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HomeMy WebLinkAbout011413 CCC Open Session_APPROVED_1m(cz)(tt)COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board /Committee: I COST CONTROLCOMMISSION Meeting Date I January 14, 2013 Location Mo'ikeha Building — Liquor Conference Room 3 Start of Meeting: 1:30 p.m. I End of Meeting: 2:56 p.m. Present Chair Sandi Sterker; Vice -Chair Arryl Kaneshiro; Members: Dirk Apao; Lawrence Chaffin Jr., Glen Takenouchi; and Laurie Yoshida Also present: First Deputy County Attorney Amy Esaki; Board & Commissions Office Staff. Support Clerk Mercedes Youn; Administrator Paula Morikami; Administrative Aide Teresa Tamura; Council Services Review Officer Scott Sato; Purchasing and Budget Director Ernest Barreira; and County Attorney Alfred Castillo, Jr. Excused Absent SUBJECT DISCUSSION ACTION Call To Order Chair Sterker called the meeting to order at 1:30 p.m. Approval of Regular Open Session Minutes of December 10, 2012 Commissioner Takenouchi moved to approve Minutes the minutes as circulated. Commissioner Chaffin seconded the motion. Motion carried 6:0 Communications CCC 2013 -01 Memorandum dated 12/13/12 from Council Chair Jay Furfaro to Chair Dirk Apao and Members of the Cost Control Commission, requesting agenda time to make a presentation on the financial position of the County of Kauai as it relates to Departmental expenditures versus budgeted amounts. Chair Sterker called for a motion to receive item CCC 2013 -01. Commissioner Yoshida moved to receive item CCC 2013 -01. Commissioner Chaffin seconded the motion. Motion carried 6:0 The following three (3) communications were distributed to the members and added to the agenda prior to the meeting: • Memorandum dated 01/04/13 from Council Chair Jay Furfaro was Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 2 SUBJECT DISCUSSION ACTION distributed to the members requesting for a deferral of his presentation relating to Departmental Expenditures versus Budgeted Amounts. • Copy of Communication dated 12/07/12 from Mayor Bernard P. Carvalho, Jr. to Council Chair Jay Furfaro, regarding plans to use the Pi'ikoi space vacated by Big Save, Inc. for additional storage and archival purposes. • Memorandum dated 01/09/13 from Council Chair Jay Furfaro, regarding information on a list of all vacant positions in the County of Kauai as of December 31, 2012, and a request from Council to the Department of Public Works, Building Division regarding the Monthly Report on Building Permit Activity. Scott Sato, Council Services Review Officer, stated that he is here today to represent Council Chair Furfaro, who was unable to attend the meeting due to a family matter. Mr. Sato began by presenting an overview of the information, and invited the Commission to ask questions or, if needed, request for any additional information by contacting Council Services who would be able assist the Commission. Chair Sterker stated that she had no specific questions at this time and suggested that the Commission defer this item for continued discussion and deliberation at the next meeting in February in anticipation of Council Commissioner Yoshida moved to defer item Chair Furfaro's return. CCC 2013 -01. Commissioner Chaffin seconded the motion. Motion carried 6:0 CCC 2013 -02 Memorandum dated 12/12/12 from Chair Dirk Apao to Ben Sullivan, Economic Development Specialist, requesting for information as Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 3 SUBJECT DISCUSSION ACTION it relates to energy savings for County facilities. • A copy of an e -mail dated 01/09/13 from Energy Coordinator Ben Sullivan, regarding a response relating to the air conditioning system in the Police Department. Commissioner Yoshida indicated that the response from Mr. Sullivan did not provide the answers to the specific questions regarding energy savings for County facilities. Chair Sterker stated that she agrees with Commissioner Yoshida, and asked whether there were plans to implement a photovoltaic system in the Police Department facility. Commissioner Yoshida stated that it is her understanding that no plans were initiated to install a photovoltaic system in the building. Chair Sterker questioned whether there was any thought to install a photovoltaic system in the future. First Deputy County Attorney Amy Esaki suggested that the Commission refer the question to the Office of Economic Development. Chair Sterker requested that the Commission be provided with information on whether the County is considering a plan to install a photovoltaic system in any of its facilities. Commissioner Chaffin questioned whether the Commission may want to consider a recommendation to include a design plan as part of the Energy Savings Performance Contract that would include installation plans of a photovoltaic system in County facilities. If successful, this would yield significant savings. He explained that initially, it is estimated to be more cost effective to install a single central air cooling system at the time of construction than it is to install two (2) separate systems because each unit is going, in the long run, cost the County more. Commissioner Yoshida stated that the design plan should only include those facilities that are utilized 24/7. Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 4 SUBJECT DISCUSSION ACTION With no further discussion, Chair Sterker called for a motion to receive both items. Commissioner Chaffin moved to receive item CCC 2013 -02 and the e -mail dated 01/09/13. Commissioner Takenouchi seconded the motion. Motion carried 6:0 CCC 2013 -03 Communication dated 10/26/12 from First Deputy County Attorney Amy Esaki, to Chair Dirk Apao and Members of the Cost Control Commission, regarding information as it relates to real property profit organization exemption list. Chair Sterker called for a motion to receive item CCC 2013 -03. Commissioner Chaffin moved to receive item CCC 2013 -03. Commissioner Takenouchi seconded the motion. Chair Sterker stated that according to Ms. Esaki's response, she indicated that the County's real property records showed only thirty -two (32) non- profits out of the three hundred (300) parcels listed are paying more than the minimum tax. She asked for a listing of the 32 non - profit organizations that are paying more than the minimum tax. Commissioner Chaffin asked how much more than the minimum are the non - profit organizations paying and whether it would make sense to have everyone pay below the minimum to save the County money. Ms. Esaki explained that the non - profits who are leasing to a private organization for profit are getting assessed at the normal tax rate. Commissioner Yoshida commented that it could also work the exact opposite because there are some non - profit organizations who lease for profit that were able to carve out an exemption based on the conditions of their lease, which made it possible for them to be able to qualify for the Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 5 SUBJECT DISCUSSION ACTION non - profit tax exemption. Ms. Esaki acknowledged the request and stated that she would provide the information prior to the next meeting in February. She advised the Commission that since a motion had already been made to "receive" this item, she suggested that the Commission withdraw its motion and make a new motion to defer the matter for continued discussion in February. Commissioner Chaffin moved to withdraw his motion. Commissioner Takenouchi seconded the motion. Motion carried 6:0 Commissioner Yoshida moved to defer item CCC 2013 -03. Commissioner Takenouchi seconded the motion. Motion carried 6:0 Business CCC 2012 -13 Discussion on the County's travel budget, per diem polices, and expenditures. (On-going) • (d) Memorandum dated 12/12/12 from Chair Dirk Apao to Wallace Rezentes, Jr., Director of Finance, requesting for additional information as it relates to the County's travel budget. Chair Sterker called for a motion to receive item CCC 2012 -13 (d). Commissioner Takenouchi moved to receive item CCC 2012 -13 (d). Commissioner Yoshida seconded the motion. Motion carried 6:0 • Communication dated 01/02/13 from Ernest Barreira, Budget Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 6 SUBJECT DISCUSSION ACTION Purchasing Director, to the Cost Control Commission, regarding updated travel information. Chair Sterker called for a motion to receive the communication dated Commissioner Yoshida moved to receive the 01/02/13 from Purchasing and Budget Director Ernest Barreira, regarding communication dated 01/02/13. Commissioner updated travel information. Chaffin seconded the motion. Mr. Barreira entered the meeting at 1:57 p.m. Ernest Barreira, Budget and Purchasing Director presented a report on the Budget Travel (General & Training) original & revised. He explained that the direct comparisons between each fiscal year are very difficult to do in this situation because as the County continues to improve on its budgeting process it is getting more detailed. For example, the 2012 numbers will not allow a direct comparison between 2011 and 2010 because the way the funds were allocated within the budget appropriations package may have differed. Mr. Barreira stated that he would like an opportunity to visit the Commission next year because he would be able to provide the Commission with finite pieces of the different elements of travel from both the funding source perspective as well as elements such as what is tuition, actual airfare, and per diem, etc. Mr. Barreira stated that the Budget Analyst instructions for this year, as well as for fiscal year 2014, were made very clear to the departments that in the upcoming fiscal year they are to budget much more specifically for all travel related items. Mr. Barreira added that his office has allocated the proper account numbers so that they can measure it much better because they found it difficult to measure based on a lump sum of numbers when they don't know how much of that is comprised of travel, and how much of it involved per diem or other types of travel related expenditures. Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 7 SUBJECT DISCUSSION ACTION Mr. Barreira acknowledged that the data that was provided to the Commission was not particularly useful to the Commission from a year to year comparison, although the Commission can look at the totals and garner an idea of what his office is doing in terms of travel patterns. Chair Sterker asked whether it would be cost effective for the County to have the trainer (s) come to Kauai rather than having a bunch of people who have to travel to the conference. Mr. Barreira agreed, and explained that in his former employment at the State level, the State was committed in purchasing technological equipment which afforded for video conference capabilities. Mr. Barreira noted that the real question is whether there is a better return on investment to achieve the same or better outcome and at the same time be conscientious about the cost involved. Mr. Barreira explained that there are some travels that are grant related. Once you apply for the grant and receive grant funds partially attributable to travel related requirements, if you don't meet those requirements it could be a violation of the grant reward. But more often than not, for travel that is budgeted under general funds or in special funds, the intention is to take a closer look at travel and see if there is a better way to achieve the desired outcome without having to expend as much money. Mr. Barreira informed the Commission that his office has not made any decisions or recommendations to the Mayor and that everything including travel will be looked at very closely in the upcoming year. Commissioner Yoshida stated that in the Budget and Travel Report she noticed that in the Office of the Prosecuting Attorney there was very little money spent. She asked whether that meant that the monies were lost or whether it was money that was not allocated to make them cautious in Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 8 SUBJECT DISCUSSION ACTION spending money that was never received. Mr. Barreira stated that he could not provide a definite answer because it depends on the nature of the funding source. He explained that many times there is a definite end date for the funding and, whether it is provided by the federal or state funds, he is not sure whether it would lapse as a result of it not being expedited for the travel in which the funds were budgeted. Mr. Barreira assured the Commission that his office is taking a closer look when conducting an analysis on budgeted amounts on what was expedited and whether there is an opportunity to address that proactively. Commissioner Chaffin asked, in his new position as the County's Budget and Purchasing Director, what other overall improvements could be made in the County. Mr. Barreira explained that prior to 2012 the budget division was handled by Mr. Alvin Honda who served in his capacity as the County's Budget Administrator for about 40 years. At the time of his retirement, it was determined that a division comprised of an Analyst as well as an Administrative post would best meet the needs of the County in terms of moving forward in executing effective and efficient budget polices. He further explained that his role as the County's Budget and Purchasing Director is unusual because the position doesn't exist in both the state and county. When he was asked by the Mayor to hold down both positions (Assistant Chief Procurement Officer and Budget /Purchasing Director) he agreed because he felt that every other element in the County operations is very much related and that every dollar that is spent finds its way through the Division of Purchasing. He stated that with the creation of a new Budget Team, it saved the County roughly $10,000 and is comprised of three (3) individuals which includes himself and two (2) Budget Analysts - Ms. Ann Wooten and Mr. Ken Shimonishi Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 9 SUBJECT DISCUSSION ACTION Mr. Barreira stated that the vision for his office is to look at, not only the County's current budgeting process in terms of revenues and expenditures, but to also look toward budgeting for outcomes. This is a very big initiative for his office in terms of planning, which is to find a better way to allocate the County's resources based on a comprehensive review of what the county does and what the charge is to the public, and to make sure that the County allocates adequate resources to meet its highest priority needs. He stated that the biggest challenge his department now faces is the absence of Finance Director Wallace Rezentes, Jr., who has been with the County for over 14 years. Chair Sterker asked whether the reduction in training costs was due to the increased use of social media. Mr. Barreira replied that not every training and travel can be replaced by some technical resource because sometimes you have to be in the same room. He added that more research is needed to see whether social media is indeed more cost effective. Mr. Barreira left the meeting at 2:10 p.m. Chair Sterker stated that based on Mr. Barreira's informative presentation, she felt that the Commission no longer needed to pursue the travel budget for now, and suggested that the Commission wait for another update from Mr. Barreira in the future. With no further discussion, Chair Sterker called for the vote. Motion carried 6:0 CCC 2012 -15 Discussion on the County's real property tax age exemptions. (On- going) Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 10 SUBJECT DISCUSSION ACTION • (c) Memorandum dated 12/11/12 from Chair Dirk Apao to Wallace Rezentes, Jr., regarding a request for additional information as it relates to Age Tax Exemption. Chair Sterker called for a motion to receive item CCC 2012 -15 (c). Commissioner Chaffin moved to receive item CCC 2012 -15 (c). Commissioner Takenouchi seconded the motion. Motion carried 6:0 Chair Sterker noted that she thought the memorandum should have read age 65 and over rather than age 60 and over. Ms. Morikami clarified to the Commission that based on its discussion at its last meeting, on a proposal to amend the current tax age exemption by eliminating the middle age bracket, some Commissioners shared their concerns that the recommendation lacked certain key elements specifically on what the ramifications would be to eliminate the middle tax age bracket. A motion was made by Commissioner Kaneshiro to specifically request information on the age exemption for age 60 and 60 and over in which the motion passed. Commissioner Kaneshiro added that the Commission had previously asked for information on age tax exemption for age 65 and over however, the real property tax division was not able to provide that type of information because the age bracket was not broken out as age 65 and over. Commissioner Yoshida asked whether the Commission would feel comfortable to assume that majority of the 3,490 taxpayers aged 60 to 69 with home use exemptions are half that amount. Chair Sterker estimated that at least 1700 plus taxpayers that are in the Homestead tax class would lose their tax exemption if the Age Exemptions were broken out in two Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 11 SUBJECT DISCUSSION ACTION categories. Commissioner Yoshida indicated that it would be hard to adequately determine what the cost and time savings would amount to as far as reducing on the age exemptions, and felt that there would no real cost savings for the County. Commissioner Kaneshiro stated that he agrees with Commissioner Yoshida that there would be no real cost savings for the County because of the time and effort expended by the real property tax division in processing each tax category. Whether there is one or two would not make a difference because it still has to be done manually. Chair Sterker asked whether the Commission wanted to continue to pursue a proposal to raise the minimum age to qualify for an age- related real property tax exemption. Commissioner Yoshida stated that although the recommendation may lessen the workload in processing time, the revenues may not be significant for the County. • (d) Communication dated 12/19/12 from Wallace Rezentes, Jr., Director of Finance to Chair Dirk Apao, responding to o the Commission's request for additional information as it relates to Age Tax Exemption. Chair Sterker asked if it is the Commission's desire not to pursue a recommendation to Council to change the Age Tax Exemption. All members present agreed. Chair Sterker called for a motion to receive item CCC 2012 -15 (d). Commissioner Yoshida moved to receive item Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 12 SUBJECT DISCUSSION ACTION CCC 2012 -15 (d). Commissioner Takenouchi seconded the motion. Motion carried 6:0 CCC 2012 -16 Discussion on the Countsspecial counsel contracts and expenditures to date. (On- going) • (e) Memorandum dated 12/11/12 from Chair Dirk Apao to Alfred Castillo, Jr., County Attorney, regarding arequest for a response as _ _ it relates to special counsel contracts. Chair Sterker called for a motion to receive item CCC 2012 -16 (e). Commissioner Yoshida moved to receive item CCC 2012 -16 (e). Commissioner Chaffin seconded the motion. Motion carried 6:0 County Attorney Alfred Castillo, Jr entered the meeting at 2:23 p.m. Chair Sterker reiterated the Commission's question on what are the pros and cons on hiring more staff for a Specialized Litigation Team in the County Attorney's Office to reduce special counsel needs. Mr. Castillo informed the Commission that he did not provide a written response because his response would contain a whole gambit of information in which he felt would be better received verbally. He stated that it has always been a dream of his to have a Specialized Litigation Team in the County Attorney's office to assist with settling controversies or disputes brought before a court of law by the parties involved for a resolution. Mr. Castillo shared with the Commission that the actual salary for a Deputy County Attorney is about $143,000 per year and when he was Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 13 SUBJECT DISCUSSION ACTION hired for the position of the County Attorney, one of his priorities was to look into the need for special outside counsel mainly because they would not have to do the work themselves and fortunately he was able to bring in litigators. Mr. Castillo noted that once the amount of cases began to decrease the need for litigators became less and the burden of litigation fell upon the deputies. He explained that this created an added burden on the deputies and that it affected their ability to service the various departments within the County which included the County Council. Mr. Castillo stated that the County Attorney's Office currently handles nine (9) cases in the U.S. District Court; two (2) cases in the Hawaii Supreme Court; one - hundred and one (10 1) Tax Appeal cases; eleven (11) cases in the 5th Circuit Court, twenty -three (23) cases in District Court, and several employment cases. Mr. Castillo stated that it is difficult to quantify the amount of work that the County Attorney's Office does because other than the Prosecutor's Office, who keeps their own statistics on the amount of work that they do, the County Attorney's Office does not because he feels that it serves no purpose. However, he assured the Commission that the County Attorney's Office is hard at work handling many cases. Mr. Castillo stated that his greatest challenge by far, is reviewing personnel cost to determine how many hours are dedicated to this specific issue. In dealing with this issue, he noted that he would need at least two (2) litigators that would remain separate and apart from servicing the departments. He also mentioned that there is a need for more training when it comes to personnel issues in each department. Commissioner Takenouchi asked what specific type of training is needed. Mr. Castillo stated that more training should be made available at the supervisory level because a supervisor needs to have the knowledge and Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 14 SUBJECT DISCUSSION ACTION the willingness to follow the proper procedures when dealing with personnel issues. He explained that when an employee files a harassment complaint for example, the supervisor must take immediate and necessary actions to ensure that all of the proper procedures are followed. In doing so, this will not only protect the County but prevent a lawsuit from happening. Mr. Castillo noted that every department needs to take a more proactive approach in doing what is right because as the Attorney for the County he knows very well how the situation can turn into something unpleasant. Commissioner Yoshida asked whether the training should be also offered to the front line people to help them gain more knowledge when dealing with personnel issues. Mr. Castillo said in looking at personnel cost that area alone is a huge undertaking and that training is just one of those areas. The "bottom line" is a supervisor needs to carry out their responsibilities to the fullest and make sure that it is followed through. Chair Sterker asked if the County Attorney's office has a backlog of cases and what would be more of a backlog than is expected. Mr. Castillo stated that in terms of backlog cases, one area that comes to mind is "collections" however, one must keep in mind that prioritizing is first and foremost. Chair Sterker stated that one of the concerns of the Commission is the cost of hiring outside special counsel for certain cases. She asked whether there was any consideration in hiring a local litigation team instead of going elsewhere. Mr. Castillo explained that the County Attorney's office has a list of qualified litigators that they select from and depending on the circumstances of each case, if it is determined that special outside counsel is needed then the proper steps are taken to secure special outside counsel. He also shared with the Commission his concern about bringing in special Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 15 SUBJECT DISCUSSION ACTION counsel and the reasons why however, in certain cases it cannot be avoided. The good thing about having a dedicated specialized litigation team is that you have control over conflict of interest cases. Chair Sterker asked whether a litigation team could do other types of work rather than just strictly litigation. Mr. Castillo said yes, and another good thing about having a litigation team is that they can be involved in doing research and writing which is a great help for the deputies. Commissioner Yoshida asked if spending $300,000 to hire two (2) litigators would, in the long run, save the County more money in the fees for special counsel and/or by the reduction of the actual payouts, i.e. settlements. Mr. Castillo said that it would have to do with the fees because there was a case in which there was a possibility that the litigation team had to be separated from the rest of the County Attorneys due to a conflict of interest. Commissioner Yoshida stated that if the Cost Control Commission proposed a recommendation to hire a two (2) member litigation team for consideration to the administration, the Commission would have to know that by doing so it would save the County money in the long run by either a reduction in the fees, which would be easier to determine, because it would be difficult to say whether the two (2) litigators actually brought the cost down on what would be a paid out in a case. Mr. Castillo stated that he would provide the Commission with information on the actual cost and how it would benefit the County Attorney's Office, stating that they would be able to provide better, more effective service to the departments because it would alleviate the time spent on litigation that could be used towards doing something else. Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 16 SUBJECT DISCUSSION ACTION Chair Sterker agreed and felt that having background information would be useful to the Commission in making a meaningful recommendation. Mr. Castillo acknowledged the Commission's request and stated that he would do his best to provide the Commission with the information he has. Commissioner Chaffin asked whether it would be appropriate for the Commission to ask the County Attorney's Office for suggestions or a recommendation on whether the department should maintain, increase or reduce its staff to make way for more outside counsel, and which is the least expensive. Commissioner Yoshida said that she does not think the County can completely eliminate special outside counsel because there are going to be cases where special outside counsel is absolutely necessary. However, if the County Attorney's Office is using special outside counsel specifically for workload because there is not enough time for the attorneys to take on additional cases, then there is a conflict or the conflict could be reduced by having separate teams to easily offset the cost. Mr. Castillo said that his office does not have the expertise to practice in Federal Court but is looking into it. Commissioner Chaffin asked whether outside special counsel have different firms with different expertise. Mr. Castillo said yes. Commissioner Chaffin stated that he still wants either a suggestion or recommendation that would help reduce the cost to the County. Mr. Castillo stated that he would address the question in his next communication to the Commission and would include the pros and cons of having a specialized litigation team. Mr. Castillo left the meeting at 2:55 p.m. Announcements Next meeting — February 11, 2013 at 1:30 p.m. at the Mo'ikeha Building, Liquor Conference Room 3. Cost Control Commission Regular Meeting - Open Session January 14, 2013 Page 17 SUBJECT DISCUSSION ACTION Adjournment Commissioner Chaffin moved to adjourn the meeting. Commissioner Takenouchi seconded the motion. Motion carried 6:0 The meeting adjourned at 2:56 p.m. Submitted by: Mercedes Youn, Staff Support Clerk (X) Approved as circulated on February 11, 2013. ( ) Approved as amended. See minutes of meeting. Reviewed and Approved by: Sandi Sterker, Chair