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HomeMy WebLinkAbout091112_CCC_MInutes_APPROVED COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board/Committee: COST CONTROL COMMISSION Meeting Date September 11, 2012 Location Mo'ikeha Building—Meeting Room 2AB Start of Meeting: 1:34 p.m. End of Meeting: 3:13 p.m. Present Chair Dirk Apao; Vice Chair Lawrence Chaffin, Jr.; Members: Sandi Sterker; and Arryl Kaneshiro Also Deputy County Attorney Mona Clark; Board& Commissions Office Staff. Support Clerk Mercedes Youn; and Administrative Aide Teresa Tamura Excused Members: Glen Takenouchi and Laurie Yoshida Absent SUBJECT DISCUSSION ACTION Call To Order Chair Apao called the meeting to order at 1:34 p.m. Approval of Regular Open Session Minutes of August 13, 2012. Minutes Ms. Sterker noted that on page four(4), third paragraph of the minutes, Mr. Rapozo stated that"in 2007 there was an attempt to change the deposit fees or just fees in general". She questioned whether Mr. Rapozo meant to say "or adjust fees in general"rather than just fees in general. Ms. Youn acknowledged that there may be a discrepancy and stated that she would listen to the recording and make the changes to the minutes if necessary. Vice Chair Chaffin pointed out that on page two (2), fourth paragraph, of the minutes, Mr. Rapozo stated"that the only County facilities that would be allowed to have lights are the neighborhood centers and comfort stations". He questioned whether that was a true statement. Ms. Sterker clarified that Mr. Rapozo's statement was true. Vice Chair Chaffin pointed out that on page six (6), fourth paragraph of the Cost Control Commission Regular Open Session September 11, 2012 Page 2 SUBJECT DISCUSSION ACTION minutes, Mr. Rapozo replied, "that in the County ordinance it states that a Type VI activity does not permit any person or organization to sell goods for a profit at any of the County pavilions". He questioned whether that was a conflict of the ordinance that would allow the Koloa Rotary Club and the Koloa School to hold their fundraiser's at the Poipu pavilion. Staff explained that it would not be a conflict because both the Rotary and the Koloa School are considered nonprofit organizations and operate under Type III and Type V activities. Staff further explained that the Director may, at his discretion, award the concession to any school, church, or other nonprofit organization based on the nature of the activity to be engaged by the organization. Chair Apao called for the motion for Staff to listen to the recording of the Ms. Sterker moved to approve the minutes with 08/13/12 meeting and make the necessary amendments if needed, as its pending corrections. Mr. Kaneshiro seconded indicated by Ms. Sterker. the motion. Motion carried 4:0 Business CCC 2011-08 Review and Discussion of the County's real property tax exemptions and rate setting. (On-going) Ms. Sterker reminded the members that pursuant to Section 28.04 of the County Charter,the Commission's responsibilities are to review with the aim of eliminating or becoming more efficient. She felt that all those who benefit from County services should pay their fair share of taxes especially if the costs and taxes go up. She explained that if the County wants to be more efficient they should either charge for services other than through taxes or eliminate certain tax exemptions and keep the exemptions that are needed. Ms. Sterker Cost Control Commission Regular Open Session September 11, 2012 Page 3 SUBJECT DISCUSSION ACTION indicated that the Commission should look into ways in simplifying the responsibilities in the Real Property Tax Division to make it run fair and more efficient. She suggested that the Commission review the list of tax exemptions line by line. Chair Apao stated that exemptions that are on the top of the list are the Federal, State, and County tax exemptions in which the Commission cannot do anything about. Ms. Sterker agreed with Chair Apao and suggested that the Commission start with the Hawaiian Homes Commission tax exemption. Chair Apao also indicated that is another exemption in which the Commission cannot do anything about either. Ms. Sterker indicated that in addition to the Hawaiian Homes Commission tax exemption, there were other tax exemptions such as the Hawaiian Homes land basic, multiple, total land, and vacant land, including the seven (7)year tax exemption. She further indicated that some of which have zero amount of exemptions. She suggested that the Commission eliminate those with zero exemptions. Vice Chair Chaffin asked whether there is duplication of services to process the various Hawaiian Homes categories. Mr. Kaneshiro stated that he remains still unclear on what defines a Hawaiian Homes basic and multiple tax exemption. Chair Apao explained that the Hawaiian Homes have a seven (7) year tax exemption in which they do not have to pay real property taxes until after the seventh year. He also mentioned that the Hawaiian Homes homesteaders do pay for trash pick-up services. Cost Control Commission Regular Open Session September 11, 2012 Page 4 SUBJECT DISCUSSION ACTION Mr. Kaneshiro asked whether the Hawaiian Homes lessees pay the minimum real property tax after the seventh year has passed. Chair Apao believed that the lessees do pay the minimum real property tax once the seventh year has passed. Mr. Kaneshiro voiced his concern that the information that was provided to the Commission on the number of exemptions by type for the entire State was not classified or reflected in the County ordinance. Ms. Sterker indicated that it would be helpful to refer only to tab (4) of the binder which lists the tax exemptions by type for the County of Kauai. Ms. Sterker mentioned that the Commission still has not received a response to an inquiry on why the Hawaiian Homelands (all types) are exempt. Ms. Clark pointed out that Section 5A-11.23 of the Hawaii Revised Statutes states that the Hawaiian Homes Commission Act of 1920 which was enacted prior to November 7, 1978, and shall remain in effect and be recognized by the County in its administration of the real property tax system provided that the real property is leased under the homestead and not under the general leases pursuant to the authority granted the Department of Hawaiian Homes Lands (DHHL) by section 207 of the Hawaiian Homes Commissions Act, 1920 shall be exempt from real property taxes, and shall have a seven year limitation on the exemption afforded by the Section 208 of the Hawaiian Homes Commissions Act, 1920. Ms. Sterker inquired how the County is keeping track of the properties that have reached the seven year mark. Vice Chair Chaffin questioned when does the seven year exemption first apply, and also whether the title can be passed on to another family member which would start the seven(7)year cycle again. Cost Control Commission Regular Open Session September 11, 2012 Page 5 SUBJECT DISCUSSION ACTION Chair Apao indicated that the Hawaiian Homes does not follow the same process as one would do when recording a title transfer which would go through the State Bureau of Conveyances. Mr. Kaneshiro expressed that he would also like to know how the County keeps track on the properties with the seven(7)year tax exemption. Chair Apao suggested that the Commission inquire with the Real Property Tax Division to provide some insight on the methodology. Ms. Sterker suggested placing the exemption type for Home Use ages 60- 69 (all types) and Home Use ages 70+ (all types) all into Basic Home Use (all types). She explained that by placing these tax exemptions into the Basic Home Use (all types) category the County could then tax them at a higher flat rate then what it is now. But, at a lower rate for the 60-69 and 70+ age groups. She acknowledged that although this may draw concern for seniors who live on a fixed income they may qualify for the Circuit Breaker tax exemption. Chair Apao reminded the members that the Commission's goal is to make recommendations on what it believes is good for the County and fair to the taxpayer. Mr. Chaffin suggested that the Commission ask Mr. Hunt to provide some of his suggestions on the areas in which he feels could be a cost reduction for the County and just focus on those recommendations. Chair Apao recalled a statement made by Mr. Hunt in which he said, Cost Control Commission Regular Open Session September 11, 2012 Page 6 SUBJECT DISCUSSION ACTION "regardless if they get taxed or not they would still have to go out into the field and do the assessment". In regard to the various nonprofit organizations tax exemptions, Ms. Sterker suggested that the Commission begin by looking into the possibility of eliminating the organizations that do not take contributions and assess them with real property tax if the building they are operating out of is owned by that organization. Mr. Kaneshiro questioned whether that was a good idea. Ms. Sterker stated that anyone can donate money to a charitable organization and use it as a tax write off. Ms. Sterker questioned whether the federal 501 (c) (3) organizations differ from state to state. Ms. Clark replied no. Ms. Sterker asked whether a charitable foundation is designated under the federal Code Section 501 (c) (3). Ms. Clark assured that all charitable foundations are designated under federal Code Section 501 (c) (3); however, Ms. Clark indicated that she was not sure which of the foundations actually takes contributions. Ms. Sterker suggested that the Commission maintain the tax exemption for the nonprofit organizations that typically either donate funds or give their support to other organizations, or provide the source of funding for its own charitable purpose alone. She further suggested that the Commission eliminate the property tax exemption for the nonprofit organizations that do not take or allow contributions or support other organizations. Mr. Kaneshiro voiced his concern that the time and effort expended by the Cost Control Commission in reviewing the property tax exemptions and trying to find out where the inefficiencies are may not result in meaningful Cost Control Commission Regular Open Session September 11, 2012 Page 7 SUBJECT DISCUSSION ACTION recommendations by this body. He further indicated that they lacked the technical background and knowledge to adequately determine which tax exemptions should be maintained, revised or eliminated. Ms. Sterker suggested that the Commission work together to come up with its recommendations and present them to Mr. Steve Hunt, Real Property Review Officer, to see if he would be willing to provide some added insight and direction. Ms. Sterker stated that she would not have a problem in making a recommendation that would eliminate the tax exemption for the Credit Unions. She indicated that that the Credit Unions are operating like a bank. Mr. Chaffin concurred that he would have no problem in seconding that motion. He suggested that the Commission defer this matter for continued discussion at the next meeting. Ms. Sterker reiterated that the Commission's responsibilities are to review with the aim of eliminating or becoming more efficient. In this case, the Commission would be lessening the work load for the real property tax division by eliminating certain tax exemptions. Additionally, Ms. Sterker questioned whether it would be more efficient for the real property tax division if the Commission voted to recommend eliminating the tax exemptions with zero amounts, and taking away the Basic Home exemption, age differences, and having just one Basic Home exemption. Mr. Kaneshiro recalled that at a previous meeting, the Commission agreed to maintain the tax exemptions for the Disabled, Disabled Veterans, and Safe Rooms. Cost Control Commission Regular Open Session September 11, 2012 Page 8 SUBJECT DISCUSSION ACTION Chair Apao commented that it may be difficult for Mr. Hunt to make a suggestion because he seems to have his own ideas that are outside of his position as the real property tax appraiser for the County and the Administration. Mr. Kaneshiro voiced his concern that he doesn't want to have go through each tax exemption with Mr. Hunt just to ask him which exemption he felt should be maintained or eliminated. Mr. Chaffin stated that he would like the opportunity to ask Mr. Hunt to provide input on which tax exemption should be combined or eliminated. Ms. Sterker asked for information concerning patriotic societies under Title 36 of the United States Code; Title 36, Part B. Ms. Clark indicated that she would e-mail that information to Staff. Ms. Sterker questioned the difference between the Kuleana land and Hawaiian Homes. Ms. Clark explained that Kuleana land are individually owned whereas, the Hawaiian Homes lands are leased to native tenants for a certain amount of years, and are owned by the Office of Hawaiian Affairs, charged with the administration of 1.8 million acres of royal land held in trust for the benefit of native Hawaiians. Mr. Kaneshiro commented that any individual regardless of their ethnicity may purchase a Kuleana but, not a Hawaiian Home land. Chair Apao stated that the questions revolve around the issue of which exemptions the Commission felt that should be either maintained or eliminated. He indicated that the Commission should take the time to Cost Control Commission Regular Open Session September 11, 2012 Page 9 SUBJECT DISCUSSION ACTION think about its questions and instructed the members to send their questions to Staff by early next week. Ms. Tamura-Amoy suggested that the Commission should forward their questions as early as next week to give Mr. Hunt adequate time for a response. CCC 2012-13 Discussion on the County's travel,policy. budget and expenditures. (Deferred on 08/13/12) Chair Apao suggested that the Commissioner defer this item for continued discussion at the October meeting. Announcements Next meeting- October 8, 2012, at 1:30 p.m. at the Mo'ikeha Building, Liquor Conference Room 3. Adjournment Chair Apao called for the motion to adjourn the meeting. Ms. Sterker moved to adjourn the meeting at 3:13 p.m. Mr. Chaffin seconded the motion. Motion carried 4:0 Submitted by: Reviewed and Approved by: Mercedes Youn, Staff Support Clerk Vice-Chair Lawrence Chaffin Jr., Chair (X) Approved as circulated on October 8, 2012. ( ) Approved as amended. See minutes of meeting.