Loading...
HomeMy WebLinkAbout051412_CCC OPEN SESSION_APPROVED 1m(tt) COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board/Committee: COST CONTROL COMMISSION Meeting Date May 14, 2012 Location Mo'ikeha Building—Meeting Room 2A/B Start of Meeting: 1:39 p.m. End of Meeting: 2:45 p.m. Present Chair Dirk Apao; Vice-Chair Sandi Sterker Members: Lawrence Chaffin Jr.; and Glen Takenouchi Also First Deputy County Attorney Amy Esaki; Board& Commissions Office Staff: Support Clerk Mercedes Youn; Administrative Aide Teresa Tamura. Invited guest: Deputy Finance Director Sally Motta and Real Property Officer Steve Hunt. (Arrived at 1:55 p.m.) Excused Members: Arryl Kaneshiro and Laurie Yoshida Absent SUBJECT DISCUSSION ACTION Call To Order Chair Apao called the meeting to order at 1:39 p.m. Approval of Workshop Minutes of March 23, 2012 Minutes Mr. Chaffin requested that a correction be made on page two (2) second paragraph of the minutes to reflect that Ms. Sterker agreed and questioned whether it would be appropriate to make a recommendation to raise the minimum tax. Chair Apao called for the motion to approve the minutes as amended. Ms. Sterker moved to approve the minutes of March 23, 2012 as amended. Mr. Takenouchi seconded the motion. Motion carried 4:0 Regular Open Session Minutes of April 9, 2012. Ms. Sterker moved to approve the minutes as circulated. Mr. Takenouchi seconded the motion. Motion carried 4:0 Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 2 SUBJECT DISCUSSION ACTION Communications CCC 2012-08 Communication dated 03/13/12 from Chair Apao and Commission Members, to Janine Rapozo, Human Resources Taskforce requesting a representative from the taskforce to be present at the Cost Control Commission meeting on April 9, 2012 to provide an update on the progress generated by the taskforce. Staff informed the Commission that the Human Resources Taskforce would be available in June to provide an update on its progress. Chair Apao called for the motion to defer this matter until the June 18, 2012 meeting. Ms. Sterker moved to defer. Mr. Takenouchi seconded the motion. Motion carried 4:0 Business CCC 2011-08 Review and discussion of the County's real property tax exemptions and rate settings. (On-going) (p) Memorandum dated 04/03/12 from Chair Dirk Apao to Wallace Rezentes Jr., Director of Finance, requesting for information on the number of people that actually pay the minimum tax of$25.00 and those who pay below $150.00 and a listing of all 501 (c) non-profit organizations. Ms. Sterker moved to receive. Chair Apao called for the motion to receive item CCC 2011-08 (p). Mr. Chaffin seconded the motion. Motion carried 4:0 (q) Email dated 04/10/12 from Steve Hunt responding to the Commission's request for information relating to the amount of tax payers who pay the minimum tax of$25.00 and those who pay below $150.00, and a listing of all 501 (c) non-profit organizations. Mr. Takenouchi moved to receive. Chair Apao called for the motion to receive item CCC 2011-08 (q). Ms. Sterker seconded the motion. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 3 SUBJECT DISCUSSION ACTION Discussion Mr. Chaffin questioned the definition between the 501 (c) nonprofit organizations and 501 (c) (3)nonprofit organizations. Ms. Esaki explained that there are several nonprofit organization types that are listed under the general 501 (c)nonprofit organizations. Ms. Sterker indicated that the 501 (c) (3) are nonprofit organizations and some included religious, educational, charitable, churches, hospitals, nursing homes, and cemeteries that are dedicated to public use. Ms. Sterker further indicated that there is a list of organization types that range from 501 (c) (2)through 501 (c) (9). Ms. Sterker stated that the response from Mr. Hunt showed that the number of homeowners paying the $25.00 minimum real property tax totaled 769 and that she was glad to see that number was not higher. She noted that the number of minimum taxpayers increased moderately due to the higher income exemption in 2012. Ms. Sterker felt that the information does not have any forbearing for her should the Commission decide to increase the minimum real property tax. She felt that although it would not bring more revenue into the County it would help with the costs to do an assessment which includes time, cost of mailing, and postage. Ms. Sterker noted that the non-homeowners should also be included in the increase. Mr. Chaffin stated there are two (2)ways of looking at this issue, 1) whether the cost to levy the tax is less than the amount of the tax and 2) is the cost to levy the tax considerably more. He suggested that the Commission either eliminate the tax or increase the amount. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 4 SUBJECT DISCUSSION ACTION Ms. Sterker agreed that the Commission should either decide to eliminate the tax completely or try to break even. Ms. Sterker suggested that the Commission have a general discussion with the Real Property Tax Division representatives on how they feel about eliminating the tax completely, which could mean a loss of revenue for the County. Mr. Chaffin stated that although it could be a loss in revenue for the County you have to factor in the amount of money it costs to levy the tax and then ask yourself whether it would be more of a savings for the County. Mr. Takenouchi asked by eliminating the tax would the tax payers fall under another category. Chair Apao stated that the Finance Director has provided the Commission with information on the minimum real property taxes for each island and that the information also included a history of when the increased took effect. He noted that the information would be very helpful to the Commission to determine the rate setting. Ms. Sterker felt that the minimum tax of$25.00 is next to nothing. Mr. Takenouchi noted that in 2003, the Hawaii County has increased their minimum real property tax from $25.00 to $100.00. He expressed his concern that the County of Kauai had not changed its minimum real property tax since 1981/82. He asked whether it would be left up to the County Council to implement the increase. Ms. Esaki indicated that it would have to come from the Real Property Tax Division Office in a form of a bill for introduction to the County Council. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 5 SUBJECT DISCUSSION ACTION Mr.Takenouchi was shocked to learn that since the early eighties nothing had been done to increase to the minimum real property tax. He implied by taking the 769 tax payers and multiply that number by one hundred would create a significant increase in revenue for the County. Ms. Sterker implied that the County should go further by combining the homeowners and non-homeowners (2972 total) and multiply the total number by a hundred. Chair Apao noted that every assessment requires the use of County resources. Ms. Sterker suggested that the Commission should inquire about the cost to process the assessment and use that information to justify the Commission's recommendation for the tax rate increase. Ms. Sterker mentioned at the last meeting, Ms. Yoshida offered to provide the Commission with a listing of all 501 (c)type organizations. Mr. Chaffin asked whether it would be appropriate to request for a cost benefit analysis that would reveal an approximate cost to create the tax versus what it would cost the County to receive the tax. Chair Apao asked Mr. Hunt if he knew what the approximate cost for the County is to do an assessment(i.e. employee time, cost of mailing, postage, etc.) and whether the minimum tax of$25.00 covers the cost. Chair Apao expressed his concern that the other counties have increased their property taxes as recently as 2011 and that Kauai County hasn't increased its minimum real property tax since 1981/82. Mr. Hunt stated part of the dilemma that the Real Property Tax Division Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 6 SUBJECT DISCUSSION ACTION Office was faced with was finding a way to determine how to assign a portion of the overall operational budget into parcels. He explained that there are different levels of service that would require an actual breakdown and that some departments generate revenue while others do not and those are the ones that rely on real property or other sources for revenue. Mr. Hunt stated that the best approach is to do a breakdown which would show the cost of having the basic services such as police, fire, lifeguard, and 911 ambulance services. Mr. Hunt voiced his concern that it would be difficult for them to do a departmental analysis on who should pay what part of the operational budget. Chair Apao noted that a suggestion was made to eliminate the billing process completely because of the extra cost it incurred. Mr. Hunt explained that the billing cycle comes in two phases. The first phase is the notification of assessment which is sent to thirty-four thousand parcels at seventy-five cents per parcel. Multiply that by thirty-four thousand and the cost to the County is a total of$25,500. The second is the billing phase which is done in two increments and handled by the Tax Collections Division. Mr. Hunt stated he understands that it takes a lot of time to process an assessment for the County. However, the County is still generating revenue and that he cannot imagine that the cost of billing would exceed the cost to send the assessment notification even though the billing is sent out twice. Mr. Hunt raised a concern that the County is losing revenue when it comes to reprocessing the returned checks. He stated that the fee that the County is charging is far less than the cost to reprocess a returned check. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 7 SUBJECT DISCUSSION ACTION Mr. Chaffin questioned why the County hasn't increased its fees for the returned checks. Mr. Hunt explained that the process for the increase would require a lot of time because it would not just be for the real property tax division, but for the entire County and that all sections of the County would have to participate in the process. Mr. Chaffin questioned whether it would be appropriate for the Commission to be involved with getting the process started. Ms. Sterker stated that this is an issue that the Commission may want to look into. Mr. Hunt agreed and encouraged the Commission to explore the matter further. Ms. Sterker asked what would be a reasonable rate to increase the minimum real property tax too, or should the Commission's recommendation be to eliminate the tax completely, that way there would be no need to do the assessments. Mr. Hunt stated that by law his department would still have to do the assessments, even though there are zero real property taxes to collect. The work load would still exist. Mr. Hunt noted that in order to get a better idea on the approximate cost for the County to do an assessment, you need to take the department's operating budget and divide that by the number of parcels. This would give you an idea on what it takes to operate real property assessment. Mr. Hunt stated that one way of doing this is by combining both the cost of the collections process and assessment notices, include the electricity to run the building whatever the budget is, then divide that by the number of parcels to decide what each fair share on the pro-rated basis of that minimum would be. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 8 SUBJECT DISCUSSION ACTION Ms. Sterker noted that the cost of County services has gone up significantly and that it is the intent of this Commission to make a one-time recommendation based on its discussions and information from the Real Property Tax Division. Mr. Hunt suggested that the Commission look at what the other counties are doing and have accomplished. Ms. Sterker stated that after seeing what the other counties are charging for their minimum real property taxes, as well as the dates they were implemented, she strongly felt that the time has come to increase the minimum real property tax for the Kauai County and determine whether the various tax exemptions should be maintained, revised, or eliminated. Ms. Sterker suggested that the Commission raise the minimum real property tax from $25.00 to $150.00 in hopes that it will cover some of the costs to the County. Mr. Hunt stated that part of the challenge is that there are different bodies going in different directions There are some people who are looking to increase the exemptions and reduce taxes even further. He voiced his concern that there must be some kind of marriage on both sides. Mr. Hunt stated that it is his understanding that the recommendation to remove the Home Owner's Exemption is not likely going to happen. However, there are talks that they are looking seriously at some of the nonprofits on a percentage value. Ms. Sterker indicated that the Credit Union exemption is a sliding scale and that the Commission strongly feels that everyone who benefits from the County's array of services should have a part in paying for those services. Mr. Hunt agreed. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 9 SUBJECT DISCUSSION ACTION Ms. Sterker asked whether her proposal to increase the minimum real property tax from $25.00 to $150.00 is realistic. Mr. Hunt noted, that would be about $12.00 a month for the County services Ms. Sterker indicated that the Commission needs to make it known that it took its charge seriously and met with representatives from the County Real Property Tax Division. They provided technical information and answered questions to facilitate and assist the Commission with its deliberations and decision-making. She acknowledged that this is a very complex subject, but in the end, it really boils down to a policy call on what the Commission believes is good for the County and fair to the taxpayer. Mr. Chaffin voiced his concern that the amount of money that is being proposed has to be justifiable in a specific manner, and how that is going to be accomplished would be based on the guidelines from the Real Property Tax Division. Mr. Hunt indicated that he is here only to provide technical information and answer questions to help the Commission with its decision-making. Any decisions regarding a recommendation must come from the Cost Control Commission. Mr. Takenouchi questioned whether the Commission's recommendation (s) would be presented as a whole package. Ms. Sterker agreed and felt that the recommendations should be presented as a whole package. Ms. Esaki reminded the members that they need to determine whether the various tax exemptions and the minimum real property tax should be maintained, revised, or eliminated. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 10 SUBJECT DISCUSSION ACTION Mr. Hunt noted that if a recommendation of the Commission gets to the Council level, he requested that his department have ample time especially if the recommendation deals with the nonprofit organizations. He pointed out that his department does not address the nonprofits in terms of accuracy of the building and any renovations that may have occurred because they do not generate revenue. He noted that the focus is on the open permits that generate revenue and anything that is nonprofit tends to get to the bottom of the pile. Motion carried 4:0 With no further discussion, Chair Apao called for the motion to receive item CCC 2011-08 (q). (r) Memorandum from Dirk Apao to Wallace Rezentes Jr., Director of Finance, requesting for information on the various types of tax exemptions. Chair Apao called for the motion to receive item CCC 2011-08 (r). Ms. Sterker moved to receive. Mr. Takenouchi seconded the motion. Motion carried 4:0 (s) Communication dated 04/27/12 from Wallace Rezentes Jr., to Chair Dirk Apao, responding to the Commission's request on questions that relate to the various types of exemptions. Chair Apao called for the motion to receive item CCC 2011-08 (s). Ms. Sterker moved to receive. Mr. Takenouchi seconded the motion. Discussion With regards to the breakdown of what is included under Charitable by category, Ms. Sterker found it interesting that it is the use of the property and not ownership that determines its eligibility. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 11 SUBJECT DISCUSSION ACTION Mr. Hunt added that if the property is not used for any kind of charitable use and is owned by a charitable organization, they are not exempt from taxation. Mr. Hunt further added that there is an ongoing appeal relating to this matter and that there is a property that was much larger that was CPR into a number of units and that each of the individual units are not in use, in fact there are a number of the units that remain vacant. In regard to what is included under miscellaneous and the purpose for it, Mr. Hunt informed the Commissioners that there are only four(4) properties under this category and that three (3) of the lots are associated with the Wilcox Estate and located in the Uluko Subdivision. Mr. Hunt noted that he is currently in the process of doing an investigation to find out whether the lots were deeded or did something happen to the property that would essentially constitute some kind of exemption for the Estate. Ms. Sterker asked what happens with the property assessment when the building on the property is unhabitable. Mr. Hunt explained that the County has an effective age and condition which basically adjusts the assessment to a salvage level and that any improvements that are made to the building would have zero exemption. Ms. Sterker asked whether there is a real property assessment done on the island of Niihau. Mr. Hunt said that the assessments are being done by John Herring, although not on a regular basis. Ms. Motta wanted to clarify the Commission's request for information on an approximate cost for the County to do an assessment notices related to time for Staff to service clients, cost of mailing,postage, and cost to the County for returned checks. Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 12 SUBJECT DISCUSSION ACTION Mr. Chaffin voiced his concern that the time and effort expended by the Cost Control Commission to ask for the additional information may not result in being meaningful. Ms. Esaki stated that she would see what the conditions are under the County Code that relates to the bad check fees and provide the Commission with information on the State Statutes. Chair Apao questioned whether the Commission was done looking at the exemption types. Mr. Takenouchi stated that once the Commission receives the information from the Real Property Tax Division staff the Commission could determine how to move forward with a recommendation. With no further discussion, Chair Apao called for the vote to receive item CCC 2011-08 (s). Motion carried 4:0 Announcements Next Meeting—June 18, 2012 at 1:30 p.m. at the Mo'ikeha Building in the Liquor Conference No. 3. Adjournment With no further business to discuss, Chair Apao called for the meeting to At 2:45 p.m. Mr. Chaffin moved that the adjourn. meeting be adjourned. Mr. Takenouchi seconded the motion. Motion carried 4:0 Cost Control Commission Regular Open Session Minutes May 14, 2012 Page 13 Submitted by: Reviewed and Approved by: Mercedes Youn, Staff Support Clerk Dirk Apao, Chair ( ) Approved as circulated(add date of meeting approval). (X) Approved as amended. See minutes of June 18, 2012 meeting.