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HomeMy WebLinkAbout061311_REGULAR MINUTES - revisions ji _2_ COUNTY OF KAUAI Minutes of Meeting REGULAR OPEN SESSION Board/Committee: COST CONTROL COMMISSSION Meeting Date June 13, 2011 Location Mo'ikeha Building- Liquor Conference Room 3 Start of Meeting: 1:30 p.m. End of Meeting: 3:15 p.m. Present Chair Sandi Sterker; Vice-Chair Dirk Apao; Members: Lawrence Chaffin Jr.; Linda Faye Collins; Glen Takenouchi; Laurie Yoshida Also First Deputy County Attorney Amy Esaki; Board& Commissions Office Staff: Support Clerk Mercedes Youn; Administrative Aide Paula Morikami; Administrator John Isobe. Audience: Deputy Finance Director Sally Motta. Real Property Review Officer Steve Hunt Excused Member Brant Fuchigami Absent Not SUBJECT DISCUSSION ACTION Call To Order Chair Sterker called the meeting to order at 1:30 p.m. Approval of Mr. Apao moved to approve the Agenda agenda as circulated; Mr. Takenouchi seconded the motion. Motion carried 6:0 Approval of Regular Open Session Minutes of May 9, 2011. Ms. Yoshida moved to approve the Minutes minute as circulated; Mr. Takenouchi seconded the motion. Motion carried 6:0 Communications CCC 2011-09 Communication dated 04/28/11, from County Auditor Ernesto G. Mr. Chaffin moved to receive the copy Pasion transmitting a copy of the "Audit of Implementation of the Cost Control of the Audit Report; Ms. Collins Commission Concerning Energy Savings"- Report No. 11-01, April 2011. seconded the motion. Motion carried 6:0 Chair Sterker expressed concern that the audit report findings indicated that most of the 2008 recommendations from the Cost Control Commission are not being full Cost Control Commission Regular Open Session June 13, 2011 Page 2 SUBJECT DISCUSSION ACTION implemented. She requested that the audit report be placed on the next meeting agenda for further discussion and requested that the County Auditor be there to address the findings. Mr. Chaffin questioned whether anything is being done to ensure that the recommendations are being implemented, and who is tasked with implementation. He said that the Cost Control Commission should not be accountable for implementation. Chair Sterker stated that the audit report indicated that accountability was lacking because the Cost Control Commission did not receive regular reports on the administration's progress implementing the recommendations. She suggested to the members to explore ways on how the Commission can ensure that the status reports are received in a timely manner. Mr. Takenouchi indicated that he read the audit report but due to his employment status as an energy supervisor, he may have to refrain from making comments relating to the energy cost-saving measures. Ms. Yoshida felt that the audit report lacks pertinent details as to what the county is planning to do with the recommendations that are being partially implemented and not implemented, as well as the recommendations that are planned for future implementation and those that are delayed indefinitely. Mr. Chaffin suggested that the County Auditor provide a concise written summary of the recommendations including which ones are not feasible and the reasons why. Mr. Isobe informed the Commission that because the Office of Boards and Commissions was not consulted, he is unclear why the Auditor concluded that the Cost Control Commission should direct the Office of Boards and Commissions to Cost Control Commission Regular Open Session June 13, 2011 Page 3 SUBJECT DISCUSSION ACTION develop a systematic process to ensure that the Commission's recommendations are communicated to the department responsible for the implementation. He further indicated that the Auditor's report does not consider that during this period, the County was under strict budgetary restraints and that all administrative departments were asked to reduce their operating budgets by 10 to 15 percent. For this reason, the delay in implementing many of the energy savings recommendations may just be the result of funding limitations at the time. Mr. Isobe also mentioned that he was surprised that one of the recommendations made by the County Auditor was to create a new "Energy Manager"position. Mr. Isobe stated that he is not debating whether the position has merit or not, "...it just should to be weighed against all of the other priorities that were cut relative to departmental needs". He noted that he would like to reserve further comments until hearing from the County Auditor. Chair Sterker said because the Department of Water(DOW) is one of the County's major energy users, she would like to request that a representative from the DOW be present at the Commission's next meeting to discuss its current and future energy cost-saving measures. Based on the discussion, staff will follow up with the requests for additional information and request the presence of the County Auditor and a representative from the Department of Water at the Commission's July 11, 2011 meeting. o County Auditor--request that he attend the Commission's next meeting to discuss the audit report findings and that he provide an expanded written summary of the findings related to the 2008 Cost Control Commission recommendations including the following pertinent information: 1. Energy cost-saving measures that are in place; 2. Energy cost-saving measures that are being implemented or have been Cost Control Commission Regular Open Session June 13, 2011 Page 4 SUBJECT DISCUSSION ACTION partially implemented; 3. Energy cost-saving measures not yet implemented; items planned for future implementation, and items delayed indefinitely. o Department of Water Manager and Chief Engineer-- request for information on what energy cost-saving measures have been implemented in the Department of Water and whether there are plans of implementation based on the recommendations and findings of the Auditor's report. CCC 2011-10 Communication dated 05/25/11, from Mayor Bernard P. Carvalho Jr., Mr. Chaffin moved to receive; Mr. thanking the Cost Control Commission for its recommendations dated 05/09/11 Takenouchi seconded the motion. regarding the consolidation of employee trainings and personnel functions/services Motion carried 6:0 and placing these responsibilities within the Department of Personnel Services. Business CCC 2011-07 Discussion and possible decision-making regarding the establishment of an Employee Incentive Program related to energy cost savings. (Deferred on 05/09/11 meeting) a) Communication dated 05/09/11, from Chair Sandi Sterker to the Director of Mr. Takenouchi moved to receive; Finance, Director of Personnel Services, and the Office of the County Attorney Ms. Yoshida seconded the motion. requesting input and guidance as it relates to their area of responsibility and expertise Motion carried 6:0 on the possibility of establishing a County Employee Incentive Program. Mr. Chaffin said he is oppose to the proposed Employee Incentive Program and felt that the county employees are already highly paid and that any incentive to reduce energy usage within the county should be part of the employees' general desire to make their work place environment energy efficient for economic and environmental reasons. To reward an employee (s) with a monetary or any in-kind reward is inappropriate and may cost the county more to administrate than saving the County money. Cost Control Commission Regular Open Session June 13, 2011 Page 5 SUBJECT DISCUSSION ACTION Mr. Apao said that he does not oppose the program and felt that the incentive program will play a significant part in promoting morale for the county employees. However, instead of rewarding the employee (s)with a monetary reward a simple lunch would do. b) Communication dated 05/25/11 from Mayor Bernard P. Carvalho Jr., and Gary Mr. Chaffin moved to receive the Heu, Managing Director, requesting additional time to provide information on communication dated 05/25/11; Mr. establishing a County Employee Incentive Program. Apao seconded the motion. Motion carried 6:0 Chair Sterker recommended that any further discussion regarding the Employee Incentive Program be deferred pending the receipt of comments from Mayor Carvalho Jr. and Managing Director Gary Heu. CCC 2011-08 Review and discussion of the County's real property tax exemptions and rate setting procedures. (Deferred from 05/09/11 meeting) a) Kaua'i County Code, Chapter 5A Real Property Tax b) Communication dated 05110/11 from Chair Sterker to the Director of Finance Ms. Yoshida moved to receive the Wallace Rezentes Jr., requesting that his office provide: communication dated 05110111; Mr. 1. a summarized listing of all real property tax exemptions that are in effect; and Takenouchi seconded the motion. 2. a summary of appeals filed in each of the last three calendar years, including Motion carried 6:0 total number of appeals that were decided in favor of the taxpayer. c) Response from Deputy Finance Director Sally Motta regarding: 1. Exemption Summary listing all real property exemptions; 2. Summary of Appeals for the past three (3)years Summary of Appeals Sally Motta and Steve Hunt, representing the Department of Finance,provided information of all real property tax exemptions and a summary of appeals that favored the taxpayer. Cost Control Commission Regular Open Session June 13, 2011 Page 6 SUBJECT DISCUSSION ACTION Mr. Hunt explained the "Summary of Appeals"which his department prepared for the Commission. He went over the figures of the appeals that were stipulated (did not go before the Board of Appeals), the closed hearings, and the appeals that were withdrawn. Chair Sterker questioned the significant increase in the dollar volume from 2008 and 2009. Mr. Hunt stated the reason for the increase is due to an increase in larger projects that are being condominiumized, which resulted in a significant increase of appeals. As examples, the County has 1030 in appeals for review of which 225 represents just one project located in Kealia, another 94 represents Cornerstone, and 356 represents the rooms at the Kaua'i Marriott Resort and Hotel that have been converted to timeshare units. In other words, for each appellant representing one project, the Board of Review has to take into account each tax map key separately. Ms. Collins asked whether having a timeshare would increase a person taxes automatically. Mr. Hunt said not necessarily, because the timeshare formula is a mathematical formula that was negotiated between county and the timeshare representatives during the late 90's. The formula looks at the comparables of the market value of a condominium vs. a timeshare unit. Chair Sterker said that based on the categories relating to the closed hearings and appeals that were withdrawn, it seems like that the county has been doing a much better job and asked how the County was able to achieve this. Mr. Hunt explained the reason was due to an active market, which provided the county with a lot more data. They also factored in the distressed sales, which were not considered in the past. Recently, legal opinions as well as opinions from the Cost Control Commission Regular Open Session June 13, 2011 Page 7 SUBJECT DISCUSSION ACTION appraisal industry have shown that distressed sales have become part of the market and are now affecting the properties that are not under distress. Chair Sterker asked what the County could do to prevent getting so many appeals. Mr. Hunt stated that having appeals is not uncommon. If the County did not have appeals, it may show that the county has lowered the benchmark too low and is giving away a lot of value. Currently, the appeals are lower than 2%. Summarized Listing of Real Property Exemptions Chair Sterker stated that she does not recall when the requirements for tax exemptions for the homeowner came into effect. Ms. Esaki responded that the age exemptions originated with the State of Hawai'i and later transferred to the other counties. Chair Sterker questioned whether it was possible to raise the age requirements from less than age 60 to less than age 65; from age 60-69 to age 65-74; and from age 70+ to 75+. She asked how many taxpayers would the proposed changes affect and what the monetary difference would be for the County. Ms. Esaki responded that any changes to the tax exemptions on the age requirements would require an amendment to the county Ordinance. Ms. Collins said that the age requirement should be based on a person that is retired and living on social security. Mr. Chaffin questioned whether a person could qualify for more than one tax exemption. Chair Sterker replied yes, and as she recalls, if someone was in the military, he/she could use two exemptions. Chair Sterker asked what percentage of the taxpayers would be affected by the age change if the age requirements were changed to 65-74 for the $96,000 and age 75+ for the $120, 000 categories. Ms. Collins stated that the change would be justified because eo le are working longer. Chair Sterker asked Mr. Isobe if he had an Cost Control Commission Regular Open Session June 13, 2011 Page 8 SUBJECT DISCUSSION ACTION comments. Mr. Isobe stated that he cannot provide a response at this time but will get the information for the commission. He pointed out that during this process of determining which tax exemptions to change, the commission must keep in mind that there are multiple facets of the exemption process. After review of the listing of all real property tax exemptions that are currently in effect, the Commission though it might beneficial to have information on the following: 1) the total number of properties that are affected by the tax exemptions; 2) the total number of exempted tax revenues; 3) a list of age requirements and other real property tax exemptions for each of the other three (3) counties The Commission would also like to a representative from the Department of Finance present at the July 11, 2011 meeting. At the request of the Commission, staff will send a memo to the Director of Finance requesting for the information from the Real Property Tax Division. Chair Sterker deferred this matter until the next meeting for further discussion. CCC 2011-11 Discussion and decision-making on a draft proposal from Mayor Bernard P. Carvalho Jr., proposing a Charter Amendment to Article XV Relating to Establishing a Department of Human Resources. Chair Sterker requested that they defer further discussion and request a legal review from the County Attorney's Office and comments from the Civil Service Commission as it relates to the draft proposing a Charter Amendment to Article XV. Announcements The next meeting will be at 1:30 p.m. on Monday, July 11, 2011 at the Mo'ikeha building in the Liquor Conference 3. Cost Control Commission Regular Open Session June 13, 2011 Page 9 SUBJECT DISCUSSION ACTION Adjournment With no further business to discuss, Chair Sterker declared the meeting adjourned. Meeting ad'ourned at 3:15 p.m. Submitted by: Reviewed and Approved by: Mercedes Youn, Staff Support Clerk Sandi Sterker, Chair (X) Approved as circulated (Approved on 07/11/11) ( ) Approved as amended. See minutes of meeting.