HomeMy WebLinkAbout080811_MINUTES_FINAL APPROVED_1 Kauai County Cost Control Commission
Minutes of Meeting
OPEN SESSION
1:30 p.m.
August 8, 2011
With a quorum being present, the regular meeting of the Cost Control Commission of the County
of Kaua'i was called to order by Chair Sandi Sterker at 1:35 p.m. at the Mo'ikeha Building,
Liquor Conference Room No.3.
Members present:
Sandi Sterker, Chair
Dirk Apao, Vice-Chair
Lawrence Chaffin, Jr.
Brant Fuchigami
Absent/excused: Members Laurie Yoshida and Glen Takenouchi
Others in attendance included:
Damien Ventura, Ag Land Use &Valuation Specialist; Tim Bynum, Councilmember; Mona
Clark, Deputy County Attorney; John Isobe, Administrator; Paula Morikami, Administrative
Aide; and Mercedes Youn, Support Clerk.
Approval of Minutes
Meeting Minutes of July 11, 2011
Mr. Chaffin moved to approve the minutes as circulated. Mr. Apao seconded the motion.
Motion carried 4:0
Communications
CCC 2011-12 Communication dated 07/18/11 from Council Chair Jay Furfaro, to Members of
the Cost Control Commission,regarding a copy of his statement to the Garden Island Newspaper
on the Budget for Fiscal Year 2011-2012 for the County of Kaua'i.
Chair Sterker: May I have a motion to receive the communication?
Mr. Chaffin moved to receive the communication. Mr. Apao seconded the motion.
Motion carried 4:0
Mr. Chaffin: I have a comment relating to Council Chair Furfaro's statement on tourism. I will
quote what he said. "That tourism has remained stagnant for the last 20 years and can no longer
be relied on to move the economy into a prosperous future". I question that.
Chair Sterker: I would think that if there is anyone who would know more about tourism is
Council Chair Jay Furfaro.
Minutes of August 8, 2011
Mr. Chaffin: Yes, but he's quoting something out of the Honolulu Star Advertiser.
Chair Sterker: Okay.
Mr. Chaffin: I find that hard to believe.
Chair Sterker: I really didn't see anything in the media statement that needs our attention.
However, I do think that it is good to talk about it.
Mr. Chaffin: On the bottom of page one (1) on the back, the word"biota" is new to me. Does
anyone know its definition?
Mr. Chaffin: It's the animals,plants, fungi, etc. in a region or period.
Chair Sterker: I don't know what biota means.
Mr. Chaffin: I just told you.
Chair Sterker: Okay. Thank you for finding that out.
CCC 2011-13 Communication dated 07/25/11 from Chair Sandi Sterker to Gary Heu, Managing
Director, requesting an update on the six (6) Cost Control Commission's Energy
Recommendations which were submitted to the County's Administration in 2008 and 2009.
Chair Sterker: May I have a motion to receive the communication?
Mr. Chaffin moved to receive the communication. Mr. Apao seconded the motion.
Motion carried 4:0
CCCC 2011-14 Communication dated 07/13/11 from Chair Sandi Sterker to Chair Sherman
Shiraishi and Members of the Charter Review Commission, requesting consideration of a
Proposed Charter Amendment Establishing a Department of Human Resources to be placed on
the 2012 General Election ballot.
Chair Sterker: May I have a motion to receive this communication?
Mr. Chaffin moved to receive the communication. Mr. Apao seconded the motion.
Motion carried 4:0
CCC 2011-15 Communication dated 07/28/11 from Charter Review Commission Chair Sherman
Shiraishi, to Chair Sandi Sterker and Members of the Cost Control Commission, requesting
comments on the County Charter, Article XXVIII, Section 28.05 Reports (Relating to the Cost
Control Commission)
Chair Sterker: May I have a motion to receive this communication.
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Mr. Isobe: Madam Chair.
Chair Sterker: Yes.
Mr. Isobe: In addition to the motion to accept the communication, I believe that the Charter
Review Commission is looking for a recommendation relative to the requirement that is
currently in the Charter,which says that that Cost Control Commission recommends that an
Ordinance be adopted based on its recommendations. For example, the Cost Control
Commission had recommended fee increases at the Wailua Golf Course. The Charter requires
the Mayor to send that recommendation for an Ordinance to the County Council within thirty
(30) days of his receipt of that request. The Charter Review Commission is wondering whether
or not the thirty (30) day requirement is adequate or would the Commission wish to extend the
timeframe.
I can tell you that there was a similar communication that was sent to the Mayor and his response
was that he does not have any problem with the thirty(30) day requirement. However, the
Charter Review Commission is asking for some kind of recommendation from this body.
Chair Sterker: Personally, I don't see any reason to have anything longer than the thirty(30)
days. I think that we went over it thoroughly and have checked to see whether we liked the
wording on it, and we were all in favor of what is was. I do not think that we have any changes
to make and I would like to have the thirty (30) days remain in the Charter.
Mr. Chaffin: I am concerned with the thirty (30) day period because we just meet once a month.
Do we have the language in front of us now? To say that is what we want.
Chair Sterker: No,we were quite pleased with the language.
Mr. Isobe: Just for clarification. The thirty(30) day requirement is not a requirement that is
imposed on the Cost Control Commission. The thirty day (30)requirement is a requirement on
the part of the Mayor. Once the Commission makes a recommendation to the Mayor, the Mayor
then has thirty (30) days from that period in which he received the recommendation to forward
the recommendation to the County Council. Again,just so that we're clear the thirty(30) day
requirement only applies to recommendations in which this body is recommending an ordinance.
If it is a non-ordinance type of recommendation, then the thirty(30) day requirement does not
affect it. But for anything in which you recommend an ordinance, meaning a law being adopted
and/or revised, then there is that thirty (30) day requirement. I can get the Charter if you want to
see the actual language.
Mr. Chaffin: Okay, Thank you.
Chair Sterker: Do you want me to read the proposed language?
Mr. Chaffin: Yes, I think that would be appropriate.
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Chair Sterker: It says "Shall the title of the Department of Personnel Services be changed to
Department of Human Resources and its existing scope of responsibilities to broaden and include
a more comprehensive Human Resources function".
Mr. Chaffin: As I understand it, we are taking some people from the different departments and
placing them into the Human Resources Department.
Mr. Isobe: Commissioners, I think that the communication that you are referencing is item CCC
2011-14. The item that we are making reference to is item 2011-15; the Charter Review
Commission is requesting your comments on a proposed Charter Amendment that the Charter
Review Commission is considering.
CCC 2011-14 relates to a recommendation that was actually sent by this body over to the Charter
Review Commission for consideration, which is a Charter Amendment proposing the creation of
a Human Resources Department.
Chair Sterker: Mr. Chaffin, we are now talking about the thirty (30) day requirement.
Mr. Chaffin: Which just pertains to the Mayor?
Chair Sterker: Yes.
Chair Sterker: Does anybody have any problem with the thirty (30) day requirement?
Commissioners Apao, Chaffin and Fuchigami: No.
Mr. Isobe: Our office will draft a communication from the Cost Control Commission to the
Charter Review Commission recommending that no changes be made with the current language
in the Charter.
Chair Sterker: Thank you.
Mr. Chaffin moved to receive the communication and send a memo to the Charter Review
Commission to inform them that the Cost Control Commission is satisfied with the current
language in the Charter and recommends that no changes be made.
Mr. Apao seconded the motion.
Motion carried 4:0
Business
CCC 2011-07 Discussion and possible decision-making regarding the establishment of an
Employee Incentive Program related to energy cost savings. (Deferred from 05/09/11)
Chair Sterker: This was deferred form the 05/09/11 meeting. I would like to ask the
Commission...we have heard from Mr. Gary Heu at the last meeting that the County is looking
into hiring somebody for the Energy Manager. I would like to table this item indefinitely until a
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time when we do have an Energy Manager and he has time to get established. Maybe six (6)
months into his position. That's when we should bring this matter up again.
Chair Sterker: May I have a motion.
Mr. Chaffin: I question whether we should allow the six(6)months or keep it open until such
time that person is on board.
Chair Sterker: Yes, we can do that. Let's just leave it open.
Mr. Chaffin: Hopefully it will be less than six (6) months.
Chair Sterker: So the motion is to table this item indefinitely until such time when there is an
Energy Manager on board.
Mr. Chaffin moved to table this item indefinitely until such time when there is an Energy
Manager on board. Mr. Apao seconded the motion.
Motion carried 4:0.
CCC 2011-08 Review and discussion on the County's real property tax exemptions and rate
setting procedure. (On-going)
a) Kaua'i County Code, Chapter 5A Real Property Tax.
(On file with the Office of Boards and Commissions)
Chair Sterker: Councilman Bynum would you like to address the Commission?
Mr. Bynum: Good afternoon Commissioners. Thank you for allowing me to be here and I want
to make sure that my comments here today is as an individual member of the County Council
and Chair of the Finance Committee. I am not speaking for the Council but only for myself.
Chair Sterker: Thank you.
Mr. Bynum: First of all, I appreciate the work of this Commission. I try to pay attention and, as
you know, the Cost Control Commission has come before the Council repeatedly. As I have told
you before, the Charter gives this Commission extraordinary power by requiring that the Mayor
constitute your recommendations in an ordinance form, if you choose to do so.
Speaking only from my standpoint that is a power I would think about very seriously, before I
implement it. It is something that would ensure that your recommendations would come before
the legislative branch, a decision making body.
This agenda item is about taxes. I am the Finance Chair of the Council for this term and we have
had few proposals regarding taxes. I want to do two (2) things: one is to make a few statements
and the other is to appreciate your interest in this because the budget is made up of revenues and
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expenditures and the Commission has looked at expenditures in specific areas where I think is
good. So I welcome your interest in looking at revenues,because I am looking at that too.
I hope to make a few statements today about concerns that I have and to provide you with some
information about some things that are at the Council, and then request if I can come to a future
meeting and do a presentation. I have been out of out of the loop for the last month because of
some personal issues. I would like to come to a future meeting,but perhaps it would be better to
provide you with documentation about what I am about to say.
Chair Sterker: That will be good if we had some documentation.
Mr. Bynum: I didn't bring it today because I did not know that this was already an agenda item.
I was going to request that it be made an agenda item.
Mr. Chaffin: Excuse me Mr. Bynum, but can you have the information made available to the
Commission in time before our meeting packets are sent out.
Mr. Bu: Yes, at least some of it,but not all. I will provide some information based on data
provided by Real Property. The short version is that over the last four(4) years we have gone
through a difficult economic time. If you look at the real property data, the resident home
owners have paid an increase burden of the real property revenues, and at that the same time
other tax categories were paying less. The reason is because the homestead class, who now has
at least a total of 12,200 owner occupied residences, was being treated differently, compared to
the other tax class that was a result of an Ordinance being passed.
The basic tax is called ad valorem and it is used all over the country. It is based on the assessed
value of the property times the real property tax rate which the Council sets every year during its
budget process. It is set like that every day,because there is no rule that says if the assessed
values go up your tax bill goes up. It only goes up if you don't lower the rate. Same as if your
real property tax assessment goes down, the revenue the County collects would also go down,
unless we adjust the rates.
Our County has made no rate adjustments for the past six (6) to seven (7)years, unlike the other
counties, who during this economic down time, have adjusted their rates. For instance, here on
Kaua'i the Hotel Resort Class has the lowest tax rate in the State. However, their assessed value
in that class has gone down by millions and we haven't adjusted the rates. The real property tax
that was collected from that category has gone down. I don't have those figures,but I will
supply them to you. If my memory serves me right, it's about 15%to 18% in the last four years.
Most of the payers in the homestead class were not subject to that rate because of the Real
Property Tax Cap Bill that passed during the run up of values that happened in 2002, 2003, 2004
and 2005. We all lived through that time when the assessed values of homes and properties were
going up dramatically during a very hot economic cycle. An attempt was made to address it,
which proved to be very successful and worked really well during the run up of values.
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People in the homestead class had their property tax bill capped at 2% and that gave a real sense
of comfort to a lot of homeowners because they could predict it and understand it. And it was
clear; you know if my property tax bill is a $1,000 this year, it's not going to go up by more than
2%. In my opinion, it also relieved pressure from the Council to adjust the rate down. The
Council at the time could have taken a different approach and said the assessed values are up, so,
let's lower the rate to make sure that the bills don't actually go up as well. So, during that run up
of values, the 2% cap protected the homeowners really well.
However, for the last four(4)years we have had a decrease in values. As the assessed values
went down, the tax bills continued to go up 2%. For example, the Resort Class had their assess
values reduced and the rates have not yet been adjusted, as a result the bills have not gone down
dramatically. It has gone down in the hotel resorts, apartments, commercial, and agricultural
except for the industrial, that has gone up a little bit.
In the homestead class there has been an increase and it's not just the 2%because in that Bill if a
property is sold it resets. It doesn't keep the 2% tax rate but is assessed at its full assessed value
and the current rate has not been lowered for the past seven (7)years. So, what that has created
is inequities in our tax system, particularly for the homestead class. For example, if you're in a
home and you pay a $1,000 for property tax, and right next door there is another home with the
exact same square footage and value and it gets sold after four(4) years of escalating values, that
property now has a high reset value and the property on the right side gets taxed at the full
assessed value which might total to $2,000 while your house stays at 2%. In order words, you
may have a neighbor with the same property value,paying vastly different rates.
As you know,people move and properties turn over and when that happens their tax bill often
goes up dramatically. When I come back, I will show you some examples. In my opinion, our
system has out used its usefulness in terms of protecting the homeowners. Because who are now
the new homeowners? They are often young upwardly families or someone like me who is
downsizing. We start to rent or build a two (2)bedroom house or we add on a bedroom. My kids
are adults now and I don't need a big home. However, if I move to a property with a lesser
value, my property tax on my old house will reset and whoever buys my house will have to pay a
lot more property tax that I have been paying.
So, the 2%protected the homeowners really well in an escalating market. But now, in a
deescalating market, it's protecting the County's revenues. So, over the last four(4) years the
homestead class was paying over 7.5% of their income or 7.5% of the County's revenue came
from owner occupied homestead class. And that is up to almost 12% in the coming year. The
bottom line is that people who live and work on Kaua'i are paying higher property taxes. The
people who own property here and don't live here,who have second homes or vacation rentals,
or the hotels and resorts, are paying much lower property taxes. I don't think that it is something
that we can continue to do. Last year I talked about this during the budget and gave a
presentation that showed the tax rates for our County and other counties. I even suggested that
maybe we need to be adjusting the rates. This year I made other proposals to the Council to
adjust some rates, which unfortunately did not pass, and right now I have a Bill pending that
would increase the homeowner's exemption by$20,000. That would give a huge tax relief to
every owner occupied home, whether they're in the cap or not. But that Bill cannot be
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implemented for this tax year due to a lack of time. So that Bill would be eventually modified
or deferred and it won't affect anything.
What we really need to do is to look at a comprehensive review of the whole tax system. Let me
give you a little history of that. In 2004, there was a Real Property Tax Task Force made up of
citizens. In fact, one of our current real property people Steve Hunt served as the Chair. It was a
real cross section of business and homeowners. Their recommendations were presented to the
Council and none of them were adopted. There was an `Ohana tax amendment, a Charter
amendment that passed and was challenged by the County and it was not implemented for legal
reasons.
Subsequently, during the Baptiste Administration, he put together a Real Property
Comprehensive Task Force who presented a Bill in 2008 at the Council. I thought that it was a
really good Bill and I supported it with some amendments. Unfortunately, it did not pass and it is
still pending at the Council. So, there have been three (3) efforts to look at property taxes and
proposals that have come before the County that have not been adopted. In the meantime, these
anomalies are still happening and it impacts our revenues; overall revenues are down, but the
homeowners are paying more. Overall revenues are down for the County and the burden is not
being equitably shared.
This year for instance, I proposed that we raise the hotel and resort property tax rate, which is the
lowest in the State by far. If that proposal would have been adopted by the Council, the resorts
would still be paying considerably less than what they were paying just two (2)years ago. It
would have made up for some of that lost revenue. Rather than this big reduction, it would have
been a smaller reduction. I proposed that we have in place a mechanism that would give the
homeowners that live and work here better treatment and I don't think that it is appropriate for
people who live and work on Kaua'i to keep paying increased taxes, while other class taxes are
paying less.
As I mentioned before, I would like to come back to the Commission and provide a detailed
analysis and to share with you information that is public record. Taxation is a pretty complex
situation and I don't think that the general public understands what is happening.
Chair Sterker: Does this apply to vacation rentals?
Mr. Bynum: There are a lot of tax issues that need to be dealt with. Vacation rentals are
currently taxed in the single residential category. There are many of us who think that vacation
rentals should be business and not residential, so why are they being taxed at a residential rate? I
have a Bill that I am working on right now for timeshares. The County assesses the value of
timeshares different so for some timeshares it may be a big advantage for them and for others it
isn't. Why are we putting our real property tax people through having this whole different kind
of assessed value based on re-sales instead of property values? It doesn't make sense to me.
The Administration is putting together some pretty substantive Bills...but currently, at least with
the information that I received; they are not addressing the inequities that are occurring because
of the 2% cap and the changes about who is paying what share of the burden.
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I personally believe that the people who live and work here should be paying a decreased share.
I think you understand about the homeowner's exemptions. In the homestead class we have a
homeowner's exemption; on Kaua'i its $40,000 which means that on the first $40,000 of value,
you pay no taxes. The exemption on Maui is $300,000. So, that is a way to make the property
taxes a little bit more aggressive so people who live in smaller homes pay a smaller amount then
someone who lives in a mansion. So in my mind, government should have progressive tax codes
meaning that payment is based on needs. So,these are very complex issues and I am very happy
that you are looking at them. I would like to make a request in writing about whether I can have
agenda time at a future meeting.
Chair Sterker: Councilman Bynum, thank you very much and we will look forward to your
return.
Mr. Bynum: I will send over some materials within a week. The main thing that you will get is
a big spread sheet that shows every tax class,the number of parcels, and tax revenue over a ten
(10)year period. You will then be able to see the trends about who is paying what. I focused on
the last four(4) years because that was a period of economic difficulty. For the Council, why do
we set these rates every year? Because we need to and I think that we are overdue for some
adjustments. We also need some tax code changes that provide fair equity; there is nothing more
fundamental that government does then take people's money. It needs to be done very
thoughtfully and very fairly so that everyone feels that they are on a level playing field. Right
now, our tax codes have winners and losers and it shouldn't be that way.
Chair Sterker: Thank you very much. Commissioners do you have any comments.
Mr. Apao: I just have a general comment. We had Steve come a couple times already and I
think that the tax assessed values that I have seen on the residential side are pretty right-on. I
haven't looked at the commercial values. I don't know how much more that they are doing as
far as the valuations go and I guess in looking at some of the exemptions that we are trying to get
more depth on are the only other things that we can do next to them changing the tax rates I
guess that is what the Councilmember is proposing and is something that we can look at. I
hope that made sense.
Chair Sterker: It does, and you're right, the more information we receive will give us a better
idea on what needs to be done.
d) Communication dated 07/14/11 from Chair Sterker to Wally Rezentes, Jr., Director of
Finance, requesting for information on what criterion qualifies a person for a totally disabled real
property tax exemption and requesting the presence of Damien Ventura at the next meeting to
discuss agricultural land use exemptions.
Chair Sterker: May I have a motion to receive this communication.
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Mr. Chaffin moved to receive the communication. Mr. Apao seconded the motion.
Motion carried 4:0
There was a Communication dated 08/08/11 from Deputy Finance Director Sally Motta to John
Isobe, Board and Commissions Administrator, with attached copies of two (2)proposed
Ordinances regarding changes to Chapter 5A of the County Code that is to be presented to the
County Council.
This information was distributed to the members for information purposes and future discussion.
Mr. Chaffin: I have highlighted the agricultural land use exemption which I think in many cases
are not being used properly.
Chair Sterker: I would like to welcome Damien Ventura from Real Property Assessment.
Chair Sterker: Mr. Ventura, I know that most of us are familiar with the time when most of us
used to plant two (2)papaya trees and call it agriculture. And then there was a time when all of a
sudden,people did not get by with that anymore.
Mr. Ventura: Yes.
Chair Sterker: And so, we have really no idea what constituted agriculture and I am glad that
you are here today to provide some insight. It says here in the dedication, the soil rates you have
to have are ten (10)years at $2,000 per acre.
Mr. Ventura: Yes, that is how we determine the agricultural assessment and that would be the
portion of the property or the land that is actually in cultivation or ranch use. So, if you had two
(2) acres and you are in crop production,you would have an assessed value or reduced value of
$4,000 which is very nominal. But if you do have improvements such as a house or a home then
your assessment is higher. The people that most benefit from an Ag dedication are property
owners that are farming their property in its entirety. In other words, a 100% dedication, and
with improvements it's slightly higher.
Chair Sterker: What if they are not living on the property and living elsewhere?
Mr. Ventura: Is that the one with the home on top of it?
Chair Sterker: Yes.
Mr. Ventura: No, the people who live on their property can also qualify for a homeowner's
exemption and all the benefits that go along with the tax cap.
Chair Sterker: Okay, so why don't you go through a little bit of what it takes for someone to
become an agriculture farmer.
Mr. Ventura: You mean to qualify for an agricultural dedication?
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Chair Sterker: Yes.
Mr. Ventura: Basically one would file the application on or before September 1St; the dedication
is good for a minimum of ten(10)years or a maximum of twenty (20) years. You must be
engaged in some kind of revenue generating agricultural use so either ranching, crop use and we
also allow for forestry. For parcels that are less than five (5) acres, the County requires at least a
five (5) year history that you have actually been commercially engaged before you can get a
dedication. And that would require a Schedule F which is a profit loss statement used for
farming that you file with the IRS (Internal Revenue Service) annually. We would also ask that
you obtain a General Excise Tax License from the State of Hawai'i. When there is a question
posed on whether you are legitimate or not,we may request that you provide the Schedule F of
1040 form showing profit or loss from farming. We may also request your general excise tax
returns and conduct inspections of the property.
Chair Sterker: Does one file annually?
Mr. Ventura: No, it is for a minimum of ten(10) years or a maximum of twenty (20) years.
Chair Sterker: What is a pasture?
Mr. Ventura: Pasture use can constitute ranching of cattle or goats or any type of meat,but, not
so much as chickens. We don't have any large scales of chicken farms here on the island
anymore. I think that the only one we have is the Medeiros Farms.
Chair Sterker: How many animals are needed on a farm?
Mr. Ventura: According to our administrative rules, for cattle you will need one (1) cow per four
(4) acres which is very liberal. Because if you are in a high rainfall area and you've got good
ground grass production, you can then do one (1) cow to one (1) acre.
Chair Sterker: Okay, that's one (1) cow per acre. How about sheep?
Mr. Ventura: Sheep and goats. You can have three (3) goats or sheep per one (1) acre of land.
Chair Sterker: What constitutes qualifying with horses?
Mr. Ventura: The ratio for a pasture versus the number of horses would be the same as cattle.
What constitutes qualifying with horses is that you must be running an equestrian school, trail
riding operation or a boarding operation where you have sheltered facilities for either horses or
ranch horses used for ranching operations. The days of just keeping a pleasure riding horse on
your property no longer qualifies you for a ........
Chair Sterker: Are there restrictions as to what constitutes agriculture? The reason why I ask is
because I have noticed that we have fourteen(14)tree farms on this island.
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Mr. Ventura: We do have a tree farm exemption program, which is totally different from the Ag
land dedication program.
Chair Sterker: Okay, so is it something that must be edible?
Mr. Ventura: No, the tree farm exemption would be the growing of hardwood trees and you will
need a minimum of ten(10) acres. Again, that is totally separate from the Ag land dedication.
Chair Sterker: So, for agriculture it needs to be something edible?
Mr. Ventura: The County also allows tree farms that are in the Ag dedication program that are
less than ten(10) acres. So, there is an exemption for hardwood trees and you can actually
dedicate your property if you have hardwood which comes under the ten (10) acre minimum
acreage.
Chair Sterker: How many of those are there?
Mr. Ventura: I couldn't tell you, there is a bunch of them.
Mr. Chaffin: More than ten(10)?
Mr. Ventura: Yes.
Chair Sterker: Can you tell us a little bit of the inspections that are being done?
Mr. Ventura: We try to inspect the properties at least annually to see if there is any progress.
However, I am the only one overseeing this so there are times that I may not be able to inspect
those properties on an annual basis.
Chair Sterker: Have you come across people who are trying to get by with much other stuff?
Mr. Ventura: Yes.
Chair Sterker: So what happens when you catch them?
Mr. Ventura: Normally if there is a violation, we would give them time to correct the violation.
We would send them a deficiency letter explaining what we saw and to give them a time period
to correct the violation. If the violation is not corrected, then we will proceed to cancel the
dedication and what happens is that there is a roll back of taxes that come with the cancellation.
There is a huge liability in being in the dedication program; the longer you are in the program,
the greater the penalty that you may incur.
Mr. Apao: If you have someone who owns an Ag land dedication property for nine (9) years and
at the last year decides to sell the property to someone else, and now the new owner wants to use
the land for another reason. Before transferring the title to the new owner, does the new owner
have to pay the roll back penalties left by the previous owner?
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Mr. Ventura: No, according to the law it carries with the land. A lot of times the new owner
may not want to continue the agricultural use, and so a lot of times the current owner and the
new owner would potentially work something out and come to us to ask what the roll back taxes
are. We would then calculate it, and most times they would incorporate the amount into the sale
price. All that we require is that the new owner sends us something in writing that they
understand the liability of the dedication and the responsibility to carry on. The dedication is
recorded also.
Mr. Apao: How does that work because it is a recorded document?
Mr. Ventura: As dedications come up for renewal,we send out notification letters which is part
of our responsibility according to our Administrative rules.
Chair Sterker: What happens when someone can no longer sell their crops that have been their
livelihood for years? Does that mean that they are taken off the dedication list?
Mr. Ventura: What would happen is that they wouldn't be liable for any roll back taxes because
that is something that we consider is an act of God. Any natural cause such as disease or a
hurricane is considered an act of God. If the owner decides not to continue for financial reasons,
then we would put the property back at market land valuation the following year. There would
be no roll back taxes and no burden on them.
Chair Sterker: Would that be the same for an act of vandalism?
Mr. Ventura: Yes.
Mr. Chaffin: I feel compelled to comment on this agricultural situation. Having sat on the
Planning Commission for five (5)years, and being an owner of a farming operation in Southern
California, farms are now getting bigger and bigger. And this gentleman farmer that we have
here on this island is just an outrage. There is this property that I go back to very often and it's
in a residential subdivision and they qualify for the Ag subdivision because they have a strip of
land on the outside where they are planting grass like a sod farm. That is not agriculture in my
mind.
Mr. Ventura: Yes, I agree, and there are areas where we could tighten up the laws even further
but until that happen our hands are tied. We are trying to do the best with what we have.
Chair Sterker: Mr. Ventura, do you have anything that you feel we could add to what the Cost
Control Commission is looking at as far as tax exemptions?
Mr. Ventura: Like Councilman Bynum said about the tax rates in the Ag land being very high,
that would compel people to apply for an Ag land dedication, especially if they do not qualify for
a homeowner tax exemption. The tax rates are rather high; it's on par with hotels and resorts,
industrial and commercial which is at $6.90 per a thousand at the assessed valuation. Tax rates
are rather high in the Ag districts.
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Chair Sterker: So that would not bring any people in who would want to do a lot of agriculture.
Mr. Ventura: Well, people want to apply for the Ag dedication because it essentially lowers their
assessed value.
Chair Sterker: I don't know how much it would cost to hire people to farm or whether it would
pay them to have someone to farm on their land, rather than to pay the higher taxes.
Mr. Ventura: There are a lot of times where people actually seek out potential farmers who
would want to lease their land.
Chair Sterker: Is that where community farms would fall into?
Mr. Ventura: I don't know.
Chair Sterker: Let's use Church of the Pacific, that property is not part of the church's property.
So,would that part fall under agriculture because it's a community farm for the church?
Mr. Ventura: What is the zoning for that piece of property?
Chair Sterker: I don't know.
Mr. Ventura: That's the thing.
Chair Sterker: I just think that there are a lot of places that are really pushing to have a lot of
community farms and, as a matter of fact, I remember the Mayor talking about that because that
is what used to done when there were a lot of communities that had farms. We don't have that
anymore and I was just wondering if that small piece of land would fall under that.
Mr. Ventura: That could possibly be,but I would have to do more research.
Chair Sterker: I have no more questions.
Mr. Chaffin: Chair, you had asked a question of Mr. Ventura on what suggestions that he may
have that we might incorporate. Mr. Ventura, I would certainly appreciate any suggestions that
you may have for this Commission.
Mr. Ventura: Okay. Can I get back to you on that?
Chair Sterker: Yes, please do.
Mr. Chaffin: Can we get the information in time for the next meeting?
Mr. Ventura: Okay.
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Chair Sterker: Thank you very much Mr. Ventura.
Mr. Ventura: You're welcome.
Chair Sterker: Next order of business is a response from Sally Motta.
e) Response dated 07/12/11 from Sally Motta, Deputy Director Finance to Chair Sandi Sterker
of the Cost Control Commission, relating to a request for information regarding disability
exemptions with the following attachments:
1. Section of Chapter 5A of the County Code that defines the requirements necessary to qualify
for an exemption for a disabled person and portion of HRS Section 235-1.
2. County RP Form P-6 for Exemption
3. State of Hawai'i Form N-172.
Chair Sterker: Do I have a motion to receive?
Mr. Chaffin moved to receive the response dated 07/12/11 from Sally Motta, Deputy
Finance Director. Mr. Fuchigami seconded the motion.
Motion carried 4:0
Chair Sterker: I am very interested in the fact that there are forms that have to be filled out and it
says that an eye exam must be completed by a qualified optometrist or ophthalmologist. A
hearing exam must be done by a Board certified ear, nose and throat specialist, or a licensed
audiologist. The report of disability must be done by a physician as described in the definition
for"person totally disabled"under Section 235-1, Hawai'i Revised Statutes. The blind and the
deaf are very specific. But, now we get to the totally disabled and we have a physician and that
covers a lot of people. I don't think that an OB/GYN would qualify to make a person totally
disabled. I just feel that there are a lot of types of people with some disabilities that are over
using their disability and that is why I wanted to see what the qualifications were. Does anybody
else have any feelings about this? Or is it just me?
Mr. Fuchigami: Yes, I see that a lot of people are trying to get more than what they actually
need. It gets frustrating at times because the State's Medicaid system will pay based on what the
doctor says, which is based on what the patient tells the doctor how he/she feels and a lot of
doctors now days are just writing prescriptions to write and that is why I think the insurance
business or coverage are getting to be stricter on what they covering or not covering. It seems to
me that the State is accommodating the people based on what they feel they need compared to
what they actually need.
Chair Sterker: Mr. Fuchigami, do you ever see some of the physicians that have signed the
forms that were not accepted by Medicaid?
Mr. Fuchigami: Yes, I have.
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Chair Sterker: Is there somewhere in there that we, as a Commission, can change the process? I
mean if we are doing special tax breaks for people who are totally disabled, I can understand
when somebody is deaf by definition. I thought that this issue was a good one to bring up and I
am glad that you are here today to offer your expertise on the matter.
Mr. Fuchigami: To actually go into the whole process, maybe you can study the patient with the
Physical Therapist on what their limitations are. I think that would be a way, but, it may be hard
because people mentally know what they can do but they physically cannot do it. So, they will
make it to where they can only push so hard so that they can get something covered.
Chair Sterker: I can see that they would be many of these people that would be totally disabled
and a lot of that would be mentally disabled.
Mr. Fuchigami: A lot of it is mental and some physiological but a lot of it is the physically
disabled who have real ailments where they cannot do a lot of things. However, there are others
who have the same ailment but they can do a lot of things as well,because they have learned to
do it in a different way.
Chair Sterker: Ms. Clark, can you please give us some insight on this matter if we choose to
pursue this or if it's even possible?
Ms. Clark: I will need some time to research it.
Chair Sterker: Okay. I just see here where it says by a physician. There are a lot of physicians
out there that wouldn't have any idea whether a person is totally disabled; but if it would help
their patient with their taxes, the physician would be happy to sign the form. Seriously, there are
physicians out there who are more than willing to prescribe people drugs and turn them into a
drug addict.
Mr. Chaffin: I believe that there are two sides to a story.
Chair Sterker: Do any of you feel that we should pursue this or just accept the fact that they are
disabled?
Mr. Isobe: My only comment is that this Commission needs to keep in mind that the focus
should be on real property tax exemptions; the Tax Office personnel are obviously not medical
doctors but land appraisers. If you are going pursue this, you need to keep in mind that the
County does not have the skilled personnel to determine someone's disability, and more so the
Tax Office. If you are going to make changes, the changes need to be made in a way that the
County is being advised by someone else.
Chair Sterker: Would it be so far out of reach if we proposed a requirement of two (2) signatures
by two (2)physicians?
Mr. Isobe: Something like that could be done.
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Chair Sterker: Requiring two (2) signatures would be a good idea because there are a lot of
people who misuse the system. There are 377 individuals on island who have filed for total
disability and that is a lot of exemptions. John, is this something that requires a Charter
amendment?
Mr. Isobe: No, it will not require a Charter amendment.
Mr. Chaffin: I would think that if we are thinking of placing more restrictions on the process,
shouldn't we get a recommendation from the Medical Association. Or is that going beyond our
scope?
Chair Sterker: Could we request for a legal opinion on the ramifications of requiring two (2)
signatures from two (2)physicians for a person to be declared totally disabled?
Ms. Clark: I will look to see whether there are any restrictions imposed.
Chair Sterker: Our next meeting will be on Monday, September 12, 2011 at the Mo'ikeha
Building in Liquor in Conference Room No.3. May I entertain a motion to adjourn?
Mr. Chaffin moved to adjourn the meeting at 2:50 p.m. Mr. Fuchigami seconded the
motion.
Motion carried 4:0.
Submitted by:
Mercedes Youn, Support Clerk
Approved by:
Sandi Sterker, Chair
Approved as amended on: 10/10/11 (See minutes of 10/10/11)
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