million operating government? Is the intent.,.and I think the reserve policy lets the public know up front, yes, we have $20 million or $30 million COUNCIL MEETING • ~ ~- 27 - December 15, 2010 in reserve, surplus, whatever you want to call it. I think it's... and the complaints you hear or the comments you hear from the public is it's kind of deceiving that we have this much budgeted but at the end of the year we always have this excess; it's a lot. And it's been...it's not just this year, it's not just because ARRA and because of the federal money, it's really just the way we budget. And if you tell me it's an acceptable way in your experience, then I'll buy that, but I don't know if that's...I mean mo...if you look at just in our state, the counties are struggling. They don't have this... surpluses and we do. So we're in a much better financial situation, but... Mr. Holt: Right. And I say you're in a much better financial position because of the way that you have budgeted. Mr. Rapozo: Right. Mr. Holt: Okay. Is there room to improve budgeting? Yes, I can say there's great room for improving budgeting. My experiences, I've seen government entities with as much as you have as a budget surplus. I've seen people with budget deficiencies, okay. And so there's the spectrum that goes throughout the place. We do not audit the budgetary process, so I don't believe from what I've seen based upon my communication with budget heads, with my communication of just auditing and looking at the differences that people are sandbagging and trying to pull together an appropriate budget. I do know that there are different departments that are looking to fully fund areas of public safety and public health, but trying to find the appropriate qualified people to want to come to the island of Kauai is just a longer process than one would want in that department and so therefore it just takes time to find and to fill those positions. Maybe there needs to be a little bit of a factor that's put into play for this is what we want or to be fully staffed. Earlier we heard testimony regarding the judiciary, I believe it was, department. I think they would appreciate more people, so I think they'd put in their budget more people. So that's why I go back to I don't think people are sandbagging and' just saying let's make up people. I think they look at the workload, I think they look at what is ideal, and they put it in the budget. So the difference between what is ideal and what you can actually execute, there's always that shortfall. And how to adequately estimate what is that shortfall is a very tough thing to do, part of which you need to do just based upon experience. So you might say well our experience says this is ideal, we only had 80% of ideal; maybe we only ought to budget 80% of ideal. But to know what really...what your budget is, you should be looking at your prior expenditures, okay. But then there is that element, what do we want to do, what have we not done because we didn't think we could do it, to put that in there. So the budget is a tough thing between what we can do and what we want to do and to try to make the two meet. I don't know if I've answered your question. Mr. Rapozo: No, you have and I guess it's up to us here, this body that determines what in fact this county will spend. And it's ironic that the timing of all' `of tlii's...you had the prosecutor, you had the emergency room 'doctor" come up and testify about ~firiancial ruin of some of the employees, about how many of our employees got cut... their pay got cut to provide public safety, and on the same agenda we have $7.5 million of surplus that we want to go and spend, and it's just kind of awkward to be in a situation here like...wasn't this money available last year? I think it was and...but the perception to the public was we're so broke, we are so worried about TAT, whatever the case was that in fact we need to cut and in fact we need to cut so much we're going to send people home two days a~ month, and we're going to cut your pay. And then as soon as...I don't know what happened, you know, the magic dust fell from the sky, we have all this extra money. So I think it's the...maybe the timing is good so the public gets to see this and all on the same day COUNCIL MEETING • - 28 - ~ecember 15, 2010 because I know for a fact and I know many of the councilmembers here today have received emails or letters or phone calls from employees, county employees that are struggling. Mr. Holt: Yeah. Well, the...it is very interesting. Last year when I was sitting here, any surplus that appeared on the financial statements was actually fully committed by all the encumbrances, and so therefore, there was really no excess dollars. The fund balance was being tapped into in order to meet the current 2010 budget that was being passed. And so when people recognized that tourism is down, that the TAT was in question, that the State was taking furloughs and was requiring that of counties to participate in that as well, the other thing that I didn't mention but I did notice in there as well was that there were other cost saving measures that went into place, okay. People were taking better care of equipment. Capital lease arrangements were not entered into. So a lot of different things showed up because there was a lot of concern about what dollars are really going to be there. I guess I would liken it to when...I'm sure a lot of people when. they heard about the furlough, ideally people were saving and had savings and they were going to call upon that savings. And the question is how much savings can you really use? And when they hear about the furlough they started to make budgets, they started to make plans, they started to cut. And some people are able to cut certain things and other people aren't able to cut certain things. Some people that have a larger amount of savings are able to take those cuts and are able to weather through it. So it's good to have the surpluses, okay, because now you're able to weather through it, but I do liken it to that...you know that individual saying oh, my goodness I got a pay cut, I need to cut something out. And so they cut something out of their budget until they see that the money has shown up. And yes, I mean it is timely. You are the... gosh, the fastest county to get out its reports, okay. The time frame that is imposed on us by council to have the department of finance turn over the reports is very fast. You'll be the first one to issue their reports. So, again, the numbers are showing up and I think it is very timely. I think they have... the county as a whole has taken actions to try and protect itself and protect some of its revenues. Chair Furfaro: John, I'm going to go to Mr. Bynum and then Ms. Yukimura, and we'll go from there. Mr. Bynum. Mr. Bynum: Thank you very much for the report today and I really appreciate the expanded reporting that's in this report. It's very helpful and you know, it's something we discussed last year and to see it here is helpful in terms of this analysis. The only suggestion I would have is I end up putting all these little stickies with tabs. You know, here's this report, here's this report, maybe you'll consider putting the tabs on it next year? Mr. Holt: There is a lot of information. Mr. Bynum: That's minor; we can do all those stickies. You know, and just another comment that we have a county auditor now who has announced pan intention to audit the budget pro~:~rss and I think that th~a's a very positive thing to do. I don't know that everybody in administration agrees with that because they kind of like the way we do it now. And the way we do it now is very conservative, very conservative, in my opinion. Would you agree with that? Mr. Holt: Yes. Mr. Bynum: And I like that, I like very conservative. I am particularly proud of this county for funding our future OPEB. You know, that is a wise decision that prevents a fiscal time bomb for some future council, right, and COUNCIL MEETING ~ - 29 - • ember 15, 2010 puts, us in good stead and that's one of many examples where I like the conservative approach. At the beginning of this fiscal year, we started with an unassigned fund balance of roughly... do you recall? Not... not... the end of this year, the beginning of the last one was like 32, right? And now it's 43. Mr. Holt: It's 43. Mr. Bynum: Okay and even with the one-time things that you discussed and you report well in the report, you know the transfer from CIP into operating and the ARRA funding and...I mean... it's still... we still had... that unassigned surplus went up by over 9 million, right? Mr. Holt: Right. Mr. Bynum: So and that's in a year where we said oh, things are so tight we have to furlough our employees. And so I agree with Councilmember Rapozo that yes, we've had this very conservative approach to the budget, which I hope we continue, but why do you do that? You do that for the rough periods and we entered this last fiscal year in the best shape of all the four counties in this state, bar none. Maui was second, not far behind us. Maui chose to do one furlough day. We still did two, right? So those are like my political comments and I'll get to the questions. The...you know in your report on page 21, it says "As mentioned earlier, the County has adopted a conservative budgetary approach, mainly due to anticipation of certain expenditures within the year." Said another way is we present the budget that we know is going to generate surpluses from day one. We, you know, pad the budget in essence. I'm not saying that's a bad thing because during the course of the year we do have various money bills that go to unexpended surplus, you know, to fill up the sewer fund, the golf fund, and these funds that are not self-sustaining. But we have the previous unassigned budget plus the one we're accumulating right now. If we could dry...wave a magic wand now six months into this fiscal year, we'd see a pretty big surplus. So when you say conservative funding, basically we know those budgets going in that we're' unlikely to spend those in each department, correct? Mr. Holt: Correct. Mr. Bynum: Okay. So and then you point that out. Council Services had a favorable variance of $0.8 million, eight hundred thousand dollars. So we had budgeted for council services...that's the first paragraph here, $3.2 million or something like that. We didn't spend, you know, close to a third of it. Office of the County Attorney $0.9 million that would fall in that category you said. I know in public safety, particularly the police department, we want to keep those positions in the budget because we want to make sure that the chief can hire those officers when he gets them and we want to...I think we all want to expand that and as you pointed out, they -have difficulty with recruiting in those positions. So that..: in that area that makes ~ some ~ sense; ~ right? Office of the Prosecuting Attorney $0.6 million, accounting and budget had a favorable variance of $0.8 million. So favorable variance meant money we budgeted we didn't spend, right? Mr. Holt: Right. Mr. Bynum: And... and again, I'm not arguing that we should change this. I like the conservative approach. It put us in a position as we face these economic uncertainties to go ho, glad we're not in the boat that city & county COUNCIL MEETING • - 30 - TJ'ecember 15, 2010 is in, glad we're not in the position that Hawaii County is who were carrying 10% unassigned fund balances, right? When ours was 32, 38%, right? So I think the debate that we'll have as a council is not do we want to be conservative, but at what level is it too conservative, right? And at what level do we have funds available to provide services that are critical for the community, and you know, to work more efficiently. So I talked about the findings, I...you know, you al...we already did that. But you know, I think really significant things are coming up. I totally agree that we need a reserve policy and it should probably be conservative, right? Because then I think it increases transparency to the public about how their funds are being expended and so I think...I'm pretty sure a unanimous group of the council would support a conservative approach to budgeting. It certainly has served us well in these difficult times that we're in right now. You know, if the TAT would have gone, in my opinion that's a separate issue and we shouldn't make budget and certainly shouldn't make staffing decisions based on something that might happen, some irresponsible act that the legislature might do, and fortunately we made a very strong argument and won the day on that last year. I believe we'll do that again. But if that would have occurred, we would have been in a better position to handle that than the other counties, agreed? Mr. Holt: Yes. Mr. Bynum: Okay, so I really appreciate the leadership that came from Mr. Furfaro as finance chair and as vice chair to address the findings, to really, as you said today, and it feels great to hear that, you know, for our county that there's real strong diligence from the administration about their responsibilities for reporting and having those clean audits, and they've done a great job. I really want to acknowledge that, as has the council oversight, and the leadership on establishing this reserve policy because people are confused. I already made my political comment. I believe furloughs were unconscionable given that we had taken this conservative approach and it really has hurt our employees and it has hurt our local economy because our...we're a small town, right? The city and county workers are a big percentage of the middle class, and their rent didn't go down, their electric bill didn't go down, so it was disposable income, if there is any, that got cut. It's like no dinners, no T-shirts, no...you know, cut back on Christmas spending which affects all of our retail stores. And I...I'm very...there are many things I'm excited about in government this coming term, lots of positive changes, very much appreciate your work and your diligence, very happy that we have an auditor department coming in that can address some of these concerns that we hear from constituents over and over again, and so, good job, John, again and in improving in terms of...now put those tabs in there and I'll be really excited. Mr. Holt: Well, it is (inaudible). Chair Furfaro: John, if you can hold on here because I want to get to all the councilmembers. Mr. Holt: Sure. Chair Furfaro: We're coming up on a break here and I've identified three members that have questions and I will go to Councilwoman Yukimura. COUNCIL MEETING • - 3T - Isecember 15, 2010 Ms. Yukimura: Thank you and thank you, Councilmember Bynum. Between you and Chair Furfaro, it's helping me to get a better picture. My questions are on page 83. ' Mr. Holt: .Yes. Ms. Yukimura: The balancing assign... under the assigned category, balancing future budget shortfalls, this section Other Governmental Funds, now is that the sewer fund and the golf fund that are being subsidized? Or maybe it's here, it's under general fund, huh? Mr. Holt: No. Our...those particular funds, your sewer fund, your golf fund, your housing fund, those are proprietary funds, okay, which are separate than these funds that are reported here. These funds are your government funds which are broken into basically two categories: your major funds which are your larger programs, and then all your other government funds fall into that other category. Examples of those... Ms. Yukimura: So your...excuse me, your proprietary funds is like enterprise funds? Is that what...the distinction? funds. Mr. Holt: Yes, your proprietary funds are your enterprise Ms. Yukimura: government funds? You're talking about proprietary funds versus Mr. Holt: Yes. Ms. Yukimura: So you're talking about enterprise funds, so to speak, yeah, because our solid waste is not yet. Hopefully one day it will be an enterprise fund. Mr. Holt: But your other funds are basically your highway fund, your liquor fund, your beautification fund, I'm just kind of reading from the table of contents. Okay, if you go to... Ms. Yukimura: So that's also where sewer and the golf are? Mr. Holt: No. Well...let me flip to a different page for you. Your other governmental funds are your other non-major funds, okay. Your proprietary funds, if I'm on page... for example of your financial statements which are your government-wide ones, on page 24, you have all your governmental activities, your major funds...I'm on page 24...and then that second column, your business type activities, those are those other funds. Those are the proprietary funds, those are the fiduciary funds. That's where the golf course is, that's where the sewer fund is. Ms. Yukimura: All right. They're not identified on page 24. Mr. Holt: No, but they're further broken out in the financial statements on page 44. Ms. Yukimura: Okay, so where does that show the subsidy from the general fund in, for example, the golf fund? COUNCIL MEETING ~ - 32 - ~ cember 15, 2010 Mr. Holt: Okay on page 45, which is a statement of revenues and expenditures, that would show dollars coming in and we can see that we have transfers. I'm down at the very bottom part of the page. Okay, we have our regular operating revenues, we have our operating costs, we have non-operating revenues and expenditures, and then we come down to other items. We have capital contributions, which would be those items that were purchased in the capital nature. The golf fund, for example, has some insurance proceeds that were received of $965,000.00 and then we have a transfer into the golf fund of $822,000.00. Ms. Yukimura: Okay and. that's as of June 30, 2010? Mr. Holt: For the year ended, yes. Ms. Yukimura: Okay. So when you say that balancing fu...back on 83, balancing future budget shortfalls, where do these things show up in our budget? Mr. Holt: In the budget, we have a budget to actual on those particular funds. Public housing, for example, would start on page 1...105. And so the public housing enterprise fund, the sewer fund, and the golf fund would be those next three pages that show the budget to actuals and any budget shortfall. Ms. Yukimura: That's on page 105, did you say? Mr. Holt: Page 105 is where we start with those enterprise funds. Ms. Yukimura: Okay. All right, so...I mean what...I guess what I'm wanting to know is when do we see that there's going to be future budget shortfalls and how do we estimate that? Mr. Holt: That would not be in an audited report. Ms. Yukimura: Okay. Mr. Holt: An audit report covers historical information. So .future budgeted shortfalls would be in your current year budget that you're working on and that would not... that's not the scope of the audit work that we do. Chair Furfaro: May I... may I add something there? So basically when. we get the P&Ls for the month, for lack of any other term in government, these profit and loss statements, the variances for that department would show up in those monthly. For example if we don't get timely checks from the State for the TAT money, we'll be able to see the variance in that monthly report. Mr. Holt: Correct. Chair Furfaro: That would be the best place for us to look. Mr. Holt: Right, for the current year operations and (inaudible) anticipated. Correct. Chair Furfaro: Yes, in the year for the year. Mr. Holt: In the year for the year. This is all old historical information. COUNCIL MEETING Chair Furfaro: tell you... Ms. Yukimura - 33 - December 15, 2010 I didn't mean to interrupt, JoAnn. I just wanted to No, that's...that's helpful. Chair Furfaro: ...we can probably pick , up that money...we can probably pick up that information from those sheets. Ms. Yukimura: Okay, all right. I can see that I have many other questions and I don't want to take up the time at this time, but perhaps I can meet with you later? Mr. Holt: We'd be glad to do that. Ms. Yukimura: All right, thank you. Chair Furfaro: JoAnn, would you mind if I yield one minute to Mr. Bynum? I'm sorry I'm going to go to Mr. Kawakami, then Mr. Bynum, and then we're going to take a break. Mr. Kawakami. Mr. Kawakami: Okay, I just want to make a comment and maybe a clarification on the surplus and the role of the furloughs and my take on it. You know, what we kind of failed to mention is when you look at the proposal from the State Legislature on that TAT takeaway, it would have been fine and dandy if it were for one year. Sure, we have enough to cover. But the proposal was always for five years. Now you multiply that by five years and that nice cushion we have is decimated. So we had to contemplate tough decisions and yes, Maui chose to go one day, but they also shifted some of that burden upon their taxpayers. They raised their property taxes in some categories. And so while we're contemplating how do we deal with the unforeseeable future, and if anybody can tell me that they could forecast the downturn and not only downturn but worldwide economic collapse that we experienced, I would certainly say that they have some psychic abilities because I think it caught everybody off-guard. It caught the private sector off-guard. They got hit first. And it caught many municipalities and counties off-guard. And so while we had to furlough, there were certainly other cases where there were jobs being cut, there were people being laid off, and so the conservative approach I think saved us in the end. But how do you forecast? And hindsight is 20-20. So we are all cheering that eh, we saved the TAT, but let's always be reminded that it was for five years and not just one year. So you multiply 12 times 5 and it's a different scenario. Maui, they raised their property taxes and they went to one day. Now, is that the right thing to do in light of just the downturn in the economy where the private sector is not necessarily laying people off but cutting workers, and businesses are shutting their doors? That is a whole different debate, but that is the reality of that situation. So I feel that it was a tough decision, but I don't think anybody in this room, unless you've been through the Great Depression, was able to experience quite what we had experienced in this past few years. Chair Furfaro: Thank you, Mr. Kawakami. M'r:`~"Bynum; `I'm going to go to you and then I'm going to just make a comment, and we're going to go to a break. Mr. Bynum: Just a follow up to the page...the constraints page. Ms. Yukimura: What page? Mr. Bynum: Twenty uh...83. ~ COUNCIL MEETING - 34 - ~ecember 15, 2010 Mr. Holt: Eighty-three. Mr. Bynum: Okay, there's this line in the general fund, balancing future budget shortfalls $15 million. Who decided on that figure? Was that a council decision or was that an administration decision? Mr. Holt: I believe that to be an administration. Mr. Bynum: So this is really set aside that they are saying we are likely to put this into next year's budget. Mr: Holt: Yes. Mr. Bynum: Right? Mr. Holt: Yeah. Mr. Bynum: But it could also be seen as part of the unassigned, so it's just kind of an arbitrary thing. Hey, we're anticipating that we're going to put $15 million into next year's budget. Mr. Holt: I...it's not as arbitrary as let's just pull a number out of the air. There is substance behind it. Mr. Bynum: Right, this... do you recall what the figure was this year that we put into the budget? It was like $10 million I think? Mr. Holt: Yeah, it was less than 15 and more than 8, but I can't recall that off the top of my head. Mr. Bynum: Right, so just...the way you move these numbers around and what you call them, you know, doesn't always say the whole picture, right? Mr. Holt: Yeah. Mr. Bynum: We could have said oh, let's make the unassigned $59 million and we'll take some of that for next year's budget. But we .put it in this line item and called it assigned for future budget shortfalls. Mr. Holt: Generally speaking, the guidelines are that you would do it just for the next budgetary year... Mr. Bynum: Right. Mr. Holt: ...for how it's classified here as opposed to a separate reserve. So, I mean I think there's some judgment that goes into that. Mr. Bynum: Oh yeah, yeah, yeah, I... maybe I'm being too flippant. But just...you know, those are real dollars that exist and they've been assigned at this point anticipating that they'll be part of next year's budget proposal. Mr. Holt: Right. Mr. Bynum: Okay, thank you. COUNCIL MEETING ~ - 35 - December 15, 2010 Chair Furfaro: I think that's along the line of a FIFO principle with managing an inventory. You can move cash like that, that becomes your starting point for your new year going forward, like that's money that was first in, so it's also the money that's first out. So we're having some interesting discussion and we need to take a caption break. And I do want to come back to the original rationale of the proviso, also the fact that, you know, we have an issue to query on the post-employee benefits that we're prepaying because it's all going into one bucket, and then of course, our reserve policy that I talked about in the beginning. And then I'll give Councilwoman Yukimura a few more minutes for questions she'll have. So, we're going to take a 10-minute break right now. Mr. Holt: Appreciate it. There being no objection, the meeting was recessed at 11:10 a.m. The meeting was called back to order at 11:26 a.m., and proceeded as follows: Chair Furfaro: Thank you, we're back from our recess. I do want to point out a couple things here. As we go forward, I think it's extremely... as I've stated earlier, very important for us to come up with a resolution establishing a reserve policy. I think you heard my comments earlier. I also want you to give some thought to...you know, the thing that has taken down a lot of municipalities is they have not funded 100% their retirement system. We were very active with this three years ago and...but yet the question about that funding deals with...it's all going into one bucket, and I'm wondering how we might, if we con... as we continue . with this policy and put ourselves in a better position than other municipalities who have actually gone into a very bad predicament, what is the step for us to earmark that contribution? And the fact of the matter is, you know, we need to establish that, the reserve policy because, you know, in the last 41 years, we've had. three hurricanes and we've all gone through a period of time when property values dropped and the fact of the matter is the only recovery we have is a situation with, you know, moving on taxes unless we have a, you know, a reserve earmarked, not just a surplus, but a reserve. And we've been facing a lot of very awkward rain events here and flooding in the last couple of years as well which have an impact on that. I think two other things that I've heard you say, we need to extend, you know, our financial reporting and at budget times, specifically, go back a few more years about our trend report. Not just go back one year, but go back several years to see what the trend has been as we develop these policies. And we also need to be more timely with our revenues and expense reporting monthly, which led to Councilwoman Yukimura's question. And so, I appreciate your being here and us being able to have some dialogue, but we do have some more questions and it is... you know, it is possible we can refer this, you know, this to a committee for more dialogue so that members are more familiar with the actual reporting system. But on that note, I want to thank you' John' for 'all of your commentary today as questions were solicited by different members. On that note, again, provisos that we put in here got us to this point, but we still have questions and I'll recognize Councilwoman Yukimura. There being no objection, the rules were suspended. Ms. Yukimura: Thank you, Mr. Chair. Just a question about where we are. Are we anticipating a discussion on the reserve later on in the agenda or is it appropriate to talk now about the reserve policy? COUNCIL MEETING ~ - 36 - ~ecember 15, 2010 Chair Furfaro: Based on a communique that I sent over to the administration, and more importantly based on the proviso that the previous council, I drafted, questioned about the reserve, I anticipate having reserve discussion with~the administration later. Ms. Yukimura: Okay, so I won't focus on that now. I basically have two questions. Well, will you be here for that reserve discussion or should I ask the questions now beca...on the assumption that Mr. Holt is it, will not be part of that discussion? Chair Furfaro: John, if we direct a few questions to you now regarding the practice of setting up a reserve policy, would you feel comfortable having discussion? Mr. Holt: I'll be glad to hear what the question is and see if I would be able to respond. Chair Furfaro: Take it from there. Okay. So Councilwoman, the floor is yours. Ms. Yukimura: Thank you. I certainly appreciate the coincidence of having you here and the fact that we're discussing the reserve. In terms of best practices among municipalities, there's usually a range of percentage that is suggested for a reserve. Is that correct? Mr. Holt: _ There is a range that is kind of a rule of thumb that's out there, yes. Ms. Yukimura: And what is that range to your knowledge? Mr. Holt: Well, it would depend upon (1) the fiscal ability of a county to be able to set aside that... Ms. Yukimura: Of course, yes. Mr. Holt: ...based upon its revenue stream. But I've seen anywhere from well... from zero, but from good reserves I've seen from 5% to about 20%. Ms. Yukimura: Five to twenty percent and what is the base? Five to twenty percent of what? Chair Furfaro: Isn't that the operating budget of the previous year? Mr. Holt: Well, you would take a look at each individual fund, okay, because each fund has basically its own budget. But yes, for the general f~.nd. you would generally take a look at your- previous years operating expenditures. Ms. Yukimura: You'd look at each...each fund and it would go by the previous operating expenditures. Actual? Or budgeted? Mr. Holt: Um... COUNCIL MEETING • - 37 - December 15, 2010 Chair Furfaro: John, let me clarify my earlier statement. As we...I talked in terms of 15% to 20% based on our $148.9 million operating budget and therefore, I arrived at roughly the $30 million as the reserve. Mr. Holt: In 2010, your operating budget was about $110 million, so the... Ms. Yukimura: Actual. Mr. Holt: Yeah. Ms. Yukimura: Mm-hm. Mr. Holt: That was what the budget was. The budget was $110 million. The actual expenditures were less than that and then it gets back to well, what number is appropriate, but I think there's discussion as to what is the best budget number. If you feel that your budget is high, you might go a little bit lower. If you feel that your budget is really tight, you might go a little bit higher. So, this is more of an operational question, okay, that I would think would take more dialogue in order for me to tell you what I would think would be appropriate for the County of Kauai. Ms. Yukimura: But it wouldn't be good to use the 11 or whatever our TAT allocation is because that is not a very stable or reliable fund? Mr. Holt: I'm not sure I understand the question. Part of your TAT is part of the... Ms. Yukimura: Operating. Mr. Holt: ...operating part of the general fund. And I... Ms. Yukimura: Well, it goes into...it goes into the gen...well, no, our general fund is all property taxes only. Mr. Holt: No, it also has the TAT in it as well. Ms. Yukimura: Okay, okay, all right. So, we would include the TAT in that base then even though it doesn't seem to be as reliable as real property taxes... revenues? Mr. Holt: Well, there are different ways that you pull together a budget. A budget to me is kind of like a stew. You put a lot of things into it, a lot of different assumptions, a lot of different ways to look at things. You could budget a reserve because you feel that you're losing revenue, okay? And so therefore, you would want to set aside moneys in order to recoup those revenues. So that would lie looking partly at the revenue. But generally speaking, if you feel that your revenue`s •are solid,'then you'rre looking at your expenditures, and you're saying-• okay, what would be a good base for expenditures. Maybe I want to set aside several months' worth of expenditures because we believe that we can react in an appropriate amount of time. That it's very much like a...you know, an individual who needs to set aside the personal savings. How much money do you keep in long- term savings? If you think you can get a job within two months, you're probably keeping two months. If you feel that economic times would be really bad and you want to save six months, you would save six months based upon your expenditures. So that's why I say a budget is like a stew. You look at your revenues, you look at your expenditures, you look at different economic factors, and you pull it all COUNCIL MEETING - 38 - ~ecember 15, 2010 together. You have people dreaming this is what we'd like to do, these are the ideal levels that our departments would like to be funded at, so there's a lot of different things. I don't know if I can adequately address your question during the time I have. Ms. Yukimura: Okay. Chair Furfaro: Excuse me, may I add to that? John, could you access for Councilwoman Yukimura at least three typical policies from other municipalities? Mr. Holt: I'd be glad to do that. Chair Furfaro: (Inaudible.) Yes. Ms. Yukimura: You mean later on or now? Mr. Holt: No, later on. Chair Furfaro: Later on. I'm saying, you know, I... Ms. Yukimura: Okay, that'll be great. Thank you. So I've only two more questions. You mentioned that last year's amounts were fully encumbered and I wasn't quite clear about that. I think you were explaining the difficulty of setting aside reserves and deciding on expenditures. But the unassigned balance last year was $33 million? Is that right? Mr. Holt: Yes. Ms. Yukimura: And that became encumbered over the year? Mr. Holt: Thank .you, I'll try and clarify some of my comments. Ms. Yukimura: Okay. Mr. Holt: My comment was last year looking at the budget to actual, it appeared that there was a, from an accrual basis, a large excess. But when you looked at what was encumbered, what was committed to have been spent under the budget, there was actually a small deficit of I believe about $900,00.00 in the previous year. So from a budgetary basis, the entire budget was spent. Ms. Yukimura: Mr. Holt: Ms. Yukimura: Mr. Holt: Ms. Yukimura: Including the reserve? No, only that year's budget. Okay, okay. Okay. All right. Mr. Holt: And so this year...I was comparing that to this year. This year we had $14 million of excess revenues over expenditures and so from an accrual basis, from an accounting basis, you're like wow, we made $14 million; however, we have $6.6 million that's encumbered. So therefore on a budgetary basis, the excess from a budgetary basis was only $8 million. So my COUNCIL MEETING ~ - 39 - ISecember 15, 2010 comment was last year we had...I don't know, I think it might have been about $10 million that was in excess, but it was encumbered fully and so there was no budgetary excess. There was no increase, okay, this year. Ms. Yukimura: Okay, that's independent of the reserve. It's about the budget: Mr. Holt: Correct. La...last year there was no amount added to the reserve; we took out of the reserve. Ms. Yukimura: Okay. Mr. Holt: This year we're putting into the reserve about $8 million. Ms. Yukimura: Okay, then my other question is you .talked about excess in CIP and I wasn't clear how that fed into reserves or does it at all? I mean you said...I think you mentioned something like $9 million in CIP that was not used? Mr. Holt: Let me flip back to page 83, if I may. Ms. Yukimura: Okay. I mean CIP doesn't go into surplus, does it? Or unless they're from finished projects? Mr. Holt: I'm trying to get back to the number you're referring to. I would have to apologize. I don't think I understand the question. Ms. Yukimura: Okay, I think and actually Councilmember Nakamura was remembering too that you said something about $9 million from CIP that wasn't used that went into the surplus. Unless we just misheard. Mr. Holt: Well, I did say that of that $800,000 or that $8 million that we had spoken of from the $14 million less the encumbrance of $6 million, resulting in the $8 million, that part of what occurred was that you...in the original budget, $4.7 million was anticipated to be transferred out of the general fund and into the capital projects fund, okay. So that's a $7.4 million number and the budget was revised and those moneys were taken out of the budget and were not paid over. So the original budget was anticipating paying $7.4 million over to capital projects, which was not paid. Ms. Yukimura: In the original budget, the anticipated transfer of $4 million from the general fund to CIP, but that did not happen? Mr. Holt: $7.4 million, yes. Ms. Yukimura: Oh, $7.4 million, from the general fund to the CIP and because that didn't happen, there was a...it remained in the general fund. Mr. Holt: Correct. Ms. Yukimura: And that was part of that $8 million surplus? Mr. Holt: Yes. COUNCIL MEETING - 40 - ~ecember 15, 2010 Ms. Yukimura: Okay and the inference you draw from it not being transferred to CIP was meaning that they didn't need it in CIP or we don't know the reason. Mr. Holt: Well, you did issue a bond of $60 million for CIP and we do have a lot of stimulus money, a lot of ARRA funds, that are put forth to capital projects. Ms. Yukimura: Okay, okay, right, okay, because I mean...I'm...I don't know if this council has discussed it, perhaps they have, but there appears to be a problem in getting out CIP projects and therefore, having money in the CIP account doesn't necessarily mean that it's good for the county. Because if there's not a good pro...I mean that means that our infrastructure needs are not being met in a timely way. So, I'm just trying to interpret these various numerical or fiscal signs in terms of what that tells us about the operations of the budget. Mr. Holt: Right and while you need to draw those inferences and look into those items, that's why those additional reports were added... Ms. Yukimura: Right. Mr. Holt: ...for budget to actual. Now you can see each one of those capital projects... Ms. Yukimura: Yes. Mr. Holt: Now you...people who need to manage them, people that need to hold them accountable... Ms. Yukimura: Right. Mr. Holt: ...that information is there and available for you to use that. Ms. Yukimura: I think that information is going to be extremely valuable and I very much appreciate that you have produced that for us. Mr. Holt: Well, that was the department of finance. Ms. Yukimura: Well, good for the department of finance, then they need to be commended. Thank you. Thank you, Mr. Chair. Chair Furfaro: Thank you, John. And I would also point out that when we take in bond money, there are some critical steps to the spending period that we have to encumber those moneys. But I think earlier your comments on the fact that we have these moneys from ARRA provided us an opportunity not to spend some of the money that was transferred over from the general fund, which therefore contributed to our surplus and I would ay that would be my summary. But am I correct, the spending period is, I think, 36 months without penalties, typically? Mr. Holt: I'm sorry. I'd need to go back and look at that. Chair Furfaro: I'll follow up on that. Mr. Bynum, you have a question? COUNCIL MEETING • - 41 - December 15 2010 Mr. Bynum: Yeah, just following up on what JoAnn said. I think the $8 million was what was a£..I don't know the exact figure, but the $7.4 million...you listed an amount in the report $7.4 million, $3.9 million ARRA and $1.7 million something else, they were kind of one-time shots into that, right? But then that still was like $9 million, right? Or close to $9 million? Mr. Holt: At the end of the day, right. Mr. Bynum: At the end of the day. Mr. Holt: $6 to $9 million. Mr. Bynum: And then just about the...real briefly about the ARRA funds, I mean part of what I heard was good news. We got $13 million; we've only spent so far $1.8 I think you said, which means that stimulus is still going to be coming, you know, into the community and you know... Mr. Holt: Right. Mr. Bynum: And I know some of those projects are going out to bid as we speak, right? So and we have high unemployment in the trades in particular, so it's really important that those funds get out there and I share Councilmember Yukimura's frustration, which we're addressing through staffing and other issues about getting those CIP projects out. Mr. Holt: Right and on the ARRA funds, I know that the department of finance is keenly aware of the deadlines of what needs to be committed so that you don't lose dollars. Mr. Bynum: It's the same with the $60 million bond, 30 of that is for the county, 30 for water. Mr. Holt: Well, there was $120 million. Mr: Bynum: Oh, that's right. I'm sorry. Mr. Holt: Sixty was for county, sixty was for water. Mr. Bynum: Sixty and sixty. So I know...the water department has a pretty good record of getting their projects out the door and I know they're looking at our 60 and saying, well, if you guys need help spending that...because there's time frames on that. It's like 36 months, right? Mr. Holt: Thirty-six or five years. Mr. Bynum: Right.. ..., . . NIr. Holt: ~ ~ Now it's three years or frve years. ` Mr. Bynum: So it's very important for the administration to get those capital projects out or we could have penalties or you know, lose funding that...yeah, anyway, so. Thank you. Chair Furfaro: Just for clarification, John, we've actually spent out• $1.8 million, but we've encumbered more than that. COUNCIL MEETING - 42 - ~ecember 15, 2010 Mr. Holt: You spent out $1.8 million on projects that have been identified, and approved of $9.4 million out of a total of $13 million. Chair Fu"rfaro: Right, so we got $13.9, we've identified spending for $9.4, and we've actually paid in the form of contract, deposits, designs and so forth $1.8. Mr. Holt: Correct. Mr. Bynum: Right. Chair Furfaro: I just wanted to get that clarified. Mr. Bynum: Yeah, because $7 million of that is one project in Waimea, right? That's a big chunk of that, so. Chair Furfaro: Okay. Let's see, do you have any more to share with us? Mr. Holt: Let's see, the other comment just on the financial side is you know, gosh, it's been a...it's been a pleasure working with you for these last three years, that's been the term of our contract, and gosh you've done a lot in those three years. The first year we were working through resolving those findings that council was holding the departments accountable toward and it's good to be able to see those things come to fruition, come down. Also, during that year was when the county had adopted the provisions of OPEB 45, which was funding the post-retirement benefits. And you guys decided to fully fund that. And that was early adopted. That was, you know, hard work to...instead of just following people, you were in the forefront of that. And then on our third...last year then you adopted the provisions of 54 which you can see the benefits that you're receiving right now. Okay, the fund balances are being identified, the projects...the capital projects are being identified even out to this year. And so in a certain sense I kind of liken it to...well, our lives. When we first get out of school, there's a lot of things we need to worry about. We need to worry about our house, how do we get that mortgage payment? We need to worry about...well, we're going to have kids, are we going to put them through college and we need to worry about our retirement. And so as you've been going along, you've been taking care of these things in various stages. You took care of your findings, you've taken care of your funding, and now you're going to take care of, you know, I highly recommend that you take care of your allocation of your fund balances. So, it's been exciting. It's good to see a government entity that takes serious its fiscal responsibility and tries to manage that in a very conservative basis. It's great to be working with employees and leaders who are very caring and ask very good questions and make sure that the dollars are there, and really wrestle with those hard decisions as to what you really need to do. So, it's been a pleasure and we hope to continue to work with you in the future. Chair Furfaro: John, it ,.is my understanding and I've had ari extreme pleasure working with you folks over the last three .years, but you will be responding to our request for a proposal? Mr. Holt: Yes, we have. Chair Furfaro: Okay, okay, very good. And.I just wanted to pass out one sheet to everybody here, the TAT so that everybody knows this is the revenue summary sheet from our budget forecast and so our TAT actually shows up in this account called intergovernmental revenues. It's showing up as budgeted as COUNCIL MEETING • - 43 - ITecember 15, 2010 an estimate of $11.2 million. We received $12 million even and it was forecasted at $800,000, better than we projected in the budget. I might point out, though, that was only $200,000 better than the previous year. So the visitor industry still needs to make a comeback, but I wanted... since this was a question where it's reported, I wanted to share the revenue sheet. And I want to thank you and I want to thank Vivian for all your work and commitment to us. But we're going to go through a period here where we're going to have the public give testimony on the audit, and then we're going to see what we're going to do with the item. If it's going to be received, if it's going to be continued to be reserved in the...reviewed in the finance department will come at the end, but right now we need to see if there's other public comment. Ms. Yukimura: Mr. Chair? Chair Furfaro: Yes. Ms. Yukimura: I would like to thank you, Mr. Holt and Ms. Vivian, for what appears to have been...because I wasn't on the council...maybe the last...first year...but very good professional guidance from the auditors and so...and it's good to hear of the progress and I want to commend you, Chair Furfaro... Chair Furfaro: It was a team effort. Ms. Yukimura: Well, I think your leadership, I know, was quite apparent when I was on the council in the terms of following up on the audits. So, it's nice to have a good team and it's good to know that we are setting our house in order financially and that we have really benefited from it because our decision to fund the pensions really did help us in getting the bond. Chair Furfaro: Absolutely. It greatly improved our bond rating. Ms. Yukimura: So it's all paying off and thank you very much. Chair Furfaro: Thank you, John, and I'm going to ask the public, is there any public testimony on this portion? None? Any comments from the audit department? Mr. Ernie Pasion? No? Okay, I'm going to call this meeting back to order. There being no one else wishing to speak on this item, the meeting was called back to order, and proceeded as follows: Ms. Yukimura: Mr. Chair? Chair Furfaro: And we're open for discussion. Yes, Councilwoman Yukimura. Ms. Yukimura: Councilmember Nakamura and I were discussing the fact that we only received this report today and that it's quite~extensve. And so it seemed appropriate that perhaps we refer this to the finance committee at least to keep the matter alive while we review this report and if in the first meeting of next...committee meeting of next year we feel we would like to bring back the auditors we would do that or if we have satisfied ourselves, we would then just recommend receipt to the council. Chair Furfaro: Well, we do have a motion to receive that's already on the table.:. COUNCIL MEETING - 44 - ~cember 15, 2010 Ms. Nakamura: I made that motion. Chair Furfaro: ... and a second. I also want to point out if a return from the auditors is not covered in the current financial scope of their bid, so if there was a request to have them come back and give commentary, we would have to...also have to have money for travel and. accommodations. So, you know, that's kind of where we're at. We have a motion to receive. I do think that we have a very capable audit department that can help us through this after we formulate other questions and we can put it back on the agenda in those particular areas where there's questions at, so. Ms. Yukimura: Well then, would you prefer a motion to defer for the... as a council matter rather than sending it to committee? And then, you know, perhaps all our questions can be answered by phone calls or further consultation? Chair Furfaro: You know, my preference is I'm extremely familiar with the outcomes that we have right now. I'm fine with receiving it and putting a new item on after I get your questions, so that we can have the audit department...our audit department and finance here. That's where I'm at. I'm fine with soliciting your questions. If I share this with you, you know, I think if we get to a portion where we want to develop a reserve policy, we're going to have to put some of this back on the agenda as well as to actually come up with a resolution that would be binding for this elected council. Ms. Yukimura: Okay. Chair Furfaro: And then therefore,. each previo...each following council would come up with their own resolution as to our reserve policy. Ms. Yukimura: Okay. So yeah, fine. Chair Furfaro: So, there is a motion to receive. There's a second along with it. Mr. Rapozo: Just one question. Are we expecting a response from the administration, the finance department as far as the findings? Chair Furfaro: Ah... Mr. Rapozo: I have read what was in here, but I mean...you know typically we would get a plan of action that I haven't seen. I haven't even seen finance here. Chair Furfaro: No, they were here earlier. I do want to say, thought, and John, if 'you don't mind coming up to the mike again. I'm sorry. I spent time with the audit staff yesterday and I am of the impression that of the 17 points that were made, we clearly have one that is outstanding with housing and we have adds=essed the other variables through the late reporting, but have satisfies the challenges according to the audits. There being no objection, the rules were suspended. Mr. Holt: I believe that you've satisfied all of them, okay. There's not necessarily a plan of action. I mean, you're appropriate in asking, you know, is there a problem, is there an action plan to resolve the problems. And what we're saying is that there is a measurement response... COUNCIL MEETING • - 45 - ~ISecember 15, 2010 Mr. Rapozo: Yeah, I see that. Mr. Holt: ...to each one and what I was trying to convey earlier was that based upon what we presently see in our auditing that those actions have been taken and management has put into place, and these issues are resolved. Mr. Rapozo: Then is that going to be coming in as a supplemental report to this audit report because the record will not reflect that other than your testimony. If you look at the report, the only resolved issues are the Section 3 issues and all of these remain open in the. report. So I mean if that's the case then and I heard you testify to that earlier, but if that is the case, then I think a supplemental statement from you, from the auditor saying that in fact those findings... Chair Furfaro: ~ Findings issues. Mr. Rapozo: ...have been resolved, then I'll be satisfied. But I don't see that here. Mr. Holt: Yeah, the... Mr. Rapozo: Because I see the management response, we understand our discrepancy, we've taken corrective action, but I haven't seen that from the auditor to validate or verify if that in fact has occurred. Mr. Holt: Right and let's see, what happens is our current year findings are current year findings. These are findings that we found through June 30, 2010. Mr. Rapozo: Right. Mr. Holt: Okay. So for us to come back and say that they are resolved, that is, as you said Section 3... Mr. Rapozo: Mm-hm. Mr. Holt: Section 3 .relates to the prior year... Mr. Rapozo: .Correct. Mr. Holt: So the next year's audit would reflect... Mr. Rapozo: Right. Mr. Holt: ....the testimony that I've ,provided today. ~,- _ , 'Mr.~-Rapozo: ~ Okay: ~ - :.- ....... . Mr. Holt: So in the current report, it would stand as is. Next year's report would reflect... Mr. Rapozo: But I...I mean in prior years, and let's... and I wasn't here in '09, but prior, at the time the auditor was here, those findings had not been resolved and we would have had the opportunity to find out from management or from the administration what the plan was. So your testimony today is it's all been resolved as of this date. COUNCIL MEETING ~ - 46 - ~ecember 15, 2010 Mr. Holt: Mr. Rapozo: Mr. Holt: Without having audited it... No, but that's my point, sir. Sure. Mr. Rapozo: You're the auditor and if you're comfortable in telling me today that it's been resolved, then that's fine and I would expect or ask for a supplemental report to be attached. Otherwise, I'm asking that the administration provide their plan of action to resolve the issues. If in fact they have been resolved, they can submit that as their statement. That's all I'm asking for. Chair Furfaro: Well, we can approach this two ways. We can ask you if there's going to be a supplemental report saying that those timing matters have been cured or I can put in a separate piece of correspondence to the administration having a report from them telling the finance committee how they've cured it. Mr. Holt: We can't do...we can't add a supplement... (?): Okay. Mr. Holt: ...because the next .reporting period would be September 30th. Chair Furfaro: Understood. Mr. Holt: So therefore, the...I would think the appropriate thing would be...to do would be to require the communication saying this is what we've done and this is how we have it resolved and would come from administration. Chair Furfaro: Then I will prepare the communication and I'll ask Mr. Bynum to follow up in finance regarding those pieces. Mr. Bynum, you had your hand up? Mr. Bynum: I just...I thought the communication was appropriate and then you're saying that next year's audit will address these, right? Mr. Holt: Correct because our audit period covers through June 30th. Mr. Bynum: And if you are successful in...it may be you or it may be someone else, right? There being no more questions for Mr. Holt, the meeting was called back to order, ar~3 proceeded as follows: .~ . Chair Furfaro: Okay, so I will send that communication over, Mr. Rapozo, asking for a response to the summary report and showing us how those particular items were cured and by what date and we'll put it in the finance department. Mr. Rapozo: Thank you. COUNCIL MEETING • - 47 - December 15, 2010 Chair Furfaro: No problem, not a problem. John and I understand your position. I couldn't find myself expecting anything different because it's actually going to be part of next year's report. But I thought I'd try. Okay, so, Mr. Bynum, you're accepting to that (inaudible) in finance? Mr. Bynum: Yeah, sure. Chair Furfaro: Okay, any other questions before I call for the vote on receiving this document? None? Okay, all in favor, we have a motion and a second to receive, signify by saying aye. Councilmembers: Aye. The motion to receive communication C 2011-11 for the record was then put, and unanimously carried. Chair Furfaro: Okay, will the clerk so note that we are going to ask for follow-up correspondence for the finance committee. Mr. Nakamura: So noted, Mr. Chair. Chair Furfaro: Thank you. We are at 12 o'clock and I want to say thank you again, very much, but we've got about another half an hour of business to attend to here, so next item. Mr. Nakamura: Council Chair, at the top of page two of the council's agenda, we have three communications for receipt. Communication C...I'm sorry, let's take two communications C 2011-08 and C 2011-09. C 2011-08 Communication (12/03/2010) from the Director of Finance, transmitting for Council consideration, a $575,000.00 appropriation from the surplus and appropriations estimated in the General Fund for the expansion'of the Kauai Bus Service, by including Sunday bus services and expanding existing from Monday through Friday services to 10:00 p.m.: Ms. Yukimura moved to receive communication C 2011-08 for the record, seconded by Mr. Chang, and unanimously carried. C 2011-09 Communication (12/03/2010) from the Director of Finance, transmitting for Council consideration, a $200,000.00 appropriation from the surplus and appropriations estimated in the General Fund to fund promotional efforts by the .Kauai. Visitors Bureau: Ms. Yukimura moved to receive communication C 2011-09 for the record, seconded by Mr. Chang, and unanimously carried. Chair Furfaro: Mr. Clerk, I just want to take a moment to thank the auditors in person. Can we take athree-minute break here? Thank you. There being no objection, the meeting was recessed at 12 noon. The meeting was called back to order at 12:01 p.m., and proceeded as follows: Chair Furfaro: Okay, I think we're back in order. Mr. Nakamura: Mr. Chair, we're on page two of the council's agenda. Next communication is communication C 2011-10. COUNCIL MEETING. - 48 - ~ecember 15, 2010 C 2011-10 Communication (12/03/2010) from the Mayor, requesting Council consideration and confirmation of the following appointments and reappointments to various Boards and Commissions for the County of Kauai: • Michael Kano -Building Board of Appeals (Fire desLgnation) • Miles Tanabe -Building Board of Appeals (Public At-Large) • Kurt Akamine -Board of Ethics • Mark Hubbard -Board of Ethics • Brad Nagano -Board of Ethics • Randall Nishimura -Board of Water Supply • Leland Kahawai -Board of Water Supply • Edgar Justus IV -Charter Review Commission • Stephanie Aranio -Civil Service Commission • Gilbert Maerina -Civil Service Commission • Lawrence Chaffin Jr. -Cost Control Commission • William Gibson -Liquor Control Commission • Shirley Akita -Liquor Control Commission • Dane Oda -Liquor Control Commission • James Nishida Jr. -Planning Commission • Charles Iona -Police Commission • Sheri Kunioka-Volz -Salary Commission • Robert Crowell -Salary Commission Chair Furfaro: Thank you. I do want to share with the group that I have tentatively asked the clerk's office to set up interviews on January 11, 2011, which is a Tuesday, from 8:30 a.m. till 12:30 p.m. with this group of 18 candidates. That's where we stand right now. I'm allowing a quarter of an hour for each interview. But is there anyone that may have a date challenge with January 11? It's a Tuesday. Mr. Bynum: It's in my calendar already. Chair Furfaro: Very good, so. No? Okay, so I'm asking for a motion to schedule these interviews on Tuesday. Ms. Nakamura: Move to receive and schedule interviews on January 11, 2011. Chair Furfaro: Thank you. Mr. Bynum: Second. Ms. Nakamura moved to receive communication C 2011-10 for the record, and to schedule interviews on January 11, 2011, seconded by Mr. Bynum. Chair Furfaro: Any further discussion? Ms. Yukimura: Mr. Chair, what were those hours again? Chair Furfaro: From 8:30 to 12:30. Mr. Chang: 8:30? Chair Furfaro: 8:30 a.m. to 12:30 p.m. Ms. Yukimura: Thank you. Chair Furfaro: Okay, all those in favor signify by saying aye. COUNCIL MEETING • - 49 - • ember 15, 2010 Councilmembers: Aye. The motion to receive communication C 2011-10 for the record, and to schedule interviews on January 11, 2011 was then put, and unanimously carried. Chair Furfaro: Thank you very much. Next item please. Mr. Nakamura: We're at the bottom of page two of the council's agenda, Mr. Chair, communication for approval, communication C 2011-12. C 2011-12 Communication (11/04/2010) from the Director of Housing, requesting Council approval of the following: (1) to apply for, receive, and expend a $133,000.00 grant from the U.S. Department of Housing and Urban Development for the Housing Choice Voucher Family Self-.Sufficiency Program Coordinator salaries, and (2) to indemnify the U.S. Department of Housing and Urban Development. Mr. Rapozo moved to approve communication C 2011-12, seconded by Ms. Yukimura. Chair Furfaro: Is there any discussion from the audience on this? Seeing none, any discussion from Councilmembers? Ms. Yukimura: Yes, Mr. Chair. Chair Furfaro: Councilwoman Yukimura. Ms. Yukimura: Just that I am aware that this is a very wonderful program that helps families bring themselves up and so it's very worthy of funding. Chair Furfaro: Thank you, any further discussion? Ms. Nakamura: I wanted to just to recognize the staff of the housing agency for doing such a good job that allowed us to maintain two positions rather than one. Because they've maintained a high workload, we've been able to secure additional federal funding, so thanks to housing agency staff. Chair Furfaro: Thank you for those comments, Councilwoman Nakamura. Any other discussion? If not, we have a motion and a second. All those in favor, please signify by saying aye. Councilmembers: Aye. The motion to approve communication C 2011-12 was then put, and unanimously carried. ~ ~~ Chair Furfaro: Next item please. Mr. Nakamura: At the top of page three, Mr. Chair, a communication for approval, communication no. 2011-13. COUNCIL MEETING • - 50 - ~cember 15, 2010 C 2011-13 Communication (11/18/2010) from the Director of Parks & Recreation, requesting Council approval to replace equipment stolen from the Koloa Maintenance Shop at an approximate cost of $1,910.00 from its Parks supply account: Mr. Bynum moved to approve communication C 2011-13, seconded by Mr. Chang. Chair Furfaro: Thank you. Is there any comments from the audience? If not...Mr. Mickens, please come right up. The rules are suspended. There being no objection, the rules were suspended. GLENN MICKENS: Thank you, Jay, for the record Glenn Mickens, just a short comment. I hope that some measures have been taken for the security of this place, that, you know, we appropriate money, they bring in new equipment, and somebody turns around and steals it again. So I hope that parks and recreation or whoever the responsible party is is doing it. Thank you, Jay. Chair Furfaro: Comments well received and we will so send a communication. Councilwoman Yukimura? Ms. Yukimura: Yes, I want to thank Mr. Mickens for his very good point. I mean, I think this is an area for risk management in terms of whether it was a preventable theft or burglary and how it's going to be prevented in the future. So if we can send a communication to ask those questions to our... Chair Furfaro: Risk management? Ms. Yukimura: ...park, yes. Is this public works? Chair Furfaro: And we'll address it as well to parks, okay, and risk management. Any further discussion on this? No? Okay. Ms. Yukimura: Thank you. Chair Furfaro: The meeting's called back to order. I'm sorry. There being no one else wishing to testify, the meeting was called back to order, and proceeded as follows: Chair Furfaro: All those in favor, please signify by saying aye. . Councilmembers: Aye. The motion to approve communication C 2011-13 was then put, and unanimously carried. Chair Furfaro: Mr. Nakamura C 2011-14. Next item. Next matter for approval is communication C 2011-14 Communication (11/19/2010) from the Prosecuting Attorney, requesting Council approval to (1) apply for, receive and expend federal funds from the Juvenile Accountability Block Grant in the amount of $22,750.00 for the period. commencing January 1, 2011, and to (2) indemnify the State of Hawaii, COUNCIL MEETING • - 51 - • ember 15, 2010 Department of Human Services, Office of Youth Services. Funding will be allocated in support of the Kauai Teen Court Program: Mr. Rapozo moved to approve communication C 2011-14, seconded by Ms. Yukimura. Chair Furfaro: Thank you. Anyone wishing to speak on this item from the public? Seeing none, is there any further discussion by members? Ms. Yukimura: Yes, Mr. Chair, just that the Teen Court Program is a really wonderful program that helps our young people stay out of the juvenile system as much as possible, so a very worthy project. Chair Furfaro: Thank you, any further discussion? If not, may I ask all those in favor, please signify by saying aye. Councilmembers: Aye. The motion to approve communication C 2011-14 was then put, and unanimously carried. Chair Furfaro: Thank you very much. Mr. Clerk, next item. Mr. Nakamura: Next matter for approval is communication C 2011-15. C 2011-15 Communication (11/19/2010) from the Prosecuting Attorney, requesting Council approval to purchase two Presentation Flag Sets (one for the lobby and one for the prosecutor's office) for approximately $858.33 with departmental funds: Mr. Bynum moved to approve communication C 2011-15, seconded by Ms. Yukimura, and unanimously carried. Chair Furfaro: Thank you. Next item, Mr. Clerk. Mr. Nakamura: Next matter is a matter for receipt, Mr. Chair, communication C 2011-16. C 2011-16 Communication (12/06/2010) from the County Auditor, transmitting for Council consideration the following: (1) to appropriate $325,000.00 to pay for the engagement of a contract auditor to conduct Financial Statement Audits and Single Audits, and (2) to procure the services of a contract auditor to conduct Financial Statement Audits and Single Audits, and to pay for the engagement from the appropriations of a later fiscal year and for more than one fiscal year (multi-year contract). Mr. Rapozo, moved to receive communication C 2011-16 for the record, seconded by Ms. Yukimura. Chair Furfaro: Thank you. Is there anyone willing to or wanting to testify on this? Seeing no one, is there anyone .here at the council that would like to have any discussion on this matter? Ms. Yukimura: Question. Chair Furfaro: Okay, all those in favor to receive say aye. Councilmembers: Aye. COUNCIL MEETING ~ - 52 - ~ cember 15, 2010 Ms. Yukimura No, move the previous question, aye. The motion to receive communication C 2011-16 for the record was then put, and unanimously carried. LEGAL DOCUMENTS: Chair Furfaro: Members, I'm going to go to legal documents. We only have about 17 minutes here before lunch, so I'm going to come to item 17 after we break for lunch. So let's go to Legal Documents, please. Mr. Nakamura: At the bottom of page three, Mr. Chair, is a legal document for the council's approval which is attached to communication C 2011-18. C 2011-18 Communication (11/15/2010) from the Director of Parks and Recreation, requesting Council approval of the following from the Association of Apartment Owners of Kapa`a Sands: • Right of Entry and License Agreement granting entry and access to Kapa`a Sands, Lot 4-A and construction parcel C-1 (TMK 4-4-3-02:02), to the County for the construction of the Lydgate-Kapa`a Shared-Use Path along Papaloa Road. Ms. Yukimura moved to .approve the legal document attached to communication C 2011-18, seconded by Mr. Bynum. Chair Furfaro: Thank you. It's been moved and seconded. Anyone in the audience that wishes to testify on this audience?~ Please come right up, Mr. Mickens. We will suspend the rules. There being no objection, the rules were suspended. GLENN MICKENS: Thank you again, Jay, for the record again Glenn Mickens. You have a copy of my testimony. (Inaudible) read it please for the record. Chair Furfaro: Go right ahead. Mr. Mickens: I'm sure that some of you councilmembers remember when proponents of this path tried to route it in front of the condos along Papaloa Road, but Bill Sweeney, a lawyer who owned one of those condos, filed a lengthy suit against this proposed route and stopped it. Those same condo owners, customers using the Kinipopo Shopping Center, plus people buying gas at the Shell Station at the intersection of this road need this road to park on and use as a two- way street, so will probably fight to stop this from being made one-way to accommodate the bike path. I cannot understand the need to make this path happen when it is such a super low priority project. I have two draft proposals here from the DOT going from Nawiliwili to Anahola, and Phase B and C include the Papaloa segment. I don't know if you people have copies of this DOT thing, but anyway the clerk can make it if you want. The original DOT draft of 4/27/10 showed a prospective cost of $1,870,000.00 for this segment. Looking at the latest map, this figure looks way low to me. I got a copy of the map. But the revised DOT draft of 7/13/10 showed that $1,560,000.00 for construction of this amount was deferred and only $370,000.00 was left for planning, design and rights of way. • COUNCIL MEETING - 53 - December 15, 2010 The point I'm trying to make is why are we spending so much of our time and money, in-house lawyers, staff on a project that will not benefit the majority of people on Kauai. We need alternate roads and routes to alleviate the traffic that worsens day by day, not recreational bike/dog walking paths. I said it before and I will say it again, I'm not opposed to bike paths and never will be. But this path was ill planned. trying to retrofit it into an area already congested from the beginning. In these hard times, we should be addressing the needs for everyone. Of the $60,420,000.00 originally allocated for the planning, design, rights of way_ and construction of this path (DOT numbers) from Nawiliwili to Anahola, $57,260,000 has been deferred or deleted leaving $3,160,000 remaining, which is mostly for designing. And since particularly all construction money has been cut, I do not know why over $3,000,000 remains for designing. Though a lot of us citizens, including Councilmember Rapozo and former Councilwoman Iseri-Carvalho, have repeatedly asked for details on this total path, including cost, land acquisition, condemnation, final routes, total maintenance costs, what the contract or agreement is with the Feds for their 80% contribution to the path, and many other relevant questions, no answers have been forthcoming. These figures from DOT are the best we have seen and they are extremely relevant. So, as you guys know, I've been a strong opponent of this bike path from the get go, and again, I'm not against bike paths. No, Tim, I'm not, obviously. If it had been left to go mauka instead of makai, I think the path had a great chance of succeeding. Bette Midler, I think, would have probably given her permission to go through that property and we could have stayed there. But now we're winding, going through the Safeway .parking lot, it's a mess. It's a total mess. And with these numbers from DOT showing that they're cutting these funds greatly, the mass of it except for the planning part, I don't know where the funds will ever come from to be able to do this. Mr. Nakamura: Three minutes, Mr. Chair. Mr. Mickens: Anyway, Jay, I thank you for your indulgence, your time and letting me testify. Thank you. Chair Furfaro: Okay, let me see if anybody has any questions of Mr. Mickens. No? Glenn, thank you for your testimony. Mr. Mickens: You're welcome. Chair Furfaro: Come right up, Alice. ALICE PARKER: Alice Parker, Lihu`e. I must disagree with my dear friend, Glenn, because I think the bike path and walking path is terrific for dog owners and non-dog owners. I think it's a good tourist attraction. When I lived in California in Torrance near the beach, my friends and I would walk the beach path down there to go... not as far as this one, but we met lots of people from lots of places, and I think tourists, as well as locals, like to get out and see the ocean and see the views. Yes, it is very expensive, but land here is expensive. After all, this is paradise. Thank you. Chair Furfaro: Thank you. COUNCIL MEETING • - 54 - ~cember 15, 2010 Mr. Bynum: Thank you, Alice. Chair Furfaro: Alice, Let me see if there's any other... does anybody have any questions of Alice. Thank you, Alice, thank you very much. Ms. Yukimura: Thank you, Alice. Chair Furfaro: Is there anyone else that would like to testify? Mr. Rosa, please come right up. JOE ROSA: Good afternoon, members of the council. Chair Furfaro: Good afternoon. Mr. Rosa: For the record Joe Rosa. As I stated before that I cannot see why the county would be just spending so much money to acquire land, something like this here, when it's something that could be worked along with DOT on the highway widening or any highway project that goes within that area. When I worked for DOT there were plans of putting a new bridge mauka because the present bridge was insufficient because of the piles that was infested with teredos. So I don't see why the county don't work with DOT and find out what are the plans in that immediate area. So, why should they be working for something with two different parties when it can be solved by one party through negotiations within DOT and the county administration. Think about it. Money is involved. And at this critical time, and that's a critical area, everything for land acquisition is going to be costly. It's high time that you looked into it and work with DOT. Look how much money is being spent on that little bridge over there, that old railroad bridge. You know, I never did feel secure because I know it's been prefabricated twice already because there's always cracks on that old railroad bridge that had to be fixed by the plantation and also now again before this thing went into construction. So, it's high time you get DOT down here, look into whatever plans for a new bridge because that bridge when I was working with DOT had a tonnage capacity of 27 tons. That's why the plantation couldn't say it was sufficient for them to operate and the last tonnage on those big trailers at times when I was busing at night, I'd see a truck with a heaping load. I'd go down to the plant the next day at that time they had 37 tons. And at that time Mr. Yamaguchi, the district engineer, used to get after the plantation. You see they do things illegal at night thinking everybody's asleep. But I was awake at night and I seen those things. So as I said, go see DOT, whatever plans because a lot of those (inaudible) just sit because it cannot take the tonnage that these people would like to go across with. So in this incident, just put it aside, leave that area (inaudible), and work with DOT and see what are their plans in that area. You'll be saving a whole lot of money because I don't think the initial plan of this resolution was to purchase land acquisition for this bike path. Thank you. Chair Furfaro: Thank you, Mr. Rosa. Are there any questions of Mr. Rosa? No? Me. Rosa, I will tell you that. I certainly support this next phase here, but I think it's important for us to be prudent in at least writing to the DOT and the Feds to get something reconciled in the way of the balances carried forward and that we will do in the way of a communique to them based on the numbers that Mr. Mickens gave us. Thank you. Mr. Rosa: - Yes, sir, thank you. Chair Furfaro: Is there anyone else that would like to testify on this matter? If not, I'm going to call the meeting back to order. COUNCIL MEETING • - 55 - ISecember 15, 2010 There being no one else wishing to testify on this item, the meeting was called back to order, and proceeded as follows: Chair Furfaro' Councilmembers? Mr. Bynum? Mr. Bynum: We're starting a new council term today. It's really exciting and a...well, we already started it, but we're at the beginning of a new term and whenever there's anything on the agenda regarding the bike path I know Glenn is going to comment and I fully support your right to do that, and usually I don't comment about the repeated misinformation that Glenn puts forward, but I thought I would today given that it's a new term. First of all, regarding Papaloa, Mr. Sweeney did object to the public using the public land in front of his condominiums and organized a group of condominium owners to oppose that. He never filed suit, however, and the compromise, you know, through a public process was that the path would not go in front of those condos and would go along Papaloa Road. In terms of the many questions that have been asked about the bike path, the parks department and since the mayor...previous mayor and continuing with this mayor set up a committee, they've come to the council regularly. They brought spreadsheets, they've answered every question. We know what the costs are. There is very little county money in this project still all these years later. It's mostly federal funds that are set aside for this type of project and I believe it's a good one that a majority of the public supports. And so if we brought all the paper here of the questions that have been answered, it literally would be taller than me. So, I've had all those questions answered and it's been the practice since Lenny's been the parks director to come here periodically with a, you know, a full disclosure and report to answer any questions, so thank you. Chair Furfaro: Thank you, Mr. Bynum. Is there any other discussion here? Mr. Clerk, I'm sorry, did... do we have a motion and second? Ms. Yukimura: Yes, we do. Chair Furfaro: ,We did? Okay and is this a roll call vote? Mr. Nakamura: No. Chair Furfaro: This is a voice vote. Okay, all those in favor, please signify by saying aye. Councilmembers: Aye. The motion to approve the legal document attached to communication C 2011-18 was then put, and unanimously carried. Chair Furfaro: We can go then to the next 'item. ~'' `= Mr. Nakamura: We're on page four, Mr. Chair," of the ~ council's agenda, on a legal document attached to communication C 2011-19. C 2011-19 Communication (11/15/2010) from the Director of Parks and Recreation, requesting Council approval of three Ratification of Purchase Agreements (the original Purchase Agreement with the Association of Apartment Owners of the Kapa a Sands was approved at the July 28, 2010 Council Meeting) to acquire property for the Lydgate Park to Kapa`a Bike/Pedestrian Path along Papaloa road as follows: . COUNCIL MEETING • - 56 - ~ecember 15, 2010 1) Ratification of Purchase Agreement by Elizabeth Ellen VanEttinger 2) Ratification of Purchase Agreement by Willard F. Souza 3) Assignment and Ratification of Purchase Agreement by Mary Ellen O'Conner Davis and the Trustees of the Mary Ellen O'Conner Davis Trust Ms. Yukimura moved to approve the legal document attached to communication C 2011-19, seconded by Mr. Bynum. Chair Furfaro: It's been moved and seconded. Let me get to public testimony first, Mr. Rapozo. Is there anyone in the public that wishes to testify on this item? If not, Mr. Rapozo. Mr. Rapozo: Mr. Chair I just receive the ratification of purchase agreement right now as I just requested it. I apologize. I should have gotten it earlier. I didn't think. I thought it was more of a formality, but as I read the purchase agreement, this is a purchase of a 2,100 square foot piece of land and the purchase is $100,000. Not only that, we're also agreeing to relocate the gas tank and its enclosure, the trash bins and their enclosure, and the Kapa`a Sands signs, "enclosures and signs shall have moss rock walls at the entrance and exit." I think we need to send this to the committee and I think we need to have the administration come explain to us what they're doing. This is a very small parcel of land, 2,134 square feet, but we're also agreeing to relocate the gas tank and I'm not sure what the gas tank...it may be just a propane tank or whatever. But I guess before I vote to approve this, I would want to get a briefing from the administration as to what the cost and the impacts will be because I think $100,000 for 2,000 square feet is I think well above any appraised value of land. I just...I apologize. I should have read this earlier. It wasn't attached to the stack of agenda documents, so... and they are available for the public at the clerk's office. So I would ask we refer this to the committee if at all possible. Chair Furfaro: May I ask are you referring to the Parks Committee. Mr. Rapozo: Yes. Chair Furfaro: Okay, any further discussion? Mr. Rapozo: I... and I'm curious if anyone else knew that it was a hundred grand for two thousand square feet plus the relocation o£..and maybe you can convince me otherwise today, but I just don't see the...that's an extremely high cost for atwo-thousand square foot lot. Chair Furfaro: Any further discussion? Ms. Yukimura: I, yes. C; pair Furfaro: Councilwoman Yukimura. .. . Ms. Yukimura: I don't believe we can pay more than appraised value and I presume that an appraisal was done. But I don't know for a fact. Mr. Rapozo: Well, if you want to move it to the end of the agenda and we can have parks here in the afternoon, that's fine with me. But I mean I'm not going to approve $100,000 for two thousand square feet. Ms. Yukimura: I don't know if time is of the essence or what, so... COUNCIL MEETING • - 57 - ISecember 15, 2010 Chair Furfaro: I'm sorry, councilwoman. Ms. Yukimura: I'm sorry. I don't know if time is of the essence for the parks department,. but maybe a phone call would help resolve this? Chair Furfaro: I do want to say that I think the previous council had voted on this item and taken action on it, and we cannot pay...we had to pay the appraised value. But my understanding of this when I queried and maybe the county attorney can help me, we actually found additional owners on this parcel, so...I don't know. Could you help me here from the county attorney's office? Is that what... did we not already take action on this? ALFRED CASTILLO, JR., County Attorney: I'm sorry, Al Castillo, County Attorney. What I... do you want me to answer all of the questions? Chair Furfaro: Well, I can move this to the end of the agenda as well, but in my summary I just want to say I believe we...the previous council had already acted on this. Mr. Castillo: It's my understanding also, but I don't know where... at what point legally we are regarding this matter right here because there's a lot of moving parts to this. Chair Furfaro: Could we come back and visit this at the... Mr. Castillo: Yeah, we...I think... Chair Furfaro: ...end of the session today? Mr. Castillo: I think we should. Chair Furfaro: And maybe you can query a few of those things? Mr. Bynum, you had your hand up? Mr. Bynum: (Inaudible) let's move it to the end. Chair Furfaro: Okay, so we're going to move it to the end, Mr. Rapozo, and get a quick summary of where we're at. I was of the impression there were more trustees identified in the previous action. So I guess I'd like to have a motion to move this to the end of the agenda. Mr. Bynum: So moved. Ms. Yukimura: Second. Chair Furfaro: Thank you, any further discussion? If not, .all those in favor to move this to the end of the agenda, signify by saying aye. ~ ~-~ Councilmembers: Aye. Mr. Bynum moved to defer the legal document attached to communication C 2011-19 to the end of the agenda, seconded by Ms. Yukimura, and unanimously carried.- ~ • ~ - • Chair Furfaro: Thank you very much. Next item, Mr. Clerk. COUNCIL MEETING. - 58 - ~ecember 15, 2010 Ms. Yukimura: Mr. Chair? Chair Furfaro: Oh, excuse me. Councilwoman Yukimura. Ms. Yukimura: Yes, I'd also like to propose to move this to the end of the agenda. Housing was to be here to just explain this very good news to us and to the public briefly. So, if we can have them after lunch that would be best. Or maybe at the beginning after lunch. Chair Furfaro: I... do we have anything that's time specific when we come back from lunch, Mr. Clerk? Mr. Nakamura: No, Mr. Chair, maybe what we can do is just take the lunch break now and come back to this matter right after the public hearing at 1:30 p.m. and then we'll have the housing agency present for that. Ms. Yukimura Chair Furfaro: Ms. Yukimura: Thank you. Does that fit? That's fine. Chair Furfaro: Okay, so after the public hearing, we'll come back to that item and then for the county attorney, if we can have some dialogue on the item previous to that. On that note, we're going to go ahead and take a lunch break. We'll be back at 1:30 p.m. for a public hearing. Thank you everyone. There being no objection, the meeting was recessed at 12:28 p.m. The meeting was called back to order at 1:57 p.m., and proceeded as follows: Mr. Nakamura: Mr. Chair, we're back on the council's agenda on page four under legal documents. This is communication...this is a legal document attached to communication C 2011-20. C 2011-20 Communication (11/29/2010) from the Director of Housing, requesting authority from the Council to execute the following: • Ground Lease conveying a leasehold interest in Lot 4-B, Subdivision 5-2007-20, TMK (4) 2-6-15-20, Paanau Village Phase 2 to Paanau Village Partners LP for the development of a 50-unit affordable rental housing project in Koloa for households at or below 60% of the Kauai Median Income. Chair Furfaro: Thank you very much. We do have people here from the housing department, but I would like to see first if there's anyone that wants to make any kind of a motion or a second to approve. Mr: Bynum moved to approve the legal dacumer~t attain Ord to communication C 2011-20, seconded by Ms. Yukimura. Chair Furfaro: Thank you. I will now suspend the rules and Mr. Mackler, if you could come up. There being no objection, the rules were suspended. COUNCIL MEETING • ~'- 59 - December 15, 2010 GARY MACKLER, Housing Development Coordinator: Good afternoon, councilmembers, and thank you very much for the opportunity to be here to talk a little bit about this project. Let me just give you just a quick overview of what this project is. Pa`anau Village Phase 2 is part of the Pa`anau Village Complex in Koloa, which is near Koloa School. The second phase of Pa`anau Village will be on a 4-acre parcel which is situated between the existing Pa`anau Village and Complex, which is 60 units and the Western Bypass Road. The project will consist of 50 units and will have a combination of unit sizes consisting of one-, two-, and three-bedroom units. The project will be serving an income group that is at or below 60% of the median household income. This is one of our neediest groups in our population for affordable rental housing and along with the affordable rents that will be offered and at this time the rent structure for one-, two-, and three-bedroom units is $675, $775, and $875 with the potential of actually being refined down a bit before the actual lease up occurs. We will have a very important, very significant housing project situated on the south shore of our island to serve our residents' needs really in perpetuity because this project initially has to be affordable for 63-1/2 years. But the reality is that it will be affordable in perpetuity. In the short-term, we're very thankful that this project is only a few months from breaking ground because it is a project that will involve upwards of $11 to $12 million of construction funding, which will in the short term help a lot of people in the construction trades find work, and of course the long-term benefit will be to have a stable permanently affordable inventory of rental housing in the Koloa area to serve that population. We all know that the future of that area is...that it will be an employment center of Kauai, a growing employment center given the future growth of Koloa and Po`ipu. And so we feel it...certainly as a housing agency, it's very important today to make sure this project gets to completion and that these units are placed in service. We are looking at, as I mentioned, breaking ground in February. And I should back up and just let you know that this project is being developed by the Kauai Housing Development Corporation. They are a locally based, non-profit housing organization. They were originally formed in 1993 and have done wonderful projects on Kauai. They are led by John Frazier, the executive director, and an excellent board of directors as well. And after breaking ground, which we expect in February of 2011, the timeline to put the site improvements and the building construction... to complete all of that will be approximately 12 months. So we're looking at occupancy there in the spring of 2012. Chair Furfaro: Gary, are you planning to break ground in February? Mr. Mackler: Yes. Chair Furfaro: Okay. Mr. Mackler: The developers informed me they expect to receive their grading permits very shortly and they will be scheduling a ground breaking ceremony, which they hope to do in February of 2011. Chair Furfaro:' - `~""~ ~ '"• " Yoiz liave...you have an updated footprint of the parcel for all the members, the number of buildings, common area elements, anything like that? Mr. Mackler: I didn't bring that with me, but I can just share with you that the parcel is just over 4 acres in size. There will be five residential buildings placed on the site. They will be two-story structures, 10 units per building, and there will be one additional building there as a community facility. It will consist of a manager's office. It will have room available for the supply of maintenance materials, and will also have a community meeting room. This project COUNCIL MEETING • - 60 - ~cember 15, 2010 is really made possible through the efforts of the past county council in negotiating for this affordable housing site to be made available to the county at no cost by Kukui`ula Development Company, and also to provide all of the off-site infrastructure that's required for the project. So, what is in place today is all of the off-site water and sewer and utilities. And concurrent with the site work will be the extension of Pa`anau Road, which Kukui`ula Development Company will be paying for, and so we see basically everything lined up to move ahead. We have two primary sources of financing. One is the Federal Home Investment Partnerships Program, which past councils have appropriated the funding for and also the financing will be provided through Development Capital, which comes from the purchasing of low-income housing tax credits and from the limited partnership who purchases those credits. They will provide development equity to finance the development of the project. Chair Furfaro: I know there's other councilmembers, but I just want to review a few other items. Did we also provide in the footprint a provision in the event that we look to access the Western Bypass or... Mr. Mackler: Yes, Councilmember Furfaro. At the time of the... going through subdivision of the lots and this lot in particular, consideration was given to the possibility of connecting Pa`anau Road to the Western Bypass Road and because there's an elevation gain from where the existing cul-de-sac up to the connection, it's about an 18- to 19-foot elevation differential, there is the potential that our access from Pa`anau Road could be impaired. And in the subdivision, there is a road reservation for access from the Western Bypass Road in the event access is cut off on Pa`anau Road. So there was...there is provisions made for that possibility. Chair Furfaro: Okay, good. I know Councilwoman Yukimura has questions for you. Councilwoman Yukimura. Ms. Yukimura: Well, first of all thank you for a very thorough and succinct description of the project and also mahalo to housing and you in particular, Gary, for the work done to bring the project to this point. Mr. Mackler: Thank you. Ms. Yukimura: What...my only question is...if the county had had to pay for the land and off-site infrastructure, how much approximately would that have been? Would it have doubled the project cost? Mr. Mackler: I don't think so. I think the land... for 4 acres of R-20 zoned land would be very expensive. I think we would have paid over a million dollars for the site in today's market. I don't have a number on the off-site. I do know that Kukui`ula has put in upwards of $29 million of off-site improvements for their master plan development and part of that goes to support the Pa`anau Village Phase 2 Project, but I don't really have a specific number or even an approximate number I can give you today. Ms. Yukimura: Okay, but you did mention in the briefings that you did that we will have no debt service to operate the project because we've been able to get tax credits and part of the reason for getting tax credits is because this project is so doable. Mr. Mackler: Correct. Any time we have a site that has off-site infrastructure available to it, an applicant for low-income housing tax credits will score very high. It a very ...highly competitive statewide competition for those COUNCIL MEETING ~ - 61 - ~ December 15, 2010 credits and you certainly have a leg up when you have your off-site in place. It certainly reassures the decision makers at the state level that this project can happen. -And last year we were here before you in December and asked that the council, prior to Kauai Housing Development Corporation applying for that financing through the state, if the council would please assist that application and support site control to the applicant. And we received council support then and... actually I think this is the sixth time we've been before a county council asking for support for this project through three fund appropriations, site control, the limited warranty deed of only a few weeks ago, and now this ground lease legal document. So we would like to thank the council especially the present and former councilmembers, all of whom have been very supportive of seeing this project go forward, so thank you. Ms. Yukimura: Well, your agency is the one that's brought it all ,together, so thank you for that. It's very exciting to see housing... affordable housing actually come to fruition. Mr. Mackler: Yes, thank you. Chair Furfaro: Councilwoman Nakamura. Ms. Nakamura: I just have a brief question. Mr. Mackler: Sure. Ms. Nakamura: Is there a waiting list on the Phase 1 project. Mr. Mackler: There is. I actually...last week I checked with our site manager actually for both Pa`anau and Kalepa, but at Pa`anau there's a...the current wait list is 13 families. At the time I checked last week, there were four vacant...excuse me, five vacant with four move-ins scheduled. So we are...we're somewhere above 90% occupancy in Phase 1. Chair Furfaro: You know, I'm...I (inaudible)...I have that report that I'll share with all of you. I had a separate discussion with housing earlier and I think of the waitlist in projects that have maybe five vacancies, you have as many as four already approved. Do you have a copy of that report for us? Mr. Mackler: I... actually, I have a copy here with me. Chair Furfaro: We can make some copies. Mr. Mackler: Okay. Chair Furfaro: Would we get that from Gary Mackler and make some copies? Thank you, Gary. Councilwoman Nakamura, did you have more? No? Okay. Gary, the tax credits are going to last approximately 15 years? Mr. Mackler: Well, the tax credit partnership will exist for 15 years and one of the provisions in the ground lease is that the county has the right to cancel or shorten the term of the 63-1/2 year lease to 15 years, which we will do. We intend to do that because once we cancel the lease, all of the improvements that are built over the next year will become the fee simple...we will become the fee simple owner of all of those improvements. So we stand to be the beneficiary of a very highly valued housing project, and we also are in a similar COUNCIL MEETING • - 62 - ~ecember 15, 2010 position with two phases of the Kalepa Village Project that were financed with tax credits. We have the same ground lease provision in there for the two phases of Kalepa Village. Chair Furfaro: Thank you very, very much, and I just wanted to point out the outstanding work. At the end of this 15 years, we have this option, the asset becomes ours. We have targeted occupancy rental rates and so forth during that period, and thank you very much for this summary for everyone at the council table. Mr. Mackler: Sure, you're welcome. Chair Furfaro: Mr. Chang, yes, go right ahead. Mr. Chang: Thank you, Chair. Gary, congratulations. I think it's very, very exciting news for the community. You mentioned a little bit about ground breaking in February. So it's exciting to know that we can get our construction people back to work, and that 60% means a lot to that growing Koloa resort area as far as the housing is concerned. But I wanted to point out that hopefully we can achieve a goal of being LEED certified and I just wanted to point out a couple of things that I appreciate about the design because I was able to look at the floor plans, the designs itself, trees, the ventilation as far as the natural trade winds, but you know, by sound proofing greater than the required code, I think many people that live in multi-family projects really appreciate that and I notice that we will be installing ceiling fans in all the living rooms and the bedrooms. And the bedrooms, I believe, the rooms are going to be as large if not larger than Kalepa, which is pretty good size units. Mr. Mackler: Yes. Mr. Chang: But also, you know, the compact fluorescents and the LED exterior lights, but I think it's real important, especially as we talk about energy efficiency. I like the fact that, you know, I'm very familiar with Pa`anau Phase 1, but I really like the fact and I think it's great for the public to know, that you got stack-up washers and dryers and Energy Star appliances, solar hot water heating, you know, plumbing... great plumbing features, Energy Star quality lighting features. You know, irrigation, you know, if you...that LEED certified building with KCFCU, they've been using the appropriate plants and the groundcover and I think that's very important and I'm glad to see that in the report here, but you know, recycling areas and solar parking lots, I mean it's going to be great, great news for those that are looking for that affordable housing, especially that 60%. But I'm happy because it's location, location, location and yet we got construction involved and that's going to be employing a lot of our local people in need of work right now, so it's very exciting. And you know, I saw the color sketch of the plans and that's...it looks really, really nice. Mr. Mackler: Thank you, councilmember, I was once told but...that we should develop afforu~+ble housing that is built with quality but is affordable to live in and energy cost is one of those variables that comes into everyone's budget each month, that the more we can do to lower the cost to live in these units, the more benefiting to the residents that live in the units. So from an environmental point of view, it's a good thing and of course for the livability and affordability, it's a very good thing for the project. Mr. Chang: Thank you, thank you, Gary, thank you Eugene. Chair Furfaro: Councilwoman Yukimura. COUNCIL MEETING ~ - 63 - December 15, 2010 Ms. Yukimura: Yes, I'm so glad Councilmember Chang raised the issue of energy use. Now, are these... are we trying for a LEED status on this? Mr. Mackler: We are...in the application that KHDC submitted to the State for tax credit financing, they did represent that they were...they had set as a goal to reach one of the LEED certifications, possibly silver, because I know we were...we were just short of getting a silver LEED designation for the last phase of Kalepa Village. So they might reach it on this project. Ms. Yukimura: That is so exciting because as you pointed out, Gary, the living costs are not only rent. It's a lot... energy use is a big factor in this, so it'll really help our families if the buildings are set up to be energy efficient. And I guess it presumes water heating too, right? Mr. Mackler: It is designed for solar hot water heating and as Councilmember Chang mentioned, a lot of thought was given as to how to situate the buildings to take advantage of natural ventilation. Ms. Yukimura: Excellent, fabulous. Chair Furfaro: Any more questions of Mr. Mackler. Mr. Mackler, let me just say how very pleased we all are where we're at, the work your office has done, you know, thank you very much. Mr. Mackler: Thank you and it's...I'm here before you, but there are a lot of other people in our office that have worked on this project who've been very instrumental in getting it along this far. Barbara Pendragon is one of those persons, as well as others. So thank you very much, councilmembers. Chair Furfaro: Thank you. The rules are still suspended and Alice, if you'd like to come up. ALICE PARKER: .Thank you, Alice Parker for the record. I'm really excited about affordable housing. I'm number 28 on a list of one affordable housing and I hope I make it, you know. But I have two questions about the Pa`anau Project. One is is it accessible to bus transportation? Are there going to be bus stops set up in there? And the other thing, is there...I understand the emphasis on fluorescent lighting. However, there are some medical conditions that say you should not use fluorescent lights because I had a neighbor who took all the compact fluorescent lights out and put in incandescent because she has lupus and no flickering of lights. That also applies to people with epilepsy, migraines and there's a fourth condition I can't recall. But I hope that people have a choice of incandescent or fluorescent. Of course, fluorescent is a lot cheaper, but if you have a medical condition that contradicts that, I think you need to have a choice. Chair Furfaro: Thank you, Alice. Mr. Mackler, would you mind coming up and answering those two questions. Mr. Mackler: ~ Okay, as to the first which is relating to transportation, yes, there is bus service that comes into Pa`anau Road presently and I'm confident it will be extended to serve this second phase of Pa`anau Village. As for the lighting itself and how it may affect individuals, we are always willing to make modifications as requested. One of the things we have designed in our multi-family rental projects is that all the ground floor units are handicap .accessible. So anyone wanting to live there that needs modifications made to the COUNCIL MEETING. - 64 - ~ecember 15, 2010 living units, we make them for the tenants. It would be really no different if one were to request a changing out of light fixtures. I don't think that would be a problem at all. So, in terms of transportation I should also point out that with the extension of Pa`anau Road, they will include curbs, gutters and sidewalks.. And then also one of the conditions... this is actually on Kukui`ula is to provide connectivity of the sidewalk which will be all the way to our project but will also connect up to the Western Bypass Road so that that system will be connected in so that people can come in or along the Western Bypass Road come down on an accessible path to the cul-de-sac and then also travel into our project or down Pa`anau Road towards the school. So I really don't... going back to the concern, I don't foresee any issue there. Chair Furfaro: Gary, thank you again, and as I mentioned since I met with Barbara, and please send her our mahalo as well. Mr. Mackler: Will do. Chair Furfaro: I will circulate the footprint of the parcel of the buildings since I have it from my meeting with her. Mr. Mackler: Okay. Chair Furfaro: Mr. Bynum, did you have a question? No? Mr. Mackler: Thank you. Chair Furfaro: Thank you, Mr. Mackler. Lonnie, please come right up. LONNIE SYKOS: For the record, my name's Lonnie Sykos. This is a very impressive project that the county has spent years on and the public is impressed at all the negotiating that's occurred. I'm from Maui. A&B on Maui is our big brother. When I was a flower farmer, we looked to A&B, particularly to Peter Baldwin, who was our champion, even though at times our industries seemed at odds with each other. A&B is a great partner because. they're invested. Their lives are our lives and so it's good to see that the Kukui`ula and all that put the infrastructure in and all of the benefits to the public as well as to the people that will be living in the units. I have an observation for the county. For the people that are going to be living in these units, the ones who are not disabled, not retired or elderly, but the ones that are trying to work and get themselves out of poverty, one of the crushing financial things, living on any of the islands in Hawaii, is the difficulty of keeping a job without owning an automobile. And so when I employed people as a flower farmer, I used to go pick my employees up. The people that worked for me, I would just go pick them up. I didn't want them having to figure out how to get to work. This would be a great...because of the time lead that you have with the construction, this would be a great...like project for the county council and the bus and the transportation committees to look at how can we make this functional so you don't have to have a car and whether you work dayshift or nightshift you can go to work and get home, never have to stand in the rain, never get beat by the wind, never get burned by the sun, and have a functional bus service for life... for the person's whole life, not just the portions of the life that are served by the bus today. And this is not a criticism. The bus (inaudible) gets expanded over time and its mission expands over time, but certainly for this project it would be a great thing if people could live there and expect to get to the doctor, get to work, and get home COUNCIL MEETING ~ - 65 - I~"ecember 15, 2010 without going through like myself I live in the houselots, but if I catch the bus I have to go stand in the sun and rain. And so that's my two cents is maybe we could use this to... as part of the bigger outlook for the community as well. Chair Furfaro: Lonnie, I think Mr. Bynum has a statement that involves you. Mr. Bynum: Yeah, I just...I want to...I couldn't agree with you more and I want to celebrate today that Bill No. 2390 is on our agenda to expand bus service into the evenings and on Saturdays. I'm thrilled and for those reasons that we have folks who are dependent on the bus to be equal participants in our community, they need to be able to get to work on Saturdays and work nights, and so, you know, there's a lot to celebrate today. Mr. Sykos: If I could say something else is that somebody who's like dealt with these issues, obviously there's no study I'm aware of specific to Kauai, but in the State of Hawaii, it costs between $300 and $600 a month just to own a car, right? If you pay registration, one set of tires a year, one tune-up a year, one oil change a year, and minimal driving, you're $600 a month easy. Mr. Bynum: Easy. Mr. Sykos: You got a new vehicle that you gotta, you know, payments to make, and insurance and all that, $2,000 or $3,000 a month may be, you know, going into expense in vehicle and so to benefit everyone, that reduction in expenses for the individual costs more to the taxpayers for more bus service, but we all win by reducing the number of vehicles on the road. Chair Furfaro:. Thank you, Lonnie. Councilwoman Yukimura. Ms. Yukimura: Yes, I just want to say that related to the overall expansion of the. bus system . is the Koloa-Po`ipu transportation plan, area transportation plan that was done which did talk about a shuttle that would take people into the work area of Po`ipu and would have a bit more and better connections between the larger islandwide system and the Koloa-Po`ipu area. So, there's a lot of pieces that are coming together. And at the planning process, one of the first things the consultant pointed out was that getting rid of a car can qualify a family for $50,000 in mortgage money, just for the...just because of what you just outlined, the cost of owning a car. So, and transportation is the second largest expenditure of a household I think next to housing. Mr. Sykos: Yes. Ms. Yukimura: So, you know, we're seeing three things come together here to help our families. One is housing costs, the other is energy costs, and the other is transportation costs. And there's a lot of work to do. We have a lot more work to do in terms of bus shelters and so forth, but we have good agencies working on these problems and wiL-h the partnership- of"'citizens and -'private developers, I think we're on our way. Mr. Sykos: There was a series of... Chair Furfaro: Excuse me, Lonnie. If there's no question posed to you and I also gave... Mr. Sykos: I understand. COUNCIL MEETING. - 66 - ~ecember 15, 2010 Chair Furfaro: ...the councilmembers some liberty here. The agenda item is a housing project, not transportation, busing and so forth. We give you...we're more flexible, but the agenda for the members, I hope you understand. Mr. Sykos: I understand entirely. Chair Furfaro: And plus we have Doug Haigh here only for another 28 minutes. So I want to get him up on the next agenda item, so. Mr. Sykos: Thank you. Chair Furfaro: Thank you very much, Lonnie. Is there any more testimony on this from anyone in the audience? If not, I will call the meeting back to order. There being no one else wishing to testify on this item, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Members, we do have a motion and a second. Any further discussion? Councilwoman Yukimura. Ms. Yukimura: Just real quickly. We have here a project that through this ground lease is going to provide 50 affordable units that will be affordable in perpetuity. It'll provide construction jobs with no debt service for operations. It's near a school, right next to a school. It's near businesses and near the beach via... and work areas via a bus and bikeways that are still parts that have to be put in. It's aiming for LEED certification and it really is because of a partnership between private sector...and I really want to acknowledge Kukui`ula Development Company... Corporation, the county and the wonderful work of the housing agency, and anon-profit housing developer, Kauai Housing Development Corporation. So, it's a very exciting project and I want to thank everyone who's been involved in bringing it to this point. Chair Furfaro: I think we're all very pleased, very much a team effort here, and it's awin-win. Any further discussion? Do I have a motion? Ms. Yukimura: Mr. Nakamura: Chair Furfaro: Mr. Nakamura: Chair Furfaro: councilmembers Yes. Yes, you do. Approved and second, I do? We have a motion to approve. Okay, all those in favor? Aye. Chair Furfaro: Are there any opposed? (Silence) Are there any silent? (Silence) Thank you very much. The motion to approve the legal document attached to communication C 2011-20 was then put, and unanimously carried. Chair Furfaro: We have Mr. Haigh here, Mr. Clerk, and so I'd like to go into the bill that we deferred until after luncheon dealing with the land acquisition. COUNCIL MEETING Mr. Nakamura Council Chair. Chair Furfaro -67- December 15, 2010 That would be a legal document on page four, Very good. Mr. Nakamura: This would be the top of page four, communication C 2011-19, which was the ratification of the legal document for the acquisition of property for the Lydgate Park to Kapa`a Bike/Pedestrian Path along Papaloa Road. Chair Furfaro: Thank you. Doug, if you could come up and while you're coming up I'm going to ask Ashley from our staff, Ashley, could you pass out the cover on the appraised value piece. I do have the appraisal here and I also would like to refer to Phase V of our bike path report in which, if you go to the correspondence dated July 2, 2009, it makes reference to this appraisal that was done and therefore my previous commentary that the council had voted on this in a previous session. And the fact of the matter is some of the reason it is back on our agenda is people who may have signed off on the agreement should have actually signed off as trustees of certain trusts and so forth, and the full appraised value is here, coming in at $123,470. And there were some credits here for landscaping, which I assume, Doug, is making up for the other work that Mr. Rapozo would like to hear from. Thank you for being here. I understand we have until 3 o'clock and so I'm going to suspend the rules and Mr. Rapozo, go right ahead. There being no objection, the rules were suspended. DOUGLAS HAIGH, Chief of Buildings: Doug Haigh, Department of Public Works. Chair Furfaro: Thank you. 1VIr. Rapozo: Thanks, Doug. I guess, did...did this...your cover letter come with the actual appraisal? Is there an appraisal report that... other than just a letter saying... Mr. Haigh: Yes, I brought the... Mr. Rapozo: Okay. I just...I'm questioning the value of the appraisal because, if I'm not mistaken, the land area is 2,OOO...a little over 2,000 square feet...right? Is that what we're purchasing, 2,134 square feet? Mr. Haigh: That sounds right. I haven't memorized... Mr. Rapozo: That's what...okay and we're basically taking 2,134 square feet of land from a larger parcel of 54, so leaving the remainder 52,000 for the owners. So we have actually...we're going to purchase 2,134 square feet which equates to about...I guess it's five-hundredths of an acre, :05 acre;' an acre is 43,000 square feet. So it's basically U.05 of an acre. Does that sound right? Mr. Haigh: Um... Mr. Rapozo: It's...it's basically 2,000 square feet out of... Mr. Haigh: 2 out of 40,000, okay, so that's 1 out of 20,000. So it would be...10% would be 2 out of 20,000, so it would be 5%, yes. Mr. Rapozo: Less. It's... COUNCIL MEETING - 68 - Tlecember 15, 2010 Mr. Haigh: Mr. Rapozo: Mr. Haigh: Mr. Rapozo: Chair Furfaro: Mr. Haigh: Mr. Rapozo: Mr. Haigh: Chair Furfaro: Mr. Rapozo: Chair Furfaro: Mr. Rapozo: Chair Furfaro:. 5% of an acre. No, not 5%. I think so. No, 5% would make it... It's 1/20 of an acre. Yeah. One-twentieth of an acre. Which is 5%. Thank you, my public school paid off. So... no 1/20 of an acre would be 0.5. 0.05. No, we're at 0.05. 0.05. Mr. Rapozo: Yeah, so if... and bear with me because it dust seems like an astronomical amount of money, but if it's 2134 times 20, you're at 20...hang, on here. You got too many buttons. Ms. Yukimura: A little less than $50 is good. Mr. Rapozo: So you're looking at...if you times the $100,000 fee, which we're paying, and you times that by 20, that would give you the per acre cost. You guys follow? Mr. Haigh: That makes sense. Mr. Rapozo: 5o if I go $100,000 times 20, I come out with it...like a $2 million per acre. Mr. Haigh: Correct. Mr. Rapozo: And that is what the appraisal was based on. Mr. Haigh: I am not an expert appraiser. I can't really give yc;u .a.professional opinion on the validity of the appraisal, .but T .can tell you the process that was used. This appraisal was done by a professional appraiser. Part of the process is then...we then have to hire another appraiser to review that appraisal on the appropriateness. And once we have that review done, we submit these...both these documents to the State Department of Transportation and they have aRight-of--Way Branch which is staffed by professional appraisers, people with many, many years in the right-of--way work and then they have their. in-house professionals review the appraisal for appropriateness, and then they approve it and tell us yes, that is an acceptable appraisal. COUNCIL MEETING ~ - 69 - ITecember 15, 2010 Mr. Castillo: Council Chair. Chair Furfaro: Yes, to the county attorney. Mr. Castillo: Excuse me, for the record Al Castillo, county attorney. I'm sorry, but the agenda item today is regarding the ratification of the purchase agreement. The...it's not...the agenda item is not to contest the wisdom of the prior council that authorized the purchase agreement for this piece of property. Basically what we have before you is what happened after we received authorization from this council to purchase this property. The county entered into... did enter into a purchase price considering the appraisal amount and the . settlement agreement that went...that was negotiated. What you have before you today is the ratification. What happened was during the title search, because the purchase has to be approved by each apartment owner, we .discovered that some of the named owners was kind of erroneous and we just corrected that. So what you have before you today is a correction of the documentation to clearly identify the owners of the property and that's all that is before the body today. Chair Furfaro: I understand your concern, Mr. Castillo, but I would point out that this was action, as I mentioned, taken by the previous council. The individuals who were actually members of trustees may have signed the documents wrong, but I do think we're certainly within the jurisdiction to find out exactly what we paid for. What is an R-20 zoned piece of property, ocean front, the appraisal came in, the appraisal was double checked, it was determined it was a fair market value, and I think it's really getting the current councilmembers to the point that they're comfortable what the previous council took action on, and why they took action is based on this appraisal that we have. I don't think the county would ever pay more than what an appraisal is identified as, but I think getting Mr. Rapozo up to date is fair and it's reasonable. So, that's how we arrived at it for those 2,170 square feet, which came out to $43.85 a square foot, and it ties in to an appraisal that we have right now, so. Mr. Rapozo: Thank you. May I continue? Chair Furfaro: Yes, you may. Mr.. Rapozo: And, Mr. Furfaro, you're well aware of that house that we almost purchased in Koloa for... Chair Furfaro: Yes. Mr. Rapozo: $200,000.00 which amounted to be worth less than $500.00. So you know, it's...I'm just doing it because I was not here and I'm reading this for the first time and the appraisal did raise a red flag or the price because it's such a small parcel. Now the other questions...and it may be too late, I guess if it's already been purchased it's been purchased, but' the facility restoration services, which was the tank, a relocation with the enclosure, the bins and the enclosure, the signs with the moss rock walls, the parking lot improvement, the electrical conduit's; the 6-foot high aluminum fence, the landscaping and irrigation system, the title report; the attorney's fees that we agreed to pay, what did that come out to? Mr. Haigh: Well, we still do not have the exact cost of those because we have not done the work. Now all that work will be part of the construction project and funded but with the federal highway funds. It's approved work. The, plans have been approved by the Department of Transportation for us to proceed. So they...we can't...I can't give you the actual cost of that work because we haven't bid it out yet. COUNCIL MEETING ~ - 70 - ~cember 15, 2010 Mr. Rapozo: Ballpark? Mr. Haigh: I... Mr. Rapozo: I mean you're asking us to...I mean and I'm not trying to disrespect the former council... Mr. Haigh: I have not memorized that number. I don't... it would take me...I'd have to go back and search in my records. Mr. Rapozo: Well, I have time. I mean and you know obviously if you folks want to go ahead and approve it, that's fine. But I think, more than just me, but the public should know what this is going to cost. I mean I think it's not unfair to ask. It looks like quite a bit of work that needs to be done and I could be entirely wrong, but I don't think that's unreasonable to find out how much this scope of work is. It's...I mean is it $100,000 or $200,000? Mr. Haigh: I...like I said, I haven't memorized that. I'd have to go back. We do have an engineer's estimate. I can get my, consultant to pick that out and provide that information. I don't know... and I'd be happy, you know, no matter what happens today, to provide you that information. That's not a problem at all. Chair Furfaro: Doug, I might send over a communication. I intend to vote for this today, but the appraisal came in and the document that I referred to from my own records dealing with Phase V of the bike path says that the appraisal came in at $123,488 based on the fact that there were certain improvements, whether it was fence, garbage bins, and/or landscaping, which has value. So I'm going to send over...my assumption is if the land is $100,000 in the appraised value, the loss of those improvements should not exceed $23,488 because if that's the fact, then we actually would have paid more whether it's packaged in the construction cost or not. The whole appraisal with the amenities and the landscaping came in at $123,488 and I just want to say I appreciate the county attorney's caution. This is something that's already been negotiated, and the bigger part of that is, you know, it's a reflection on, you know, us saying this is what we want to exercise based on these appraisals that are done and so forth. So, I'll send over a communication asking for you to detail and I hope it's not more than $23,488. Mr. Rapozo: How time sensitive is this document? Mr. Haigh: It's important for us to be moving forward. We're about ready to go out to bid on this work and we do need to have these documents in place. Part of the problem is we...this was all done over a year ago and approved and executed, and due to unforeseen circumstances the project got delayed and all of a sudden we got caught where we had this document expire, and so it is important for us to get it approved. Chair Furfaro: I concur is what I was saying. I mean, the previous council had exercised this acquisition, but I think in Mr. Rapozo's case it is nice to be assured that we don't have other amenities that we're replacing that exceeded the total appraised value. So I'll send over the communication. Mr. Rapozo: Is...I mean how difficult is it to get that information because I'd like to vote on it today. COUNCIL MEETING ~ - 71 - ITecember 15, 2010 Mr. Haigh: I'm going to have to work with my consultant. I can't get you an answer within an hour. It is probably going to take me a couple of days. I don't know what his schedule or work is right now. Mr. Rapozo: Obviously I'm not going to vote unless I have the information I need. I mean, it...I'm sure you folks all have the votes, but I just...I don't think it's unreasonable to ask a simple estimate ballpark figure I mean on a project like this that has been in front of this council for several months and... Chair Furfaro: As a member of the past council I want to make sure if I voted in favor of something and we've executed something, that there is a certain credibility to that. But at the same time I would hope you would take my explanation that I do plan to send that over. I would like to get something back, Doug, that said we were in reasonable amounts in trading off the landscaping, the garbage bin, and the landscaping, so. Mr. Rapozo: I guess the way I read it...because it's a relocation of the tank, the trash bins and the signs need to be relocated and constructed in moss rock walls, the parking lot needs to be extended by 2 feet and they want asphalt with wheel stops. I mean, it's a huge, huge commitment on our part, which I think will be way over $23,000.00, Mr. Furfaro. I just...the 6-foot high aluminum fence and the landscaping and irrigation systems as well, and the attorneys' fees, I don't know what that will cost. Chair Furfaro: Well and I will pursue finding out because I don't remember all of those moving parts when we voted on the acquisition. Councilwoman Yukimura. Ms. Yukimura: Yeah, it seems like it could likely be over the appraised value of the small parcel, but if that's what it takes to get this project ahead and you have to negotiate with landowners and make sure that their land is restored back to whatever is fair to them for the taking of this land, it just becomes a normal part of the cost of making this project happen. And you know...and I don't think... unless we are giving them more value than it takes to get this. agreement, I don't see anything wrong with that. Chair Furfaro: Well I am planning to call for the vote, councilwoman. Ms. Yukimura: Good, I'm glad. Chair Furfaro: And I think it is not...you know I think Mr. Rapozo's point is you know this is taxpayers' money. We want to make sure it's fair and reasonable at the same way. Ms. Yukimura: I'm all for that. Chair Furfaro: We...I think you are all for that, as we alI are. So, Doug, just so we know, we'll be sending over a communication. I think we will be voting on this today. Mr. Haigh: Thank you. Chair Furfaro: Any further questions of Doug? He needs to get back fora 3 o'clock. Am I correct, Doug? COUNCIL MEETING • - 72 - ~cember 15, 2010 Mr. Haigh: Yes, correct, my first meeting with my new boss, the new county engineer. Ms. Yukimura: Don't want to miss that. Mr. Bynum: That's kind of important. Chair Furfaro: I think I used to work with your new boss. Anyway, thank you very much for coming over. Mr. Haigh: You're welcome. Thank you. Chair Furfaro: I'll get... Doug, you have this Phase V report that shows the 128 in it? Mr. Haigh: Yes. Chair Furfaro: Yes, okay, thank you, thank you. Any members of the public that would like to speak on this item? If not, I'm going to call this meeting back to order. There being no one wishing to testify on this matter, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Do we have a motion? Mr. Nakamura: We have a motion and a second, Council Chair. Chair Furfaro: We have a motion and a second? Mr. Nakamura: Yes, yes. Chair Furfaro: And this is simply a voice vote? Mr. Nakamura: Voice vote, yes, Mr. Chair. Chair Furfaro: Okay, if there's not any further discussion, all... oh, further discussion, Mr. Bynum? Mr. Bynum: Thank you, Mr. Chair. As I mentioned earlier today, I think the parks department...the administration some time ago created a task force to deal with this bike path project that includes county attorney and parks and public works. They've given us .periodic reports. They've been responsive to any questions. This is a project that I'm very supportive of and I follow closely for all the time that I've worked for government. And I meet regularly with the people involved and I've come to trust that the myriad of details are handled well and appropriately. And we saw an example of that today where we had the process explained to us that -not Drily do we have this appraisal by a professional appraiser, but it's reviewed by another appraiser, goes to the Department of Transportation for their okay. You know, there's like standards of practice in this, and we have competent people that do that standard of practice, and so I have faith that we're being well served by the people that are involved in this project because I've seen dozens and dozens of these instances where there's appropriate and reasonable answers. COUNCIL MEETING • -.~73 - ISecember 15, 2010 I also think that the amount of $100,000.00 for 2,000 square feet of ocean front resort zone sounds reasonable to me any way you do the math. If you did three 2,000-square foot parcels, that's a houselot. Maybe~$300,000.00 for a houselot in the resort zone seems like about right to me, so I'm prepared to vote on this today. Chair Furfaro: Okay, any further discussion? If not... Mr. Rapozo: I just want to... Chair Furfaro: Go right ahead, Mr. Rapozo, the floor's yours. Mr. Rapozo: You know the appraisal is not the only issue I had as I just explained. I don't think it's the appraisal and our... my experience anyway with appraisals and this is meant not to disrespect the appraiser, but you know I'll bring up that ca...we had an appraisal for the house, years ago, and it was just by chance that I happened to be driving by. Mr. Heu, you remember this, because I called you from the lot and said, where is this house. And the house was worthless and it was an appraisal that was written up. I'm not saying this is the case in here, but it's the additional cost that's not explained, and that's all I am concerned about. I have not followed this as closely as Mr. Bynum and if maybe Mr. Bynum can help me with the estimate of the cost for the improvements, I don't know. Mr. Haigh doesn't know. If I was the administration wanting the council's approval, I'd come prepared to answer the questions. It's not unreasonable to ask how much do you think it's going to cost, ballpark. I mean...can't even get a ballpark, then I simply cannot lay my support. If it was that important, I would not...I don't know who the consultant is. Maybe parks and rec has that number. You cannot tell 'me that there has been no discussion regarding this project at the administration's level. I mean, I cannot believe that in fact nobody knows what the ballpark figure is. So, I think a phone call would have done it. But if not, and you folks are prepared to vote, that's fine. I'll respect the actions of the former council, don't get me wrong. But this is a question I have as this was the first time I've had the opportunity to actually read the purchase agreement and I was not aware of all those additional improvements that the county...I would much rather this county improve some of our parks with those beautiful improvements rather than private property. So anyway, that's my position on it and I'll stand by it and we'll take the vote. Chair Furfaro: Your comments are well taken, Mr. Rapozo, and it is the chair's intent to ask for a report on what is made up of those additional improvements and are they within the range of the $28,300.00 that were in the application. Could the clerk's office so note my request for that communication? Mr. Nakamura: So noted, Mr. Chair. Chair Furfaro: Mr. Bynum, did you have some more? Mr. Bynum: ~ I'll leave ~it go for now. Chair Furfaro: Okay, if not, I'm going to ask for a vote on this. All those in favor? Councilmembers: Aye. Chair Furfaro: Any opposed. Mr. Rapozo: No. COUNCIL MEETING • - 74 - ~cember 15, 2010 Chair Furfaro: Any going silent? (Silence) Okay, we have six yeas and one nay. Thank you very much. The motion to approve the legal document attached to communication C 2011-19 was then put, and carried by a vote of 6-1 (Mr. Rapozo voting no). COMMUNICATION: Chair Furfaro: Next item? Mr. Nakamura: Council Chair, at this time we're back on page three of the council's agenda on communication C 2011-17. C 2011-17 Communication (12/08/2010) from Council Chair Furfaro, requesting the presence of the Director of Finance at the December 15, 2010 Council meeting to provide an update and to discuss the County's Furlough Plan and Draft Policy Regarding Budgetary Reserves, pursuant to Sections 32 and 33, respectively, of the Operating Budget for FY 2010-2011. Chair Furfaro: Thank you and we're at a point that we're going to receive this communique. Okay, we're going to take a 5-minute recess here as...oh, he's right outside. Okay, the recess has just ended. Chair Furfaro: I am going to go ahead and suspend the rules now that we have Mr. Rezentes here. There being no objection, the rules were suspended. Chair Furfaro: He has a passout. Excuse me, Wally, is this piece you're handing out, is this referencing a reserve policy? WALLACE REZENTES, JR., Director of Finance: That's on furlough (inaudible) and I think we'll do the reserves after. Chair Furfaro: Okay. Yes and Mr. Rezentes, I want to tell you I'm not looking for, you know, a forensic accounting report here on every detail. Could staff make a copy for our auditor's office and could our staff make a few copies for the audience as well? Oh, you already did, okay. Mr. Rezentes, the floor is yours. Mr. Rezentes: Okay, good afternoon, Chair and councilmembers, Wallace Rezentes, Jr., Director of Finance for the record. I did pass out a memo as well as some spreadsheet data on the actual numbers for the first five months of this current fiscal year. I also included a comparison of the five months of the prior fiscal year. So it's a comparison between July 1 through November 30 of 2009 to... compare that with July 1, 2010 through November 30, 2010. The numbers include the cost for salaries, overtime and fringe benefits from all the respective departments. Overall, the first five months...over the course of the first five months of the fiscal year; the saw in ~s was approximately 11% and that represents approximately $4.2 million in savings. I'm not, like you said Chair, I'm not intending to go through the entire report line-by-line, but it does show individual performances of the various departments and, you know, it provides further details, you know, throughout the four or five pages that I have there. Like I said, the individual department results had varied and that was expected. As you know, furloughs represented approximately 9.23% of an employee's salary. Some departments in the areas of public safety, i.e. police officers, fire fighters and the prosecutor and the deputy prosecuting attorneys were not COUNCIL MEETING ~ - 75 - December 15, 2010 furloughed. Other employees' work schedules that were staggered to reduce...I mean to obtain a greater level of coverage, other employees (water safety officers, dispatchers and public safety workers) remained on the job and received a 5% salary waiver. From a dollar perspective; furloughs, functioned as designed. When all is said and done, the majority of the county...of our employees would have been furloughed a total of two weeks and two days over a 26-week period. As reported by our external auditors this morning, the county's general fund unassigned fund balance totals $43.1 million, which represents about 29% of the county's operating budget. As of this date, there are either approved ordinances or pending money bills for an additional $8.6 million. If all of the pending bills are approved, the unassigned fund balance would be reduced to approximately $34.5 million and represent approximately 23% of our operating budget. Please keep in mind that we are just short of halfway through our fiscal year and based on historic information as well as some knowledge that I have from discussions with other department heads, there are at least two, maybe three departments that are looking at possible additional funding during this fiscal year's cycle. The county, like our counterparts, are not without fiscal challenges ahead in fiscal year 2012 and beyond. Future cost increases will occur next year. As an example, based on the most recent actuarial study that was performed by Aon Risk Services that we just received a few weeks ago, the county will be required to pay $17.4 million next year for EUTF or health fund cost for our retirees and employees. This represents a 46% increase over the present year. It's basically a $5.5 million increase. Other increases we'll be funding next year is $4.6 million, which represents the elimination of the furloughs on an annualized basis. We're looking at a sewer fund shortfall in the range of $2.5 million and a debt service increase of about $0.5 million as a result of our 2010 bond issuance. These cost increases that I mentioned will iri part be offset by revenue enhancement measures that have already been approved, including the sewer fee rate increase that is expected to derive approximately $700,000 next year as well as the implementation of the solid waste residential pick-up fee, which will bring in an approximate $2.5 million into our coffers. On a positive side as well, based on the recent tourism numbers, we are hoping for a slight increase in our TAT revenues in fiscal year 2012 as long as we are successful in retaining the TAT through this legislative session. Real property taxes is expected to dip slightly. I don't have specific numbers, but my...based on accounts from my real property staff, we're looking at a slight decline in real property tax revenues and we'll look to our unassigned fund balances to potentially cover some of that revenue decline. I'm not sure...I know that I've met with most of you over the last week or so and went over some of the information that I provided today. I'm not sure if you folks may have any questions of me to discuss any specific matters. ' ' ^Chair Furfaro: ~ -' Well first, Wally, thank you for'the 'report. I do, want to say, though, as I speak out on these questions, I'm going to ask Rick Watanabe to kind of lean over my shoulder, if he's around, and on your summary report here, I want to make sure when we're looking in our own backyard here, the county clerk's office showing a 20% increase. Mr. Rezentes: Yes. COUNCIL MEETING ~ - 76 - ~cember 15, 2010 Chair Furfaro: In the line item that you have here for the county clerk's office, I'm assuming (1) we have some consideration based on this being an election period and that the budget trend actually trends out over the whole year versus just the six months. Mr. Rezentes: Yeah. Chair Furfaro: Secondly, I guess you've rolled into this area... it looks to me that you've rolled in the auditor's department. Am I correct? Mr. Rezentes: Yes. Chair Furfaro: Okay. Mr. Rezentes: On the second to the last page, you know, I gave a breakdown of the county clerk's office, which... and breakout of council services, elections and the county auditor. So, you know, you see a decrease when you... Chair Furfaro: Oh I see it, I see it. Mr. Rezentes: Okay. Chair Furfaro: Much appreciated, so we have council services actually down 13.4. Mr. Rezentes: Yes. Chair Furfaro: Okay and then we have elections because it was an election year... Mr. Rezentes: 2%...I think...you look at the next column over. Chair Furfaro: Yeah, 2...2%. I was talking in terms of dollars. Mr. Rezentes: Oh okay, you're right, $13,000. Chair Furfaro: But it's 2% down. Mr. Rezentes: Right. Chair Furfaro: And then we have to add in there elections and the audit. That satisfies my question. Mr. Rezentes: Okay. Chair Furfaro: Okay, I'm sorry I asked a question first, but I wanted to check in oar own backyard. Any questions of Mr. Rezentes at this point? rAx fxiln ~ lCC~Ii~i:t a iii, fCa aheau, Cou~ici~.woman Yukimura. And councilwoman, if y ' ', T'- going to turn the meeting over to you for a minute. I want to check with Rick on something. Ms. Yukimura: Okay. Thank you. All right. Well, if I'm chairing this, I'll take questions first from others. Are there questions? Okay, if not, Mr. Rezentes, can you give us a list of people who were not...departments or_ divisions that were not subject to furloughs? Mr. Rezentes: Okay. COUNCIL MEETING ~ - 7'7 - December 15, 2010 Ms. Yukimura: Mr. Rezentes bargaining unit. Ms. Yukimura Mr. Rezentes: Ms. Yukimura Mr. Rezentes: And the ones that... Right, it's actually better to go by collective All right. SHOPO, the police officers. Police. HFFA. Ms. Yukimura: Fire fighters. Mr. Rezentes: The fire fighters, and then the prosecuting attorney, deputy prosecuting attorney, the...then there was the employees that were on 5% salary waivers. Those folks were the water safety officers, dispatchers and the public safety workers within the police department. Ms. Yukimura: So 5% salary waivers meant basically a 5% pay cut? Mr. Rezentes: Basically, yeah, they worked the 40-hour week... Ms. Yukimura: They worked their fulltime... Mr. Rezentes: as, you know, salary Ms. Yukimura: Mr. Rezentes: Ms. Yukimura: was the other one? Mr. Rezentes: officers. Mr. Bynum: Mr. Rezentes: Mr. Bynum: '.1VIr. Rezentes: Ms. Yukimura: fighters, police got pa; Mr. Rezentes: ...and for that period were given what was labeled vivers of 5%. And they were HGEA? Is that their bargaining... Yes, yes. Okay, so it was water safety, dispatch and what Water safety, radio dispatchers, and public safety Jail. Well, our...yeah, our... Holding facility. ...holding ;facility at our police:headquarters. I see, okay. Now, am I to understand that fire V raises during this time? Yes, yes. Ms. Yukimura: And what percentage pay raise. Mr. Rezentes: I believe it was in the 6% range for both of those collective bargaining units. COUNCIL MEETING • - 78 - ~cember 15, 2010 Ms. Yukimura: public safety officers? Mr. Rezentes: didn't have any. Ms. Yukimura: Mr. Rezentes: Hm... and what about water safety, radio dispatch, They were HGEA, so my understanding is they They didn't get any pay raise? No. Ms. Yukimura: Okay, all right. Well, that seems like a pretty heavy cut for them, then. All right. Any other questions of Mr. Rezentes? If not, are you going to discuss the reserve at this time, then? Mr. Rezentes: Yes. Mr. Rapozo: Councilmember Yukimura, I do have one... and I may have...I stepped out and you may have covered it and if I may? Ms. Yukimura: Sure. 1VIr. Rapozo: The bill will restore the pay cuts as well. Mr. Rezentes: The bill will not cover the July 1 through December 30. It will...it provides enough funding for the reestablishment of...to basically get rid of furloughs effective January 1. So the 9.23% factor will not be there going forward effective January 1. The funding that we requested for basically would, make the furloughs...elimination of furloughs effective January 1. Mr. Rapozo: Right, but in those...like the people that were...their salaries or their pay was cut or whatever, they took the pay cut. Does this restore it back to... Mr. Rezentes: No. Mr. Rapozo: Oh, it doesn't? Mr. Rezentes: It doesn't go back in time. Mr. Rapozo: So they're going to start all over? I mean they're going to remain where they're at or... Mr. Rezentes: Oh no, the waivers will be restored for the guys that had 5% reductions. M~. Rapczo: Mr. Rezentes: 95%, they'll go back to 100. Mr. Rapozo: the pay cut. Mr. Rezentes: Mr. Rapozo: Yeah. -- Yeah, so they would go back to 100...instead of They're going to get their pay that they had prior to Right, restored. This bill will cover that. COUNCIL MEETING Mr. Rezentes: Mr. Rapozo: Mr. Rezentes: Ms. Yukimura: -79- Correct. Okay, thank you. December 15, 2010 I'm sorry I misunderstood you. So Chair, please, I hand back the chair to you. Chair Furfaro: Thank you very much, Wally, two comments. So you know, as this bill works its way through and it's subject to approval of the councilmembers, what I want to make sure I heard because I touched on this briefly with the auditors earlier, the administration is looking to go back to January 1. Mr. Rezentes: Correct. The funding that we're requesting will allow us to effectuate the elimination of furloughs and the waivers January 1. " Chair Furfaro: Okay. And then my next questions, I went back to check on our records in the area of the clerk's office, we're showing the full burden of the elections. You didn't put any credit in yet for what we get reimbursed at the end of the year from the State. Mr. Rezentes: Correct, whatever is on our books right now. Chair Furfaro: Okay, so just for the members right here, what you're looking at at the council numbers, because I just checked on that, we don't bill until the end of the year for our reimbursement from the State. But you're showing the full burden of expense in this summary report. Mr. Rezentes: Correct. Chair Furfaro: So we have a credit coming. Mr. Rezentes: Correct. In the '09 time period, you...you know the numbers were really low because the election had not... Chair Furfaro: Right. Mr. Rezentes: ...you know, started really. You haven't...you didn't wrap up yet. Chair Furfaro: But for a portion of it, we incurred...if I can go to your second to the last page, and I know I'm guilty of saying I wasn't going to do any forensic accounting here, but...there is a reimbursable to us tied to that election number on the second to the last page. Okay. And am I reading this right? For the auditor's office, this would have only been for two months? Mr. Rezentes: No, five. Chair Furfaro: Five months, I'm sorry. We're going forward seven. Okay, I'll take a question later from the auditor. I hate to audit the audit's payroll, but this seems like a large variance to me. But you're saying it's five months? Mr. Rezentes: July 1 through November 30. COUNCIL MEETING • - 80 - ~cember 15, 2010 Chair Furfaro: Okay, okay, okay, but I'm glad I went to check on the election reimbursement from the State, so thank you. Councilwoman Nakamura. Ms. Nakamura: I have a procedural question. Is there... administration is planning to go ahead as of January 1. Then is there a need for any council action on this? Chair Furfaro: Yes, because we need to approve the money action that we had earlier identified and the fact there is some risk on the. administration's part because the assumption is we are going to go ahead and say furloughs have ended, and it sounds like they're willing to take that risk without our action. Mr. Rezentes: And we've had some cost savings as I have, you know, indicated in the first five months that would give us some breather room, you know, pending the approval of the money bill with the county council. Chair Furfaro: But it is pending our approval on the money bill. Mr. Rezentes: Correct. Chair Furfaro: You still have the floor, councilwoman. You're fine? Okay. Any other questions at this point? Ms. Yukimura: On... excuse me, on the furloughs? We're soon to move to reserve? Chair Furfaro: On the furloughs, in the payroll summary, yeah. Ms. Yukimura: Yes, I... Chair Furfaro: Go ahead, councilwoman. Ms. Yukimura: When you say annualized...there was a cost of $4.6 million for the annualized effect of ending furloughs? Mr. Rezentes: Yes Ms. Yukimura: What...what does that refer to? Mr. Rezentes: Well, like the money bill that we are requesting council approval for was $2.3 million. That equates to hal£..approximately half of the cost to reinstate furloughs. So $2.3 million is for six months, $4.6 million would be for the entire year. Ms. Yukimura: And that's going to be in next year's budget? Mr. Rezen*.~;s:.. Correct. If. we arc ~ ~- the, present ~ level of compensation or pay, the added burden...cost burden would be $4.6 million by ending furloughs. So to reinstate furloughs on an annual basis, it cost us $4.6 million. To reinstate it for half a year is $2.3 million. Ms. Yukimura: So you're saying the baseline was last year's budget, which included the...or is this year's budget which includes the furloughs, so it's double for next year. COUNCIL MEETING ~ - 81 - December 15, 2010 Mr. Rezentes: Right. Basically, we didn't budget... it's zero now technically until the bill is passed. So when, you compare this current fiscal year, it's a... Ms. Yukimura: I see. Mr. Rezentes: ... $4.6 million increase. Ms. Yukimura: Okay, all right, thank you. Chair Furfaro: Any more questions of Mr. Rezentes on this furlough summary? Okay, Mr. Rezentes, do you want to touch on taking a...consideration on a reserve policy? If you're familiar with what we did with the auditor, they're going to send us, at the request of Councilwoman Yukimura, at least comparing three other municipalities on their furlough recommendations. I think you and I know that I have... (?): Reserve. Chair Furfaro: The reserve, I'm sorry. I had always hoped to get to 20%. You would perhaps present other approaches to us whether it's 15% or it's two complete estimated cost months that are earmarked which might have... amount to about 17%. We're open to hear about the need and the administration's proposal for establishing a reserve. Mr. Rezentes: Okay, well, again I thank you: Councilmember Kaneshiro is not here today, but he was with the mayor and I and George Costa when we made our... Chair Furfaro: Bond pitch. Mr. Rezentes: ...presentations to the credit bond rating agencies less than a year ago. And we were asked the question then by each of them, you know, if we had an established reserves policy. And you know, obviously we did not and it's something that the credit market looks at positively. If you establish one and can maintain one, you know, we had, you know, a strong reserve, but we were absent a written policy. So you know I'm happy to be going down the road with of it working with the county council to establish a reserve policy that makes sense for the County of Kauai. I had, in my handout...I have included a memo from PiperJaffray written by Russ Reyes who was our bond underwriter for this last bond issue. I've also provided the most recent copy of the Government- Finance Officers Association best practices recommendation that was done in 2009, as well as an article written by Stephen Gauthier, who's an actuary with the Government Finance Officers Association and does a lot of training seminars across the nation for finance officers in county and state government. Basically, my recommendation is to establish a 20% unassigned fund balance policy and I'm going to...you know I think what... I _ also .recommend that we adopt a policy via a resolution and I world, you b~o~w, like the opportuni'ty...~I would want the opportunity`~to wog°k wiih -she council and your staff in formulating... Chair Furfaro: Wally, can I stop you right on there because I'm glad to hear you're willing to work with us on establishing that, but we gotta change the tape. We want to get that on tape. Okay, we're on a short break here. There being no objection, the meeting was recessed at 3:16 p.m. The meeting was called back to order at 3:20 p.m., and proceeded as follows: COUNCIL MEETING • - 82 - ~cember 15, 2010 Chair Furfaro: Okay, thank you, we've completed our tape change. Mr. Rezentes, we're now working on the memorandum on your recommendations for establishing a line item that reflects the .county's reserve policy, which in effect I do agree with you. I would prefer we do it with each new council as a resolution. So you can continue, sir. There being no objection, the rules were suspended. Mr. Rezentes: Okay, again, our recommendation is to establish a reserve policy .of 20%. The GFOA, you know, if you read their best practice recommendation, their starting point basically is to look at two months of either revenues or expenditures as your starting point and then look at your... the individual county's exposures to revenue/expenditure fluctuations, as well as other factors. Some of the reasons why we had decided to add a little cushion on top of the 16.7% that the GFOA had recommended is... Chair Furfaro: Wally, can I ask you just to bend your mike a little down... Mr. Rezentes: Okay. Chair Furfaro: ...maybe closer there. Mr. Rezentes: ...is the cyclical nature of real property values. We have, over the last two or three years, seen, you know, pretty significant declines in assessed value or net.value, and we don't think the future years will follow suit. We think it hasn't bottomed yet, but we don't think it will decline as much as it has in the last two or three years. So part of the reason for an additional buffer is our declining real property assessed values. Also, because the county does not control the Transient Accommodation Tax, which is a significant portion of our operating budget-you know, it is a substantial revenue source-because we do not control 100% of the outcome of TAT, that's another cause for concern that we should be mindful of. And I've already talked about the increase in fixed health fund, health cost with our EUTF (Employee Union Trust Fund) where we're going to receive a 46% increase. These costs, unless laws change, you know, in the near future at the State level, we will likely continue to see added outlays of, you know, county cash to fund our annual required contribution that the EUTF puts forth to us annually. As you all know, on top of that we have the collective bargaining season where all of our collective bargaining units will be up for potential negotiation, the outcomes of which, you know, we don't know yet. But it is something that, you know, we're...in the next year going to be working with all the respective unions on these negotiations. I touched also on some of the cost factors and one of the reasons, in my recommendation... my recommendation includes looking at all the county operating funds versus just the general fund, and the rationale for building a reserve based on our entire operating budget is because we have a number of operating funds that are deficits funds, where the general fund has to support annually. Right now, you know, besides the budget ordinance, we've since requested additional funding for solid waste fund, sewer fund, and golf fund. To date, through the first nearly half of the fiscal year, the general fund will be supporting these deficit funds to the tune of $12.5 million. So it's a significant amount and it warrants the county to consider COUNCIL MEETING ~ - 83 - 15ecember 15, 2010 the operating budget as a whole when establishing a reserve policy. If the county... if our operating funds stood on its own over time and has a history of that, I would be more, I guess, comfortable in establishing a reserve policy that is just tied to the general fund. But at this time, until we are at that point, if we're ever at that point, you know, I think it's more fiscally prudent and conservative to look at the entire county operating budget in the reserves analysis. All I can say, you know, in conclusion I'm happy that we're talking about this. I'm happy that we're moving in, I think, a positive direction that can, you know, help us in the future fiscally when we go. into the marketplace. And you know, I think I've said...or in the past we've said that you know because of the county's performance in the 2010 bond issue alone, we were able to receive upgrades from Moody's, Standard and Poor's, and Fitch that helped us basically save taxpayers $3 million in debt service over the life of the bonds. So that's something that is, you know, positive and not to sneeze at... not something you can sneeze at. That's all...that's basically all I've got. If you have any questions? Chair Furfaro: Wally, thank you very much for pointing that out. Certainly the fact that we're paying our contribution to the Employee Retirement Fund that helps us with our bond rating as well. The fact that...coming up with a reserve policy will even strengthen us in that area. Mr. Rezentes: Correct. Chair Furfaro: I want to make sure that I heard...we're talking about 20% not just on the $111 million general operating piece, but we're talking about the total operating cost with all accounts, which is wore like $150 million.:. Mr. Rezentes: Correct. Chair Furfaro: ...you're earmarking the 20% at. Mr. Rezentes: Correct. Chair Furfaro: And the other thing I want to say is I mentioned this to the auditors, I think what we've done with the Employee Retirement System is extremely beneficial for us that we made a decision to fully fund it. Mr. Rezentes: Yes. Chair Furfaro: But now I'm starting to have some concerns. How do we earmark that we have contributed to the one pot, that we're being- acknowledged for covering our liability. I'd still like to know how we're doing that, how... Mr. Rezentes: Yes. .Chair Furfaro: What do we need to ensure Lilat t-hey're recognizing us because we have other political subdivisions that are paying 30%, 70% of their liability. Mr. Rezentes: Correct. Chair Furfaro: - -But we want to make sure that -we get our full credit and that's something we need to do as well. COUNCIL MEETING. - 84 - Tlecember 15, 2010 Mr. Rezentes: Yes, in the actuarial report that was prepared by Aon, they did...they do provide a breakdown by jurisdiction of the contributions and the, you know, annual accrued liability. All the data is broken down by jurisdiction, and you're correct, you know, the City & County of Honolulu and the State of Hawaii have elected not to fully fund the annual retired... retirement... annual required contribution, and as a result of doing that, that is looked at negatively on their CAFR reports and when they enter the market, it is definitely noted. And we were asked that question as well when we did our presentations to the rating agencies. Chair Furfaro: Okay. I'll go to Mr. Bynum, then Councilwoman Yukimura for questions. Mr. Bynum: Sticking with this because Councilmember Furfaro raised that twice today is a concern I also... a question I've never posed to .you, but you know, you just said that's all accounted for in the Aon Report, right? Mr. Rezentes: Yes. Mr. Bynum: And so are we at any risk that the other counties some time in the future or in the state who have underfunded, you know, could use our revenues to deal with their shortfalls? Is that a risk nor is it something that's covered? Mr. Rezentes: You know, that's a good question. I don't believe so, but I can...that may be a legal matter too that we can have. looked into and researched. Mr. Bynum: Yeah, I would like that because I think it's a thought I've certainly had when I think about... Mr. Rezentes: We've always tried to ensure that, you know, we did get the credits that we provide and one of the things that I've been unsuccessful in trying to get the EUTF to do is separate us from water. Because the Water Board technically can make a decision that is separate from the county council's decision to fund and thus far, we've stuck together. However, it could... they could, you know, by policy go in a different direction and I've informed the last two heads of the EUTF that, you know, this could happen and right now, you know, we've tried to work with our actuary to provide that cost separation, but we want it done consistently from the EUTF Board as well. Mr. Bynum: And you're raising an issue that I hadn't even thought of, right? And so... and that's... I appreciate your work, Wally, because when I ask you questions, you have answers, and you've thought about it in advance and so I think we should get that clarified, though, because the legislature has this history of raiding funds when things get tight. , Mr. Rezen`as: ~ A. ~;uok notes. Mr. Bynum: And I know employees unions-I don't know about in this state-in other states, they've had to go to court to protect the resources that were set aside for retirement. And so I appreciate following up, but the question.... Chair Furfaro: That's why I asked the question twice today. Mr. Bynum: Yes, you did. Good job. The...regarding the reserve policy, I appreciate what you said. I'm glad we're having this discussion. I too am COUNCIL MEETING ~ - 85 - December 15, 2010 glad we're having this discussion. Because I think for members of the public this whole idea is confusing and you know, you hear a lot of things that aren't... don't really hit the nail on the head, so to speak. But the specific question has to do with, you know, I heard your 20%, which is very conservative of the operating budget as opposed to the general fund. Because many of the measurements we've measured over the years are based on a percentage of the general fund. And I understand that. How many dollars last year, you said $12 million so far this year, right, that we've funded... is that what you said earlier? Mr. Rezentes: About $12.5 million thus far, yeah. Mr. Bynum: $12.5 million of spending on various things or just to reimburse the operating budget? Mr. Rezentes: It's...it's in the...it's $12.5...the operating budget was approved with the general fund supporting the deficit .funds to -the tune- of $9;752,000. Since then, there's been a money bill request to supplement those deficit funds further, either approved or pending, you know, county council. Mr. Bynum: So that includes all the ones that are there today. Mr. Rezentes: Right. On top of what we appropriated from the general fund- at the inception of the...in the inception of the fiscal year, an additional... what is it? Chair Furfaro: 3.2 Mr. Rezentes: Yeah, close to $3.2 million, whatever the difference is, is what is either approved or pending approval with the county council. Mr. Bynum: Right and we're just at the beginning of this discussion so, you know, I don't need to go into that much depth today. But you know the concept of us having a percentage of the operating budget is one that I'm not...you know I'm fine with that. But how we define that operating budget is something in detail we need to get into because not all of the funds continually need reimbursement, right? Mr. Rezentes: Correct. Mr. Bynum: I mean typically sewer, solid waste, golf fund are the biggies, right? Mr. Rezentes: That is correct. Mr. Bynum: Okay, so we can... you know, we'll flush that out and the details later. But I appreciate the documents you've provided us and I think this is an important dialogue for us to have, so thank you. ._ . • •:~. Chair Furfaro: Thank you. Councilwoman Yukimura. Ms. Yukimura: Yes, I want to register my concern that the Chair and Councilmember Bynum have mentioned about how we protect our... Mr. Rezentes: ~~Investment in the health fund. Ms. Yukimura: ...in the...yeah, ETU... COUNCIL MEETING • - 86 - ~cember 15, 2010 Mr. Rezentes: EUTF. Ms. Yukimura: ...EUTF, and I think it's a pretty complex legal issue. So I'd like to ask that we actually get a report back, like... Chair Furfaro: Oh, I'm planning... Ms. Yukimura: Okay. Chair Furfaro: ... to communicate that in writing... Ms. Yukimura: Great. Chair Furfaro: ... to the county attorney and to the finance department. Ms. Yukimura: Thank you. And then as regards the deficit funds, would you recommend that we consider a policy that all funds maintain certain reserves themselves? I mean, you know, I know that the golf course, for example, has some unexpected expenditures, you know, such as the burning down of their...their shed or their maintenance building. Mr. Rezentes: Mm-hm. Ms. Yukimura: And insurance covered part of it, but- not all of it, and when there's no buffer for these funds, it's not good budgeting, it's not good management. And so, I know you can think well, if they're not even making their operating cost, how could they put aside reserves? And that brings me to the second point, what about a policy goal that all funds become self-sufficient within so many years and we ask the managers of those operations to develop a strategy and a plan for that over time so that we actually are moving toward healthy enterprise funds because the draw on the general fund and things like parks and recreation, which have no enterprise fund, makes...puts the non-enterprise funds at a disadvantage, you know. So how about policies like that? Mr. Rezentes: That's...you know, that's a policy call. I... personally, I, you know I think you could make those policies and make it, you know, work for some funds... some of the funds, but funds such as the solid waste fund where they're in a deficit to the tune of nearly $10 million, I don't think...it'll be very difficult to set tipping fees at levels or rubbish...trash pick-up fees at levels to recoup all of $10 million worth a year of cost. I'm not saying it can't be done, but I think it'll... Ms. Yukimura: Over a 10-year period? Mr. Rezentes: It could... it's a policy call. I mean, you know, that's a discussion in and of itself, but you know, we could look at that. Chair Furfaro: I think just to bring Councilwoman Yukimura more current, I think over the last couple years I have had discussions that, you know, whether we start to charge these tipping fees incrementally and so forth to reduce some operating costs, we have some basic understanding of how we book assets here. And for example on the golf course, you know, .the cost of the building reimbursement, less our insurance cost, and so forth should not necessarily be expensed like our irrigation system as an operating cost, in my opinion. In my opinion, the accounting procedure would be those now go on the books as an asset to COUNCIL MEETING. - 87 - December 15, 2010 that amenity and not necessarily showing up as an operating deficit. But you know, those are the kinds of discussions we still should have and I appreciate your question, but it is a question we keep rehashing. So, Mr. Bynum. Mr. Bynum: It's along the same lines that we're here to talk about a reserve policy, but you know I know I would like to bring to the parks and recreation committee a discussion about the golf fund because of some of the factors you just said that, you know...and what you just said about tipping fees, you know we probably can't increase tipping fees to make that self-supporting. It would be politically untenable and people wouldn't want to...you know business would revolt, right? Just like I don't think we can raise golf fees for kama`aina golfers to something to make it self-sustainable. So in a future meeting in the parks committee I'd like to look at that fund, the history of the irrigation system and the financing, and you know what adds to that... the cost... the ongoing cost of that fund, and you know, but I don't think that's really an agenda item for today regarding a reserve fund. But I keep hearing these questions from councilmembers and the public: Why isn't this self-supporting? Well, we...recreation is something that we support and I don't know that the golf section of the recreation has to be self-supporting. I don't think soccer is self-supporting, right? So, I just think we should have that discussion at length and in a future meeting. Chair Furfaro: Okay, Councilwoman Yukimura. Remember everyone at the table, we're talking about a reserve policy right now, so. Go right ahead, Councilwoman Yukimura. Ms. Yukimura: Yes, it sounds to me from what other councilmembers have ~ said that part of it is how the funds are structured and how the accounting is done in the funds, but if that all goes to a properly managed and operated fund, then the reason I see this is related to the reserve is that if we just say okay, we need a large reserve in the general fund to support all these funds without looking at what may be the causes of the deficits... Mr. Rezentes: How you can cost save, how you can manage appropriately. Ms. Yukimura: Right. Mr. Rezentes: Right, I understand what you're saying. Ms. Yukimura: Yes, then I think we're ignoring some...both opportunities and things that we should look at. And I recall Maui's system of solid waste accounting and budgeting, which was much easier to understand and seemed to put the accountabilities in the right place than our present system, and I realize that we have a lot of work to do there. So by putting those things in order, we can see more clearly, you. know, where the solutions actually lie. So that's why I raised this question. Mr. Rezentes: Yo-u know... and not to belabor the point, but I did about a year or so ago attend a meeting with the Maui County solid waste chief and .some of his staff members with Troy and Donald, and you know after looking at what they have, as far as their solid waste program, although they've made some inroads with curbside pick-up, you know, a little quicker than we, you know, have implemented, I tell you, our:..we have a service that I don't think is replicated in any other county and what I mean by that is you know on Maui County, they're over double our size in population. They have one landfill and one transfer station, that's it. You know, they are...they don't have five ,transfer stations and a landfill like we do. On the Big Island, all they have is transfer stations. You know, they COUNCIL MEETING • - 88 - ~cember 15, 2010 don't have trash pick-up service. So, we have....you know even though we're a little slow on the...to get off...out of the gates as far as our curbside program pick-up or curbside recycling, what we have had in place on this small island is pretty significant and costly to operate, but it's very...it's good for our residents to have... not have to travel 20 miles to go to a transfer station, you know. I was kind of surprised. Chair Furfaro: Well thank you for pointing out those amenities that we have here. Mr. Kawakami has a question. Mr. Kawakami: Wally, the other three counties, Maui, Big Island and Honolulu, they don't have... do they have a policy on their unappropriated surplus and the percentage? Mr. Rezentes: No, not that I'm aware of, no. Mr. Kawakami: Do we have any idea of what levels they were maintaining prior to the downturn in the economy because all three counties, they...they got hit harder than we did. So I was just curious to see what level they had maintained at before they got hit. Mr. Rezentes: Yeah, I don't have that data, but in...you know in just discussions that I've had with some of my counterparts and the mayors, you know, I think the City & County of Honolulu is probably the worst off of all the other counties and I don't have the specific details. I don't have the data going back, you know, in time on their... the fiscal... their fiscal status before the declination. But I could get that information. Mr. Kawakami: Yeah, no, we can make the inquiry because the other three HSAC members are all the respective finance chairs of their council, so I would just pose a question to them. But it just kind of hit me that that'd be an interesting thing to go and see looking back in retrospect to see kind of like where they were compared to where we were and why we came out, you know, a lot fiscally healthier than our three counterparts. I'll go check on that. Chair Furfaro: Thank you very much, Wally, for your presentation. I know we still have to take public testimony and we should probably take a 10-minute break here. We'll take a 10-minute break and then we'll go in for public testimony. There being no objection, the meeting was recessed at 3:45 p.m. The meeting was called back to order at 4:01 p.m., and proceeded as follows: Chair Furfaro: Okay, we are back in session. Excuse me, is there any testimony based on the presentation recently made by our finance director? There bei.~:ig no objection, the-rules were suspended.. Chair Furfaro: If not, I'm going to call the meeting back to order. There being no one wishing to testify on this item, the meeting was called back to order, and proceeded as follows: Chair Furfaro: And I really think at this point this is an item that we want to receive. COUNCIL MEETING ~ - 89 - December 15, 2010 Mr. Nakamura: We have no motion, Mr. Chair. Chair Furfaro: We have no motion to receive. Ms. Yukimura: Move to receive. Mr. Rapozo: Second. Ms. Yukimura moved to receive communication C 2011-17 for the record, seconded by Mr. Rapozo. Chair Furfaro: Thank you. We have a motion and a second now to receive. Any dialogue? Mr. Bynum: Yeah, I just want to thank the mayor for sending us a bill to end furloughs. I think it's appropriate and I want to thank him very much. Chair Furfaro: And I would also remind everybody that in our process as the county council, we put this on the agenda as a proviso of the last budget, so I thank the mayor as well for respecting our provisos on both the furloughs as well as establishing a reserve policy. Any further dialogue? Councilwoman Yukimura. Ms. Yukimura: Yes, just then kudos to the council for your leadership on this because I think this is a really important subject. Chair Furfaro: Well I think we were all trying to work through this and get to a good place, so thank you very much. If not, we have a motion and a second, all those in favor say aye. Councilmembers: Aye. Chair Furfaro: Any nays? Any no... silent votes? Hearing none, can we move on to the next item? The motion to receive communication C 2011-17 for the record was then put, and unanimously carried. CLAIMS: Mr. Nakamura: Mr. Chair, we're on page four of the council's agenda on Claims, three claims, communication C 2011-21 claim filed against the county by Aloha-n-Paradise Espresso Bar & Internet Cafe, C 2011-22 which is a claim filed against the county by Krista Dela Cruz, and C 2011-23, which is a claim filed against the county by Kathleen A. Smith. C 2011-21 Communication (11/23/2010) from the County ,Clerk, transmitting a claim .flied against the County "of Kauai -by Aloha-ri=Par`adise Espresso Bar & Internet Cafe (Candy Baar) for loss of revenue, pursuant to Section 23.06, Charter of the County of Kauai: Ms. Yukimura moved to refer communication C 2011-21 to the County Attorney's Office for .disposition and/or report back to the Council, seconded by Mr. Rapozo, and unanimously carried. C 2011-22 Communication (12/07/2010) from the County Clerk, transmitting a claim filed against the County of Kauai by Krista Dela Cruz for personal property damages, pursuant to Section 23.06, Charter of the County of COUNCIL MEETING • - 90 - Tlecember 15, 2010 Kauai: Ms. Yukimura moved to refer communication C 2011-22 to the County Attorney's Office for disposition and/or report back to the Council, seconded by Mr. Rapozo, and unanimously carried. C 2011-23 Communication (12/07/2010) from the County Clerk, transmitting a claim filed against the County of Kauai by Kathleen A. Smith for damage to her vehicle, pursuant to Section 23.06, Charter of the County of Kauai: Ms. Yukimura moved to refer communication C 2011-23 to the County Attorney's Office for disposition and/or report back to the Council, seconded by Mr. Rapozo, and unanimously carried. RESOLUTION: Chair Furfaro: Let's move to the next item please. Mr. Nakamura: Next item at the bottom of page four is a Resolution, Resolution No. 2010-39. Resolution No. 2010-39, RESOLUTION TO ESTABLISH A POLICY FOR FACILITATING OPEN GOVERNANCE AND INTERNET ACCESS TO PUBLIC DOCUMENTS Chair Furfaro: Thank you very much. I believe Mr. Bynum has a presentation on this item, but before we do, I also wanted to share with my colleagues I do have my own internal report. I have spent time with the IT department, I have spent time with purchasing, I have spent time with some suppliers as it relates to this and focusing on the technology upgrades, the workforce needs to integrate the different agencies' collaboration as well as some guidelines and expectations of the various committees, and I feel this is a correspondence that I will circulate to you later, but I feel within a 60-day period this is a doable item for us. Mr. Bynum, you'll get my correspondence later, but you have a presentation? Mr. Bynum: I do. It should take about 10 minutes and I'll start while that's getting ready. I also have an opinion from the county attorney with some questions that I sent over that came up six months ago and I'd like... and it's been circulated to councilmembers. And I'd like to make a motion to release this opinion to the public. Ms. Yukimura: Second. Mr. Bynum moved to waive the attorney-client privilege of correspondence No. 10-0833 (county attorney's filing number) addressed to Mr. Bynum, dated December 14, 2010, from Jennifer S. Winn, Deputy County Attorney, regarding Request for Legal Opinion Regarding Resolution 2010-39, seconded by Ms. Yukimura. Chair Furfaro: Okay, there's been a uiotio~~ a;iC~ second. to release a county opinion from the county attorney's office. I will ask the county attorney if he would have any commentary for us at this point. There being no objection, the rules were suspended. Mr. Castillo: I had previously gone over the procedure with Councilmember Bynum regarding this particular opinion from the county attorney's office and we had no objections to his waiver or concerns about his intent to waive the privilege. COUNCIL MEETING ~~ - 91 - December 15, 2010 The meeting was called back to order, and proceeded as follows: Chair Furfaro: Thank you very much, Mr. Castillo, so... Mr. Rapozo: Mr. Chair, I just have a...I have a point of order as far as...is that a legal motion under this agenda item? And I guess I can ask the county attorney for that. I'm not sure you... Chair Furfaro: Let's ask him to come up on the specific response to a question, so Mr. Castillo, may I ask you to come to the mike. There being no objection, the rules were suspended. Mr. Castillo: Council Chair, councilmembers, Al Castillo, County Attorney. Chair Furfaro: Mr. Castillo, would you like to have Mr. Rapozo restate his question? Mr. Rapozo: Mr. Castillo, just if that was a valid motion considering the agenda item is a resolution? Is that appropriate? Mr. Castillo: It would be appropriate if the subject matter of the county attorney's opinion is relevant to this resolution, this item. Mr. Rapozo: Okay. Mr. Castillo: Provided that the councilmember can tie it in on how it is relevant and basically relevance is any tendency to prove a fact. So it can be as broad as that. Thank you. Mr. Rapozo: Okay, thank you. Chair Furfaro: Thank you very much. The meeting was called back to order, and proceeded as follows: Chair Furfaro: Mr. Bynum. Mr. Bynum: Yeah, the subject line of this document says "Request for Legal Opinion Regarding Resolution 2010-39," which is the resolution we're here to discuss. So I think it meets the criteria of the county attorney. Chair Furfaro: So I think we got a confirmation from the county attorney. The response from the county attorney's office was addressed to you, you wish to release it, there seems to be no problem as it relates to this from the county attorney: ~ Councilwoui~ari Yukimura? ' Ms. Yukimura: We still need to vote on it right? Mr. Bynum: Right. Ms: Yukimura: Is it a... unless there's discussion, I'm ready for a vote. COUNCIL MEETING • Chair Furfaro: not... Mr. Castillo: Chair Furfaro: -92- ~cember 15, 2010 We're asking if there's any further discussion. If Council Chair... Yes. There being no objection, the rules were suspended. Mr. Castillo: I'm sorry, Al Castillo, county attorney, again. Chair Furfaro: Go right ahead. Mr. Castillo: The council has not adopted any particular protocol regarding waiving the county attorney's opinion. However, specifically for today, it's my understanding that the request came from a particular councilmember, the response from the county attorney's office went to that particular councilmember. I think in the way that this has come about today, it would be proper for the councilmember to specifically waive the attorney-client privilege, so the waiver is basically his and not necessarily the body. Should the council adopt council rules regarding how the body is to waive the privilege, maybe that's for another time. The meeting was called back to order, and proceeded as follows: Chair Furfaro- Okay, so we do know that we have not adopted a policy on waiving this, that this is not deciding on any policy as such. We will be having a rule's committee assignment and two resolutions for HR and for rules committee on January 5, so this is solely releasing this opinion request from a specific councilmember. Mr. Bynum. Mr. Bynum: And in the absence of that policy, I'd ask for unanimous consent. Chair Furfaro: Okay, so is there a motion and a second to do this? Mr. Bynum: Yeah. Ms. Nakamura: Motion and second. Ms. Yukimura: Yeah, point of inquiry. Mr. Bynum: Let me clarify. Ms. Yukimura: I just thought I heard the attorney say that you alone can waive it. Mr. Rapozo: That's what I heard. 5, Mr. Bynum: And that's what I heard and if I could clarify... Chair Furfaro: Well you were asking you were hoping it was unanimous, so. • Mr. Bynum: Yes. Chair Furfaro: I'm trying to comply to you and comply to the county attorney, so. COUNCIL MEETING • - 93 - December 15, 2010 Mr. Bynum: Well and I hope we have this discussion in our rules sub-committee that in my own view and this was a discussion two terms ago, any of us as councilmembers, the county attorney is our legal adviser. And if we're working on issues prior to them being introduced on the agenda, then I think the privilege is between us. It's just my own person view and not necessarily that...but once something is on the council agenda, I believe that we should establish a rule that says the body is the client at that time and because this is on the agenda, you know, I would like everyone's agreement because this was circulated to everyone. It went via the council chair... the questions, right? So I'd like everyone's concurrence that we can release this. It's pretty benign and straightforward. Chair Furfaro: Okay. Mr. Rapozo: That would call for the question and... Chair Furfaro: Okay. So I'm back. I do have a motion and a second to release the county attorney's opinion that was solicited and granted to Mr. Bynum. Do I have a motion? (?): YuP. Chair Furfaro: Okay and I have a second? (?): Yup. Ms. Yukimura: Question, Mr. Chair...I mean move the question. Chair Furfaro: Okay, all those in favor say aye. councilmembers: Aye. Mr. Bynum: Thank you very much. Chair Furfaro: Any nays? Hearing none. The motion to waive the attorney-client privilege of correspondence No. 10-0833 (county attorney's filing number) addressed to Mr. Bynum, dated December 14, 2010, from Jennifer S. Winn, Deputy County Attorney, regarding Request for Legal Opinion Regarding Resolution 2010-39 was then put, and unanimously carried. Mr. Bynum: Moving on I'd like to quickly read the resolution into the record. This resolution is to establish a policy for facilitating open governance and internet access to public documents. Whereas, in a democracy, the people are vested .with the ultimate" decision-making power and an informed; aware and engaged electorate is an important component of good governance; and whereas, the Hawaii State Legislature, when it passed the Sunshine Law, expressly declared "it is the policy of this State that the formation and conduct of public policy -the discussions, deliberations, decisions, and action of government agencies -shall be conducted as openly as possible"; and whereas, the Hawaii State Legislature also enacted the Uniform Information Practices Act mandating that all government records be open to public inspection unless access is specifically restricted or closed by law; and whereas, the Council of the County of Kauai (hereinafter "the County") recognizes the value of partnership and collaboration with an informed public; and whereas, the internet has become the most reasonable, customary, and efficient COUNCIL MEETING • - 94 - ~cem~ber 15, 2010 method to access information; and whereas, the County has invested in a web portal that facilitates easy public access to public information; and whereas, the County has entered into a third party contract to produce live streaming video and an archive of government meetings, including an interface that facilitates easy access to public meetings and important records online, creating an unprecedented level of openness and improved access for persons with disabilities; and whereas, implementing the tools now available to the County will boost staff efficiency and control costs; now, therefore, be it resolved by the Council of the County of Kauai, State of Hawaii, that it is our policy to provide an exemplary level of openness, public participation in government, and Internet access to public documents. Be it further resolved, that the Council will fully implement the capabilities made available by the investment in the technologies and tools which has been made by the citizens of Kauai. Be it further resolved, that key Council documents shall be posted on the Council website and be searchable by text. Documents shall include, but not be limited to: Council and Committee Meeting agendas with related attachments, committee reports, the full text of introduced bills and resolutions, draft bills and resolutions subsequent to amendment, final version of bills and resolutions adopted by the Council, and minutes of Council and Committee meetings. Be it finally resolved, that a copy of this, resolution be forwarded to the Mayor, the Director of Finance, the County's Information Technology Manager and the County Clerk. Thanks for your patience with that. I wanted to show some examples. This is from the website for Granicus, the third party. vendor that was the successful bidder. They have an open platform that does leading contents... so here's this business whose sole mission in life is to facilitate our services and the thing that we do here. That's probably why they're the low bidder because they have software tailored to this and it increases efficiency. You see here that they currently have done...what is that...27 million government web broadcasts. They have a very extensive client list, which we have joined. This is the cities and counties that they service with this service. These are the counties, and public agencies and school districts. This is an example of the San Jose...city of San Jose...similar to our interface, which is one of their clients. You can see that they have council meetings, you know, and they have the video, the MP3 audio which is important for people with sight impairment because they can download that to their iPods or listen on their home computers, and then for each meeting they have documents like the agenda, the transcript and the synopsis. So this is just a catalog of their meetings. If you look at their... this is their... this is a site similar to ours. It has their council agenda from August 10, 2010 on the right-hand side. On the left-hand side if I click this, it's going to show you the Pledge of Allegiance for their council meeting on August 10. Below here is a list of all of the agenda items for that day. If one clicks on the agenda item, they can see than portion of the meeting. On the right-hand side is the ;,ouncil agenda. .. A-few things I wanted to point out that have been discussed recently, each agenda in their county has the rules, how do you do public comment, that kind of thing, which are... and they do a call-to-order and roll call at 9:30 in the morning at this particular...and they have a...what they call a closed session agenda. If you click right here, you'll see the separate agenda comes up. So they have hotlinks on their agenda for the public. This is the closed session agenda here and it lists the executive sessions that they're having that day. It doesn't have details obviously because they're executive sessions, but it has, you know, the legal information: COUNCIL MEETING ~ - 95 - December 15, 2010 what lawsuit is involved, what, you know, what is...who are the parties involved, that kind of thing, so. If you click back, you go back to their agenda. This works. So if you scroll further down the agenda, they have a section that the public has talked about recently early in their agenda called Ceremonial Items. Those are like the certificates and the presentations that we do. Then they have something else that I hope that we really look at called a Consent Calendar. At today's meeting, there were many votes...like the claims we just did or grant things that the vast majority of the time are, you know, positive votes. Many municipalities combine these, the staff makes a decision, says hey, these are probably routine votes, and they put it on a Consent Calendar. The Consent Calendar is displayed for everyone to see and any councilmember can discuss or pull something off of the Consent Calendar and have it be treated like a regular item. Any member of the public can comment on a Consent Calendar. The attachments for the items on a Consent Calendar come up just like they do for other things. So in this case there's a memorandum for the acceptance of this donation. So it has all of the information about what that donation is, the analysis, you can see that it has a signature. So, it's the document that would be part of the agenda packet. That's something that community members have considered we consider, that we have a Consent Calendar. It could save 35-50 minutes in a council meeting for the routine items. So, you know, you can see they had a pretty good set of routine items here and then they get down to the strategic...then their agenda...their regular agenda items. If you look at just this first one, it's ordinances to implement retirement boards governance changes. It doesn't matter what the agenda item is. If it's a zoning approval, you click and you're going to get the supporting documents. It says hey, we want to know about this ordinance. It says ordinance here, you click and you'll see the ordinance, right? So, if it's a zoning amendment, you'd click and you'd see the planning commission report. You know one of them that I won't click on here is a 73-page report. It has the maps and the pictures. These are all public documents that in their system are sent over electronically to council services to begin with, so it's easy to propagate them onto an agenda like this, so. This is something that many community members are really looking forward to. As you can see, on our website, which I think is the next...is right here, we... this is our new... it has upcoming events. Since this meeting they've... right now the county council meeting is in progress. You should be able to click here and see live streaming video of what we're doing right now. But then down here if you click this, you have adrop-down and it has the archive with the agenda, the video, the MP4 video which is a downloadable version that can go into an iPhone or an iPad if you didn't want to watch it on your computer. What we don't have up here yet, but we have the capability and it's been announced in our press release is transcripts of the meeting are generated as we speak. Those. transcripts are available, can be searched by keyword, and then you can find that portion of the meeting that way if `yuu don't ~ know what particular agenda item it is. This is routine as I showed in that list for hundreds of communities and I can't tell you how thrilled it is that this... how thrilled I am that this could be a routine for the county council. The resolution that I presented relates to the council business, although you can see our planning commission, police commission. It's really the administration's kuleana to what level they implement this, but I would encourage them, say for a planning agenda, to have the planning department's report. For those citizens that do view these reports now and have to come down and get hard copies, they know that we have really good COUNCIL MEETING ~ - 96 - ~ ~cember 15, 2010 quality people working in our county that generate this business on their behalf and I think we're going to look even more together as a community as we make these things available. Thank you very much. Chair Furfaro: Thank you, Mr. Bynum. I wanted to share with you folks I have not completed some 17 talking points on things that .we need to implement. I intend to support this resolution as long as we get 60 days to, in fact, touch on these 17 points that I would like to circulate. I have met with vendors; I have met with IT; I have met with our staff. We're trying to end furloughs here as well. There's some really good things I want to share with you as we move forward. So, watch for my communication here on the things that... internally, and from a management standpoint we can speak for as it results in our council, but also are things that need to be considered at police and planning and so forth, so okay. Mr. Bynum? Mr. Bynum: I'll just say that the resolution is a policy. It doesn't have a time frame attached and you know, getting things implemented takes time, so. Chair Furfaro: Okay. So I believe you're concurring with the memo I'll circulate later that we should attempt to do this in the next 60 days. As we hurdle these particular pieces, hopefully we'll complete it at the end of February, first week of March. Ms. Yukimura: Is there a motion on the floor? (Inaudible) Ms. Yukimura: There is? (Inaudible) Chair Furfaro: Is there a motion on the floor? Mr. Bynum: Move to approve. Ms. Yukimura: No, there is one I think. Is there not? Mr. Nakamura: No motion (inaudible). Ms. Yukimura: Okay, I second. Mr. Bynum moved to adopt Resolution No. 2010-39, seconded by Ms. Yukimura. Chair Furfaro: Okay and I've shared my commentary with you. I'll be circulating this, but I would hope that we'd understand in 60 days is our target date to implement this. Ms. Yukimura: Great. Chair Furfaro: Any further discussion? Mr. Rapozo: I have a question. Chair Furfaro: Yes. COUNCIL MEETING. - 97 - ~ December 15, 2010 Mr. Rapozo: Who is in charge of this project? And I, you know obviously wasn't here in the last two years, but who is in charge of getting these documents up online. Chair Furfaro: We have a clerical position that is frozen right now, but we plan to end. As you remember earlier I talked about having two legal analysts by filling another position. And so we need to have that kind of discussion, but as we end furloughs and we replace those people that we've not plugged, we can in fact look to manpower. The second thing I think we need to have a policy discussion on is how much of a role will the committee chairs have in making sure their information for their committees get out to the public, certainly with a review and then of course, the purging of those files as amendments go up and you start to remove them because amendments have changed. You don't want to confuse the public, but those are all pretty much covered in my request for the 60 days. Mr. Rapozo: So this function is the sole function of council services and not IT. Chair Furfaro: This... for us.. . Mr. Rapozo: Yeah. Chair Furfaro: ...for us. Mr. Rapozo: Okay, is it possible to get the clerk up to ask the clerk about this? Chair Furfaro: Sure, we can have Mr. Nakamura up. He's been involved in my discussion with the departments that I've talked about, so. There being no objection, the rules were suspended. Mr. Rapozo: And I apologize if, you know, I'm revisiting areas that you folks have. already covered in the last term. Chair Furfaro: No, no, no, no problem. I just want to make sure the public and we understand. We're talking about our kuleana with the council material. I can't speak for planning or so forth, so. Mr. Nakamura, thank you for coming up. Mr. Rapozo has questions. Mr. Rapozo, the floor is yours. Mr. Rapozo:. Mr. Nakamura, I'm assuming you had an opportunity to-read the resolution. Mr. Nakamura: Yes. Mr. Rapozo: And what's on the resolution, is that what we are pursuing at this time as far as uploading the information and getting the bills and resolutions up on our website. Mr. Nakamura: Yes, as far as looking to get bills and resolutions on the website, that's something that we've always talked about doing. I think until we moved from the Historic County Building to this building, we didn't have an ability to hook up the scanners, basically... network scanners because we were on a older network system. We were on the token ring system at that time, so it didn't support the network scanning capabilities for... COUNCIL MEETING • - 98 - ~cember 15, 2010 Mr. Rapozo: So this resolution talks about scanning or uploading documents up to the county or the council website and not what... not the online streaming website, but our county council website. As I read this... Mr. Nakamura: Yes, yes, this is... Mr. Rapozo: ...the key council documents shall be posted on the council website and be searchable by text. Mr. Nakamura: Correct. I think... Mr. Rapozo: This is not the Granicus website. Mr. Nakamura: No. This would...I think...I think overall when we were looking at this from back as early as the beginning of this year as we were getting ready to move to this facility, I think there are basically three areas we were looking at. The first area was technology upgrades in terms of getting into a system where we can network scanners and network multi-function printers and that was just the kind of the technological...the technology...the tools aspect. The second aspect was looking and evaluating workforce needs and integration of the workforce with this task, and collaboration with the other agencies, the most critical one being the information technology division at the finance department. Third was...the third component we were looking at is trying to develop overall policies, guidelines and expectations. So those are the three main areas we were evaluating at that point in time. The issue with the...the way the Granicus online streaming piece works, that's an area that would fall into the collaboration with different agencies because we're not primarily in control of that. The information technology division of the finance department is the one who administers the contract, and what we've been trying to do is work with them as well as, I think, along with the planning department...I think right now it's the planning department, the police commission and the...I'm not sure if the fire commission is on the public access TV, but it was those commissions... selective commissions that were on this Granicus system and...so we worked to...in that sense it kind of fell into that second area where what happens with that, the Granicus streaming and the documents that are attached to that, that's more in collaboration with the information technology division and the other boards and commissions that we're doing. So on that one, no, we're not completely in control of that. What we're trying to do is work with the other agencies and the IT division to figure out ways to make sure that there aren't duplication of efforts on both the county website and on the Granicus website. Mr. Rapozo: Right and as I read this resolution, this is basically mandating thsa ?;hls goes up on the ^ouncil website, which is not the Gra~iicc~s website. Mr. Nakamura: Correct, correct, that's my understanding, yes. Mr. Rapozo: And based on what's here, the council and committee agendas, related attachments... Mr. Nakamura: Mm-hm. COUNCIL MEETING. - 99 - • ember 15, 2010 Mr. Rapozo: ...committee reports, full. text of introduced bills, and so forth, basically the agenda packet today was this. Mr. Nakamura: Correct... and additional stuff. Mr. Rapozo: Yeah and then yeah, but as far as the... Mr. Nakamura: Yeah (inaudible) on file. Mr. Rapozo: Not counting the... Mr. Nakamura: Mm-hm. Mr. Rapozo: You know that purchase agreement that I reviewed was another... Mr. Nakamura: Correct. Mr. Rapozo: ...that's not in here. Mr. Nakamura: Correct. Mr. Rapozo: I guess the bottom line and I... this question is really to you and the Chair of the council, are we in a position right now with manpower to get this done within 60 days or... and is that something that we can achieve? Mr. Nakamura: I think... Chair Furfaro: Excuse me, Mr. Clerk. Mr. Nakamura: Yes. Chair Furfaro: Before you...I need to finalize my summary. Mr. Nakamura: Correct. Chair Furfaro: And some of those questions are... Mr. Rapozo: Oh, okay. Chair Furfaro: ...are answered in here, talking from technology upgrades to the furlough process, the vacant position we have, the workforce needs, making sure that, you know, we have some overall policy guidelines that all of us agree on too, especially I'm looking towards individuals to make sure they're looking at, you know, _material that has to do with their committees that is up there. But~I ,didn't mean to interrupt, but this is still iri a draft form... ~~' Mr. Nakamura: Correct. week. Chair Furfaro: ... and I do want to circulate it before the end of the Mr. Nakamura: Mm-hm. Chair Furfaro: I think the 60 days has a little reach in it, but you know if it turns out to be 70 days, you know, the rationale is here, so. COUNCIL MEETING. - 100 - ~cember 15, 2010 Mr. Rapozo: So was the intent to...were we going to defer this or is this something we're going to send to the committee or... Chair Furfaro: I'm going to look to the clerk for some recommendations. I've spoken on my part about getting this piece, you know this piece on what we need to do to be prepared for public document out... (equipment noise)...I'm sorry, they're drilling for the electrical needs for the upstairs offices which have no air conditioning at the moment, so. But, you know, that's my plan. I guess the question I would pose to the clerk, it is a target; it has a little push in it, but I think after the meetings I've been participating in with several departments, we have a chance to do it in 60 or 70 days. Mr. Nakamura: And I think that that's part of the reason why I don't think that...and I don't want to raise false expectations or...but one of the things that when we talked about it was that I think that we know what the targets are and I think we're de... and working together with the other agencies including, I think in the past...in less than the past week we've...like Council Chair Furfaro's been saying is that we've been in discussions with the purchasing division, with the IT division, trying to change some specifications on previous types of equipment that we have or trying to upgrade them. The IT people were here based on a request from Council Chair Furfaro for a walk through of our area to evaluate whether we can...where we can actually place things. The other thing that we were trying to do also is that keep in mind that with the relocation back to the Historic County Building, I think at that point space becomes an issue. And then so we were even looking at sizes of equipment and scanners and just to make sure that there were data ports available at sufficient areas, so there's a review. of that. So just I think, what we're hoping to do within about 60 days is to like Vice Chair Furfaro...I mean Council Chair Furfaro said is be able to scope out and present kind of an implementation and steps of how we can get to where we're going. Mr. Rapozo: .Okay, so I mean I guess it's safe to assume that what's on this agenda is...I mean what's on the resolution is the direction we're heading at this time. Mr. Nakamura: That's my understanding, yes. Mr. Rapozo: Okay, thank you. Chair Furfaro: Thank you, Mr. Rapozo. Mr. Bynum, we'll... Mr. Bynum: Just one clarification, like this website that I showed is on the county website, the video might come from a server by Granicus, but the interface is on the county website, and...' Mr. Nakamura: Yeah and... .. > idIr. Bymam: Yeah and this is. , , as I said, if i~ .takes : 60 -days or 120 days, this is a policy statement that says we want to implement these services for the public. Chair Furfaro: I just want to point out that the county clerk has been most helpful in getting me together with IT, suppliers, you know, as we go out for certain requests, meeting with Aida on staff review, some training; and yet I do want to make sure there's going to be some burden on us to make sure we're constantly updating the information and removing the old. But on the web connection and you want to share something? COUNCIL MEETING ~ - 101 - • ember 15, 2010 Mr. Nakamura: Mm-hm, ah, no, um, yeah, I'm not...I'm sorry, Councilmember Bynum, but I'm not quite sure how it...how that specifically works. But I think you're correct, there's some portions of it that are either housed or generated or archived on Granicus, some on the county, I'm just not sure what that... it is. Mr. Bynum: Yeah, part of our contract with them... Mr. Nakamura: Mm-hm. Mr. Bynum: ... is we didn't want to be hosting a server... Mr. Nakamura: Because of the size. Mr. Bynum: ...for this volume of data and so that's part of the contracted agreement. Mr. Nakamura: Yeah, I'm not sure what the (inaudible) was. Mr. Bynum: But the interface comes through the County of Kauai website and it's already happening. IT... Chair Furfaro: Well when we met with the new division head for Mr. Nakamura: On his first day on the job, I believe, Council Chair. Chair Furfaro: ... he felt very confident. Mr. Rapozo. Mr. Rapozo: And I just want to make sure that when we're talking about the. council website... Mr. Nakamura: Yes Mr. Rapozo: That's our...that's kauai.gov and you go to council and that's... that's where we have control of. We have someone here that can actually alter that website. Mr. Nakamura: Working together with IT, yes. Mr. Rapozo:. Right. The Granicus website... Mr. Nakamura: Mm-hm. Mr. Rapozo: ...that's a contract. iJlr. hTaka'iiura: ~ 'That's... and that's through the contractor, through the third party contract we have with Granicus, yes. Mr. Rapozo: Right, so if... and then that's why I want to make sure that that's clear by this resolution because the resolution says shall be posted and if it's posted on the council website, we do it internally. Mr. Nakamura: Correct. Mr. Rapozo: Granicus is not involved. COUNCIL MEETING • - 102 - ~ cember 15, 2010 Mr. Nakamura: Correct. Mr. Rapozo: But if you... if want to get to where that San Jose website was where you're adding up documents on the Granicus website, then I believe there's a cost involved, right? Mr. Nakamura: I think that's a matter for what...what's in the contract between the County of Kauai and Granicus. Mr. Rapozo: Right. I mean I read this resolution as our council website, what we have total control o£ Mr. Nakamura: And as part of the assessment of the collaborative effort, I think we have been sitting together with the IT division, with the boards and commissions office, with the planning department because obviously .the planning commission is also on the live streaming, and I think what we're trying to do there is trying...working collaboratively with the other agencies, is trying to see what can be done with the...under the current contract. But that's...you know, it's not only our call, that's more of an agency... interagency, interdepartmental kind of effort. Chair Furfaro: Well, you know, I'm leaving on Friday, but before Friday I hope to get this circulated to all the councilmembers that touch on those inquiries and things-to-do list. So I guess you can look at it as like Christmas reading. But, you know, we're going to set a goal for 60 or 70 days and you know, I would like to support this resolution. Mr. Nakamura: I think, Council Chair, one of the things when we were looking at the overall... kind of the overall framework for this, it's... what I've come to realize is that it's not just a matter of putting things on the web, but there's also contextual...the context in which you put it in in terms of if you put up a bill, are you putting it in a context that the public is going to understand why that bill is there. Is it in a context for the public to understand where -the bill goes, why the bill was changed. So it's...when...in talking to other people who are in information management and calling some other jurisdictions and some other agencies that work in this, what they kind of stressed was that it's not just a matter of putting things on the web. You have to kind of respond to different kinds of questions as can the public use it, can the public find it easily, and what was interesting was one of the things they said is can the public trust it in terms of what's put on there. (?): True. Mr. Nakamura: So I think not just... it's not... and then there's also this interesting concept of what level of granularity are you going to put up. Are you going to put up from the smallest item or you going to go and... depends on what types of documents that you put on, and are you able to explain to the public why it's there, what it does. We usually get those kinds of L~ ~ls...people will find~~stuff on the website and they'll call us and ask, well we have this document, but what stage is it at, how is it moving, what are the concerns. And so I think other than just putting it up, I think it may be prudent to have a discussion just within our staff or even among the councilmembers in terms of how we get to that kind of explanation, and part of it is also educating the public on what's going to be on there, what's not going to be on there. Chair Furfaro: I thank you for that. You know, let me say we'll circulate this after we get it clean of a draft form. COUNCIL MEETING • - 103 - • ember 15, 2010 Mr. Nakamura: Yeah. Chair Furfaro: And I certainly concur. You know, there's going to be a maintenance effort and you know, a lot of additional reviewing the materials... Mr. Nakamura: Mm-hm. Chair Furfaro: ... so that we can properly respond to the queries that come in, and as I said items that have several amendments, you want to make sure that the amendments that are there are the most current, and all of this ties to Mr. Bynum's... Mr. Nakamura: Mm-hm. Chair Furfaro: ...county attorney opinion about those documents. Mr. Nakamura: And I think .there's not... it's... in most of the information or most of the discussion that I've read on accessibility and open governance, I think one thing they stress is it's not just about the technology, it's not just about changing technology, it's also about an organizational change and almost a cultural change in terms of how people look at information. I think it's also kind of an internal change in terms of how within the county we look at the information technology division. I think initially what they were set out to do in their mission was to kind of gather information and store it and index it. But now because of the change in the way the world is moving and the culture is changing, that role...the traditional role of information technology divisions, which is basically to, you know, gather, organize, index, is kind of turning into more of a push as opposed to a pull of information. Now how do you push out information that you've done? And that's kind of a...that's kind of a change that hopefully comes about through a collaborative discussion with some of the other agencies and with the information technology division. Chair Furfaro: Okay, well thank you very much, Peter, and thank you very much for the...you know, the commitment for us to set a goal and a timeframe and we'll keep the council posted should we successfully vote on this resolution. Mr. Nakamura: Council Chair, if I may, the only other thing that probably what we may be looking at is also establishing deadlines for... if we are working on committee... Chair Furfaro: Yes. Mr. Nakamura: ...matters and having things into our office on time from councilmembers in order to get it posted on time because I think once you start building in b,at expectation, that...arid that's a discussion I think for the council'to' have in terms of~policies and guidelines. ~=j'- ~- ' Chair Furfaro: Well as you already know I already sent a communique to the administration. They need to have things into us on a timely basis, two Fridays ahead so that that material can be available for the public, so. Mr. Nakamura: Thank you, Mr. Chair. Chair Furfaro: Thank you again, Peter. Thank you for all your help here. Okay, Mr. Kawakami, yes. COUNCIL MEETING ~ - 104 - Tlecember 15, 2010 Mr. Kawakami: You know, I just want to be clear. If we're going to be taking a vote today, my non-support of this resolution has nothing to do with the opposition of any of the initiatives that are on the resolution. What I'm hesitant in doing is this resolution, with the way I'm reading it-and if I'm not right, I can be corrected-but what this resolution does is it in essence directs council services that this is going to be the top priority. Now I agree that it's a priority, but for us to now pass a resolution that says that for the next...who knows, 60, 70 days that this is going to be the top priority, I'm not in agreement with. And the only reason why is I agree this is a great amenity and for me especially, it would benefit me, but I'm just not getting the feedback that this is a top priority from the majority of our residents. There are a few people that are really pushing for it and I'm in agreement with them, it's great. But the fact of the matter is is we just heard it, that we're moving in that direction as it is anyway and not one of us, the prior council or I think this council, is opposed to any of any of the initiatives that are in that resolution. But if you can answer me, does this now start directing council services that hey, amongst the seven of us we got bills that we're working on that this is now going to supersede any of those priorities, then I'm opposed to it. And that's the precedent that I don't want to start today is that we start passing resolutions...because it's okay to want something, and we're already moving in that direction, but to try and pass a resolution to say that hey, I want it now and this is going to be the top priority, it's not something I can be in agreement with. But as far as the initiatives, 100% and we're already moving in that direction; we heard that today. Chair Furfaro: Well, you know, we have moved that way with this... as early as our first action of getting our meetings streamed. Mr. Kawakami: Exactly. Chair Furfaro: And I do want to tell you that my role as Council Chair is to determine the priorities and at some point you folks honestly elected me to trust me to guide us in that way, and I absolutely heard your concern, and this will not be in a situation that overwhelms our staff. I want to be to a place that we can identify the right people and there are hurdles in here, and I would like to circulate those comments to you over this Christmas break. I heard you clearly, but I want you to know this will not be the piece that overwhelms our ability to do our business. I clearly heard you. Councilwoman Yukimura. Ms. Yukimura: Nothing in the resolution reads anything about 60 days or it being the top priority. Chair Furfaro: No. Ms. Yukimura: To me it just sets a policy direction that this is the direction we want to go in and I presume there's flexibility in the 60 days and in... that would be subject to your discretion and judgment, Chair. So I think it's good to have a statement that this is ~l~e c;.~ Yi~tion we want to go in. Chair Furfaro: Well, it's a form of leadership, which is, you know, you make a very bold and broad statement about setting a goal. Ms. Yukimura: Mm-hm. COUNCIL MEETING ~ - 105 - • ember 15, 2010 Chair Furfaro: And then at time's, you know, as long as you're within the parameters, the goal is to get there: But what I'm saying is I don't want on the flip side, anybody to say oh, we passed a resolution and so this thing should be happening next week... Ms. Yukimura: Right. Chair Furfaro: ...you know and so that's why the clarification. I'm sorry, you know, I need to get this out to you folks because we've had discussion and Mr. Nakamura has been very helpful getting me to talk directly with potential suppliers, with IT, you know, and with our staff, so. Okay. Mr. Bynum? Mr. Bynum: I just want to reiterate this is a policy statement. I would invite the public to go on the Granicus website. I showed you hundreds 'of communities, some of them not much smaller than Kauai who have implemented this long ago, and you know, I have a pretty clear understanding of what it involves and I agree with Mr. Nakamura about a cultural change and a change in the way we move information. You know, that's a good thing and it's in process in the county. But, you know, to accomplish this even with old technology, I have a pretty clear idea of how much effort is involved, so I appreciate your statements. I certainly had no intention that this be designated the top priority for our staff. You know if you read on the Granicus website, you're also going to see lots of testimonials from council service staff who say we love this, this saves us time and money with documentation of how it saves money. So, I think it's a good policy and I hope we can approve it today. Chair Furfaro: Okay, Councilwoman Yukimura. Ms. Yukimura: No, I thought the clerk had something. Chair Furfaro: No, I'm going to give him an opportunity. I just want... several of us have appointments with the governor on island... Ms. Yukimura: Yes, I know. Chair Furfaro: ...and we still have a lot to cover in... Ms. Yukimura: I'd like to hear from the clerk too. Chair Furfaro: Okay, very good. Mr. Nakamura. Mr. Nakamura: Thank you, Council Chair, very briefly, we appreciate...I appreciate what Councilmember Kawakami put forth because I think it just reminds us that as we move through the year...of any calendar year of the council, at different times there are things that we concentrate on I think. When the budget comes up that's pretty much what we're concentrating on, and the budget process starts in March. ~ I think we're looking at and not within any great excitement, some' time in the second or~`~tliird quarter' of next year, of actually relocating back to the renovated building. So I think there's going to be things that are going to kind of overtake the...it's going to push itself up the priority list. And I think if we remember moving here, it was...it took awhile to kind of just...the priority was, at that point, was just to make sure we could have meetings here and I think it just took a while to get everything working. So we...I appreciate Councilmember Kawakami's comments in terms of the council understanding that as we move through different periods of times that there are different things that we do concentrate on. Thank you. COUNCIL MEETING • - 106 - Chair Furfaro: I do appreciate and I do want to let all of you know that this overwhelm us to be the top priority. But let's achieve. Tlecember 15, 2010 Councilman Kawakami's comments project, as we set a goal, will not be reasonable about what we can Mr. Nakamura: I think...I think pretty much that's what we're hearing from the council as a whole, Council Chair, and I think what we ask is also to make sure that as we do it, as we move through this that there are areas that are truly kind of dependent on how well we collaborate with, whether it's the information technology division or the purchasing division, with some of the... and with some of the other boards and commissions and making sure that everybody's kind of moving along. But that's kind of hopefully where we can get to and I think Councilmember Bynum's reso mentions that we should be trying to set an example and that's...and to me part of setting the example is working with the other agencies to help them move along also. And so that's hopefully what we will be able to do. Chair Furfaro: Thank you very much, Mr. Nakamura. While we're on this item and I'm going to suspend the rules. Is there anybody in the audience that wants to speak before I call the council back? Seeing nobody, I call us back to order here. There being no one wishing to testify on this item, the meeting was called back to order, and proceeded as follows: Chair Furfaro: Councilwoman Nakamura. Ms. Nakamura: I just have one comment on the first whereas. I would like to recommend that we either take out the first portion of that sentence or revise it. It reads "in a democracy the people are vested with.the ultimate decision- making power" and I believe we're in a representative democracy and the people have elected representatives who are vested with the power to make decisions on their behalf. So, if we could clarify that. Chair Furfaro: Yes, very good point. Do we have a motion to massage that or... Ms. Yukimura: Mr. Chair, I'd like to ask the maker of the resolution or the introducer of the resolution whether he would object to taking that first paragraph out, which would be easy to (inaudible) or i£.. Ms. Nakamura: Just leave...or just put...excuse me. Ms. Yukimura: Go ahead. Ms. Nakamura: Excuse me. Ms. Yukimura: Go ahead. Ms. Nakamura: If we could just put "Whereas an informed, aware and engaged electorate is an important component of good governance" and just leave it at that. Mr. Bynum: I'm fine with that. Chair Furfaro: You're fine with that? Well, then we're going to need to take a recess because that's going to have to be in writing. • COUNCIL MEETING - 107 - December 15, 2010 Ms. Yukimura: Well we can be doing...we have the other bills that we have to be... Chair Furfaro: That's true. Ms. Yukimura: Mr. Chair, maybe we can be doing those bills while we prepare an amendment? Chair Furfaro: Okay, Nadine, do you want to be excused for a moment so you could be very specific about that amendment in writing? And Mr. Clerk, can we then go to... Mr. Nakamura: We'll be on page five, Council Chair... Chair Furfaro: Yes. Mr. Nakamura: ... on bills for first reading. Chair Furfaro: Excuse me. Lonnie, you had your hand up. I gave the public time to speak. I called the meeting back to order. When we have an amendment to speak on, I'll let you speak then, okay. Okay, Mr. Clerk. BILLS FOR FIRST READING: Mr. Nakamura: Council Chair, we're on page five of the council's agenda on Bills for First Reading, first bill for first reading is Proposed Draft Bill (No. 2387). Proposed Draft Bill (No. 2387) - AN ORDINANCE AMENDING ORDINANCE NO. B-2010-706, AS AMENDED, RELATING TO THE CAPITAL BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL YEAR JULY 1, 2010 THROUGH JUNE 30, 2011, BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE GENERAL FUND (1,571,001.00 - County 800 Mhz radio system P25 compliance upgrade): Mr. Rapozo moved- for passage of Proposed Draft Bill (No. 2387) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Public Safety & Environmental Services Committee, seconded by Ms. Yukimura. Chair Furfaro: Okay, it's been moved and seconded.. Is there anyone that wants to speak on this item? Seeing none, is there any dialogue about this calendar date? 1VIs. Yukimura: Mr. Chair, I had earlier said that I had some questions for the police department, but I'll get those answers before the public hearing; so thank you. Chair Furfaro: Thank you very much. This would be a voice vote? Mr. Nakamura: Roll call. Chair Furfaro: Roll call, yes. COUNCIL MEETING • - 108 - ~cember 15, 2010 The motion for passage of Proposed Draft Bill (No. 2387) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Public Safety. & Environmental Services Committee was then put, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. Mr. Nakamura: Seven ayes, Mr. Chair. Chair Furfaro: Okay, next item, next draft bill. Mr. Nakamura: Next bill for first reading is Proposed Draft Bill (No. 2388). Proposed Draft Bill (No. 2388) - AN ORDINANCE AMENDING ORDINANCE NO. B-2010-705, AS AMENDED, RELATING TO THE OPERATING BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL YEAR JULY 1, 2010 THROUGH JUNE 30, 2011, BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE GENERAL FUND ($62,719.00 - golf fund and $2, 704,873.00 -sewer fund): Mr. Rapozo moved for passage of Proposed Draft Bill (No. 2388) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Committee of the Whole, seconded by Ms. Yukimura, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. Mr. Nakamura: Seven ayes, Mr. Chair. Chair Furfaro: Excuse me for that mistake. Next item please. Mr. Nakamura: Next draft bill for first reading is Proposed Draft Bill (No. 2390), an ordinance amending ordinance no....oh, I'm sorry, for 2389. Proposed Draft Bill (No. 2389) - AN ORDINANCE AMENDING ORDINANCE NO. B-2010-705, AS AMENDED, RELATING TO THE OPERATING BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL YEAR JULY 1, 2010 THROUGH JUNE 30, 2011, BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE VARIOUS FUNDS AND MAKING THE APPROPRIATE TEXT CHANGES AS IT RELATES TO FURLOUGHS ($2,328,554.00): Mr. I;ynum moved for passage of Proposed Draft Bill (No. 2389) on first reQUing, tha+; e:~ ne ordered to print, that a public hearing thereon be achedulerl. for January 12, 2011, and that it be referred to the Committee of the Whole, seconded by Ms. Yukimura, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. COUNCIL MEETING - 109 - December 15, 2010 Mr. Nakamura: Seven ayes, Mr. Chair. Next draft bill...proposed draft bill for first reading is Proposed Draft Bill (No. 2390). Proposed Draft Bill (No. 2390) - AN ORDINANCE AMENDING ORDINANCE NO. B-2010-705, AS AMENDED, RELATING TO THE OPERATING BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL YEAR JULY 1, 2010 THROUGH JUNE 30, 2011, BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE GENERAL FUND (575,000.00 - Kaua`i Bus services expansion): Ms. Yukimura moved for passage of Proposed Draft Bill (No. 2390) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Housing/Transportation/Energy Conservation & Efficiency Committee, seconded by Mr. Bynum. Chair Furfaro: We have a... can we have a roll call vote? Ms. Yukimura: Mr. Chair, may I just... Chair Furfaro: Oh yes, go right ahead. Ms. Yukimura: I can't let this moment pass to express my gratitude to the administration for initiating this much needed service. I know our bus riders will be delighted and I hope that those who can come to the public hearing will come and testify or submit testimony because they've been talking my ear off about how important this is and we want support for it. Thank you. Chair Furfaro: NIr. Bynum. Mr. Bynum: I just want to concur and say that this bill is about extending bus until 10 p.m. and on Sundays, and making all of our citizens full participants in our community, so. Chair Furfaro: Thank you very much. Any further discussion? If not, we have this going to a public hearing and housing on the 12 of January. May we have a roll call vote, please? The motion for passage of Proposed Draft Bill (No. 2390) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Housing/Transportation/Energy Conservation & Efficiency Committee was then put, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. `- ~ ~ ' `Mr: Nakamura: Seven ayes, Mr. Chair:' ~ ~ °- - ~ ~' ' ~~ Chair Furfaro: Thank you. Next item. Mr. Nakamura: Next proposed draft bill for first reading is Proposed Draft Bill (No. 2391). Proposed Draft Bill (No. 2391) - A BILL FOR AN ORDINANCE AMENDING ORDINANCE NO. B-2010-705, AS AMENDED, RELATING TO THE OPERATING BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL COUNCIL MEETING. - 110 - ~ecember 15, 2010 YEAR JULY 1, 2010 THROUGH JUNE 30, 2011, BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE GENERAL FUND (.$200,000.00 - Kaua i Visitors Bureau): Ms. Yukimura moved for passage of Proposed Draft Bill (No. 2391) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Economic Development & Renewable Energy Strategies Committee, seconded by Mr. Chang. Chair Furfaro: Thank you. Is there anyone in the audience that wishes to speak? If not, councilmembers, Iunderstand Mr. Chang, you might have some detail for later if people want that information, your committee has it. Let's do a roll call vote, then. The motion for passage of Proposed Draft Bill (No. 2391) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Economic Development & Renewable Energy Strategies Committee was then put, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. Mr. Nakamura: Seven ayes, Mr. Chair. Next bill for first reading is Proposed Draft Bill (No. 2392). Proposed Draft Bill (No. 2392) - A BILL FOR AN ORDINANCE TO AMEND ORDINANCE NO. B-2010-705, AS AMENDED, RELATING TO THE OPERATING BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII FOR THE FISCAL YEAR JULY 1, 2010 THROUGH JUNE 30, 2011 BY REVISING THE SURPLUS AND APPROPRIATIONS ESTIMATED IN THE GENERAL FUND ($325,000.00 - county auditor): Mr. Chang moved for passage of Proposed Draft Bill (No. 2392) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Committee of the Whole, seconded by Mr. Bynum, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. Mr. Nakamura: Seven ayes, Mr. Chair. Chair Furfaro: Thank you. Can we go back to the proposed amendment on the resolution? Mr. Nakamura: We have one last bill for first reading, Mr. Chair. Chair Furfaro: Oh, I'm sorry. Mr. Nakamura: Oh, I'm sorry,' did we finish the 2393? One last bill. Chair Furfaro: Okay. Mr. Nakamura: We have...last bill for first reading is Proposed Draft Bill (No. 2393). COUNCIL MEETING - 111 - December 15, 2010 Proposed Draft Bill (No. 2393) - A BILL FOR AN ORDINANCE AUTHORIZING THE COUNTY AUDITOR TO PROCURE THE SERVICES OF A CONTRACT AUDITOR AND APPROVING A CONTRACT FOR A CONRACT AUDITOR FROM APPROPRIATIONS OF A LATER FISCAL YEAR AND FOR MORE THAN ONE FISCAL YEAR: Mr. Chang moved for passage of Proposed Draft Bill (No. 2393) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Committee of the Whole, seconded by Mr. Bynum. Chair Furfaro: Thank you. For the general public to know, the reality of this proposal is the fact that we cannot extend, without a resolution identifying those funds, moneys for multiple years, and this will trigger a public hearing on the 12. Is that what you said, Mr. Chang? Mr. Chang: Yes, sir. Chair Furfaro: Okay. Is there anyone from the public that wishes to speak on this? Seeing no one, members, any further discussion? If not, a roll call vote, please. The motion for passage of Proposed Draft Bill (No. 2393) on first reading, that it be ordered to print, that a public hearing thereon be scheduled for January 12, 2011, and that it be referred to the Committee of the Whole was then put, and carried by the following vote: FOR PASSAGE: Bynum, Chang, Kawakami, Nakamura, Rapozo, TOTAL - 7, Yukimura, Furfaro AGAINST PASSAGE: None TOTAL - 0, EXCUSED & NOT VOTING: None TOTAL - 0. Mr. Nakamura RESOLUTION: Chair Furfaro: Mr. Nakamura: Seven ayes, Mr. Chair. Okay, now we can go back to the... We're back... Chair Furfaro: ... (inaudible) amendment on resolution 2010-39 and I will recognize Councilwoman Nakamura. Ms. Nakamura: ~ Okay, I'd like to make an amendment that it says "whereas" and deletion is "in a democracy the people are vested with the ultimate decision making power" and add...that would be .the end of the deletion and then continue on "an informed, aware and engaged electorate is an important component of good governance and." Ms. Yukimura: Second. Ms. Nakamura moved to amend Resolution No. 2010-39 as shown in the Floor Amendment attached hereto (Attachment No. 1), seconded by Ms. Yukimura. Chair Furfaro: It has been motioned and seconded.'' Anyone from the public? Lonnie, come right up. There being no objection, the rules were suspended. COUNCIL MEETING ~ - 112 - ~ecember 15, 2010 LONNIE SYKOS: Oh, wrong switch, okay. Lonnie Sykos for the record. I believe that Mr. Bynum quoted the text for the introduction to the Sunshine Law in the uniform information deal, which is why I raised my hand. The power is vested in the people. That's what's stated in the law and whether the council wants to change that or not is up to the council, but that is what the uniform practice says. Thank you. Questions? Chair Furfaro: Thank you, Lonnie. Let ask, any questions of Lonnie? None? Mr. Sykos: Chair Furfaro: meeting back to order. There being no one els proceeded as follows: Chair Furfaro: Thank you. Thank you for waiting. Okay, I'm going to call the e wishing to testify; the meeting was called back to order, and We have a... Mr. Nakamura: Motion and a second on the floor. Chair Furfaro: A motion and a second on the floor, do we not? Mr. Nakamura: Yes. Chair Furfaro: For the amendment. We're first voting on the amendment. All those in favor of the amendment as presented? Councilmembers: Aye. Mr. Kawakami: No. Chair Furfaro: Any nays? We have one no. Any silent? Okay. So we're back to the main motion on the resolution as amended. So this will be a roll call vote. The motion to approve the Floor Amendment was then put, and carried by a vote of 6-1 (Councilmember Kawakami voting no). Mr. Rapozo: (Inaudible). Chair Furfaro: We can have discussion on that right now. Mr. Rapozo:. Mr. Chair, you know what I heard today and again this is the first time I've actually gotten the information and the resolution, but what I heard today is that what is being asked for in this resolution is currently being done: I heard, that loud and clear from the clerk. I r~aard that loud and clear from you. I haven't seen your commentary yet and I look forward to seeing it for some Christmas reading. But I guess for me, you know resolutions are reserved for certain items that we are encouraging the State or other departments, the administration. I don't think I've ever seen a resolution where we're encouraging ourselves to do something that is, in my opinion, currently being done. You know I look to you, Mr. Chair, and I've said this many times and I'll probably say it many more times that as the Chair of the Council you will be working with the staff, you will be working with the clerk, you will be working with the resources that we have to accomplish what we need to accomplish. I...like Mr. Kawakami said, I agree • COUNCIL MEETING - 113 - December 15, 2010 with what is being requested, but I also believe that it's already being done. I think the Granicus site is up. I think it's a heck of an opportunity for people to be able to watch this live or watch it archived. You can already click on the agenda and get to the item that you want to watch. As far as the text base searches, I think it'll be a wonderful thing once we get the resources available to get it done. I think my concern is much like Mr. Kawakami. This doesn't show a dateline, it doesn't show a commitment as far as a priority, but it's a pretty strong policy statement to the...basically to the clerk and to...actually to the Chair and to the clerk saying this is what we want you to do. As a recently returning councilmember, I'm not familiar with the staff right now, their workflow, their workload. I know that in the short time that I've been here, this staf£..people work extremely hard, no different than when I was here the last time. So you know, I'll agree with Mr. Kawakami that we...this is where we're headed. This is exactly where we're headed and it's just awkward, I guess, for a resolution to be directed to our own department and I appreciate what Mr. Bynum is accomplish..'. trying to accomplish. I think, you know, to his credit the Granicus site is up' today. It was a lot of effort and persistence, and I'm glad it's up. But I think this is something that needs to be developed by you and the clerk and. the staff at the pace that you feel will best benefit this office and the public, so. I just wanted to make those comments for the record. Chair Furfaro: I appreciate those comments and I would point out that it is a team effort here that, you know, we go forward on these things and I welcome your comments. Mr. Kawakami. Mr. Kawakami: Thank you, Mr. Chair, and you know, like I said before, it's good initiatives, but you know, the council is empowered with certain tools and a resolution, in my opinion, is a strong tool and it should be respected as such. And when we... and if I'm going to put my name behind a resolution, then by any means I would expect the introducer to say that I'm... this is a top priority and that's why I was reading it as a top priority, but if this is now not going to be a top priority, why have a resolution? And you know, like I said, everything in there is good. We're already moving in that direction. We heard that this is going to be a matter of short time. You feel we can get it done in 60 days anyway and so it seems to be that we're almost already there anyway: So, I stand by my non-support of this, but look forward to having everything up and running within 60 days. Chair Furfaro: Very good, okay. Ms. Yukimura: My understanding of resolutions as a policy setting vehicle is a very common thing and it's really important to have a policy in writing about our... about how we want to do our information technology and have access from the public. So I feel this resolution is very appropriate and it doesn't in itself have those time requirements, which is wise because then it gives us flexibility and through your management of the issue we can keep moving in that direction. Chair Fuicfaro: ~ . Okay. I do want to say that I felt it's 'important to put soiie target date in there because a resolution is a statement on iil~;enC and where we're going and how we want to proceed. I think I didn't tie myself to the 60 days. I said 60 days is a target and it has reasonable reach. But I also want to say that the county clerk and myself are up for the challenge. So if you feel my attempt here is being challenged, hey, I'm up for it. That's what leadership is all about, and if I fail, I'm always able to pick myself up. But this is an intent of where we're going and we're going to put furloughs behind us, we're going to fill a vacancy or two, and we're going to constantly try and make some improvements here. And I am delighted that I have the clerk's support to do this, so. I am going to call for... oh, Mr. Chang. COUNCIL MEETING - 114 - ~ecember 15, 2010 Mr. Chang: Yeah, thank you, Chair. I respect your comments and you know we definitely support you and I'm looking forward, like Councilmember Rapozo, to have that good Christmas reading material. So I'll be looking forward for those 17 bullet points because I think when we see what you present on paper that a lot of our questions will be answered. Thank you very much. Chair Furfaro: Those are the hurdles. Those aren't the answers, but that's what we've got to hurdle as a team, so and I appreciate all the comments today made. Let's go ahead and call for a roll call vote on this. The motion to adopt Resolution No. 2010-39, as amended herein to Resolution No. 2010-39, Draft 1 was then put, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Nakamura, Rapozo, Yukimura, TOTAL - 5, Furfaro AGAINST ADOPTION: Kawakami, Rapozo TOTAL - 2, EXCUSED & NOT VOTING: None TOTAL- 0. Mr. Nakamura: Five ayes, two noes, Mr. Chair. EXECUTIVE SESSION: ES-475 Pursuant to Haw. Rev. Stat. sections 92-4, 92-5(a)(2), (4) and (8), and Kauai County Charter §3.07(E), the purposes of this executive session are to consider the evaluation of officers and/or employees where consideration of matters affecting privacy will be involved, salary consideration, and associated 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. Chair Furfaro: Thank you. I believe this is going to end our meeting today, but I also want to postpone the executive session. I have material and this was specifically as... answering one of eight questions that were posed to me. But in light of some new information, I would ask that I could move that executive session to the January 5, 2010. So, I'm looking for a motion to defer. Mr. Rapozo: Move to defer. Ms. Yukimura: Second. Chair Furfaro: Thank you. Any discussion? If not, all those in favor of the deferral, say aye. Councilmembers: Aye. Mr. Rapozo moved to defer ES-475, seconded by Ms. Yukimura, and unanimously carried. Chair Furfaro: And thank you and before we close here, it is our last meeting of this year and I will give a moment of personal privilege to any councilmember that wants to do as I do, wish everyone in the County of Kauai, the island of Niihau, a very, very, happy new year and a very, very good Christmas, so. Ms. Yukimura: All together now... • COUNCIL MEETING - 115 - December 15, 2010 Councilmembers: Merry Christmas! Chair Furfaro: Thank you very much, we're all (inaudible). ADJOURNMENT. There being no further business, the meeting was adjourned at 5:10 p.m. Respec lly submitted, .~~ PETER A. NAKAMURA County Clerk /wa • ATTACHMENT NO. 1 December 15, 2010 FLOOR AMENDMENT Resolution No. 2010-39, Relating to Open Governance and Internet Access to Public Documents Introduced by: Nadine Nakamura Amend Resolution No. 2010-39 by amending the first paragraph to read as follows: "WHEREAS, [in a democracy, the people are vested with the ultimate , decision-making power and] an informed, aware and engaged electorate is an important component of good governance; and" (Material to be deleted is bracketed.)