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HomeMy WebLinkAbout10-13-14 Agenca PacketArryl Kaneshiro Members: Chair Dirk Apao Jan Hashizume Joanne Nakashima Sandi Sterker Laurie Yoshida Glen Takenouchi Vice Chair COUNTY OF KAUA'I COST CONTROL COMMISSION NOTICE OF MEETING AND AGENDA Monday, October 13, 2014 1:30 p.m. or shortly thereafter Mo'ikeha Building, Liquor Conference Room 3 4444 Rice Street, Lihue, HI 96766 CALL TO ORDER APPROVAL OF MINUTES Regular meeting minutes of September 8, 2014 BUSINESS CCC 2014 -09 Review and discuss the County of Kauai 2013 CAFR and the County's revenues — fees, rates, assessments and taxes for fiscal 2014 -15. (Deferred on July 14, 2014) (b) Memorandum dated September 15, 2014, from Chair Arryl Kaneshiro to County Engineer Larry Dill, requesting his presence to discuss solid waste /sanitation operations and expenses including reasons for the substantial budget increases from 2009 and 2013 ANNOUNCEMENTS Next regular monthly meeting, Monday, November 10, 2014, at 1:30 p.m. at the Mo'ikeha Building, Liquor Conference Room 3. NOTICE OF EXECUTIVE SESSION Pursuant to Hawai'i Revised Statutes §92 -7 (a), the Commission may, when deemed necessary, hold an Executive Session on any agenda item without written public notice if the Executive Session was not anticipated in advance. Any such Executive Session shall be held in pursuant to H.R.S. §92 -4 and §92 -9 and shall be limited to those items described in H.R.S. §92 -5(a). Discussions held in Executive Session are closed to the public. I_\ VI9]U.I►� Y An Equal Opportunity Employer PUBLIC COMMENTS and TESTIMONY Persons wishing to offer comments are encouraged to submit written testimony at least 24 -hours prior to the meeting indicating: 1. Your name and if applicable, your position/title and organization you are representing 2. The agenda item that you are providing comments on; and 3. Whether you will be testifying in person or submitting written comment only. 4. If you are unable to submit your testimony at least 24 hours prior to the meeting, please provide 10 copies of your written testimony at the meeting. The length of time allocated to person(s) wishing to present verbal testimony may be limited at the discretion of the chairperson or presiding member. cc: Deputy County Attorney Mona Clark Send written testimony Cost Control Commission Attn: Mercedes Omo Office Boards and Commissions 4444 Rice Street, Suite 150 Lihue, HI 96766 E -Mail: myoun(aakauai.gov Phone: (808) 241 -4920 Fax: (808) 241 -5127 SPECIAL ASSISTANCE If you need an alternate format or an auxiliary aid to participate, please contact the Boards and Commissions Support Clerk at (808) 241 -4920 at least five (5) working days prior to the meeting. 2 1 P a g e Cost Control Commission — October 13, 2014 COUNTY OF KAUAI =%bow Minutes of Meeting OPEN SESSION Board/Committee: Cost Control Commission Meeting Date I September 8, 2014 Location Mo'ikeha Building — Liquor Conference Room Start of Meeting: 1:35 p.m. End of Meeting: 3:11 p.m. Present Chair Arryl Kaneshiro; Vice Chair Laurie Yoshida; Members: Dirk Apao, Jan Hashizume and Sandi Sterker Also present: Boards & Commissions Office Staff: Support Clerk Mercedes Youn; Administrator Paula Morikami; Administrative Aide Teresa Tamura; Director of Finance Steve Hunt (Left the meeting at 2:54 p.m.) Excused Commissioners Joanne Nakashima and Glen Takenouchi Absent SUBJECT DISCUSSION ACTION Call To Order Prior to the start of the meeting, Administrative Assistant to the County Clerk Eddie Topenio officiated with the Oath of Office for new Commissioner Jan Hashizume. Chair Kaneshiro called the meeting to order at 1:35 p.m. with five (5) members present to _ ascertain a quorum. Approval of Regular Open Session Minutes of July 14, 2014. _ Commissioner Sterker moved to approve the Minutes July 14, 2014 meeting minutes as circulated. Vice Chair Yoshida seconded the motion. i Motion carried 5:0 Business Review and discuss the County of Kauai 2013 CAFR and the County's revenues — fees, rates, assessments and taxes for fiscal year 2014 -15. CCC 2014 -09 (a) Memorandum dated July 15, 2014, from Chair Amyl Kaneshiro to Director of Finance Steve Hunt, requesting his presence to discuss the methodologies /philosophy used to formulate the County of Kauai Revenues relating to fees, rates, assessments and taxes for fiscal year 2014 -15. Cost Control Commission Regular Open Session September 8, 2014 Page 2 SUBJECT DISCUSSION ACTION Director of Finance Steve Hunt provided the Commissioners with hard copies of his Powerpoint presentation (On File) containing illustrations relating to the following four main topics: 1. County of Kauai Budget Ordinance for FY 2015 revenues by fund. 2. Where the money is being spent 3. Impact of removing the Permanent Home Use Tax Cap 4. How property taxes are divided by tax classification Understanding CountYRevenues Mr. Hunt began his presentation by stating that the County of Kauai has 181 million dollars in its operational budget that reflects a balance sheet and an income sheet of projected revenues and projected expenses including surplus funds that may be used to balance the budget. He stated although the budget took in 11.7 million dollars in fund balance the balance sheet is depleting most of the County's fund balances because it's neither 4 sustainable budget nor a budget where the revenues and expenditures are paired. He noted there is roughly 4.9 million dollars left in the General Fund that can be used for any type of emergency. Where is the money being g`pent Mr. Hunt stated in fiscal year 2009 the County had a total of 171 million dollars in expenditures amounted, but by fiscal year 2013 it increased to 203.4 million dollars reflecting a 32 million dollar increase that came primarily from Public Safety ($14 million increase) and Sanitation ($14.5 million increase) showing an overall growth of 4.7% per year from 2009 to 2013. Cost Control Commission Regular Open Session September 8, 2014 Page 3 SUBJECT DISCUSSION ACTION Impacts of Removing the Permanent Home Use Tax Cap Mr. Hunt stated the most traumatic change for most homeowners was the removal of the PHU tax cap (Permanent Home Use). He explained in 2013 the Real Property Tax Division used current data to estimate the type of impact it would have with the assumption that there would be no changes to the tax rates. As a result, the basic home exemption increased from $48,000 to $160,000; Ages 60 -69 from $96,000 to $180,000; and Ages 70 plus from $96,000 to $200,000. He stated two separate groups were analyzed one of which was the Island -Wide group with 12,340 parcels, which includes properties that have home use exemptions regardless of the tax class, and the Homestead group with 10,510 parcels, which includes properties with home use exemptions that are used exclusively as owner- occupied residences and/or have Long -Term affordable rentals on the property. Mr. Hunt explained the Homestead group are properties that are occupied as the principal dwelling place of the homeowner with no income produced capabilities, but can have multiple dwellings and still qualify for one Homestead Exemption. However, if the homeowner claims a residence homestead exemption on another property on the mainland the County will remove the Homestead Exemption. Chair Kaneshiro asked how a homeowner in the residential class can apply for the GHE (General Homestead Exemption). Hr. Hunt explained it will require an initial application (with all required documentation) that must be submitted no later than September 30 of the year for which a homeowner is requesting the exemption. He further explained the GHE is mutually exclusive because the homeowner can have the exemption on a vacation rental; reside in another vacation rental on the property and still qualify for the GHE. However, the caveat is Long-Term Affordable Occupied Cost Control Commission Regular Open Session September 8, 2014 Page 4 SUBJECT DISCUSSION ACTION Rentals by itself has no exemption, but if the property is leased below the rates the homeowner can qualify for the Homestead Tax Rate, but not the exemption. He went on to say if there is a combination of renting a second home at the affordable rental rate, and the homeowner lives in another dwelling on any given parcel the owner would qualify for the exemption on one of the rentals and the entire property will be categorized in the Homestead. Chair Kaneshiro asked since the removal of the PHU cap (Permanent Home Use) does he anticipate more homeowners in the residential class filing for the General Homestead Exemption. Mr. Hunt replied most people already have the exemption, but there are new homeowners who are in the process of building a new home on family land who normally would not know about the GHE, and would have to file for the exemption the following year. But if it was the other way around where the new homeowner wanted to purchase a home they would work with their respective Escrow Company who would normally inform the homeowner about the GHE. Mr. Hunt explained, to put things into perspective, the Homestead tax class, as a whole, actually benefited from a $432,099 decrease in property taxes from 2013 to 2014; not to mention that slightly more owners in this tax class that received the decrease compared to those that got the increase. He stated of the 5,293 owners that received increases, 127 were simply moving to a higher minimum tax. There are only 246 Homestead taxpayers that received an increase greater than $500, which represents approximately 4.64% of the group of taxpayers and only 591 had a tax increase greater than $250. He noted that many of the outliers may have qualified, but did not apply for additional relief such as the Low Income Exemption and/or Home Preservation Limit tax credit. Cost Control Commission Regular Open Session September 8, 2014 Page 5 SUBJECT DISCUSSION ACTION Mr. Hunt referred to a chart showing tax comparisons Statewide for properties in the Homestead class valued at $250,000 and $500,000 for ages under 60 and ages 70 plus. The chart showed Kauai the most favorable in both categories compared to the other counties in terms of the amount of taxes paid with or without tax income exemption. Mr. Hunt stated the removal of the PHU cap taxes for the long -time homeowners increased by $515.06 between 2013 and 2014; however, the aggregate taxes from the same group decreased by $21.15 year - over -year, which only goes to show that the length of ownership is not always indicative of the inability to pay taxes, but creates a system of entitlements. How Property Taxes are Divided by Tax Classification Mr. Hunt referred to a chart showing the percentage of the different tax classification values and taxes paid in FY15. Mr. Hunt pointed out that the value in the residential class was at 32% which is slightly less than the 31% paid in taxes. The Homestead class showed the properties valued at 29 %, which the owners paid 10% of the taxes. But compared to the vacation rental class the value was at 14 %, which owners paid higher taxes at 22 %. Vice Chair Yoshida asked if residential class are considered regular rentals and not vacation rentals to which Mr. Hunt replied yes. Mr. Hunt stated on Wednesday, September 10 the County Council will be discussing a proposal to amend tax classification for the timeshare industry. The objective is to go back to the traditional comps by using comparable sales of condos and value of timeshares rather than using a methodology of a mathematical formula, which has nothing to do with the appraisal. Cost Control Commission Regular Open Session September 8, 2014 Page 6 SUBJECT DISCUSSION ACTION Chair Kaneshiro stated at the last meeting the Commission had questions regarding the County's fees and rates for FY15. Mr. Hunt stated unlike the previous years this is the first time the report was incorporated into the annual revenue budgeting process. Commissioner Sterker stated at a meeting last year, the Commission invited Parks Director Lenny Rapozo to talk about increasing the user fees for the County's recreational facilities, but he was against any fee increases because for economic reasons he felt that the local families should be able to use the facilities as a gathering place. She voiced her concerns on how the wear and tear has had a tremendous effect on the facilities, and that the public is taking advantage by using the County's electricity to charge their personal electronic devices. He stated unlike Maui County it has always been a policy for the County of Kauai to donate the use of park facilities to organizations like the Pop Warner Football Association and the American Youth Soccer League without charging a fee. He stated at this point he does not know whether the County wants to continue that as a policy or start looking at charging a fee. Vice Chair Yoshida asked if the responsibility fell on each department to review and update its own charges and fees versus having the Director of Finance take the responsibility. Mr. Hunt indicated that each department should be responsible for its own collection, review and update including recording the date the fees and charges were last modified. Vice Chair Yoshida asked if there are fees that cost more to process than it does to collect the fees. Mr. Hunt stated he has not looked into the matter, but one thing that comes to mind is the Hawaiian Homelands. Cost Control Commission Regular Open Session September 8, 2014 Page 7 SUBJECT DISCUSSION ACTION The Commissioners thanked the Director of Finance for taking the time out Vice Chair Yoshida moved to receive the of his busy schedule and for a great presentation. Chair Kaneshiro called memorandum dated July 15, 2014. for a motion to receive the communication dated July 15, 2014, for the Commissioner Sterker seconded the motion. record. Motion carried 5:0 Announcements Chair Kaneshiro announced that the next meeting of the Cost Control Commission will be on Monday, October 13, 2014, at 1:30 p.m. at the Mo' ikeha Building — Liquor Conference Room. Commissioner Sterker asked whether the Commission wanted to revisit the County's vehicle take home policy. Ms. Morikami noted because it's the start of a new fiscal year any financial information relating to cost savings would not be available. Also, from what she understands the police department is using subsidized vehicles as part of a cost saving measure. Chair Kaneshiro asked whether the Commission wanted to start a review of the 2013 CAFR, and if so, the Commission could take one section at a time. Vice Chair Yoshida asked if the Commission needed to decide today on a specific topic to place on next month's agenda. Ms. Morikami suggested that the Commissioners bring their ideas for discussion at the next meeting relating to how the County can cut costs. Vice Chair Yoshida asked if it would be appropriate for the Commissioners to email a specific topic to the Office of Boards and Commissions rather than wait until the next meeting to decide. Chair Kaneshiro stated he liked the idea particularly because it would give Staff enough time to request for the appropriate information, and to see if the individual(s) is available. After a lengthy discussion, the Commission came to a consensus to invite County Engineer Larry Dill to discuss solid waste /sanitation operations and expenses including reasons for the substantial budget increases from 2009 and 2013. Cost Control Commission Regular Open Session September 8, 2014 Page 8 SUBJECT DISCUSSION ACTION Staff acknowledged the Commission's request and will make the necessary arrangements. Adjournment With no further discussion, Chair Kaneshiro called for a motion to adjourn Commissioner Sterker moved to adjourn the the meeting. meeting. Vice Chair Yoshida seconded. Motion carried 5:0 At 3:11 p.m. the meeting adjourned. Submitted by: Mercedes Youn, Staff Support Clerk () Approved as circulated () Approved as amended. See minutes of meeting. Reviewed and Approved by: Arryl Kaneshiro, Chair Arryl Keneshiro Members: Chair Dirk Apao Jan Heshizume Josmne Nakashima Sandi Starker Laurie Yoshida Glen Takenouchi Vice Chair MEMORANDUM TO: Larry Dill, County Engineer FROM: Arryl Kaneshiro, Cost Control Commission Chair VIA: Paula M. Morikami, Office of Boards and Commissions Administrator CC: Nadine K. Nakamura, Managing Director DATE: September 15, 2014 SUBJECT: Requesting your presence to discuss solid wasteJsanitation operations and expenses including reasons for the substantial budget increases from 2009 and 2013 Aloha Mr. Dill, As Chair of the Cost Control Commission I am requesting your presence at its next meeting to discuss solid wastelsanitation operations and expenses including reasons for the substantial budget increases from 2009 and 2013. 1 have attached a copy of the comparison provided by Steve Hunt, Director of Finance. Please call or email Mercedes Youn at 241 -4920 or m ou�auai.gov if you or a representative will be able to attend our next meeting on Monday, October 13, 2014 at 1:30 p.m. located in the Liquor Conference Room. If you are unable to attend the meeting we would appreciate any and all information you have on this topic forwarded to the Office of Boards and Commissions for circulation to the Cost Control Commission prior to the meeting. Mahalo. An Equal Opportunity Employer Sanitation 796 Unallocated Housing, Interest, 1.805,736 3,533,4 l PubOdWelfare, 22.793.756 11,123,472 FY09 Golf 2% SIVAM 7u' Public Works 6% Sewer, 11,W,555 . T - - , f, Public: Works, 10,338,337 2,547,080 $171,092,934 Unallocated Housing Interest 1% 296 PubBe WW4M Culture 5%1 Unallocated Housing, Interest, 2,352,640 5,240,755 Culture 6y FY13 Golf sumv196 l Sewer, Public Works 6% 2,262,578 Pubpc Works, IW 12,011,341 $203,476,571 Housing Unalkwated 1% Interest 2% Public re cWhirelk 13% Sanitation 796 Unallocated Housing, Interest, 1.805,736 3,533,4 l PubOdWelfare, 22.793.756 11,123,472 FY09 Golf 2% SIVAM 7u' Public Works 6% Sewer, 11,W,555 . T - - , f, Public: Works, 10,338,337 2,547,080 $171,092,934 Unallocated Housing Interest 1% 296 PubBe WW4M Culture 5%1 Unallocated Housing, Interest, 2,352,640 5,240,755 Culture 6y FY13 Golf sumv196 l Sewer, Public Works 6% 2,262,578 Pubpc Works, IW 12,011,341 $203,476,571