HomeMy WebLinkAbout101011_MINUTES_DRAFT Kauai County Cost Control Commission
Minutes of Meeting
OPEN SESSION
1:30 p.m.
October 10, 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 1:30 p.m. at the Mo'ikeha Building,
Liquor Conference Room No. 3.
Members present:
Sandi Sterker, Chair
Dirk Apao, Vice-Chair
Lawrence Chaffin, Jr.
Laurie Yoshida
Absent/excused: Members Brant Fuchigami and Glen Takenouchi
Others in attendance included:
Gary Heu, Managing Director; Glenn Sato, Sustainability Manager; Wallace Rezentes, Jr,
Finance Director; Sally Motta, Deputy Director of Finance; Steven Hunt, Real Property Review
Officer; Amy Esaki, First Deputy County Attorney; Boards and Commissions Office Staff:
Paula Morikami, Administrative Aide; and Mercedes Youn, Support Clerk.
Public member: Lonnie Sykos
Approval of Minutes
Open Session Minutes of August 8, 2011.
Mr. Chaffin requested that the minutes be amended on page 12; 5th paragraph to indicate a
minimum of 10 acres and not 1 acre.
Mr. Chaffin moved to approve the minutes as amended. Mr. Apao seconded the motion.
Motion carried 4:0.
Communications
CCC 2011-17 Communications dated 08/09/11 from the Cost Control Commission to Chair
Sherman Shiraishi and Members of the Charter Review Commission, responding to a request for
comments relating to the timeline as determined in Section 28.05 of the Kaua'i County Charter.
Mr. Chaffin moved to receive the communication. Mr. Apao seconded the motion.
Motion carried 4:0.
Minutes of October 10, 2011
Business
CCC 2011-09 Update from Gary Heu, Managing Director regarding the six 6) Cost Control
Commission's Energy Savings Recommendations which were submitted to the Count
Administration in 2008 and 2009. (Deferred on 07/11/11,pending status report from the
Administration)
Communication dated 10105111 from Glenn Sato, Sustainability Manager to Chair Sterker and
Members of the Cost Control Commission, regarding an update on the six(6) Cost Control
Commission's Energy Savings Recommendation.
Chair Sterker: We need to add to the agenda and receive the communication dated 10105111
from Glenn Sato, Sustainability Manager, regarding an update on the six (6) Cost Control
Commission's Energy Savings Recommendations.
Mr. Chaffin move to add and receive to the agenda the communication dated 10105111.
Mr. Apao seconded the motion.
Motion carried 4:0
Mr. Heu: Chair, may I address the County Attorney?
Chair Sterker: Yes.
Ms. Esaki: Chair, the communication dated 10105111 presented today is part of the testimony
from Mr. Sato; generally we cannot add to the agenda at the last minute. Mr. Chaffin needs to
make a second motion to withdraw the original motion, and then make a new motion to receive
the communication from Mr. Sato which is his testimony.
Chair Sterker: Thank you. May I have a motion to withdraw the original motion?
Mr. Chaffin moved to withdraw the original motion. Mr. Apao seconded the motion.
Motion carried 4:0
Chair Sterker: We now need a motion to receive the communication from Mr. Sato which is his
written testimony.
Mr. Chaffin moved to receive the written testimony. Ms. Yoshida seconded the motion.
Motion carried 4:0.
Mr. Heu: Thank you Chair Sterker and Commission members. For the record, my name is Gary
Heu, Managing Director. With me is Mr. Glenn Sato, who has appeared before this Commission
in a different capacity. Since then he has accepted the position of the Sustainability Manager.
Mr. Sato is now at an Executive level and was appointed by Mayor Carvalho. So, when you
think of Glenn, you can think of him in a role at a level similar too John Isobe, Administrator of
the Boards and Commissions or Beth Tokioka, Communications Director.
Mr. Sato now sits in on our weekly department head meetings at a cabinet level because we feel
that his position is very important and that he needs to be able to communicate across all
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departmental lines. Mr. Sato is also the individual who prepared the update that is before this
Commission which will be part of our testimony this afternoon.
We are here today basically because of the discussion that we started back in July which was
based on the Auditor's Report on the implementation of recommendations of the Cost Control
Commission. What we have chosen to do with our update and our testimony is to focus on the
specific Commission recommendations from the 2008/2009 Annual Reports. Although we were
not specifically asked to do so, at the end of the report you will find additional energy initiative
updates just to give you a flavor for what Glenn and the rest of the team have been doing in the
past 2 years relative to energy efficiency and conservation.
I think my closing remarks to the Commission last time were (inaudible) and although we
weren't necessarily interested in doing a line item report based on the County Auditor's matrix,
we did want to provide you with a general update based on your previous recommendations as
well as let you know of the good news in terms of all the other initiatives that we have been
moving on over the past couple of years. With that being said, I would like to turn the floor over
to Mr. Sato who will step you through the report.
Mr. Chaffin: May I interrupt for a moment please? I would encourage the Mayor and the
Managing Director and staff to focus on the things that you feel are important, rather than just
what we have outlined and the reason for that is because you are doing it full-time, and we're
doing it spasmodically. I would hate to see anything overlooked because it was not on our list of
recommendations.
Mr. Hen: Thank you, we appreciate that.
Mr. Sato: Good afternoon Commissioners, I will just go down the list of the recommendations.
The first recommendation is from the 2008 Annual Report, and basically the recommendation
was for the Water Department and the Wastewater Division that they be required to develop
cost-savings opportunities for their operations through energy efficiency and conservation
measures, and the use of alternative energy resources.
The update for that recommendation is that the Wastewater Division is going through an Energy
Savings Performance Contract. After a lengthy review and ranking process, Chevron Energy
Solutions received the highest rank out of 4 competing proposals. By receiving the highest rank,
it enabled us to execute an Investment Grade Audit Contract allowing Chevron to proceed on
September 1, 2011. The Chevron team is now working with personnel from Wailua, Li-hu'e, and
Ele'ele Wastewater Treatment Plants to collect relevant information to come up with a detailed
proposal on equipment retrofits and process changes to save energy. The Investment Grade
Audit results will be presented to the Wastewater Division, Public Works, and the
Administration.
The Waimea Wastewater Treatment Plant was not included in the ESPC solicitation because it's
going under major renovations funded by stimulus money. The renovation includes energy
efficiency and a 120 kW photovoltaic energy system.
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Chair Sterker: Can you tell us why the Water Department chose not to participate?
Mr. Sato: There are 3 questions that one must ask before going through a Performance
Contract: 1) Do you have the funding; 2) Do you have the internal expertise; and 3) Do you
have the time.
When I first approached the Water Department, they basically said yes to all three. My boss at
that time was Mr. George Costa,who also spoke to the Water Department and their decision was
to do it themselves. So, we decided to go with just the Wastewater Department. At that time we
had Wastewater, Building Division, Parks and Recreation, and Water all lumped into I RFP.
But after reviewing Wastewater concerns they did not want to end up with a lighting or air
conditioning contractor. Wastewater specializes in pumps and motor components, so we decided
to split Wastewater and do a special RFP for Wastewater and another for Building Division and
Parks and Recreation, which is basically lights and air conditioning.
Chair Sterker: I have a question. When you say that you have picked a company, do they feel
pretty good about the fact that they can charge any amount at this point; and is there a set limit of
what they can charge?
Mr. Sato: We required a proposal from them which included a technical energy assessment
component. We had them go to all 3 Wastewater Treatment Facilities and do a one step below
investment audit. So they had to come up with numbers and although those figures were
preliminary, they included what Chevron considered the cost of doing what they were proposing.
It also included a profit component which is basically an open book; they had to declare what
their marginal profit is.
The project started when the County signed up for DAGS (Department of Accounting and
General Services) and DAGS put out a preliminary proposal asking all energy service companies
to get pre-qualified and at that point, DAGS looked at financial strength and the ability of the
company to do large projects and to get a peek on all of their previous work done. DAGS pre-
qualified 7 energy service companies and the County of Kaua'i signed up to use that pre-
qualified list.
When we issued the RFP,we could have taken the 7 and whittled it down to 3 or 4 if we wanted
to, but we chose not to because 7 was still a manageable amount, even if all 7 submitted
proposals. When we put out our Wastewater RFP without any restrictions of which the 7 could
apply, we got 4 proposals and 3 out of the 7 chose not to respond.
Mr. Chaffin: Am I to assume that within those qualifications, who is going to be the project
leader?
Ms. Sato: Yes, naturally the energy service company is the project lead. What's more important
is when we looked at their project team...that's where your technical expertise comes in.
Chevron was very impressive because they teamed up with Aqua Engineers who is very
knowledgeable in wastewater treatment plants and water systems, and also the Limitiaco Group
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(environmental specialists) and Kennedy Jenks (environmental and wastewater systems
specialists)
Mr. Chaffin: Is Aqua Engineers the only team involved?
Mr. Sato: Yes.
The second recommendation from the 2008 study states that all departments should be asked to
read the Energy Use Survey Guide and to follow the recommendations outlined therein. The
Energy Use Survey Guide terminology was not really clear to me, so I looked at what I had and
assumed that the guide refers to the 12/7/07 "County of Kaua'i Energy Use Study"that identifies
opportunities and programs to increase the energy efficiency of the Kaua'i County organization.
This study was distributed to all departments by then Mayor Baptiste's Administration. Most of
the recommendations referenced in the study have been addressed in part by some of the projects
that I listed at the end of this testimony. I tried to cover from 2009 through 2011. It just shows
you the different projects that were initiated in those 3 years. A lot of the recommendations have
the ability to leverage KIUC funding and there is a notation next to each of the recommendations
indicating whether it qualifies for KIUC rebate funds. That is one of the reasons why we jumped
at the opportunity. If the rebate funds were not available, we would have backed off and let it
fall under the Performance Contract.
Chair Sterker: I think that one of the things that we were looking at when we made the
recommendations is that we thought a person who works in an office setting would take charge
of what needed to be done. Of course, they came back and said well we really don't know what
we should be doing and nobody wanted to take that responsibility. So we don't know where we
sit with that and hopefully with you at the helm, you would be able to make it known to everyone
in each department on what they should be doing.
Mr. Sato: When we do a comprehensive energy efficiency program a lot of it is education. For
example, when we had the energy service company do the Civil Center Complex, part of the
work included interactions with the department and the staffing at the facility. One of the things
that can really hurt the project is if we put in efficiency equipment and do efficiency measures
and the people at the facilities don't know what we're doing or don't know how to use the
equipment or retrofits properly. They can negate all of the savings that we anticipate. All of it is
really the human factor and that is why it's really important that after the efficiency work is
done, the people know what can and shouldn't be done.
Chair Sterker: Education is important.
Mr. Sato: Right, a lot of the recommendations that were done in that study in 2007 was very
broad based and generic. But most of the departments don't have the capability to follow-up on
those recommendations and they don't have special funding to do the measures and they are not
required to. We would like to handle it through an organized program like a Performance
Contract.
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Chair Sterker: Yes. I think that we had started saying okay maybe we could make this into a
project so that we could reward somebody for doing it,but found that it was not a good thing to
do. What we really need is for you to educate and make sure that everybody knows what should
be done.
Mr. Sato: Right. One of the things in my new position as the Sustainability Manager is forming
"Green Teams"which are representatives from various agencies and offices. We hope to get
some good and reasonable recommendations to follow-up on. And from there it is more of a
public education program with County staff. It's not only energy efficiency or energy
conservation. It's just a broader umbrella under sustainability, so it could be efficient resource
use like trying not to use too much paper cups as much as possible or buying bottled water.
Another idea is to have filtered water from a faucet. This program will focus on education on a
constant basis because you have to keep re-enforcing and reminding people to save energy.
Mr. Heu: Chair Sterker, if I could interrupt Glenn for just a moment, I have to excuse myself for
a 2'oclock meeting,but if you have any specific questions for me that you want to fire off at this
point and time or during the course of Glenn's presentation, or if there are specific items that
may come up which would require my review and response I would be more than happy to
follow-up in writing and/or appear at a subsequent meeting. But I think that Glenn has a very
good handle on where we are and where we should be going.
I would like to reiterate what Glenn had already shared about the "Green Teams"because it is
something that was very important to the Mayor when it was first recommended 2 years ago, and
in part because of some of the work that this Commission has done as well as others both in the
Administration and the Council, we were able to get this position approved in this last budget. I
think it is a great thing for us all because we are all concerned about conservation and efficiency
and we are moving to put the resources there. It's always going to be a struggle so in part by
creating this position, we all helped to remove (inaudible) which is resources to get this kind of
work done and focus to make sure that its being followed through.
We are in the process of reviewing Glenn's old job as a coordinator in OED, and we are looking
at how in conjunction with this new position that Glenn has taken on, how we can gain some
additional synergy as well looking at a down the road conversion of a position or re-describing a
position in public works for their support to focus on energy conservation efficiency. There
could potentially come a time where we would have 3 positions County wide to focus on really
good use of our resources and this would start at Glenn's level which would be the highest level
as a Sustainability Manager looking at energy as a component of the overall sustainability efforts
within the County, and then we would have the position of economic development and
potentially describe a position on public works. I would like to keep that one as soft and loose as
possible at this point at time because I don't want to over commit. But those are the things that
are being looked at. The good news is that where we had one position previously focusing on
this, now we have two, and potentially an additional one for support in the future.
Chair Sterker: Thank you Gary for being here today. Actually we can feel a little pride in the
Cost Control Commission because we were the ones to sort of get this started and pushed
forward.
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Mr. Heu: Okay, thank you very much.
Mr. Sato:
The first recommendation was: Execute a new Energy Savings Performance Contract to improve
energy efficiency in the County of Kaua'i buildings and facilities. The Office of Economic
Development is now working on a second Energy Savings Performance Contract for the Public
Works building and the Dept. of Parks and Recreation. The second ESPC is expected to cover
most of the non-water and non-wastewater facilities.
Chair Sterker: I have one comment on that. I was one of those blood donors over at the
Convention Hall and it must have been 68 degrees in there. There were people there who wanted
to have blankets put on them because of it being cold. There is something about that building
that is just...and I would ask you to please look into that building.
Mr. Sato: That would be with Parks and Recreation and under the second Performance Contract.
Chair Sterker: Thank you.
Mr. Sato:
The second recommendation: The County should develop cost savings opportunities for their
operations through energy efficiency and conservation measures by exploring the issuance of a
new Performance Contract proposal solicitation for County Facilities. Basically, the update date
is the same as the reply for Wastewater ESPC. The Office of Economic Development is now
working on a second Energy Savings Performance Contract for the PW-Building Division and
the Dept. of Parks and Recreation. This second ESPC is expected to cover most of the non-
Water and non-Wastewater facilities.
The third recommendation: The County should form a County Departmental Green Team to
assess work environments, identify opportunities and make recommendations to reduce waste
and improve efficiencies in their daily work.
The fourth recommendation: The County should engage and promote employee awareness,
understanding, and sense of personal and departmental responsibility among employees for how
they use energy and other resources and how they can reduce waste and improve efficiency in
their daily work by creating an"Employee Green Team" in the County.
Recommendations 3 and 4 are similar recommendations. The County has selected me as the new
sustainability manager and right now I am in the process of forming a Green Team, and we will
be moving forward to discuss what can be done. I am basically looking for Green Team
members that have the ability to observe and provide good recommendations. Right now, I have
5 members and would like to have up to 8 members. At this point I am working on a basic
working draft of what the "Green Team"would be looking at and what the goals and objectives
are going to be.
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Chair Sterker: I know that once you start making recommendations, you would have to review
them at some point. How many times a year are you going to check to see whether the
recommendations are being implemented?
Mr. Sato: I don't think that it is so much checking on people if one of the recommendations is to
have better control of the thermostats in the County facilities, I would be working with the
building division to see how the control system works and if the recommendation, for example,
is that the thermostat be locked in at 72 degrees and not be adjusted by the employees. I know
that the human element is a factor on whether the thermostat gets adjusted or not because some
offices that I know of are so cold that the employees actually have space heaters under their
desks. It is a battle between employees, and I am not sure how I am going to handle that at this
point. It is something that needs to be discussed with the Mayor and the public works people.
Chair Sterker: I think that is what we were seeing too when we made that recommendation...we
did not see a way how we could control it and that it needed to be controlled by someone in the
department.
Mr. Sato: If you notice, the new controls are different from the old fashion model. It's part of
the County working with KIUC and stimulus funding. Public Works is putting more controls on
the air handlers in the Mo'ikeha Building and they actually have the ability to control the air
temperature by computer. However, they have not exercised total control, and that is one thing
that we would like to discuss via the "Green Team"whether a recommendation is possible.
Another thing that I mentioned was to look at the possibility of providing the offices with some
kind of water filter for the faucets.
Chair Sterker: Has the County water been tested for impurities?
Mr. Sato: I don't know.
Chair Sterker: That might be your first step.
Mr. Sato: If you speak to the Water Department personnel they will tell you that the water
quality meets all standards, and I believe it does because the department provides a report on the
water quality quite often.
Chair Sterker: Do you think it would be helpful to place a thermostat that is big enough for
everyone to see what the room temperature is.
Mr. Sato: That is a good suggestion. I just want to mention that the County has hired Ken
Stokes as a sustainability consultant, and I will be working with him. I know that Ken has done
a lot of training with the Administration, and he has been collecting information from the County
employees that would provide helpful information for the Green Team.
The rest of the update is additional energy information for 2009, 2010, and 2011.
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If you have any questions, I would be happy to answer them. If you look at 2011, the first 6
bullets relate to lighting retrofits, and those are the shielded lights that are due to the Shearwater
concerns which are the endangered birds. There is a cost savings component because the new
lights are more efficient than the older ones. Those numbers are coming off of the consultant
brochures for each of those facilities. So,we got an additional benefit of energy savings.
Chair Sterker: That is a considerable amount of energy savings.
Mr. Sato: Well, if you add it all up over ten years...it's quite a bit.
Chair Sterker: I have one question, where would the EVs charging stations be located?
Mr. Sato: At the time of procurement for the electric vehicles and the level II charges, we found
out that the charging stations would cost more due to installation. So we had to boost the budget
for the chargers and at the same time try to make the scope of work easier by moving some of the
chargers that was designated for other facilities. The installation costs were so high because you
had to go through so much concrete and asphalt from the power room to the charging stations.
Some of the runs were very long and that is what blew our budget. However, we changed the
scope to consolidate most of the chargers in four locations; we also received the second RFP
issuance, so hopefully we will get the contractor on board. But for the next few months we are
going to have to triple charge the electrical vehicles by using a 1.10 charger.
Mr. Sato: Just a little information. The County secured a grant for 5 silver 2011 Nissan Leaf
EVs and 5 Level I1 chargers. I consider this a pilot program because this will give us the
opportunity to examine how the cars perform without putting any County funds into the pot. The
user agencies will include Water, Building Division, Real Property, Parks, and Auto Shop.
Chair Sterker: What about the cost to repair one of these vehicles?
Mr. Sato: The electric vehicles come with a basic 3 year warranty and the batteries have a 7 year
warranty. We purchased the cars from King Windward Nissan on Oahu and just last week and
later learned that Kaua'i Nissan has become a certified lease dealer. So now we have a service
outlet here on Kaua'i.
Chair Sterker: Thank you Glenn for an outstanding comprehensive report.
Mr. Sato: You're welcome.
Chair Sterker: Our next business is CCC 2011-08 Review and discussion of the County's real
property tax exemption and rate settings procedures. (On-going)
(g,) Confidential Opinion dated 08/17/11 from Deputy County Attorney Mona Clark, regarding
whether there are legal restrictions in requiring certification by two 2)physicians to qualify a
person to be declared"totally disabled".
Chair Sterker: May I have a motion to take the Attorney's opinion out of confidentially?
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Mr. Chaffin moved to waive the Commissions rights to confidentially and allow the
Opinion to be publicly released. Mr. Apao seconded the motion.
Motion carried 4:0
Chair Sterker: Basically the opinion states that we can do it; however, the certification process
should be consistent for different types of disabilities.
Ms. Yoshida: In other words, if you make a change one disability you have to change them all.
Chair Sterker: Right. I guess my only concern is that there seems to be more and more people
that are using the term"disabled"whether they are really disabled or not because I see people
running around with dogs assisting them. I know because I am one of the founders for hearing
dogs for the deaf and know what we had to go through to get a law passed so the deaf people
could have a dog with them at a business. I see people with dogs and they say they can't walk
straight. I just see more and more people claiming to be disabled and that is the only reason why
I brought this up. I think that there are people who say that they are totally disabled but if you
see them bowling... you kind of wonder if they are really disabled. I am not against leaving it to
just one physician and maybe we should not to pursue this anymore.
Ms. Yoshida: So you're saying not to make the change.
Chair Sterker: Yes, I don't want to make the change. If we made the change it would require for
two physicians to declare a person deaf or blind and I think that we are opening a can of worms.
Ms. Yoshida: I understand the need for consistency. But the blind and deaf have a standard of
tests that they need to go through before being declared legally blind or deaf. Being totally
disabled does not have that kind of standards and I think that's where the question on whether
having a second physician do the certification would be necessary. I do understand the legal
opinion of being consistent, but there is no legal standard to be declared totally disabled because
the criteria may be extensive. There are so many different ways one could be disabled and I feel
torn because and I think that the intent was that there are so many ways to be considered totally
disabled.
Chair Sterker: Sir, would you please state your name for the record.
Mr. Sykos: My name is Lonnie Sykos, and I am here as a member of the public just to witness
democracy in action. I have twelve compressed discs and I am legally partially disabled. I went
through court and all of that stuff in regards to my old injuries and I think the problem that you
are addressing is not who is fully disabled,because only the disabled have the kind of criteria as
the blind or deaf or other things that are easily measured. The problem is people who are
partially disabled. And so if you run a gament of people who could legitimately be declared
fully disabled like me who choose not to, versus people who find themselves discomforted and
thus are partly disabled. Being declared fully disabled I don't think is going to present a legal
challenge as being partially disabled. I am just trying to help with the conversation. Thank you
very much.
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Chair Sterker: Okay, thank you very much.
Ms. Yoshida: The disability exemption is for totally disabled and we don't have a category for
the partially disabled.
Chair Sterker: No, we do not. It says totally disabled. I see in the audience the County's Deputy
Finance Director Sally Motta and Real Property Review Officer Steven Hunt. Do either one of
you care to comment on the totally disabled exemption? We have here an Opinion from Deputy
County Attorney Mona Clark that states that if two physicians are required for a certification of
total disability, then two certificates should also be required for exemptions based on blindness
or deafness.
Mr. Hunt: For the record, Steven Hunt of Real Property Assessment. It is my understanding that
if you were to change the criteria for any of the disabled qualifications it would have to be
similar because we are subject to uniformity laws; it's the challenges within our code on Real
Property Assessment.
Chair Sterker: If somebody goes to an ophthalmologist and say that this person is blind because
the chart tells them, is it the same as going to an audiologist? Because there aren't any criteria to
determine a person totally disabled.
Mr. Hunt: I understand, and it is somewhat of a gray area, because it could be a physical or a
mental disability. There are other things that must be considered when determining whether a
person is capable. However, I think what we're trying to determine is whether a person has the
ability to go out and earn a wage, and if they cannot, do they become a ward of the State which
would provide some relief for them.
Chair Sterker: I am sure that there are a lot of people who cannot even go out and work and they
consider themselves partially disabled.
Mr. Chaffin: I have great mixed emotions. I have just gone through eye surgery and the
ophthalmologist said that you're qualified to drive without glasses, I went to the DMV
(Department of Motor Vehicles) and they said no you have to wear glasses. So I had to go back
to the ophthalmologist office which was closed today, so I couldn't pick up my certification
paper. It was very frustrating.
Ms. Yoshida: I think if I'm reading this right... I am referencing to a list of exemption types and
under Disability (all types) there are 390 disabled people and that includes the blind, deaf, and
totally disabled. So I am right in assuming that it includes all types of exemptions, except for the
disabled veterans?
Mr. Hunt: I believe so.
Ms. Yoshida: And I am right in assuming that the total exempt value disability (all types) is 19
million? Because looking at the exemption list, disability is one of the smaller exemptions.
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Chair Sterker: You're right, it is one of the smaller exemptions, but is it one of those that have
the potential to keep growing larger and larger?
Ms. Yoshida: Well I think it's going to grow larger and larger automatically because as our
population ages you'll get more people who will get to the point of hearing loss, vision loss and
disability period.
Chair Sterker: We can drop it and leave everything as it is. However, if it's something that we
need to look at to save the county money and to see and whether people are really misusing this
exemption, that is the only thing that I am concerned with.
Chair Sterker: Do you feel there are people out there that are misusing it?
Mr. Hunt: That is somewhat of a loaded question. My expertise is in assessing property values
and not to determine whether someone is faking an injury or to question a doctor for signing the
authorization acknowledging that a person is disabled. We have to take their word and if it is a
board certified physician that's signing it...who are we to contest it. Do I see people who come
in that I think could work and is maybe not as disabled as they make out to be...yes, but again I
am no expert to challenge that?
Ms. Yoshida: And the exemption is fifty thousand in addition to the other home owner occupant.
Mr. Hunt: Correct.
Mr. Hunt: Just to clarify, it's actually nineteen million and it's 1.9 million in exempt value
which is about seventy-one hundred in taxes.
Ms. Yoshida: Is it only one from a couple that needs to be certified?
Mr. Hunt: A husband and wife who are both on the title are both entitled to the exemption
whether it's the husband or wife who has the disability passes. The exemption is given.
Ms. Yoshida: To me it doesn't seem like a huge number of people taking advantage, because it's
370 out of 32, 000. If it starts to grow over a period in time, then that might be a reason for
concern. I'm thinking that those who really want to abuse the system will find a way to do so.
Chair Sterker: That's probably true.
Ms. Yoshida: It just creates another hurdle for the person who is really disabled and I don't want
that for our disabled population.
Chair Sterker: So we are just going to dismiss the idea.
Ms. Yoshida: Yes.
Chair Sterker: Okay. Do we need a motion?
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Ms. Esaki: No,just as long as the Commissioners all agree.
Chair Sterker: Okay.
CCC 2011-16 Communication dated 08/08/11 from Sally Motta, Deputy Director of Finance, to
John Isobe, Boards 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. (Copies of the two (2)proposed ordinances are on file with the Office of
Boards and Commissions)
Chair Sterker: May I have a motion to receive the communication.
Mr.Apao moved to receive the communication. Mr. Chaffin seconded the motion.
Motion carried 4:0
Chair Sterker: Okay, let's look at proposed Bill No. 2012.
Ms. Motta: Since the time that the bills were presented to you, a request was made to our office
to take out of the bill the portion that deals with alternative energy. I brought copies of the new
alternative energy bill that was presented to the County Council by George Costa of Economic
Development. I also brought copies of the revised proposed Bill 2012, and I apologize for the
delay in providing you with the revised copies.
Ms. Yoshida: So we are going to replace the first copy of Bill 2012 with the new copy of Bill
2012?
Ms. Motta: Yes.
Chair Sterker: May I have a motion to receive the revised proposed Bill 2012 and the proposed
bill for the alternative energy.
Ms.Yoshida moved to receive. Mr. Apao seconded the motion.
Motion carried 4:0
Chair Sterker: Okay. Would you like to tell us why this is happening?
Ms. Motta: As far as taking out alternative energy?
Chair Sterker: Yes.
Ms. Motta: The determination was made by the Administration. The actual purpose of the
energy bill is to encourage the use of sustainable energy on the island. As for removing it from
Bill 2012, it came as a request from the County Council to have it taken out and presented as a
separate bill. Once it was taken out, it was then determined that it would become an energy bill,
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which would be presented by George Costa of the Office of Economic Development via the
Sustainability Committee.
Chair Sterker: So the alternative bill belongs to Economic Development?
Ms. Motta: Correct.
Chair Sterker: And Bill 2012 with the Finance Department and Real Property"
Ms. Motta: Correct.
Chair Sterker: I have couple questions. Why were the dates moved around so much?
Ms. Motta: The main reason for moving the dates is because we were faced with a terrible time
crunch at the end of the tax year. When we were going through budget, the Administration was
trying to get all of the figures together to determine the amount of taxes that we were going to be
getting from the tax bills. From there we had to present that information to the County Council
which put them under a great deal of pressure to try to absorb all of the information and to come
up with tax rates in order to comply with what is in the County Code. So by moving the dates
up, it allowed little breathing room for the County Council and by doing so it eased the time
crunch to prevent mistakes and to make it easier for everybody. We are following what the City
and County of Honolulu started many years ago to see how it has worked and apparently it
worked extremely well so we are following suit.
Chair Sterker: So this has been done before.
Ms. Motta: Correct.
Ms. Yoshida: So all you're doing is to certify the assessment for everybody.
Ms. Motta: Correct.
Mr. Hunt: Initially the first proposed Bill 2012 was sort of a voluntary effort to move the dates
up a month and the only thing by ordinance that had to change was the appeals deadline;in order
for us to certify we had to push the dates up.
The Bill for 2013 was to change not only our certification date, but also our assessment date
from January 1St rolling it back to October 1St. However, we could not accommodate all of those
changes within this short period and get it approved with enough lead time so we would actually
be doing an assessment twice during the 2012 year. When October 1St rolls around, we would
have to start with the evaluation for 2013. We would actually be printing the forms before the
end of the 2012 year. It's a real tight crunch for us because we have to set the values for 2012
and get the appeals handled, and the certification must be done a month early with enough time
to turn right around and start shooting for October 1 st for the next year's assessment.
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Ms. Motta: The other dates that we were concerned with and why we needed to do this over a
two year period is if anybody is filing for an exemption or credits, we would have to have that
information in order to actually give correct re-calculations.
Chair Sterker: Okay.
Mr. Chaffin: Is there a reason why the pages are not numbered?
Mr. Hunt: You would have to ask the Attorney who prepared the bills.
Ms. Esaki: If you notice, it goes by sections.
Chair Sterker: I have a question pertaining to Section 10. Section 5A-9.1 and it states something
about less than 5 acres in size and must be used for ranching and livestock. What can you do
with ranching and livestock with 5 acres?
Mr. Hunt: Not a whole lot.
Ms. Esaki: I think Damien Ventura already answered that question.
Chair Sterker: Yes, but you need more than one cow.
Ms. Esaki: I believe Mr. Ventura said five cows. You may want to review the minutes.
Mr. Hunt: Yes,because he is our expert and the recommendations include ranching and
livestock; Damien is the person who has to enforce it, so I know he had a good reason why they
were included.
Ms. Yoshida: That's the only change; everything else was added in there. I mean for ranching
and livestock.
Chair Sterker: Can you explain what the Honolulu Consumer Price Index is.
Mr. Hunt: The CPI which is most commonly known as CPIU contains a pricing structure for a
bundle of goods. It's about the re-price of gasoline, bread,rent,utilities, and all the products
and essentially it is a measure of inflation. It may differ when you have one that's a U.S
Standard CPI and then you have another by the metropolitan area. They each have their own
individual prices which may fluctuate depending on shipping cost which may be higher or lower
depending on what the cost shipping is for certain goods and what's going on with our local
economy. It's a measure to keep in pace with inflation.
Chair Sterker: Proposed Bill 2012 under Section 11. 5A-9.3 Permanent Home Use, Tax Limit
for Home Exemption Property. (2) States: "If the size of the existing floor area (exclusive of
garages, carports, and porches) is increased, the taxes attributable to the additional floor area
shall not be limited". Does this mean that a person can build an additional storage area to the
existing floor area and add electricity and not be taxed?
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Mr. Hunt: I am curious into the extent of that, because we do tax porches, garages and other
things, we don't tax gross living area. Basically what this is referring to is if your home burns
down and you have to re-create your home you won't have a step up because it will be based on
your original home. Let me give you an example: if you had a 1920's home with 1200 square
feet of living area, and it burned down and you re-built it with the same 1200 square but using
2012 materials, then all of a sudden the depreciation goes way down and it's a brand new home,
you will not be penalized and your cap will not be affected by replacing your home. But if you
build something that's bigger and better than your original home, your cap will change.
Chair Sterker: Next question...for home exemption properties that are multi-use structures. I
thought that home exemptions are home exemptions; how are they multi-use?
Mr. Hunt: You are entitled to a home exemption if it's your primary residence. The difference
between a home use exemption and homestead classification is they are not usually exclusive.
And you can have an exemption...say that you reside in your residence 9 months out of the year,
but for 3 months of the year you go on a vacation and you rent out your home for the 3 months
that you're gone and generating income, you will not be considered a homestead and will not get
the homestead exemption. But you get the home use exemption because it's your primary
residence. We have properties that are either multi-used on a time frame or multi-used by three
quarters as a residence. For example, I have an office that I use for commercial purposes or a
bed and breakfast that I rent out. This is considered multi-used because you are not using your
home exclusively as your primary residence.
Chair Sterker: So a bed&breakfast fall under this category?
Mr. Hunt: Yes.
Chair Sterker: What about if you have an auto repair at your house.
Ms. Motta: It's illegal.
Mr. Hunt: Well, I have seen situations where there have been use permits filed for that. And
you cannot have your residence and a use permit for a garage facility on the same property.
We do what's call a split pit, the pit is short for Pittsburgh Coating and for residential use we call
it Pit 100 or Pit 800 if it was a homestead. And industrial use is Pit 4 which would represent that
portion of that property which is used industrially. So you could have two land assessments for
the same property and you could have two tax classes for the same property; that's what you call
a split-pit property.
Chair Sterker: How would you know if someone in your area has a split-pit?
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Mr. Hunt: You would not know unless you look at the property records website to see what kind
of classification the residence has. There are use permits that are filed, and there also some that
are not approved.
Ms. Motta: Chair, to clarify that,we do our assessments based on what's physically on the
ground and we do not get involved in whether something is legal or is permitted.
Chair Sterker: I think we are sort of behind the ball at this point, and what we're doing is getting
information from you and it's nice that you are here to explain these bills.
Chair Sterker: Explain to me again what the circuit breaker exemption is.
Mr. Hunt: The circuit breaker exemption was intended to break the ties between the market
value and the taxes paid and there were certain areas on Kaua'i that are depreciating faster than
others and County Council has adopted an ordinance that essentially sets the taxes at what they
paid in 2001 or 3% of their adjusted gross income.
The Bill was crafted by adding language based on what the taxes were or would have been which
became very problematic for us. Because now it forces us to recalculate retroactively what the
taxes would have been in 2001, even though there might not have been a dwelling on the
property or a sub-divided lot. The application is more challenging than others because we have
to replicate what the taxes would have been in 2001. It does allow us to make adjustments. For
instance, if a property had a cottage on it and they built a mansion as a second home or a
replacement for the cottage, they could still file a circuit breaker.
So we have to look at what our cost tables were and then re-cost it in that file. So you can see
the complexities; the more we get, the harder it gets to administer this because we have to
annually look at any changes to the property and calculate hypothetically what taxes would have
been in those years. And it's just become unattainable for us. Our proposal is to grandfather
those that had the exemptions or the circuit breaker credits from 2001, put it in their PHU
calculation and terminate the program. This would allow them to maintain their credits but, no
more through the door. I am a little concerned because this is the first time that I am actually
going on tape, but since it's on the agenda I will expand more. For a long time I complained on
the risks of this because what if all 13,000 homeowners come in and say I want my 2001 taxes;
what's that going to do to the tax base not to mention the time it would take to try to figure out
what the old taxes were at that time. We would need a lot of staff members to do that. 2001 was
a fixed number and it may have been relative to that time but it doesn't move; it just stays at
2001when everything else continues to move on. So at this point we just don't see its usefulness.
Ms. Motta: The alternative energy bill is for Commercial/Industrial means. This is for
homeowners that may create energy for themselves just for their own use or is selling twenty-
five percent of the energy.
Chair Sterker: Is that twenty-five percent of what there are generating?
Mr. Hunt: Yes.
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Chair Sterker: So if you had a windmill and its generates so many kilowatt hours per day say
two hundred kilowatt hours per day and you're using 150 kilowatts; ,does the rest go back.
Mr. Hunt: The intent for the bill was to promote self-use. For example, if you have an
agricultural piece and you want to augment your Ag by powering your own dairy or your
buildings, you are doing it as self sustaining and you would retain the Ag exemption. But if you
are producing energy to sell, we have this Bill to say that this is no longer self contained; this is
an actual business.
Chair Sterker: I have a concern about all of this paper being used for the bills.
Ms. Motta: If you all had computers in front of you or tablets in front of you we could do that;
but since you don't, we really do not have any other option. We do send everything over to
County Council through the internet.
Chair Sterker: Maybe that should be a requirement to be a Commissioner that you have to have
a computer.
Mr. Chaffin: Let the County furnish the tablets.
Chair Sterker: Let's look at proposed Bill 2013.
Ms. Motta: This one has not been changed at all.
Chair Sterker: For Section 10. Sub section 5A-8.1 (a) The Director shall cause the fee simple
fair market value of all taxable real property..... Fee simple versus what?
Mr. Hunt: We have people who come to us that don't own a fee simple property; they own a
leasehold interest.......projects like Kiahuna where they buy only leasehold interest and within
their agreement, it states that the lessee is responsible for the taxes on the land. We don't split
the assessment fee because of what their agreement say...we don't care what their agreement
says; we are still going to assess the fee. How you arrange to make payments on the land is
separate. We wanted to make it clear that what we are appraising or assessing is the
unencumbered fee simple interest on the property.
Chair Sterker: Okay. For Section 12. 5A-8.1, subsection (e), How do you know when
something is twenty percent or more completed?
Mr. Hunt: We actually have a component sheet that we look through when we mark up when a
project has its foundation and its framing and its roof structure at twenty percent. We also have
components for electric and plumbing.
Chair Sterker: Section 6. 5A-6.3 Real Property Tax; Determination of Rates, subsection (c), (2)
states "The percentage of revenue to be raised from net taxable real property within each class
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shall be multiplied by the total revenue to be raised from all real property in order to determine
the amount of revenue to be derived from that class".
Mr. Hunt: This is essentially saying that through the budgeting process, it's the Administration
and ultimately the Council who decides how much revenue by class,because we have different
classes of property. We currently have residential, single-family residential, apartment,
commercial, industrial, agricultural, conservation, resort/hotel, and homestead classes. And
within them, we have a break down of what their gross valuation, exemption and if there is an
appeal amount are. If there is an amount in their appeal, we are allowed to budget fifty percent
of that in revenue and then you come up with your total net assessable value. And to that you're
supposed to assign a tax break and that tax break should correspond with how much revenue you
should garner from that particular class of property.
Chair Sterker: Section 14. 5A-8.1, subsection(g) Land leased or held under a revocable permit
from the State of Hawaii. Please give an example of this.
Mr. Hunt: Kokee.
Chair Sterker: Where do the sugar mills fit in.
Mr. Hunt: The actual sugar mill site is classified as an industrial; most of them are situated on
Ag lands but it is an industrial function of that Ag.
Chair Sterker: Why would somebody who has an exemption not want the exemption?
Mr. Hunt: I don't know.
Chair Sterker: There is a lot of stuff in here about...if you don't want the exemption.
Mr. Hunt: I know that under the permanent home use was one that you're enrolled into the
program and you must let us know if you don't want to be in the program; I think that was
actually carry-over language from one that was a dedicated program. It was a ten year
dedication.
Chair Sterker: Okay. Section 28 5A-11.4, subsection (d), "Real property which has a home
owner's exemption under this section shall be entitled to an additional exemption not to exceed
$80,000, provided that the annual income of the owner-occupant does not exceed 80% of the
Kaua'i Median Household Income as set forth in the Kaua'i County Housing Agency Affordable
Rental Housing Guideline for the calendar year preceding the year in which the application is
filed". Is that every year that you have to do that?
Mr. Hunt: Yes,that's correct and we'll always be chasing a year because we have to make our
application available for a person who wants to apply for next year.
Chair Sterker: So if you sold some property and that one year your income goes up and you had
a permanent exemption, then you wouldn't have that exemption that year.
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Mr. Hunt: Correct and that would be adjusted to your base. The main gist of this is right now
the median household income for 2010 for Kaua'i was $70,500 and so we would be taking 80%
of that amount which I believe is $56,000. I just got the 2011 update to and right now it's up to
$75,200 which is a little perplexing because I thought it would be going the other direction.
Chair Sterker: Okay. I think that was the end of my questions and I thank you both for being
very patient. Is there anyone else who has questions?
Ms. Motta: If there are any further questions,please let us know because I know it's pretty hard
to absorb.
Chair Sterker: Mr. Sykos would you like to speak?
Mr. Ste: I would like to thank you very much for being here and doing the tremendous public
service that you do. One of the reasons why I came down today is that I will be slowly going to
all of the Boards and Commissions and encourage you to petition the appropriate entities of
government to put this on television. Right now the public can never know what you do unless,
if I understand you correctly, we asked to get an audio copy which often times is not clear. We
cannot even go on the internet and listen to the meetings. And if you think about it, without the
pictures to associate the voices with the face it could become very complicated to figure out who
says what without a video microphone. The public should be here participating because you
represent us and yet we have to go to work and so we really cannot come down here. Thus, we
are prevented from participating in this very important activity of Cost Control as well as all of
the other important activity done by all of the Boards and Commissions just to address why this
would be important to you. I am not an electrician but I do understand a little bit. If the County
has a 220 volt charging system and they have a 110 system, the 110 system costs twice as much
per amp than what the 220 volt does. So we are paying twice as much to charge the cars as we
need to. Which is not what the Administration told us; they told us that they didn't know what
the cost differential was.
I attended Maui Community College in the late 80's and all of the buildings that were built in the
80's and onwards all have computerized environmental and security systems. This is old
technology although retrofitting is very problematic, but the entire issue of controlling cost
through controlling building environments is old technology with obviously new ones coming
out. The question that I have about controlling the cost of the buildings is a failure to have
measurable successes without having a written description of this is what we want to accomplish.
All you ever have is a general conversation about less and more but no description; did we
actually save money? A number of the issues that were addressed regarding different people in
an office handling the thermostat are actually a Human Resources issue. It actually has rules that
govern how you determine what an environment is in an office and especially in buildings that
have different zones and all of the issues they discussed about air flow. And so, I would
encourage you not to try to re-invent the wheel; this is a Human Resources function and some of
it is also the function of the loss prevention service that we don't quite have yet. Loss prevention
is not just safety; it's the loss of anything of value and so loss prevention has a hand in
environmental control. HR has a hand in environmental control and until those departments are
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up and running, our civics process is corrupted and will not function properly,because they are
the authorities that should be handling portions of these. And your observation on the county
providing tablets...I would say that it's absurd that you do not have the county supply tablets.
It's absolutely absurd that we paying printing companies or running our own printing office to
keep printing these enormous documents all through the county. If we access them through a
tablet, and that would require the county having wireless access,but if you have wireless, all of
this will be at everybody's finger tips and you would all be on the same page. It`s to save money
straight up. This is like a no brainer for the accounting department to figure out what the paper
costs and what the tablets cost and the training for the tablets is minimal compare to the training
to figure out how to wade through hundreds and hundreds of paper.
And last but not least, there was an editorial that was printed in the Garden Island Newspaper
that I believe was written by Mr. Stossel. In the editorial the writer said that they have
approached Mr. Bynum regarding this entire issue on property taxes. I think that our property tax
system is absurd. According to the writer of the article, we have more pages of tax codes per
dollar collected than the federal government. His suggestion was to eliminate all 12 different
classifications as well as the requirement to do the property and the building separate from each
other; go to a single classification in which homeowners would get a 50 percent break and the
elderly would get another 10 percent. All of the adjustments are fair and will eliminate thousands
of pages of documents and would focus on simplifying the tax system. I believe that the writer
of the article is talking to Mr. Bynum about this now. My suggestion to you as the Cost Control
Commission is for the county to embark down a path on what is being presented to you. You
should go to the Mayor and say are we nuts; we got another 50 pages of tax codes that we have
to absorb into the system for the next 2 to 3 years. It's time now to simplify things and that
would save an enormous amount of money and paper. Thank you very much for your efforts in
trying to save us money.
Chair Sterker: Thank you for your comments.
Mr. 5ykos: I will be more than happy to answer any questions that you may have.
Chair Sterker: That's okay because the Sunshine Law prohibits the Commission to submit
anything to you.
Mr. Sykos: Okay, that's correct because I am not on the agenda.
Chair Sterker: I have some items that I would like to discuss at the Commission's next meeting:
Tax exemptions for Credit Unions, and we would need someone here from the Department of
Finance Real Property Division. Does anybody have anything else for the Energy Savings? I
think that we should just know that Glenn can back sometime next year for another update.
Mr. Chaffin: I will not be here for the November meeting.
Chair Sterker: I would still like to address the age 60 exemption.
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Ms. Yoshida: We need to settle that; it's either we are going to ask for the changes or drop it all
together. Right now it's in limbo.
Announcements:
Chair Sterker: The next Cost Control Commission is scheduled for Monday,November 14,
2011, at 1:30 p.m. at the Mo'ikeha Building in Liquor Conference Room No.3.
Adjournment:
Chair Sterker: May I have a motion to adjourn?
Mr. Chaffin moved to adjourn the meeting. Ms. Yoshida seconded the motion.
Motion carried 4:0.
Submitted by:
Mercedes Youn, Staff
Reviewed and approved:
Sandi Sterker, Chair
Approved on: _11/14/11
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