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HomeMy WebLinkAboutEconomic Development (Workforce Development & CIP) FY2013-2014 DEPARTMENTAL BUDGET CALL-BACKS 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 1 The departmental budget call-backs reconvened on April 22, 2013 at 9:05 a.m., and proceeded as follows: Economic Development Workforce Development and CIP Honorable Gary L. Hooser Honorable Nadine K. Nakamura Honorable Mel Rapozo Honorable JoAnn A. Yukimura Honorable Jay Furfaro (Left at 12:22 p.m.) Excused: Honorable Tim Bynum Honorable Ross Kagawa Chair Furfaro: Aloha and good morning. I am going to call back our ongoing Budget talks from recess. I want to make a couple of announcements before we start. I want to review today for the purpose of saving any moneys and remind you folks that the May 8th communication that comes over from the Mayor on the Budget is, in fact, not a new bill. It is a communication that they have an opportunity to make any suggested changes based on what might be the Legislative outcome and what might be a closer point as it relates to any significant changes, especially any labor agreements that are negotiated prior to that time. May 8th is a communication. It is for our intent to work off of a May 8th schedule that they resubmitted to us if they have taken into consideration the commentary that we shared with the group. Then starting from May 9th, we have three and a half days to begin our Decision-Making. Our decision-making is Thursday, May 9th; Friday, May 10th; Monday, May 13th, and Tuesday, May 14th. Tuesday is for half a day. That is not a period for call-backs but I want to ask you folks to think about that today if you want call-backs that are scheduled for Thursday and Friday. If we do not use that, we will save the money allocated for Ho`ike and others for this Thursday and Friday. Keep that in your minds today. Again, when the May 9th decision pieces start, this is not a period for call-backs. Those are the dates that we will be doing the plus and minuses. Again, the public hearing is May 1st and the public will have an opportunity to comment at 5:00 p.m. on the Budget as we have gotten to this particular point. That will be the Operating Budget, the Capital Improvement Projects (CIP) and the Real Property Tax portion. We need to post the actual amendments by the 15th in a Special Committee of the Whole for the changes that we have. I want to ask again that you members are making appointments in two (2) hour increments to discuss with the Budget Staff. I hope you folks have been able to do that from the 29th. That is your opportunity to give comments and feedback before we actually get to our own decision-making on May 9th. That is the next day after the Mayor has submitted his communication for any changes. Then for the 9th, 10th, 13th, and 14th; we will work through the amendments that we have as proposed. Now Scott, today we are going to start at 9:00 a.m. to 11:00 a.m. with the Office of Economic Development. Scott, you heard my announcement. If we have anybody that planned call-back for Thursday and Friday, we would like to know by the end of today so that we could actually save some money on the schedule arrangements for Thursday and Friday. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 2 Mr. Rapozo: I have a question. I guess it is a request and maybe that we can send over. It is a general question for the Administration. I know when we started the Budget discussions, Mr. Hooser asked, and I forget which Department Head or who it was, but he asked if there was a possibility that departments could reduce their budgets even further by—I believe he said five percent (5%) was the recommendation. I cannot remember who was on the stand at the time and that person said, "We are really, really thin." As I have been trying to digest the discussions over the last few weeks, realizing that cuts are going to have to be made, I would ask that we send a communication over to the Administration to revisit that opportunity to reduce because you touched on the collective bargaining agreements that are going to be coming out. There are no reference or reflection of that in this Budget. Chair Furfaro: No. There is no reference to collective bargaining. If the Administration sees it different than I do right now, there is none referenced in the Budget. I think your point is well-taken and that is the purpose of the communication back to us on May 8th. The suggestion will go over again based on the fact that I believe Units 3 and 4 settled a tentative agreement yesterday with four percent (4%). We have not heard from anyone else but obviously, those are the kinds of things that the Mayor needs to reflect in his May 8th communication to us. I think that is a good point and we will send that reminder back over. Mr. Rapozo: Thank you, Mr. Chair. Chair Furfaro: Okay. Now on that note, the second part of today at 11:00 a.m. to 12:30 p.m., Council Vice Chair has an excused absence during that period. Finance is back on to talk about credit, collection, and merchant services. Mr. Kagawa has an excused off today and Mr. Bynum has an excused absence for today and tomorrow. On that note, may I call up the Office of Economic Development? Is there anyone here in the audience that is here for public testimony? I see another hand in the back. Lonnie, why do you not come up first? LONNIE SYKOS: Good morning, Council Chair and Councilmembers. For the record, my name is Lonnie Sykos. Thank you for the opportunity to speak this morning. I am trying to follow the shifts in schedule here, but I am prepared today to talk about the Department of Personnel Services and the interrelated areas of procurement and the rest of the administrative functions that they have impact on. Chair Furfaro: Excuse me, Lonnie. It will not be counted against you here, but I want to make sure you understand that these shifts in schedule of dates have always been posted as call-backs. If we were not able to cover the appropriate topic when it was posted—because every day we are in recess. It is only being reallocated to what was posted as a call-back day. Mr. Sykos: Okay. The first thing I would like to ask is the terms of our Human Resources (HR) settlement through the courts a number of years ago. Is the Council aware of what the terms of the settlement are? I came to the County Council several years ago when I was told that the Council was not. I also went to the Cost Control 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 3 Commission who also said that they were not aware of what the actual terms were. Regardless of what secrecy agreement was made regarding the settlements, the terms of it that impact the public are public information. We all realize we need to reform our HR and Personnel, our Loss Prevention and Safety; all of these interconnected functions. My question is since we have been sued repeatedly, it is impossible that a judge has not told the County something about changing our current operational system. I would like to know, the public to like to know, what has the court actually ordered us to do? It could be a generic statement. It could be a very specific list. This is not uncommon that courts do this. My maternal family has been self ruling themselves in the United States—well, before it was the United States. There are about three hundred fifty (350) years of history in the US of local government, State government, and Federal government having to get its act in order and redo how they provide administrative or other functions. It is kind of difficult to try and provide some guidance or advice to the Administration about what to do about HR and Personnel if we do not know where we are trying to get to. The cost of our HR settlements, our internal legal expenses, and the loss of productivity by our workers, who are tied up in doing this instead of what their regular jobs are, appears to be many millions of dollars over the last five (5) years. Chair Furfaro: That was your first three (3) minutes, Lonnie. Mr. Sykos: Thank you, Jay. From my perspective, that money would have been a lot better spent on modernizing our system, not doing whatever we are doing which continually fails to modernize our system. There are some serious issues that are hidden in all of this. One (1) of them is, "Does the bond market know that we do not have a legal HR system?" Do they know that our Loss Prevention and our Safety do not appear to function very well? This could have huge, dramatic impacts on our financial position,not to mention the lawsuits themselves draining our economy. I am here to ask of all of the administrators and managers that we have in our payroll for HR and Personnel, who of them has an educational background and a life's experience not in managing an already functioning HR system, which anybody who has come up through the County has never worked in a legally functioning HR system. Who have we brought in that has a life's experience in lead us how we go from basically twenty (20) to thirty (30) years ago to today, in compliance with all of the things that we are not in compliance with? These are very technical skills in the system's management world and most entities do not have people like this on their payroll. They are specialty jobs that are done for a period of time and then your system no longer needs to be designed, but just managed and managing for what the future will bring. When personnel and everybody comes up, who has the background to say, "Yes, I know how to do this, and not only do I know how to do this, if you give me the authority and the responsibility, you can hold me accountable for whether or not I succeed." I have been watching for about five (5) years of this whole thing just going in circles. Even two (2) months ago, Personnel or HR was in here and made the comment that they were going to hire a consultant as soon as they could figure out how to circumvent State Procurement Law. They wanted to have both the designer and the supplier be the same party, which State Procurement Law prohibits. Our procurement policy is corrupted at the very beginning of designing HR, and so if we start out with the corrupted process, what makes us think we are not going to have a corrupted end product? That is my six (6) minutes. Thank you very much, Council. Good luck and may the wisdom of Solomon be 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 4 upon you all, and the Administration. I give my thanks to the Administration for at least realizing that all of this needs to change and doing their best, which is insufficient, but doing their best to make this happen. Thank you. Chair Furfaro: Lonnie, may I ask you also in pursuit of this information that you would like, with the exception of any settlements that are not closed... Mr. Sykos: Correct. Chair Furfaro: You could certainly use a UIP process for a request. If you would like some information on it, I would be glad to share it with you. If you would like to see the financial pieces offer legal expenses, you can do that directly with the County Attorney's Office. We do have people available to us from consulting services that assist us in us doing our due diligence, as it relates to other labor agreements and so on, but I can assure that that legal consultation is available to the Administration. Certainly, our discussion about our insurance exposure is an important one because that is Loss Prevention. Thank you very much for your testimony. Mr. Sykos: Thank you very much. Chair Furfaro: Come right up. BOB CRAVER, Race Director for the Kaua`i Marathon: Good morning Council, Bob Craver, Race Director for the Kaua`i Marathon. I would like to thank you for this opportunity to present a little information on the marathon. I do have a handout here for each of you. First of all, I would like to say that the marathon when it was initially set up by Jeff Sachini as our founder in 2008, it was set up as a 501c3, Hawai`i Non-Profit, and it was never the intention to make a large profit on this event. The intent was to put on a healthy community event, involve the community, provide strong economic impact from the event, and also to be able to give back money to local non-profits. In the first four (4) years we have done that. We have not turned a large profit. The past couple of years we have broken even or made a very small profit but we have been able to give to the charity and have a significant impact, we feel, on the economy. Based on the first four (4) years plus our forecast for this year, I have some bullet points here that I would like to just run through. We will have had over five thousand (5,000) participants come to the event from outside of the State, using the state multiplier of 2.3 visitors would mean that 11,500 people have come in from out of the State for the marathon. The total economic benefit based on the State Department of Business, Economic Development, and Tourism (DBEDT) read formula will be over fifteen million dollars $15,000,000. Over the five (5) years, our total budget of about two million dollars ($2,000,000)—over nine hundred thousand dollars ($900,000) of that has remained here and spent directly on Kaua`i. Our marketing budget marketing Kaua`i the destination, not just the marathon, will be over two hundred fifty thousand dollars ($250,000) total in the five (5) years. Donations to Kaua`i non-profits as of the 2013 event will be over seventy-five thousand dollars ($75,000). We have received financial support from the County for the past three (3),years; our past two (2) years plus 2013. We have broken even or made a very small profit. Actually in 2011-2012—and we are forecasting the same for 2013. Without County funding, there is no way that would 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 5 have ever happened. Our cash sponsorship and participation growth has not been as strong as what we originally forecasted when we started with the event. Cash sponsorship from Kauai businesses has grown slowly. In 2011, ten thousand dollars ($10,000); 2010, twelve thousand five hundred dollars ($12,500); 2011, thirty-five thousand dollars ($35,000); and in 2012, thirty-seven thousand seven hundred fifty dollars ($37,750). Here to date, for 2013, we have raised forty-five thousand seven hundred fifty dollars ($45,750), which is still growing. We partnered with the Kauai Visitors Bureau and the County for the past four (4) years with the Iwaki City Marathon. That has producing course records by our winners in the event. We have hosted national writers for the last four (4) years that have produced several articles, both in print and the internet. Chair Furfaro: Bob, that is your first three (3) minutes. You have an additional three (3) minutes. Mr. Craver: Thank you. We created the Grand Hyatt Kaua`i fifteen thousand dollar ($15,000) Speed Challenge in 2010. That enticed a great deal of elite runners to travel to Kaua`i over the last four (4) years, and continues to create great press opportunities for us. We only had to pay that out one (1) year. We made the target a little tougher for the next couple of years, so hopefully we do not have to pay it out. We utilized Dean Karnazes, the Ultra Marathon Man and Bart Yasso, the Chief Running Ambassador for Runner's World Magazine. Dean has been here all four (4) years. Bart has been here the last three (3) and both will be back next year. Last year for the first time, we facilitated a shadow half-marathon at the Pasha Army Base in Afghanistan. On September 2, 2012, providing medals and shirts to all participants and we are going to continue that program again this year. We partnered with the Chamber of Commerce— excuse me, I missed one there. This year we created the One Grand Mile Charity Campaign, with a goal of providing twenty-six thousand dollars ($26,000) to Kaua`i's charities. We already raised fourteen thousand dollars ($14,000) for this program and one hundred percent (100%) of that money will go directly back to the non-profits. We partnered with the Chamber of Commerce and hosted a recent after hours party in conjunction with The Grand Hyatt. We developed a special promotion with the Chamber members for the month of April. We were honored with the top one hundred (100) status on Bob Anderson's website called "bestroadraces.com." He is the founder of Runner's World Magazine and participated in our half marathon last year. I wanted to point out that too, that the Maui Marathon has been around for almost forty-three (43) years and in its 41st year, it received twenty-five thousand dollars ($25,000) in County funding. In its 42nd year, it received eighteen thousand dollars ($18,000) in County funding. The bottom line is if we are to continue to produce this event at this magnitude and produce a world class event as we have been, adding new programs, youth-oriented programs, produced a television show, and bringing in riders for travel and trade publications to further promote the event and the island; we do need continued County support. Thank you. Chair Furfaro: I guess our concern would be, and that is for a later topic with George, this year's contribution would be how much? Mr. Craver: Eighty-five thousand dollars ($85,000). 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 6 Chair Furfaro: The Maui contribution is how much? Mr. Craver: I think Maui is eighteen thousand dollars ($18,000). Chair Furfaro: Obviously, we are hoping that we can see a margin shrinking. Mr. Craver: Yes. I think the request was for twenty-five thousand dollars ($25,000) for the 2014 event in Nalani's presentation. If we could receive twenty-five thousand dollars ($25,000), that would still enable us to do everything that we are doing, as our sponsorship grows with other local businesses. Chair Furfaro: That is the reason I raised that question. Her presentation for the following year was twenty-five thousand dollars ($25,000). Mr. Craver: Correct. Chair Furfaro: Thank you very much. Joann has a question for you. Ms. Yukimura: Hi. Thank you for all of your efforts. The first statistic of five thousand (5,000) participants, that is the over the periods of... Mr. Craver: Through 2013. Ms. Yukimura: It is accumulative, right? Mr. Craver: Yes. Ms. Yukimura: Okay. This year, you are asking for how much? Mr. Craver: For 2014, the request was twenty-five thousand dollars ($25,000). Ms. Yukimura: Okay. Thank you. I think it is been a very good event and I appreciate all the work that has gone into it. Mr. Craver: Thank you. Chair Furfaro: Since your request has shrunk, obviously, the first years that we invested in it have hopefully given it some momentum so that we can look at this lesser amount that you are requesting now. Mr. Craver: Thank you. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 7 Chair Furfaro: Thank you, Bob. Is there anyone else who wishes to give testimony on anything for today? ERNEST BARREIRA, Budget and Purchasing Director: Honorable Chair, Vice Chair Nakamura, and members of the Council, good morning. Ernie Barreira, Budget and Purchasing Director. One (1) of the things that I committed to when I came before you three (3) weeks ago, was that we would always ensure that the Budget Process would be honest and have the highest degree of integrity possible. When I hear comments being made in terms of"corruption" and "procurement," it concerns me. I want to speak to that issue because I recall the discussions very clearly. I believe what the testimony referred to was the desire to pursue a payroll management time leave and other consulting services that would bring benefit to the County, in terms of the kind of functionality that we need. To the credit of Information Technology (IT) and HR collectively, they did not pursue any such initiative. They consulted with me like they should do in terms of any procurement that is being sought. I provided them specific guidance and counseling about the fact that we could not enter into a service that was given to us because there would be consideration and favor that is prohibited under the Code, and that whatever procurement activity it terms of these services that would need to be achieved, it would have to be done in a competitive bidding environment. I just want to be clear that consultation did come through my office as we talked about last week. I think Councilmember Rapozo said, "Everything should come to your office." In this particular case, it absolutely did. I provided the guidance and counseling and we are going to proceed to follow the Code specifically as required. Chair Furfaro: Thank you for that statement of your position. Mr. Barreira: Thank you for the opportunity, Chair. Chair Furfaro: Mr. Costa, you have the floor. There being no objections,the rules were suspended. GEORGE COSTA, Director of the Office of Economic Development: Aloha and good morning Chair Furfaro, Vice Chair Nakamura, and Honorable Councilmembers. For the record, George Costa, Director of the Office of Economic Development. We are continuing from our last presentation and finishing up. I am going to introduce Kaeo Bradford, our Workforce Development Specialist, followed by Art Umezu, our Film Commissioner. I will finish up the presentation with a presentation on the agricultural sector, finish up the Office of Economic Development, and then go into the Mayor's Holo Holo 2020 program. Lastly, I will go into the Capital Improvement Projects (CIP) Budget consideration. To start off I would like to call upon Kaeo Bradford, our new Workforce Development Specialist. KAEO BRADFORD, Workforce and Development Specialist: Aloha and good morning. Chair Furfaro: Aloha, welcome. MUM= WNW 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 8 Ms. Bradford: Kaeo Bradford, Office of Economic Development, Workforce Investment Act (WIA) Administrator. I am going to start off today and go over my notes here on the overview of my program. Back in 1998, President Clinton signed into law the Workforce Investment Act of 1998 or WIA. You will hear me mention WIA or WIA as we like to call it sometimes. The purpose of the act was to stimulate local area strategic redevelopment ve opment and improvement of local workforce systems. The WIA is designed to increase employment retention and earnings of participants and increase occupational skill attainment by participant, and as a result improve the quality of the workforce, reduce welfare dependency, and enhance the productivity and competitiveness of the nation. While the mandates of the act was to form a Workforce Investment Board, the Kaua`i Workforce Investment Board (KWIB) has undertaken the challenge of developing a workforce development system or a one-stop consortium which cultivates needed individual and organizational investment through education and training opportunities; thus enhancing the value of investment in our local labor market supply. The KWIB is made of approximately thirty (30) members, authorized to make local decisions regarding workforce development strategies and polices under the Workforce Investment Act of 1998. These members include representatives of businesses, local educational entities, labor organizations, community-based organizations, economic development agencies, and representatives of each of the One Stop Consortia partners, including Work Wise Kaua`i. The County Office of Economic Development, as the new administrator, is responsible for coordinating the entire WIA program for Kaua`i and continues to collaborate with various businesses, organizations, and agencies in the community. Here are some of the successes and accomplishments over the past few months. As of the Census of 2010, the population of Kaua`i was about sixty-seven thousand ninety-one (67,091) people, and Kaua`i's Unemployment Rate this past quarter for the end of 2012 was about six percent (6%), as compared to last December in 2011 where it was about seven point eight percent (8.7%). Kauai County has the second highest unemployment rate, not seasonally adjusted at six point four percent (6.4%), as compared to Hawai`i County at seven point four percent (7.4%) which is the highest in the State. Here is a little bit more program overview. The WIB is led by seven (7) principles: number one (1), streamlining services; two (2), empowering individuals; three (3), universal access; four (4), increased accountability; five (5), strong role for local workforce investment boards and the private sector; six (6), State and Local flexibility; and seven (7), improve youth programs. Average employment with statistics. The average weekly wage for Kauai County was about seven hundred thirty-one dollars ($731) in 2011, which is equivalent to eighteen dollars and twenty-eight cents ($18.28) per hour or about thirty-eight thousand dollars ($38,000) a year assuming a forty (40) hour week worked year round. Industry employment distribution. The total number of employees located in Kauai County recorded in the past 2011 was around twenty thousand three hundred ninety-two (20,392). The largest major industry sector during that period and still is the accommodation and foodservices with about twenty-six point two percent (26.2%) of the employment, followed by public administration with fifteen point five percent (15.5%) of employment, and third which is retail trade with thirteen point three percent (13.3%). 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 9 One of the successes and accomplishments during the past two (2) years, from 2010 to 2012, is the Community Services & Employment Training (CSET) partnership grant, which is the State Energy sector partnership. It is part of a three (3) year, six million dollar ($6,000,000) American Recovery and Reinvestment Act (ARRA) United States (US) Government Grant awarded to the State. Kaua`i County received about two hundred seventy-three thousand two hundred seventy-eight dollars ($273,278) in the late 2010. The focus of the CSET grant was to address Hawai`i Energy Industry needs and to equip our workforce to support the goals of the Hawai`i Clean Energy Initiative and the County of Kaua`i's Energy Sustainability Plan. Also part of the initiative, a portion of those funds was contracted to the State of Hawai`i, Department of Labor and Industrial Relations Workforce Development Division, Work Wise Kaua`i One Stop Center to help administer the initial recruitment and support services needed. In late Fall of 2011, when it became apparent that green jobs were not as available in the US, as has been anticipated, the Department of Labor increased the target population to include incumbent workers as parts of the grant. This helped to broaden the scope of the recruitment in the Kaua`i island community. Kaua`i County exceeded the number of participates trained under the CSET grant and is committed to continue to provide relevant training in the areas that local WIB Board envisions job opportunities, as well as areas that support the fulfillment of Hawai`i's Clean Energy Initiative and the Kaua`i Energy Sustainability Plan. Of the total amount recruited and enrolled in the program, ninety-five percent (95%) received their certification. 1 Part of the successes and accomplishments of this particular program are the veterans' services that we provide. Local, disabled veterans' representatives continue efforts in providing a variety of services to incoming veterans, assistance with resumes, job searches, and assistance with job applications are done on a daily basis. Outreach services are conducted weekly at various locations around the island. Other available programs and services for veterans may include, but not be limited to, the initiative Veterans Opportunity to Work (VOW) to Hire Heroes Act, Uniform Services Employment, Reemployment Rights Act, Homeless Veterans Reintegration Program, the GI Bill, Incarcerated Veterans Transition Program, and the Veterans' Retraining Assistance Program. Another successful accomplishment was our most recent job fair held back in October, which was held at the Kaua`i War Memorial Convention Hall. The job fair ran for about 9:30 a.m. to 1:00 p.m. and hosted seventy (70) plus participating employers with a few coming from O`ahu and Maui. Media release went out at least two (2) weeks in advance and approximately seven hundred (700)job seekers from around the island streamed in steadily all day until the end. More job fairs and other community activities are being planned by our consortia committee this year. In fact, there is one (1) coming up this week at Kaua`i Community College. Successful accomplishments are the effective management of our funds over the past two (2) years. This federal funding in the amount of—there is funding for adult programs, dislocated worker programs, and the youth programs for around the island. It totaled to about one million three hundred ninety thousand dollars ($1,390,000), approximately for the past two (2) years. If you include the CSET grant that is about one million six hundred seventy thousand dollars ($1,670,000), it is a little bit more. This is all federal funds coming in. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 10 These are the challenges for our program. Diminishing WIA funding makes it challenging to function effectively since the ten percent (10%) limit on administrative costs, as well as what can be charged against it, limits our ability to budget for important board activities and events that could enhance member satisfaction and improve active involvement. As the WIA Administrator, I am responsible for not just overseeing the grant, but also doing research writing, overseeing the youth programs, Request For Proposals (RFP) Development and awards, negotiation and drafting of service provider contracts, Memorandum Of Understanding (MOLT), the four (4) year local plan, as well as the annual plan, as well as other types of amendments and supplements like the program oversight, formal case file reviews, and monitoring of the Work Wise Kaua`i Office. I monitor that office, as well as evaluate and write assessments and recommendations for them. I also write reports to various agencies. These types of procedures are repeated for other grant funded programs received. In addition, the specialist, me, serves as the Executive Staff Member for the workforce board and its related entities like the executive committee, the youth council that we have, other ad-hoc committees, scheduling meetings, preparing agendas, arranging for speakers, transcribing minutes and so forth because we do not have a board secretary, so I take care of that. I also follow up on each action item, as well as whatever kinds of board initiatives. I am also the Mayor's Representative Liaison to the State Workforce Development Council. Another challenge while actively collaborating with the State Workforce Development Council (WDC) and other entities is essential to secure additional funds for County workforce development activities, each potential grant application requires significant staff time to research and compile meaningful, supporting data of whether the grant is actually pursued or not. While each new funded grant and program benefits the community, it multiplies the workload for the specialist and part time accountant since most requires similar intensity of administrative activity and oversight, regardless of the dollars funded. Since typically no additional staff is hired or assigned to oversee these new Yp Y g program requirements, important and administrative activities and responsibilities, especially for our core program, are not performed, delayed significantly, or may be completed but not to the desired level of execution. Improvements are to reduce WIA funds to fund workforce programs, frequent visits to the One Stop center by myself, and to interact with the customers and staff to ensure program objectives are being implemented effectively. It is just weekly monitoring and evaluation of services. Also, to providing informal One Stop Center meetings with the manager and staff, and ensure collaborations and support services is intact. Review and revisions of the Work Wise Kaua`i website has been completed to date, so you can go there and check out more information. Also, minimal collaborations with the KWIB board members and other communities are important, meaning collaborations with the KWIB youth council and other organizations and agencies in the community serving the youth population. Also, a new look to the Hirenet Hawai`i website is an improvement this year so you can check that out, too. Upcoming initiatives are continuing all WIA reporting as usual, more activities and events supporting community initiatives and collaborations with all service providers, more community liaison initiatives, seek other types of grants for education, training and career development opportunities for our Kaua`i community, a focus on youth groups or a summer youth employment programs to continue boosting economic 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 11 growth, and ensuring that Kaua`i family values are instilled. More initiatives include committing to funding for at least one (1) person or board member to attend the National Association of Workforce Board Conference held in Washington, D.C. annually, and the States and Counties annually send at least one (1) representative, generally more, to this important event. Participation is vital for networking with other regions and local areas to gather information about best practices and innovative projects. It is also essential to be able to present full representation of our region to national officials, including our Congressional Delegation, and to effectively move our workforce program forward. Hawai`i is unique in that it is designated as a region, whereas other regions overlap multiple states. Upcoming initiatives; very, very few. Dues, airfare,per diem, and other travel. Mr. Costa: I just want to add for Kaeo, as she just mentioned that these are her other administrative costs for the program that come under County funding. Basically, dues and subscriptions to annual publication and membership, and then airfare, per diem, and other travel basically about three thousand dollars ($3,000) for her attendance at the National Workforce Investment Board Conference that she had just mentioned. Chair Furfaro: George, all of the things that were presented to us are reflected in your Budget submittal? Mr. Costa: Yes. Chair Furfaro: Okay. There are no additional projections since we got the transmitted narrative to now? Mr. Costa: No. Chair Furfaro: Okay. Joann, you have a question? Ms. Yukimura: Thank you, Kaeo for... Ms. Bradford: I just wanted to add something. Just recently we had in the news that President Obama put more funds into his own physical budget for the Department of Labor of about twelve point one billion dollars ($12,000,000,000) into the new Fiscal Year 2014. How much it trickles down to us—hopefully we do get more funding from that, too. Thank you. Ms. Yukimura: Thank you. I do not remember as an extensive of a significant portion in last year's Budget. Has there been a change in the organization of the workforce development, or is it just that you have given us a more elaborate report? Mr. Costa: A more elaborate report, only because—and maybe this just my own personal observation. Coming into the County—Jan Miyamoto was our Workforce Development Specialist, and Jan did a great job; so much so that that was one (1) area I was busy focusing on everything else in the economy. As Jan was getting ready to leave and transfer into the Human Resources Department, it really forced me—I 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 12 had to take over the department for a few months, and it really forced me to see how much is involved with this department. We are very thankful to have Kaeo because she comes with the experience, and she hit the ground running. I wanted to take this opportunity during our Budget Presentation to really convey what actually gets done with this one (1) person department. As far as funding, like I said, when I first came into the County, I saw how much work was being done by Jan, and over the years the funding kept being reduced, and reduced, and reduced to the point where I had come before the Council over a year ago in our last year's Budget, to ask that the County at least fund the Workforce Development Specialist position so that whatever moneys we do get; most of it goes to the program, which is very little as Kaeo mentioned. Just in recapping, over the last three (3) years we have gone from five hundred thousand dollars ($500,000) to a little over four hundred thousand dollars ($400,000) for the entire program. Ms. Bradford: For a year. Mr. Costa: Yes, for a year. There are three (3) main programs that each get over one hundred thousand dollars ($100,000). Again, really the emphasis was to ensure that those programs; the youth, the dislocated worker, the adult programs. Even though it is a little bit more than one hundred thousand dollars ($100,000), most of those moneys go towards the program and not to the staff, which basically is Kaeo and Kent Hirokawa, which is our part time accountant. Ms. Yukimura: You mentioned the four (4) areas. What are the four (4) areas? Ms. Bradford: The areas of concerns are the ones mandated by the grant; the adult program, dislocated workers program, and the youth services program. Ms. Yukimura: Okay. Do you have objectives in each a area? Dislocated worker, youth, adult—I am sorry, the fourth one was? Mr. Costa: Dislocated worker, the adult program, and the youth program. Ms. Bradford: Yes. There are always introductions of different types of grants, like the CSET energy services initiative. That one. Mr. Costa: Which comes with additional program. Ms. Bradford: Yes, additional funding. Mr. Costa: These are specialized programs that... Ms. Yukimura: Okay. Youth, adult, dislocated worker, and special funding kind of programs—special programs, sort of ad hoc because they come in and then they finish and go on. They terminate and you go to another special program? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 13 Mr. Costa: Right. Similar to what Kaeo just mentioned about President Obama putting another twelve billion dollars ($12,000,000,000) into the Department of Labor. Hopefully, the trickledown effect will be some workforce development programs. Ms. Yukimura: Okay. I am still not clear about what each of these programs are trying to do. Ms. Bradford: They are part of the mandate that President Clinton signed into law in 1998 that these workers need to be helped with education and training opportunities in the local community. That is what it is all about. All of the members of the board are mandated by this particular law to be part of the board as well. Ms. Yukimura: To your credit on page 12 of your presentation, you have—I wish we had this for every County program...County of Kaua`i actual versus goals. Ms. Bradford: Those are the local measures that are taken by the State. Ms. Yukimura: Right. Ms. Bradford: We do that. Ms. Yukimura: You are showing here in bold faces where we achieved the goal. Green is where we had ninety percent (90%) or more of the goal, yellow is that we had eighty percent (80%) or more of the goal, and red is under eighty percent (80%) needing to be approved. I see. I was just looking at the challenging ones where you have red. In your dislocated worker program, you have "employment retention rate." What is Fiscal Year 11? Mr. Costa: Program Year. Ms. Yukimura: Okay. The unemployment retention rate is forty- five percent (45%). What does that mean? Ms. Bradford: The unemployment rate at forty-five percent (45%)—that is how much I guess of the forty-five percent (45%) for dislocated workers they served. The State came up with performance targets and we are not necessarily following what they target because it is like right across the board. What they do on O`ahu is not necessarily the same on Kaua`i, and we really cannot change Ms. Yukimura: I guess that is what I am curious about. The employment retention rate we have at forty-five point five percent (45.5%) which means that as I am trying to discern this, the dislocated worker program brings in dislocated workers and puts them through your workforce training program, right? You have a high ABLIE 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 14 score for the number that enter—entered employment rate which is in yellow showing eighty percent (80%) or more of the goal achieved. Ms. Bradford: Yes. Ms. Yukimura: The employment retention rate is below your goal. The employment and credential rate is below—it is at fourteen point three percent (14.3%) which does it mean that even though we put them into jobs, they were not retained? Is that what it means? They were not kept in the jobs that we helped them get into? Ms. Bradford: Yes. Mr. Costa: Yes. Ms. Yukimura: Then the same thing with the job credential rate. What does that mean? Ms. Bradford: If and when they receive some kind of certification or degree during the process. Ms. Yukimura: Okay. Scott, can we put this on the screen so others can see it? It means that they did not get employment or credentials? They did not achieve that? Ms. Bradford: Yes. Ms. Yukimura: In the younger youth, ages fourteen (14) to eighteen (18), diploma attainment rate is thirty-five percent (35%). I guess my question is has there been an analysis of why we are not able to achieve our goals? Mr. Costa: Yes, we actually— this past December, I attended the State meeting that reviews these performance measures. I guess in the past from what I gathered from the other Workforce Development Specialists is that pretty much when the State—actually, the Federal Government came out with performance measures and for whatever reason, there was not a whole lot of discussion. The Federal Government said you need to achieve ninety percent (90%). That comes from without really understanding the State of Hawai`i, and then each islands' challenges. This year when we met, and it was Kaeo's first week on the job that we met in Honolulu with the other Workforce Development Specialists that there was actually some discussion, and I guess for lack of a better term, "push back," to say these are unrealistic goals because these are the challenges each island is facing. One (1) of the things I noticed with some of these programs is that we do a good job in getting dislocated workers, youth into these programs, and we go through the process and along the way, you cannot force them but some of them drop out and do not complete the programs. Maybe Kaeo can expand more on that. Ms. Bradford: One (1) of the issues with working with federal grants is the fact that a lot of these measures are not done in real time. If we pulled up 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 15 information today, we would not be able to get it today. We would be able to get it a couple of years ago, but not today in real time. Ms. Yukimura: Are you saying that if we get it in real time, we will have better ratings? Ms. Bradford: I am not sure. Ms. Yukimura: Okay. Either the measures are not correct and they are not measuring the correct things. If so, then you folks should be changing the program to get the correct measures so we know what we are measuring. If it is the correct measures, then there are some reasons why we are not achieving those goals, and we need to know that rather than just continuing to spend four hundred thousand dollars ($400,000) a year and not achieving our goals. I do not know what it is but I also have another question because I am part of this Keiki to Career Group and Diane Zachary, who is part of that group, is here today. I will recuse myself on this issue when it comes to appropriating funding because I am part of the group. One (1) of my questions is, are you trying to do remedial work for things that need to be addressed in the school system that are not being addressed? In particular, I am asking that about the youth program. I see here "older youth, not applicable," for the results. You alluded to some kind of problem with that group, which I will ask about. I feel like it is our responsibility to get at the core problems and if so, not just spend it on kind of programming, but really look at where you are going to target the real problem. I do not know what the answer is, but I want to ask these questions because I think first of all, we need to ask them and then secondly, try to answer them. Ms. Bradford: Yes. I do not have all the answers. Ms. Yukimura: I do not think anybody does. Ms. Bradford: I can just tell from you my own experience that changes takes place over time and I have been in this position barely four (4) and a half months. I can see changes being made because of the type—you look at how the measures are being done. Yes, the assessment does need to be looked at. I can agree with that. It does and really take a look at the monitoring and how it is being evaluated because there is a system. It gets tallied up by O`ahu with the rest of the islands. How they are monitoring it and how it is being evaluated is another story. I would have to check because I have not started doing that portion of the program yet, which is going to be coming pretty soon. Ms. Yukimura: Okay. I understand what you are saying about being new on the job, but the office has been doing this for a long time, George. Mr. Costa: Yes. Ms. Yukimura: We need to have some kind of analysis. If it is not being done properly, I would ask you guys what is the proper way? By the proper 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 16 process of assessment, what results are we getting? If they are still low, then how are we analyzing it and changing our ways to get the right results? Ms. Bradford: Actually, our goals and everything, what we have achieved here is much better than Hawaii island or Maui. I can tell you that for a fact. Some of the goals that are targeted that are put down, they are unreasonable. They really are because I have looked at performance targets for the past few years. Ms. Yukimura: All right. Ms. Bradford: We have had this discussion with the State Department of Labor and Industrial Relations. It is something that is of concern and we are discussing at the table. Ms. Yukimura: Good. I want to encourage to you get the right measures in place because otherwise we could all be spinning our wheels or we could be failing to congratulate ourselves because we are achieving things, but it is not showing. Either way, we need to know. Chair Furfaro: Would you yield the floor for another Councilmember? Ms. Yukimura: Yes. Ms. Nakamura: Thank you for your presentation, Kaeo. It is good to see the way you have laid out the data and your performance measures. I guess that coincides with the State's measures. I think Councilmember Yukimura has a good line of questioning. I would like to ask that we bring this up in a committee format where we can delve into, especially the older and younger youth strategies and our local outcomes that we want to achieve. Ms. Bradford: Yes. The service youth program targets at risk youth in the community. Ms. Nakamura: Good. I am not sure what committee this would fall into. Do we have the community services? Mr. Rapozo: That would be me. Ms. Nakamura: I would like to put in a request that we put it into Mel's community service committee so that we can look into this a little further. I am sure you have your own grant timetables that may not coincide with ours, but I think it would be a good idea to take a look at what are some of the outcomes we are trying to achieve and are we getting there or not? That might be a good way to take a closer look at our strategies. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 17 Mr. Costa: Prior to attending that meeting on O`ahu in December with Kaeo and looking at the report, I had the same concerns. It was really interesting to sit down with other Counties and different philosophies. As far as Kaeo and I are concerned, we would like to help as many youth and adults as we can. On the other hand, another philosophy for us is let us just help a few and get really good grades. For one hundred thousand dollars ($100,000) for Kaua`i on each program, like in the youth program, we have to hire or contract. Ms. Bradford: We contract. Mr. Costa: We have to seize companies who have the professional credentials to work with the youth. When you look at one hundred thousand dollars ($100,000) and you contract to another entity that has two (2) or three (3) employees, really, the trickledown effect on how many youth are really going to get helped and for how long is really the challenge? Ms. Nakamura: I think when we do the committee briefing, it would be good to know the funds are currently being spent and how they have been spent in the past and what some of the results have been. Just an overall assessment from the KWIB board about what they think about it and what their thoughts are moving forward would be good to know. Chair Furfaro: Okay. Folks, I think we have commitment that this is going to go into a committee. We have four (4) more divisions of George's department and we have fifty (50) minutes for four (4) other divisions. I would like to ask you, George, can I confirm our allocation from the federal government is tied directly to the unemployment rate on Kaua`i? Mr. Costa: That and population, right? Ms. Bradford: Yes. Chair Furfaro: Population and the unemployment rate; that is the formula, right? Mr. Costa: Yes. Chair Furfaro: I will send the question over to find out what those ratios are. Also, for the at-risk youth, what are we doing to track a better understanding of their motivation and their adaptability to the programs? Is there an exit interview? What exists there? Ms. Bradford: Yes, they do have exit interviews and there are constant follow-up and even job placements, too. Chair Furfaro: We would like to see what that is, actually. I will send it over as a question. There is an exit interview. We are sitting around and talking to III 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 18 these people, especially on adaptability for the at-risk youth and motivational portion. Councilmember Yukimura, you have another question? Ms. Yukimura: I just want to commend you for the successes. It is not on there anymore, but skill attainment rate for younger youth of ages fourteen (14) to eighteen (18) is seventy-eight percent (78%), retention rate fifty percent (50%); those are bold indicating that you exceeded your goals. Congratulations on that and I look forward to a more detailed discussion of your programming. I am going to request you to give us, as part of the Budget Process, a breakdown of how much money goes into each of these programs and maybe a brief description of how it is used. Mr. Costa: Okay. Ms. Bradford: Also, I wanted to invite you at any time if you want to come to our youth council meetings, let me know. Even for our KWIB meetings, let me know because it is really informative. You can learn a lot about what we do in the community. Ms. Yukimura: I think there might be some real value in your office participating with the Keiki to Career effort that is this collective action group... Ms. Bradford: Diane Zachary is also a member on our KWIB board. Ms. Yukimura: Oh, she is on your board. Then you have the connection. Very good. Thank you. Mr. Costa: Right. Ms. Bradford: Thank you. Chair Furfaro: Thank you very much for the invitation. Ms. Bradford: Thank you very much. Mr. Costa: I would like to call up Art Umezu, who our Film Commissioner. ART UMEZU, Film Commission: For the record Art Umezu, Film Commissioner, Office of Economic Development. Good morning, Chair Furfaro and Councilmembers. Thank you for this opportunity to share information about Kaua`i's Film Industry of its success, accomplishments, challenges, and initiatives. Before I start with the presentation, I would like to give a short overview and history of the film office. Kaua`i Film Office was established in 1982 under Mayor Tony Kunimura. In the early 1990's, the film office was officially named the Kaua`i Film Commission under Mayor Yukimura's administration. There are film commissioners in each County office in Hawai`i, including the City and County of Honolulu plus the State Film Commission which is part of DBEDT. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 19 All County commissions are part of the respective Office of Economic Development. Each County film office has a staff of one (1), and the State film office has a staff of four (4), including a specialist who handles all the State Film Tax Incentive, Act 88. This was signed into law on July 2006, after four (4) years of crafting the Legislation. The incentive provides twenty percent (20%) rebate to neighbor islands for filmmakers with qualified local expenditures of a minimum of two hundred thousand dollars ($200,000) with a cap of two million dollars ($2,000,000). O`ahu provides fifteen percent (15%) rebate as opposed to the neighbor islands of twenty percent (20%). The current incentive sunsets in 2016. Kaua`i was the first County to take advantage of this bill, Act 88, when DreamWorks, if you remember, announced six (6) months later in January 2007, to film a movie called "Tropic Thunder," which filmed on Kaua`i for nine (9) months with a local expenditure of nearly sixty-three million dollars ($63,000,000), making it the biggest budgeted production on Kaua`i. As Hawai`i celebrates its one hundred (100) years of filming this year, Kaua`i also celebrates eighty (80) years of Hollywood films this year, which began in 1933 with the movie called "Cane Fire." This movie was mostly shot on Kaua`i's Westside in Waimea, Kekaha, and Camp Wahiawa. Somehow, they even made it to Kalalau to film it. Since 1933 to the present, eighty (80) plus Hollywood movies and television productions have been filmed on Kaua`i. This happened about two (2) weeks ago. It is a quarterly,magazine called "Hawai`i Film and Video Magazine," which has a focus on Kaua`i. There is an article about the eighty (80) years of Kaua`i's film. I have a copy for each member. The primary role of the film office is to bring film productions including feature films, television shows, television and print commercials, independent documentary films, and music videos to shoot on Kaua`i for the overall impact for Hawai`i. Now I will get into the presentation itself. Starting from last year, the overall number of film productions for 2012 was slightly lower than 2011, in terms of number of productions. It was thirty (30) plus, opposed to thirty-three (33) in 2011. In terms of expenditure, it was one point three million dollars ($1,300,000) last year as opposed to one point eight million dollars ($1,800,000) posted in 2011. Even though we did not have a feature film in the last two (2) years, there were still two (2) big budget commercials and print ads including a small company called Orbitz Group, which comes from Vermont but they have been back to Kaua`i seven (7) times in last five (5) years to film their catalogs. When you say "catalogs" you would think that it is just a piece of paper in a magazine that features their clothing but in essence, they spent close to twenty thousand dollars ($20,000) each time they come. I would say with that figure, seven (7) times twenty (20), we are looking at over one hundred thousand dollars ($100,000) in expenditures. To compare this year for the first quarter, Kaua`i had already nine (9) productions. I scouted for three (3) feature films which will hopefully decide within the next couple of months because I have been waiting for a few months already, if they will shoot here or not. One (1) is a very major film production. I pray, like everybody else, too. I have been in dialogue with the producer for Hawai`i Five-O, who happens to love Kaua`i, who is a local lady who has filmed here as a location manager in the last twenty (20) years. She is pushing for Kaua`i so I am working with them. As you may know already, today is the last day of filming of the third season on O`ahu. They will be on hiatus for the next four (4) to five (5) months, but during this time is when I will pitch Kaua`i. They are already going to 04-22-2013 Economic Development Workforce Development and CIP(cy) Page 20 Hawaii island next year. It looks like I will have is push hard so that it will come to Kauai, hopefully in the next season. At this time, I would like to at least give you an example of production figures for the last five (5) years leading up to this year, as I already mentioned. Back in 2007 and going back to Ben Stiller, that was a banner year for all film figures for Kaua`i. We are looking at sixty-five million dollars ($65,000,000) in total of which sixty-three million dollars ($63,000,000) was "Tropic Thunder." There was five hundred (500) plus people who were hired during that year with forty (40) projects, which includes the independent films and smaller projects like the Orbitz Group. In total, there was three hundred twenty (320) shoot days and that means three hundred twenty (320) days of the year of the three hundred sixty-five (365), there was some sort of film activities going on Kaua`i. In 2008, we dropped off to the norm, if you will, if there is such a thing. One point seven million dollars ($1,700,000), thirty-nine (39) projects. If you compare that with forty (40) projects the year before, but the total number of expenditure is only one point seven million dollars ($1,700,000) opposed to sixty-five (65) the year before. It goes to show you how big a feature film is to Kaua`i or any island for that matter. In 2009, was two million dollars ($2,000,000), one hundred eighty (180) shoot days, thirty-one (31) projects, and eighty-five (85) people that were hired that year. Going back to 2008, there were one hundred twenty (120) local people were hired for these productions. In 2010, the total expenditure for Kaua`i was fifty-four point five million dollars ($54,500,000). That was not quite as high as 2007 and that is because we had four (4) major Hollywood films that was produced on Kaua`i that year. There were two hundred (200) hires and close to three hundred (300) shoot days, and total of forty-five (45) projects. Even though the project figures are higher, the total expenditure is not quite up to the fewer projects for the year of 2007. The year 2011 and 2012 was a very challenging year for the whole State of Hawai`i. If it was not for Hawaii Five-O that filmed on O`ahu, our expenditure figures for the total State would be low, but fortunately O`ahu has the Hawaii Five-O television series, which was picked up for the fourth season. Going back to 2013, which is this year; so far, so good. At this pace, I believe that we will make the forty (40) plus projects. I cannot say anything about the expenditures, depending on those several major films that I have scouted which will make their decisions within the next couple of months, I hope. I would like to quickly cover something that has never been covered before. This is called "film tourism" or "movie tourism." Sue Kanoho from the Kauai Visitors Bureau may have expanded on this. If you remember two (2) and a half years ago when George Clooney filmed the movie called "The Descendants," it was not just a movie. It was a movie that essentially talked about our beautiful Hanalei. That made a lot of difference in the way the media was expressing interest on Kauai because they did not just film any movie; they filmed a movie about our beautiful North Shore. Because of that, we have an increase in a lot of television shows who want to cover where it is shot. Movies like The Descendants and Soul Surfer, about Bethany Hamilton who is our local surfer. That was filmed here as well for about five (5) to six (6) days. Most of the production was done on O`ahu. I just wanted to touch upon that. There is a bunch of television shows, reality shows; and travel related shows including the Travel Channel, Discovery Channel, Weather Channel, and Home and Garden TV which is here right now for its third time to film about Kaua`i. As you can see, unlike before, there are a lot of television shows and especially these reality related travel 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 21 shows that is documenting Kauai. What it does is once it airs, it promotes Kauai, so it helps our tourism sector. I will just go ahead and skip it because I have a lot longer presentation, but I will just skip right into the initiatives. Right now, I am preparing to attend, as I always do, for the Association of Film Commissioners International (AFCI) Location Expo and Trade Show in Los Angeles. AFCI stands for Association of Film Commissioners International, which takes place once a year in Los Angeles. This year, unlike in the past where it was at Santa Monica Civic is now going to be held at the Los Angeles Convention Center which I will attend for about a week. I just want to emphasize that the trade show itself is only about two (2) full days. All film commissioners will attend, meaning all Hawai`i Commissioners, as well as all of the commissioners around the world attend this. What it does is that we have a booth that attracts literally thousands of global filmmakers looking for locations. This is where we make our pitch at our booth. Four (4) commissioners will be representing four (4) Counties will be there to share this booth and the cost as well. This will take place in June of this year. For the other three (3) days on there, we do what we call "pound the pavement." We go out to these Hollywood film makers and location managers and attorneys who are specialized in entertainment. These are power brokers in Los Angeles and Hollywood. I have been doing this for about eight (8) year. This year, I think collectively, we are working together because we have retained our State Film Commissioner, who is now back in office after two (2) years of absence. She is going to lead the four (4) of us and we are going to go to this trade show in June. Chair Furfaro: What is her name? Mr. Umezu: Her name is Donne Dawson. She has been in the office since 2002. She was released for political reasons from what I understand but I do not know. All I know is that I am glad she is back in the office. When I first got in office, she took the time to come to Kaua`i and brief me on various things that were needed for me to understand. Of course, if you can see the upcoming news and subscriptions, is the norm. We have to advertise like the one you see in front of you; this magazine. If you look, there are no ads in this one. Knowing that there is going to be a focus on Kaua`i article, I decided I could perhaps save some money by not advertising in it. The airfare, as you can see reflects the two (2) round trips. For the other one, George and I discussed this. I think it is very important to attend this trade show but also separately, as you will, go there and market Kaua`i on my own, as opposed to being with the other commissioners separately because I believe that Kaua`i has been successful in pursuing the big pictures. Not just any film, but if you look at the past ten (10) years with "Jurassic Park"—or twenty (20) years rather. We are talking about Johnny Depp and George Clooney being here. Opposed to the other islands, Kaua`i seems to attract the big names in Hollywood, so we are very fortunate. I especially embrace and keep very close to my heart when I go to Los Angeles and talk about the history of Kauai. I think it is very important as part of my marketing strategy. That in a sense is my presentation. I had a longer one, but I understand we are short on time. George, did you want to add to anything? Mr. Costa: No. We will open it up for questions at this point. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 22 Chair Furfaro: George, all the trade material and travel and so forth is in the Budget as submitted? Mr. Costa: Right. There are no new trade publications. Basically, the Budget remains pretty much the same as previous years except the focus is going to be on those two (2) trips to market the Kaua`i Film Industry. Ms. Nakamura: Thank you for your presentation, Art. It sounds like there are a lot of potential projects that might be coming here. Mr. Umezu: Yes, there is and in fact, I did not mention one (1). Next week I will make an announcement and I am excited because this will be the first feature movie from Japan that is coming here in November. I cannot disclose the name. The working title is called "The Rain" and the movie takes place on Kaua`i. It is almost like a George Clooney situation in "The Descendants." I scouted with them for five (5) days back in February, and I just got notice that they wanted to thank the Kaua`i Police Department because in one (1) of the scouting, we spent three (3) hours at the Kaua`i Police Department and they walked us through because it does have a scene that includes a police department. Ms. Nakamura: There is a lot of focus on trying to bring these productions, big and small, to Kaua`i. Mr. Umezu: Yes. Ms. Nakamura: Once they get here, what is the County's role? I think that is probably another strong source of marketing is if we are able to service and make sure that the experience here is positive. Who does that? Mr. Umezu: I do. I enjoy that. George and I often talk about this. We are so involved with the daily internet, E-mails, and what not. I think those are very important with social media and the business networks that we have. Almost every film production that comes, how big it is—I have two (2) coming this week. I make sure I am at the airport. It also depends on the size of the crew. If it is a small crew, I will pick up a few lei. That does make a difference. I come from the old school and some part of me is very old school. I do that and it does make a difference because when I go to Los Angeles, there are people who actually pick me up at the airport. It is something that it may be my style. I do not think they do it on other islands. Ms. Nakamura: Are you also assisting with permitting or expediting things? Mr. Umezu: Absolutely, for the County film permits. Yes it is. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 23 Ms. Nakamura: Also problem solving along the way and anticipating potential problems? Mr. Umezu: Absolutely. I am in the mix from the get go. A lot of times though, they would contact the State Film Office and they will contact me to say, "Hey, there is a person who needs your help because they are looking for a special jungle that they know is not on any island except Kauai." They will contact me. Here is a case. Yesterday, on a Sunday, I had to finish up my presentation for today. There was a guy who calls from New Jersey and this is a big production. Rarely do I get a call from the East Coast. It is usually California. He is adamant to come here because he saw the 3D version of "Jurassic Park" that just came out two (2) weeks ago. His wife, who is the co- producer of this says that she wants to specifically come to Kaua`i, but not only film on Kaua`i, but only on the West Side of Waimea. That is influenced by the movie that they saw. I talked to them for hours yesterday in E-mails, and in this conversation, he said that all he needs is a big park in Waimea. Tomorrow, I am going to Hanapepe, Waimea, and Kekaha. There are parks out there. What they are looking for is a sports camp to bring the professional athletes to be part of this big movie. What I do is that I actually would tell them that I will go to the West Side tomorrow, take photos, get some dimensions, and talk to some local people and then disseminate the information to the people who call. Ms. Nakamura: Thank you, Art. Mr. Umezu: Thank you. Mr. Hooser: Thank you very much for your presentation. How long have you been the Film Commissioner for the County? I should know this but I do not. Mr. Umezu: It feels like I have been here a long time, but since 2004, I believe. Mr. Hooser: That is a long time. Mr. Umezu: It is a long time and of course for the people who may remember, but back in the latter part of 1985, I was a Film Coordinator; not a Commissioner, until 1988, I believe. Mr. Hooser: You have obviously got lots of experience. Were you doing your own production company or promoting and that kind of thing? Mr. Umezu: Yes I was. For fourteen (14) years, I did a majority of the Japanese film productions and a lot of magazines and whatnot. Mr. Hooser: We are still reaching out to Japan for their business as well? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 24 Mr. Umezu: Absolutely. This year, you probably heard about or read about the initiative that was put together by the Japan Associated Travel Agencies (JATA) and the Hawai`i Tourism of Japan. Last October there was a front page article. The initiative is to bring two million (2,000,000) people to Hawai`i by 2016. As soon as that hit, I was getting calls for production. One (1) of the production that filmed here of Kaua`i was a crew of five (5) from Tokyo Broadcasting System (TBS). They were here for five (5) days, filmed four (4) hotel properties in HD quality. They did everything and they aired it on PS Channel, which is broadcasted by satellite which reached out to a million people, without any cost to the County or the State. It was some joint agreement with the State and the Japan tourism people, and they came and I have the actual video. I showed this to the properties that they filmed at. It was three (3) Starwood properties and one (1) at Koa Kea Hotel, which was named the most romantic hotel in Hawai`i. I watched it and believe it or not, it is twenty-five (25) minutes per episode. It constitutes millions of dollars in free publicity for Kaua`i, and especially for the hotels. Mr. Hooser: How is the year to year Budget for your office over the last several years? Has it been flat? Increased or decreased? Mr. Umezu: It is the same as far as the budgets is concerned. Expenditures on Kaua`i, as I mentioned, varies. One (1) major film makes a whole lot of difference. Mr. Hooser: Right. One point three million dollars ($1,300,000) for the last year is kind of a low point. There is nowhere to go, but up from there? Mr. Umezu: Absolutely. It really it depends. Let us say that we have one (1) or two (2) feature films that will film. I used to call it cyclical, where we have a high year, and then for a couple of years there is a down. I do not rely on that, only because in 2010 we had four (4) Hollywood films and for the first seven (7) months, I had no idea how I was going to survive. It was a great year. I am not complaining, but I wish every year had a project as opposed to four (4) at one (1) time. Mr. Hooser: Did the State also have a bad year in 2012 as a whole? Mr. Umezu: Yes. Like I said, thankfully they have "Hawai`i Five-O." They had three (3) other television shows that were cancelled. Do you remember "The River," "The Last Resort," and "Off the Map." Those were three (3) television shows. Unfortunately, they lasted for less than three (3) months. Hopefully, we will have an episode of Hawai`i Five-O for the next season. Mr. Hooser: Okay. Great. Thank you. Mr. Umezu: Thank you. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 25 Chair Furfaro: Are there any more questions for the Film Commissioner? If not, thank you very much, Art. Mr. Umezu: Thank you very much. Mr. Costa: As I mentioned previously, I will go right into the agricultural sector. In my opening comments last week, I mentioned the fact that when I first started with the great recession, we were focused on getting our visitor industry back up to par and keeping our economy above water. Since then, two (2) areas that have been our main focus within the Office of Economic Development, has been the energy sector, as well as agriculture. With the goal in mind of helping our island not only diversify our economy, but becoming more self-sustaining. From the agricultural sector, which is headed by Bill Spitz, our successes and accomplishments over last year is the Kaua`i Grown program that continues to gain momentum. We with work with the Farm Bureau. That is our partner. They support the Kauai Grown program and two (2) farmers markets that they initiate and work in partnership; one (1) with the Kaua`i Community College and the other one (1) is with the Kukui`ula Shopping Center. We also work with the Agricultural Producer Organizations in helping to improve their businesses, preserve irrigated farmland, and also provide farming opportunities to farmers hopefully by connecting them to landowners that provide reasonably land tenure. The Sunshine Markets sales in 2012 nearly hit one million dollars ($1,000,000) of reported sales by each farmer vendor. We also introduced the value added products in the County's Sunshine Markets. We also worked in partnership with the Kaua`i Independent Food Banks Electronic Benefits Transfer (EBT) program in the Farmer's Markets. We worked with the State and user groups to prevent valuable agricultural—actually, to work with user groups in hoping to promote valuable agricultural infrastructure. Also, we assisted the Hawaii Tropical Flower and Foliage Association, Kaua`i Chapter, when they attended the Philadelphia International Flower Show last year with the emphasis on Hawaii. We also obtained the services of a mediator for the Kaua`i Feral Cat Task Force, which is underway. We continued to support the agriculture industry non-profits with County funding directed towards increasing industry income and preserving critical infrastructure. As far as challenges, we continue to have challenges on the State and Federal level that have eliminated some of the best discretionary programs for assisting and developing new farmer enterprises. A lot of them come with the State CTAR program. Also, another challenge is the community interest for improved Sunshine Markets and value added programs and products continue to require additional resources and changed the present operations. Another challenge is as our other sectors in the Office of Economic Development; it is a one (1) person operation. I will mention it in our improvements and upcoming initiatives where our recent hire of the OED Specialist II position has helped each of our specialists with their initiatives. As far as improvements, as I mentioned, the Kaua`i Grown program was launched and marketing pieces are now being installed in region retail outlets. In the next few weeks, we are going to have a rollout of the program at Ishihara Market, Sueoka Store, Living Foods at Kukui'ula, Times' Lihu`e, and Papayas. Also, continued pardon the pun "weeding out of non-farming vendors" in the Sunshine Markets. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 26 For upcoming initiatives, we will continue to work with our consultant on what started out as the slaughter food processing, which has now evolved into a combination of both the two (2) initiatives that we started off a couple of years ago. One (1) was the slaughter and now called "Multi-Species Processing Facility" and the Commercial Kitchen Business Incubator have combined forces to look at a Kaua`i food hub, which will not only help be a source for processing our locally grown meats, but also a facility where a commercial kitchen business incubator can be located to help our entrepreneurs create value added products and a retail area where they can sell those products. Another initiative that we continue to work on is the Kilauea Ag Park. It is something that was started several years ago. We have had several meetings with the Kilauea Neighborhood Association. The last presentation I made to the association was the increased costs due to no water source. Actually, we have a water source. There are five (5) 5/8 inch potable water meters on the property but it is being highly discouraged to use potable water for agriculture. That property in Kilauea was once serviced by surface water irrigation system from the old plantation. Because of the projected cost of drilling wells and installing a water tank, we are look at maybe another source of irrigation water to service that property. Also in our meetings with the Kilauea Neighborhood Association, they would like the Office of Economic Development to explore another opportunity that hopefully will reduce the cost of developing that agricultural park. The possibility of maybe looking at either leasing the land to a non-profit or a stewardship agreement, so that is currently in the works right now with our County Attorney's Office. We are also working in partnership with the Planning Department to see how we can make that property really beneficial as a County asset for the community. Several other initiatives that we continue to work with on the agricultural sector is the funding of, as I mentioned, the Hawai`i Tropical Flower and Food Association and working with our livestock producers, the Kauai Cattlemen's Association. We continue to help fund the maintenance of the shipping facility that was built in the Kalepa area and until we can actually build a facility that produces, or has a meat processing facility here on the island, we will continue to export at least six thousand (6,000) head of cattle to the mainland to finish, and then we import it back in our local stores. Ditch irrigation is another initiative that we continue to support and fund working with the East Kaua`i Water Users Cooperative. We also have the continued funding of the Sunshine Market through the Garden Island Resource Conservation and Development. We fund a Sunshine Market monitor that goes through each of the Sunshine Markets and monitors the farmers/vendors to ensure that they continue to grow their produce and not purchase them from retail outlets and then resell them in the Sunshine Market. We are look at a marketing initiative for the Sunshine Markets. Also, the Cattlemen's Association is the ongoing repairs and upgrades grant that we have to our two (2) slaughterhouses here on the island and to keep them going to the point that we are able to build a modern slaughter facility for the island. We will continue to support the Kaua`i Grown program which markets locally grown produce and meats. As I mentioned, we have our roll out on the marketing program in a couple of weeks. We also continue to support the KISS; the Kaua`i Invasive Species Council each year. They play an important role on our island, not only to help prevent invasive species, but it also helps our economy by keeping those invasive 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 27 species either off our island or at a minimum. We also have continued support of the EBT program in the farmers market. Other administrative costs, dues, and subscriptions, minimum airfare, per diem, car rental, and other travel of about one thousand five hundred dollars ($1,500) for the agricultural sector. That is the conclusion of my presentation for the agricultural section. I will entertain any questions with regard to that. Chair Furfaro: George, expand on your comment about the acreage in Kilauea being leased to a third party. For what? Mr. Costa: To develop the agriculture park. Chair Furfaro: For agriculture? Mr. Costa: For agriculture, yes. One (1) of the ideas that the Kilauea Neighborhood Association, many of whom are made up of Kilauea farmers. When I presented what the current estimated cost of developing that agricultural part, many of those farmers feel that they have the resources where instead of hiring outside that maybe they can form a non-profit and they could provide some of those infrastructure improvements themselves, as opposed to using County funds. I am working with the County Attorney's Office to explore that possibility before we make a decision if we want to move forward with that or not. Chair Furfaro: Could we go into more detail if we put that as an agenda item in the near future? Mr. Costa: Sure. Chair Furfaro: I would certainly like to understand that better. Those capital costs would be those of the third party and then I guess we are the water source as well? Mr. Costa: Right. Chair Furfaro: I might put that on as an agenda item in the near future. Ms. Yukimura: Thank you. As a follow-up, is the Kilauea Ag Park in the CIP Budget? Mr. Costa: Yes. Ms. Yukimura: At a cost of four hundred thirteen thousand dollars ($413,000)? Mr. Costa: Right. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 28 Ms. Yukimura: It is your plan to spend this money this year on what? It sounds like the decision is in abeyance, but we would authorize this money to be spent, and I am not clear what it would be spent for. Mr. Costa: Initially, that is the balance of what was there several years ago. We did the planning phase. We did the environmental assessment phase, and so this is the balance of the funds that remain in there that was initially slated for the construction design of the infrastructure, roads and irrigation system, the farmers market, the community gardens, laying out the grid so to speak of the agricultural park. That was the moneys that were set aside for the design phase. Ms. Yukimura: What is the purpose of the park? What is the main purpose it fits into the County's Economic Development Plan? Mr. Costa: The park itself is County lands that were part of the development of the Sea Cliff development where they were required to dedicate lands. In this case, seventy-five (75) acres to the County, and my understanding that the Kilauea farmers wanted to develop that into an agricultural park for close to thirty (30) years now. We have been moving forward with creating an agricultural park that hopefully will generate jobs for farmers, opportunities, but at the same time, part of the plan is to create a farmers market venue where they can sell produce as well. There is a small section to provide land for community gardens. Ms. Yukimura: It feels like there are all these nice ideas that are put together in one (1) plan, and there is no clarity about what the main goal is here. I was involved with that—I think it was a zoning requirement that the developers of Sea Cliff give the land for an agriculture park. The history of that is that there were nine thousand (9,000) acres—well maybe six thousand (6,000) acres that were in agriculture in Kilauea as part of a plantation. When that closed down, there was a promise from C. Brewer to do a one hundred (100) acre agriculture park for the farmers in Kilauea. At that time, my husband to be was a farmer there. That never happened because the County did not tie down that commitment well. Instead, C. Brewer said they will do this guava farm, which then closed down—it was very successful thanks to Jack Gushiken's expertise. It was producing fabulous guava. But in the vagaries of corporate decision making, it was closed down. That place got developed into agriculture subdivisions. What is left is this historical remembrance that somewhere along the line, Kilauea is supposed to have an agriculture park. Also, in part of this history is that with the plantations closing down, the State Legislature formed three (3) task forces in the State; Kohala Task Force, Moloka`i Task Force, and Kaua`i Task Force, which started the Moloa`a Papaya Farmers Cooperative but that essentially failed overtime. If you are going to start nonprofit groups to do farming in agriculture parks, you have to go back and look at the history of why those groups failed. Do not repeat the same error. I think we need to ask in our picture of agriculture on the North Shore, what is our goal? Does it fit into the picture of somewhere having an agricultural park? The disconnect in food to families is that farmers or young farmers who want to start do not have access to long term tenured lands for agriculture. How are you really going to address that? Things like farmers markets, if you look at smart growth principles, they need to be in town, not off somewhere in an agriculture park. To me, there 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 29 are all sorts of things that are coming up in terms of whether proper planning was done on this. Chair Furfaro: JoAnn, I will put this item in Mr. Hooser's committee. Ms. Yukimura: Thank you. Chair Furfaro: I think he has some oversight there. Ms. Yukimura: The thing is that there is this Budget item for this year's Budget that is probably going to come up before we have this session that is focused on this kind of agriculture. and I feel very uncomfortable about putting this much money in this line item without knowing how it is going to be used. Thank you. Mr. Hooser: Thank you very much for all that you are doing for agriculture. I realize that it represents a very small part of the County Budget, and in terms of staffing, even smaller probably. I think you are doing an amazing job with the very limited resources, so thank you. I think that the work with the farmers markets and attempting to get the Costco buyers out and restrict it to real farmers and use of EBT and whatnot are think are major steps forward in how we are doing things, and have a real impact for small farmers. So thank you for that. I would like to have you back and raise the elevation or elevate the discussion, if you would, of agriculture on Kaua`i to a higher level, and to keep it on the forefront. I think it kind of drifts to the back for lots of reasons, and certainly from the County's perspective. I would I like to work with you, our Council, and the Mayor to re-elevate the Garden Island and reframe that in terms of agriculture like local food growing. Ag parks are certainly a big part of it. We will have you back. I do have some specific questions. I would like also to have you back to talk about the Kaua`i Food hub and that entire project. I have not been properly briefed on all the details. I understand to a certain extent that it is still a work in progress. Mr. Costa: Right. Mr. Hooser: I do not want to get too much into it and I probably should save that for another time. The question was going to be whether it was only for Kaua`i made products or was fish also envisioned to be included? Mr. Costa: That is a long term vision because just in a few months I have been asked, "What about locally caught fish?" That one would be hard to monitor, but we really want to produce local foods, especially if the fish is either raised here whether in aquaculture or caught here. We would definitely like to have it available for people. Mr. Hooser: As this project moves forward, I would love to have the opportunity, both the community and Council, to provide some input before the decisions are made at the end of the day. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 30 Mr. Costa: Okay. Mr. Hooser: I know sometimes things move quickly, but we would like some input. I noticed on number two (2) on your opening statement says, "One of the goals is to preserve irrigated farmland owned by the public." Is that speaking of public lands owned by the public like Agribusiness Development Corporation (ADC) lands? Mr. Costa: The State lands, AD, right. Mr. Hooser: Is there anything actively underway to make that happen? Mr. Costa: Actually, we work with East Kaua`i Water Users Cooperative. They do great work. I wish we had a lot more money to fund them on the great work that they do, but whatever we provide is used to maintain the systems, mainly on East Kaua`i. Mr. Hooser: In terms of preserving the farmlands themselves, for use to local farmers; I would encourage your office to dialogue with ADC to make sure there is land set aside for local Kaua`i farmers who are doing real farms and feeding people. In the Budget, one (1) of the questions—I would hope the voice of the local organic farmers, if you would, are part of the conversation also. I notice and I support the Cattlemen's and others here, and believe they are doing good work but are organic farmers involved in the discussions? Are there any initiatives to support that segment of the industry? Mr. Costa: Yes. We work closely with Louisa Wooten. She is our local person who certifies organic farming. I have attended a few of her sessions. Speaking of Kilauea Agricultural Park, that has been part of the discussion with the Kilauea Neighborhood Association and the farmers. That seventy-five (75) acres—when you put the infrastructure in and some of the other components that we are hoping to install, really comes down to fifty (50) acres of land. Right now, part of the plan is to have traditional farmers and organic farmers, and that is going to be another debate process if that can actually work. Some farmers say it can and others say it cannot. We can schedule that for another discussion. Mr. Hooser: Could you have anybody like Ms. Wooten on the Kaua`i Agricultural Advisory Committee as an organic industry representative? Mr. Costa: No, she is not. We are looking at a couple of positions on there. Some of the members have either retired or basically want to retire from farming and life, so we have a few positions on the advisory committee that we are looking at filling. Mr. Hooser: To get a copy of who is on there; is that on the website? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 31 Mr. Costa: No, but we could provide you a copy. Mr. Hooser: Thank you. Lastly, it is a small Budget item that kind of stuck out at me. We are spending six hundred dollars ($600) for a subscription to the Wall Street Journal under the agricultural. I think we would do like National Farm Journal or something, rather than the Wall Street Journal. You do not have to answer that, but it is a curious item on the Budget. Thank you. Mr. Costa: Thank you. Chair Furfaro: George, you understand what I am saying? I would like to have an update on the seventy-five (75) acres in Kilauea, probably in Mr. Hooser's committee. Mr. Costa: Okay. Chair Furfaro: You just work out the particular details with him. Secondly, I would like to make sure that you bring Mr. Hooser up to date on the things that have transpired as we look into investments, so he is familiar with some of the plans we had going forward, especially on moneys we have allocated. Ms. Nakamura: Thank you, George. I just wanted to mention that the Kilauea Ag Park funding—ever since the Environmental Assessment (EA) was completed has been in this Budget. I think for the past three (3) years, as long as I have been here, I have seen it in there. I guess the question is that the only difference that I see this year in your write up is very specific questions that need to be asked, especially relating to the bird issues and relating to the water use issues. These are fundamental questions that will determine the fate of this project. I do not have a sense of timing. As an administration, when do we expect to make a determination whether this project goes forward or not? It is four hundred thirteen thousand dollars ($413,000) sitting in the CIP that could be used for projects that might be ready to go now. That to me is the issue with Kilauea, and I know there is a lot history to the project. There are these outstanding issues but we need to resolve this year so it does not sit in this. Maybe the funding is at a later date when they are ready to move something concrete. Do you have any response to that? Mr. Costa: I am constantly reminded. I believe it is thirty (30) years in the making since the idea; the inception. It weighs heavily on my mind. I would like to see it come to a decision and it may not be an agriculture park. Ms. Nakamura: If it is not, what is it? If they want to use a portion of the four hundred thirteen thousand dollars ($413,000) for something relating to agriculture uses in Kilauea, what is that alternative? I think if we do not have that or a plan for using the four hundred thirteen dollars ($413,000), then we should just put it off to the side for now and use the money in ways that are going to make a difference tomorrow. Mr. Costa: Agreed. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 32 Ms. Nakamura: That is just my perspective. My question has to do with the EBT program. Mr. Costa: Yes. Ms. Nakamura: For the forty thousand dollars ($40,000) that is in the Budget, I wanted to find out what is the match for that program that you are proposing? Mr. Costa: Basically, the forty thousand dollars ($40,000) is to provide additional funding obviously for people. Right now, anyone coming with their EBT card to the farmers market and purchases a dollar of food, another dollar will come from the County, so it is one (1) for one (1). Ms. Nakamura: It is one (1)for one (1)? Mr. Costa: Yes. Ms. Nakamura: Thank you. The Cattlemen's Association grant of twenty thousand dollars ($20,000)—that would go to private slaughterhouses. Is that in the form of a grant or loan? Mr. Costa: A grant. Ms. Nakamura: Is it without these funds that they cannot sustain their operations or make the improvements they need? Mr. Costa: Yes. The funds help those two (2) slaughterhouses maintain the facility and improve the facility, so that they can continue to stay in compliance with United States Department of Agriculture (USDA). One (1) of the slaughterhouses has indicated that in the next five (5) to ten (10) years, they are looking at retiring. Hopefully they can find somebody to train and continue the business, but for long term, we would like to see a larger facility for the island. Ms. Nakamura: Thank you. Chair Furfaro: On that note, we are a few minutes past our caption break time, George. When we come back, I would like to wrap up the agriculture piece because I already agreed to have two (2) items in subcommittees. Those items will get posted accordingly in the very near future. We are on a ten (10) minute caption break. There being no objections, the departmental budget call-back recessed at 11:07 a.m. The departmental budget call-back reconvened at 11:22 a.m., and proceeded as follows: Chair Furfaro: We are back from the recess, you have the floor. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 33 Ms. Yukimura: Thank you. I still have one (1) more question about the Kilauea Ag Park. You did an EA and a feasibility study? Both? Mr. Costa: Part of the Environmental Assessment included a study by an agronomist who presented his version of a feasibility study of what crops would be feasible to plant on that acreage given the climate, soil,and the lack of water. Ms. Yukimura: Okay. I really question the Administration's tendency to go straight to go EAs before you do a real clear feasibility study. I think you waste a lot of money doing EAs without knowing if you want go through with the project. My question was if you did a feasibility study, what was the conclusion? Is it feasible or is it not feasible? Did you get that? That would be the first threshold question, right? Is it something that we can do there? I, as one (1), who talking about using public moneys that literally belong to the whole island would rather you ask the question and if we had an agriculture plan, you would ask the question. If a really successful agriculture park is our goal, where is best place to put it on the island? That would be my questioning. If you are starting with a location, you would at least want to ask if it is possible and viable to have it here? Was that question asked and if so, what was the answer? Mr. Costa: I certainly did not ask the question. When I came into the County in 2009. Ms. Yukimura: It was already ongoing? Mr. Costa: Yes, a plan was already there. We were actually looking at Economic Development Administration (EDA) funding, and part of the EDA funding requirement was doing an Environmental Assessment. It actually came as part of looking at the funding source, but as far as a feasibility study, that was not done. Ms. Yukimura: Environmental Assessments as I understand it, the question is, "Is there going to be a significant environmental impact?" If the answer is no, it stays at EA level. If the answer is yes, you go on to do a more full blown environmental impact statement, but in order to answer the main question, "Will there be an environmental impact?" You kind of have to have the whole design in place in order to do that. That is why I am forever baffled by doing EAs before you ask the main question, "Is this really where we want to do it?" If so, in what design do we want to do it. Then to me, you can answer the question of what the environmental impacts are. Did you share the study of the agronomist with the Council? That is the closest thing that we can come to a feasibility study. Have you submitted that to us? Mr. Costa: I believe I did two (2) years ago but I can send another copy. Ms. Yukimura: No, we can find it in our files. Chair Furfaro: We have it in our records, George. =gin. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 34 Ms. Yukimura: Thank you very much. Mr. Costa: You are welcome Ms. Nakamura: I guess I am still going back to this because if the intent is to make all of the projects—I think this is what we heard from the Administration on this plan, CIP plan to be completable in eighteen (18) months; is that really feasible in your opinion? Mr. Costa: You mean to do the design in eighteen (18) months? Ms. Nakamura: To expend these funds in whatever way that is necessary to accomplish whatever goal is decided upon? Mr. Costa: Maybe not the entire money. I would not know. Our goal is to determine if we can move forward with the agricultural park based on the suggestions or ideas that are on the table right now. We may determine that it is not. I do not know what it is. Ms. Nakamura: What I am looking for and that it would be good to see this year is when do you anticipate to make that determination? If it is not an agriculture park, what is the alternative? Do we just move on? Chair Furfaro: I wanted to add onto that, and then I will give you the floor, JoAnn. George, I guess the real message here is that our resources at this time in this financial environment is pretty limited. We want to make absolutely sure that before we move forward on spending of larger amounts of money, we have buy in. That is the best and the right reason to do it. That is really what it means. It is important that we manage our resources to get the best outcome. Mr. Costa: Understood. Ms. Yukimura: Thank you. If you do want to go ahead with an agriculture park, there are two (2) tracks. One (1) is the County develops it and two (2), which to me this is somewhat an amorphous idea, that a nonprofit will develop it. Please go back and research what happened to the Moloa`a Task Force before you head down this road. If the County were to take it on and develop it as a County agriculture park, what is the ultimate expenditure that we would have to put forth? Mr. Costa: Right now about eight million dollars ($8,000,000). Ms. Yukimura: Okay. I am glad to know that you know the amount. That is a substantial commitment. In our agriculture planning for this island, how much money are we going to put into agriculture for the next ten (10) years? What are our goals for that process for the next ten (10) years, if we were to spend our money in the 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 35 most cost effective, biggest return on investment? Where should we put that money? How much do we plan to spend? Even if you just say it is on an agriculture park, where is the best place for an agriculture park? Where will we get the biggest return? The most land? The most farmers? The most production? The centralized location or not? You could also take the whole agriculture picture and ask, "What are our key goals for agriculture?" How should we spend the eight million dollars ($8,000,000)? Thank you. Chair Furfaro: Okay. George, you know that we currently have limited resources, and then "what is the rationale on that kind of dollar amount if that is what we come up with?" We are going to continue to move towards completing this, and I would like to have the discussion on CIP, and then try to get Credit and Collection as it relates to Merchant Services at Wailua done. If we are okay with that, we are going to go into Economic Development CIP. We have kind of touched on it already with four hundred seventeen thousand dollars ($417,000). Mr. Suga, you want to come up, Sir? George, will you continue to lead us through this discussion? Mr. Costa: Yes. We are going to go into CIP and then come back around to finish the Office of Economic Development? Chair Furfaro: Yes, we can do that. Mr. Costa: Okay. Chair Furfaro: I do not think anybody else had any more questions on the OED Budget at this point, George. Mr. Costa: We are not finished. Now I have my portion. We will go into CIP and then come back around to Office of Economic Development? Chair Furfaro: Well, we will see where we are at when 12:30 p.m. comes. Mr. Costa: Okay. Chair Furfaro: Do you have any major additions in your department? Mr. Costa: Actually, there is quite a bit. Chair Furfaro: I do not think any of it was very complicated to understand? Mr. Costa: No. Chair Furfaro: Do you want to brief us again? Let us do ,CIP and then go to your office. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 36 Mr. Costa: Okay. Ms. Yukimura: I have a procedural question. Chair Furfaro: Yes. Ms. Yukimura: This food agriculture cluster that you have included in your update, the two (2) page presentation that we got today? Mr. Costa: Right. Ms. Yukimura: Is this CIP or is this Operating Budget? Mr. Costa: CIP. Ms. Yukimura: Okay, so we are on that right now? Mr. Costa: Yes. Chair Furfaro: Okay. I think I made it clear that I want to do CIP because we have limited resources, so let us forward. George, at the end if you want to add dialogue with your Operating Budget as it relates to your department, we will see if we could squeeze that time in today. Mr. Costa: Okay. KEITH SUGA, CIP Manager: Good morning, Council. Keith Suga for the record, CIP Manager. We could go to the first project on our sheet which is on page 2 of our spreadsheet. Kind of near the top, it is the Alternative Energy Projects for eight hundred forty-nine thousand dollars ($849,000). George can speak to that project. Mr. Costa: The eight hundred forty-nine thousand dollars ($849,000) is actually the remaining balance of a one point five million dollars ($1,500,000) CIP project that started with the photovoltaic system on the Civic Center. Obviously, that came in about three hundred thousand dollars ($300,000). This is the remaining balance. Between our former Energy Specialist, Glenn Sato, and the current Energy Specialist, Ben Sullivan; they looked at other County facilities that would have the biggest impact and right now the focus is on the Police, Civil Defense, and the Prosecuting Attorney's building. Chair Furfaro: Before you go any further, how could we budget one point four million dollars ($1,400,000) spend only three hundred thousand dollars ($300,000) to accomplish what was in the narrative? Was there a component that was missing? Mr. Costa: My understanding was that one point five million dollars ($1,500,000) was set aside to look at alternative energy projects and at the time, which was about three (3) years ago, was to look at County facilities. The first one (1) that 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 37 rose to the top was the Civic Center to do photovoltaic with the police building in mind, but seeing what would the balance be after we did the photovoltaic system on the Civic Center. That is where we are right now. Chair Furfaro: I understand it differently. There was a whole shopping list of facilities that we were supposed to address to improve reducing kilowatt hours, whether it is photovoltaic or anything else. There was a whole group of County buildings. We have done one (1) and we kind of think this is the balance. It is not the balance because we have not launched the whole program. That is my point. Mr. Costa: Okay. Maybe I am confusing the issue because we are also working on a performance contract to look at all the County facilities to become more energy efficient. That is being worked on as we speak. Part of that initiative is with Ben Sullivan and Glenn Sato working with Chevron Energy Solutions. That is one (1) side of the equation. Chair Furfaro: Just so we know, this is not a balance carry over; this is an ongoing project. Mr. Costa: Right. Chair Furfaro: We do not have the best outcomes identified yet. Mr. Costa: Absolutely. There is a lot more. Chair Furfaro: Okay. That is what I want to make sure that it is not a carryover amount of money, but an ongoing project. Mr. Costa: Right. Chair Furfaro: Thank you. Mr. Costa: Did I answer the question of what these funds are going to be used for? Chair Furfaro: Yes. The reason I said that is because if you point out it is a balanced amount, there might be some members that want to tap it. Mr. Costa: Okay. Chair Furfaro: You have to make a point to us that this is only the beginning of our enjoyment of reducing our kilowatt hours. Mr. Costa: Exactly. Chair Furfaro: It is not money that could be used elsewhere. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 38 Mr. Costa: Thank you, Chair. I could not have stated it better. Thank you. Ms. Yukimura: I have a question about that. Chair Furfaro: Go right ahead, JoAnn. Ms. Yukimura: As the Chair has pointed out, the Civic Center was with the first phase of an ongoing program to energize our County facilities with alternative energy. Do we have a report anywhere on this first phase, i.e. how much energy we are saving? Or anything like that? I was looking in your "successes and achievements," and I do not see it. Mr. Costa: No, it is not in there but we can get it to you. Ms. Yukimura: We want some validation that the three hundred thousand dollars (300,000) was money well spent. I would like to know things like, how much we are saving a year in both, kilowatts and costs. Costs get distorted by the price of oil, and also what the projected payback period is. We had one (1) when we started but actual performance is sometimes different than projected performance. If we can get just information? If the Police/Civil Defense/Prosecuting Attorney's facility is in next proposal, how much will it going to cost? Is it going to take all of these eight hundred forty-nine thousand dollars ($849,000), or a portion of it? What is the projected return on investment i.e. the savings? What will be the projected payback time? I presume someone has looked to see that this will be the best payback of any of the County facilities that is going to be the best place to spend this limited money? Often, the really good energy consultants will first do an energy audit to make sure that the energy uses is as low as it can be first before you size the photovoltaic system, so I am hoping that is going to be part of it, rather than having all of this waste that is not identify, and then sizing a PV to accommodate that. I am just looking for some evidence that this kind of analysis has been done so we know we are spending our money best in way possible. Chair Furfaro: George, I think you know what we are looking for. I know with your credentials you know that, too. You have both Glenn and you have Ben there. As you target these things, it should be an applied ROI that we can look at that says, "What is the return on investment and how many years is the payback?" I know with your hotel background, you go through that but I think what Councilwoman Yukimura is saying, something we are all expecting. Ms. Yukimura: Thank you. Mr. Costa: Yes. Chair Furfaro: Are there other questions? Next item, then. Mr. Suga: The next item is on page 3. It is the CEDS Project, four hundred fifty thousand dollars ($450,000), in the middle of page 3. ii 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 39 Chair Furfaro: George, you want to give us a narrative here? Mr. Costa: You have the handout and that is why I detailed it. That four hundred fifty thousand dollars ($450,000) is broken down into several CEDS related projects. We have granted two (2) entities; one (1), the Kaua`i Economic Development Board (KEDB) and the Kaua`i Planning and Action Alliance, to divide up some of these projects based on the CEDS or the industry clusters. From the food and agriculture cluster, KEDB was charged with looking into the business plan for the modular slaughter/chill processing facility for seventy thousand dollars ($70,000). Also along with another part of the food and agriculture cluster, was the beef quality study for twenty-three thousand five hundred dollars ($23,500). Another food and agriculture cluster was the commercial kitchen feasibility study for thirty-five thousand dollars ($35,000). As part of the commercial kitchen business incubator, looking at funding sources for that commercial kitchen business incubator facility, which was also a KEDB project. The last one under KEDB was under the science cluster, looking at a digital media center and creating a business plan for seventy thousand dollars ($70,000). On the Kaua`i Planning and Action Alliance, they took on the arts and culture cluster which was the facility feasibility study for visioning session for the arts and culture cluster. Then you had the Workforce Readiness which is the Keiki to Career Action Plan, which was for forty-eight thousand dollars ($48,000). Under "sustainable technologies and practices," the sustainable technology cluster was sixty thousand dollars ($60,000) to work with not only our Solid Waste Division on looking at recyclables, and what could be done with some of those materials to create business entities and economic opportunities, but also work with our Sustainability Manager, Glenn Sato and the County's Green Team on sustainability initiatives. The last one was under the sports and recreation cluster for the Wailua Golf Course Strategic/Business Plan which was for seventy thousand dollars ($70,000). Chair Furfaro: Okay. Tell me again about the Wailua Golf Course. Mr. Costa: Okay. Chair Furfaro: Is it in or is it out? Mr. Costa: It is still listed here, but it is one (1) of the projects that we were unable to get to at this point but it is something that we feel is important and something that we still want to carry on with. Chair Furfaro: You do not have to sell us on how important it is. I just want to know, is it in or is it out? Steve, do you want to answer the question? STEVEN A. HUNT, Director of Finance: Steve Hunt, Director of Finance. It is part of the CEDS project. It is in this four hundred fifty thousand dollars ($450,000). Chair Furfaro: How much is it exactly? Mr. Hunt: Seventy thousand dollars ($70,000). 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 40 Chair Furfaro: I think that answers our question. George, can you tell us a little bit of what you expect regarding the understanding of the Wailua Golf Course and its marketing positioning? Mr. Costa: As far as that project is concerned, looking at the total operation of the golf course and the ancillary facilities that it has like the restaurant and the pro shop. Also, part of the scope of work would be doing a survey of all of the patrons of the golf course to see what they envision the golf course and services that they would like to see. Chair Furfaro: Visitor industry as well? Mr. Costa: Yes, and the visitor industry. Initially, Sue Kanoho and I met with my brother Ian Costa and Lenny Rapozo. Prior to this study, actually coming out and looking at how we could help assist the golf course from a marketing standpoint. As I mentioned, we have not really gotten started on this project yet. Chair Furfaro: That is all I need for right now, because we are going to talk about the golf course later today. The fact of the matter is that I want to know where the money was. I promoted you as an expert last week; you and Ken Shimonishi. You know what we are talking about when it comes to number of rounds versus of the average round rate. You know what we are talking about when it comes to the amenities of the facility versus boosting rounds, rather than just selling eggs and vienna sausage in the morning. We need to know that the money is there, and Steve has answered that. We are going to talk about the golf course later. Thank you. Ms. Nakamura: I am a little confused because the money is here, but I thought we heard last week from the Administration that although money was in the Budget, you did not intend to spend it. I guess I am confused about what is happening moving forward. Mr. Costa: Okay. As far as I am concerned, from the Office of Economic Development, this is one (1) of the projects that we have not started on. Whether we will start on it this year, I am not certain. I would have to defer to the Mayor. Chair Furfaro: George, you have to be certain with us. We have the final say. We are going to be rolling in the golf course so I do not want to have a golf course discussion now, but I want to know; you have not started but the money is in and you are overseeing it as of right now? Mr. Costa: That is correct. Chair Furfaro: But you have not started? Mr. Costa: That is correct. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 41 Chair Furfaro: That satisfies me for right now. Mr. Rapozo: Yes, but I also heard him say he is going to defer to the Mayor. If the Mayor said they are not going to do, it and George said he is going to do it but he will defer to the Mayor, we can assume it is not going to get done. Chair Furfaro: Unless we put it back. Mr. Rapozo: That is where I am heading with this. If they are not going to use it, we definitely need to pull the money back. It is useless to just keep the money floating in a line that is not going to be used. We are just not going to do that. Thank you. Chair Furfaro: Steve, maybe we will get some clarity on your May 8th return? You are due to send us a communication on May 8th and we will get some clarity there. Mr. Hunt: Yes, we will try to address that in terms of where out timeline is for both the reopening and ongoing projects in the Wailua Golf Course, as well as the marketing plan. Chair Furfaro: Okay. That sounds reasonable. We look for it in the May 8th communication. Mr. Rapozo: I have a follow up. Chair Furfaro: Go ahead. Mr. Rapozo: On the sheet, you are showing four hundred fifty thousand two hundred twenty-five dollars ($450,225) to KEDB and two hundred ten thousand dollars ($210,000) to KPAA. That leaves a balance of fifteen thousand dollars ($15,000). Mr. Suga: Councilmember Rapozo, the information you are referring to on the sheet, I think that was the—at the time this was put together, it was the latest information I had from George, but he had since recently provide the worksheet. I apologize for that information not adding up to four hundred fifty thousand dollars ($450,000), but if you refer to his presentation, it does. Mr. Rapozo: Has some of these studies not been completed already? Mr. Costa: They are in the works right now. Mr. Rapozo: None of them have been completed? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 42 Mr. Costa: No, June 30th is when they are scheduled to be completed. Mr. Rapozo: So these moneys will be spent this Fiscal Year? Mr. Costa: Yes, this Fiscal Year. Most of them are being spent as we speak. Mr. Rapozo: Okay. We still have that four hundred fifty thousand dollars ($450,000) available? Nothing has been expended? Mr. Costa: Quite a about bit of it has. Mr. Rapozo: Okay. That is my question. Ms. Yukimura: On the Wailua Golf Course you say a user survey will be done. One (1) of my concerns is that the users are the only people consulted often times, and that this golf course is not just for the present golfers, but it is for future golfers. One (1) of the questions is the long term sustainability of the golf course. It also impacts all the taxpayers of this island because we are subsidizing it a million dollars a year, which means that a million dollars that could be used for other purposes is not being used. I am asking how will this study address those bigger questions? Mr. Costa: It is not the answer to all of the issues at the golf course, but it will help provide a picture or an idea of what the actual users of the facility envision and help us towards the end goal. As you mentioned, it is a facility that is really funded by the public and not everybody plays golf. As Chair Furfaro mentioned, the visitor industry, and I look the hotel because you have "x" number of potential of rounds and what your maximum revenue might be; your revenue strategy. Currently, we may not be maximizing that top revenue because obviously there is the visitor industry that is interested in playing. They may not have the best tee times. I envision the study to provide several scenarios on revenue producing opportunities. Some of them—one (1) scenario is showing the present scenario as you have a lot of local players, local clubs. I am not 'a golfer, but my understanding is that a lot of those clubs take up some of the primetimes to maximize your revenues and you may have to move them out of the primetime playing time. Ms. Yukimura: Or share it like the Chair mentioned. Mr. Costa: Or share it and provide more opportunities for the visitor who is paying a higher rate. There is quite a bit of scenarios. Ms. Yukimura: Okay. You have outlined a lot of the issues that will come up as you develop a strategic plan. One (1) of my concerns is whether the consultant will have expertise in municipal golf courses because they bring different issues than just a private golf course attached to a hotel. It is an asset to local people here and we want it to continue to be an asset to local golfers. On the other hand, we need it to be 1 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 43 financially viable and there needs to be consideration of the other needs and uses for public County moneys. I am hoping that we are going to have someone who is doing the strategic plan who understands those parameters and can help us sort and balance them. Do you know if it is your intention to find a consultant like that? Mr. Costa: Yes. Ms. Yukimura: Is it within KPAA's capacity to do that and oversee that process? Mr. Costa: We would develop the Scope of Work, and hopefully there is someone or entities out there that can provide that expertise. Ms. Yukimura: To a certain extent a strategic plan is—it has to be based on a lot of economics. I have been concerned at how economics has been ignored or not fully focused on in some of our important reports. I am asking you how are you going to spend this seventy thousand dollars ($70,000), so that in the end we really get a workable strategic plan that will guide us to create a very viable Wailua Golf Course? I want to say too that it is not only an asset not only to local golfers, but it is an asset to the island from the publicity and the quality of play and to our visitor industry. It is like so many pieces and we need really good help in putting that together. Mr. Costa: Understood. Chair Furfaro: You know what we are looking for and Steve, you understand, the big question gets answered on May 8th when you submit your communication again. We will continue talking about some of the market segmentation when we get to the golf course for today's presentation. Ms. Nakamura: I just have a question. I know that the Farm Bureau has put forth a Grant-In-Aid request to the State to get some planning funds for the food hub. Do you know how much they requested? Mr. Costa: Three hundred thousand dollars ($300,000). Ms. Nakamura: Do you know the status of that request? Mr. Costa: No. I have heard from different sources, but not from our State Legislature so I need to find out exactly. Ms. Nakamura: I guess we will not know until the end of the session. Mr. Costa: Yes. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 44 Ms. Nakamura: I just wanted to follow up on that because I am worried that we might not get funding for that study. Was it going to be some sort of business plan? Mr. Costa: Actually business plan and then also coming up with the design scope. Besides the Legislative ask, we are also looking at other funding sources that will help with that. We have talked to a few organizations that think it is a great idea. Verbally they said they would like to help, so we will see on how much. Ms. Nakamura: Are these federal sources? Mr. Costa: Some is federal. Some is actually private. I do not know all the legalities of doing that, but we are looking at several sources, not relying on the County. Ms. Nakamura: I think what is the gap is that we will take the slaughterhouse to at least a business plan stage, take the commercial kitchen to a business plan phase, but then there is the produce processing piece. Mr. Costa: The retail section, yes. Ms. Nakamura: The retail section. Mr. Costa: Right. Ms. Nakamura: I thought it was the washing and keeping up with the federal standards. Mr. Costa: Right. The food safety. Ms. Nakamura: The food safety section. That we really have not looked at the numbers and the financial feasibility of that. If we are looking at it as a hub, then that needs to be done before anything can move forward. Mr. Costa: Right. Ms. Nakamura: If the Administration is not willing to do some of these other projects that have been slated or included in our previous Budget, and if there is a gap in State funding, should we look at reprogramming some of these funds for that purpose? Mr. Costa: I guess it is possible. As part of the follow up or the remaining piece of the Office of Economic Development Budget, I have in there some moneys slated for just that, to look at that final piece of the processing and the retail section. Ms. Nakamura: Okay. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 45 Mr. Costa: Which is in, I guess, my piece of the Budget. Ms. Nakamura: That we did not get to. Mr. Costa: Yes. Ms. Nakamura: Okay, thank you. Chair Furfaro: You are making us more and more anxious to get to your piece. Ms. Yukimura: Regarding the food agriculture cluster, the moneys that are proposed here from the County's Budget would not be contingent on the funding from the Legislature? If the Legislative money does not come through, you can still proceed to do this next phase? Mr. Costa: Which next phase? Ms. Yukimura: The seventy thousand dollars ($70,000). Mr. Costa: That is happening right now. This is what is in CIP right now and most of it is right now for this Fiscal Year. Ms. Yukimura: Okay. This sheet is not proposed uses of money? Mr. Costa: No, actually proposed—if you look at the CEDS, the four hundred fifty thousand dollars ($450,000), that is now. What is proposed or carried over to the next Fiscal Year would be the eight hundred forty-nine thousand dollars ($849,000) of the Alternative Energy and the Kilauea Ag Park. The other projects are happening right now. Ms. Yukimura: On page 3 of the CIP, which says four hundred fifty thousand dollars ($450,000), which will be in the next CIP that we are looking at; Fiscal Year 2014. Of this list, of the two hundred twenty-five thousand dollars ($225,000), two hundred ten thousand dollars ($210,000); I do not know what you are proposing the four hundred fifty thousand dollars ($450,000) for? Mr. Costa: Okay, maybe I have this wrong, but I am reporting on what is in the CIP right now. Ms. Yukimura: It is going to be carried forward because you have not encumbered it? Mr. Costa: No, we have. Chair Furfaro: Hold on, JoAnn. Would you yield the floor for a moment for a point of clarification? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 46 Ms. Yukimura: Sure. Ms. Nakamura: I think the concern here is on the sheet on page 3, the data in here is not quite accurate. Under the section "Appropriation Balance," I think some of this has been appropriated to KEDB and I know part of it to KPAA after March 8, 2013. I think to clarify the issue for Councilmembers, it would be good to put in what has already been encumbered into that spot so that we actually know what is the balance today. Mr. Costa: Okay. Ms. Nakamura: I think that is the issue. Mr. Costa: Okay. Chair Furfaro: You are following that discussion so that you can send us some type of an amendment. Mr. Suga: Chair, could we request a quick recess? Chair Furfaro: Sure. We will take a five (5) minute recess. Mr. Suga: Thank you. There being no objections, the departmental budget call-back recessed at 12:02 p.m. The departmental budget call-back reconvened at 12:09 p.m., and proceeded as follows: Chair Furfaro: We are back in session. George, let me offer a couple of suggestions, okay? Mr. Costa: Okay. Chair Furfaro: We do need some clarity to understand what might currently be in your operating plan, followed by what these balances are in the CIP. I think you need to reconcile it. At the same time, what portion of those improvements might actually be coming from bond money? You have to get those pieces really clear for me. I am thinking for right now, we are going to continue with your office until we get to lunch. Mr. Costa: Okay. Chair Furfaro: I am going ask that we move the Department of Finance Credit Collections and Merchant Services as it relates to the Wailua Golf Course, to tomorrow at 1:30 p.m., followed by a continuation of this portion of the CIP reconciliation. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 47 Mr. Costa: Okay. Chair Furfaro: That puts you to about 2:30 p.m. tomorrow. Mr. Costa: All right. Chair Furfaro: I think there seems to be a lot of confusion as to current year and committed and next year and reconciling the balances. We are okay with that. We have got to get it right though. We are not going to do in the next ten (10) minutes. Let us leave it at that point. Mr. Costa: All right. Chair Furfaro: Mr. Hooser wanted the floor. Mr. Hooser: Just to add to because it I think you said it already, but I want to restate it. We are also asking for clear decision or definition between what is bond funded and what is otherwise funded. Chair Furfaro: Yes. Mr. Hooser: Okay. Thank you. Chair Furfaro: I did say that. Thank you. That is a very important piece. We have to have consultation with our bond counsel on that. Mr. Hooser: For all areas, not just Economic Development. Chair Furfaro: Yes. Mr. Hooser: Thank you, Chair. Ms. Nakamura: On page 2 of your handout, the second bullet related to the "Arts and Culture" project cluster. I wanted to clarify that we are not pursuing a facility feasibility study at this time based on feedback from the initial focus groups. That is really not where the group is at. Mr. Costa: That is correct. Ms. Nakamura: I think it might be good to rename that, maybe to "Collaboration and Capacity Building," because I think that is the direction that the cluster wanted to move in. I understand that that number is not seventy-two thousand dollars ($72,000), but twenty-five thousand dollars ($25,000). If we can just clarify what the contracted amount is for based on the changes. That was a good part about our process is that we brought all of the different stakeholders together throughout the idea and got the feedback that they were not really ready to move in that direction. Scale it back and do not put the resources, and readjust it to what the needs of that cluster really are. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 48 Mr. Costa: Okay. Ms. Yukimura: I have a concern about that because I do not believe that the conclusion that this group came to reflected a really thorough survey, in terms of the need for a—well, what I see as a performing arts/sports covered facility. I think it might be worthwhile to begin the discussions on that. I really feel like the group that was surveyed was a very limited group. My sense in the community is that we do need to start planning for a large facility that is covered, gathers people, and can be used for sporting and cultural activities. I do not see it happening tomorrow but the planning can and should be done. I am not sure that KPAA is the proper group to do it. I do not know if the Administration will put it forth as a beginning from this year. You may say next year or another year. I hope that the Administration is not concluding that we should not look at planning for something. It is something for the Administration to look at but my sense out in the community is that people feel we should—that there is some real support for that idea. It would be good to begin to bring it together and talk about what it would be. It is a huge project and has to be done so well. If you go back to look at Maui's Performing Arts Center, which was not huge arena so that was different. The closest one you can get to is the Merrie Monarch facility. Mr. Costa: Right. Edith Kanaka`ole Stadium. Ms. Yukimura: Yes. Even the Maui Performing Arts took some real leadership...what do you call that? Ms. Nakamura: Vision and champions. Ms. Yukimura: Yes, champions. (Inaudible) was one (1) of them there. Yes, so visionary champions, but then a whole collective action of community to do it. I am not sure how we would even begin, but I have a sense that we need to begin. Thank you. Ms. Nakamura: I would agree when we first talked about sports and recreation cluster, the multi use facility rose to the top as something that was very important. Pretty much, the group felt that the Convention Hall is maxed out and we are ready to move on to something bigger that will serve multiple needs. I think the focus of the feasibility study done by KPAA did involve the arts group, but may not have involved the sports and recreational group. That was the focus. It was an arts and culture focus. It might be a broader group of stakeholders that need to be involved, but that is a huge undertaking and a huge commitment of resources that we need to consider. Chair Furfaro: Okay. George, I am going to give you the last fifteen (15) minutes to talk a little bit about your department for all intents and purposes, we are going to defer the rest of this CIP discussion until tomorrow. Mr. Costa: Okay. 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 49 Chair Furfaro: It is important that you have something that reconciles what is committed either CIP from the General Fund or Bond, or what your improvements are going forward. Also, please make sure that we weeded out of their moneys that might have been in the Operational Budget and not CIP because we have got some crossing of narrative over here. That will be at 2:30 p.m. We are going to also defer the Office of Finance but I see that Steve is not here, but you will tell him. We are going to move the Credit Collections on Merchant Services for the golf course from 1:30 p.m. to 2:30 p.m. tomorrow. After you had some time to reconcile it, we will do the continuation of the CIP for 2:30 p.m. Today, I do want to get a late start on our afternoon meeting, which is Department is of Personnel Services. We will start that regularly at 1:30 p.m. George, I am giving you the floor for the next ten (10) minutes to cover anything that you want in Economic Development and your office? Do not feel I am rude. I am going step out at twenty-five (25) after the hour to take care of an appointment I already had, and then I will be back at 1:30 p.m. I will let you take it from here, Mr. Rapozo. Mr. Rapozo: Thank you, Chair. If I can, I have both Ben Sullivan and Glenn Sato here. Did you want them to come up and clarify? Chair Furfaro: It is your time. Mr. Costa: Maybe they could speak to the photovoltaic energy piece. Chair Furfaro: I just want to make sure that we understand the balance of the money. That is all I want to understand. Ben come on up. We were talking about the moneys we allocated for photovoltaic, and you also need to know that the Council does reserve the right to move or reallocate money that is identified in CIP if we feel that there a large balance is left or the attention to detail would leave some wiggle room for us. It has been conveyed to us that you folks have other scope that perhaps needs a little bit more definition for us on the—how much is left there, George? Mr. Costa: Eight hundred thousand dollars ($800,000). Chair Furfaro: A little more than eight hundred thousand dollars ($800,000). If you could brief us on the intent and vision for that money. I will turn it over to Mr. Rapozo. BEN SULLIVAN, Economic Development Specialist IV Energy: Thank you. Ben Sullivan, for the record. The Mayor has made it a priority to look at this project next in our workload and that is a photovoltaic (PV) system at the Police facilities. The project has been studied with a reasonable amount of thoroughness and we are ready to proceed and issue an RFP into the next fiscal. The amount in the CIP is eight hundred forty-nine thousand dollars ($849,000). One (1) of the challenges with getting the numbers exactly right is that we have multiple variables that are impacting the way this project is looked at. One (1) is certainly that the price of photovoltaic panels themselves have been dropping to about ten percent (10%) to fifteen percent (15%) per year for the last three (3) or four (4) years in terms of installed cost. That is good news. Another variable that becomes a trick 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 50 is that the overtime amount of photovoltaics on the grid, as well as a given on the on a specific amount on a given circuit subjects any project to review by Kaua`i Island Utility Cooperative (KIUC) that may or may not be favorable to the County. KIUC has limits they have to work within and they communicate to us as best they can but those things are changing in dynamic. This is another variable. In general, the reason that we selected the police facility to proceed with is because it is a major load. It has a significant amount that the usage is concurrent to photovoltaic generation, so basically it has a daytime load curve that is favorable to PV because basically the way we are paid or the way we benefit from photovoltaics on County facilities or in any facility is that the highest value is received if you generate concurrent to you load. Again, the police facility has a daytime peaking load, so that is very favorable. That is versus say a wastewater facility or another facility where the load curve is fairly flat. They may have a big load and still be good candidates but it is not the same curvature and does not align. Just the simple payback on the project would be about seven (7) years so we are talking about a project that at the last time we priced it was a little over one million dollars ($1,000,000). I do think the price of PV has come down, and I do think that we are going to have to get into the RFP to find out if our assumptions about the additional infrastructure associated with the photovoltaics are going to be accurate. We expect that the eight hundred fifty thousand dollars ($850,000) will get us most of the way there. We will either reduce the size of the project a little bit to accommodate the Budget, or we will also seek other funding and try to perhaps come back to Council, or look at other sources for funding to make it optimally sized. I think that is the general background on that project. I was also listening actually when you were discussing this earlier, and I think there was a question from Councilmember Yukimura regarding the consideration of efficiency. I can say that the sizing that we have assumed for this project is based on reducing the load ultimately at the police facility by about twenty percent (20%). We anticipate being able to do that. It may not happen before the PV system is put in, but it is certainly on your agenda. The discussion up to now has been to try and use the performance contract method to achieve those savings and that is still being looked at. Basically, we have not moved forward with that one because as you all know, we are still working on the performance contract for Wastewater. We are taking it one (1) at a time. I am certain there are other questions and I would be happy to respond if we can. Mr. Rapozo: Thank you. We have five (5) minutes left, George. I do not know what you want to do. Mr. Costa: Tomorrow is fine. Mr. Rapozo: Okay. Are there any questions? Ms. Yukimura: Thank you, that answered most of my questions. What you implied is that your performance—what is it called? Mr. Sullivan: Performance contract. Ms. Yukimura: The performance contract includes the Police Department so you will be retaining consultants to see how to reduce or reduce usage by increasing efficiency. Is that right? 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 51 Mr. Sullivan: That is correct. Ms. Yukimura: You are sizing the PV based on a twenty percent 20% load reduction, which you may not achieve right away, overtime you will? ( ) � Y Y g Y� Y Mr. Sullivan: Correct. Ms. Yukimura: That is very, very good. I will wait to get in writing the report back on the Civic Center project to see what the actual performance is. It could likely be something to really brag about in terms of energy saved and moneys saved, but I would like to complete the circuit, so to speak when we fund the project to get back the results of the expenditure of that money. Mr. Sullivan: Understood. Ms. Yukimura: We will ask for that and you can do that in writing. Thank you very much. Mr. Rapozo: Are there any other questions? I have a e Ij p Y question. The KIUC issue, the grid capacity, has that been resolved? Mr. Sullivan: I think the last time we spoke to them they were certainly open to it, but I do not know where they are now. We have not discussed the police facility specifically in the last six (6) months and like I said, there are a lot of things changing quickly on the grid. We have to get back to them and discuss the capacity of the circuit. Mr. Rapozo: That probably should be done firs, right? Mr. Sullivan: Yes. Mr. Rapozo: I would suggest we get that squared away with KIUC because at the end of the day, they basically say if we can or cannot. If we do not get a Power Purchase Agreement from them, then... Mr. Sullivan: It is not a Power Purchase Agreement, but you are right; it is an Interconnect. Mr. Rapozo: Right, yes, the Interconnect. We fled need that. Mr. Sullivan: Yes. Mr. Rapozo: I would suggest we clear that up because I think that is one (1) of the issues that Kekaha... Mr. Sullivan: Just to clarify, they do not offer an Interconnect Agreement until you are actually ready to put in. It is a little bit of a chicken and egg. You 04-22-2013 Economic Development Workforce Development and CIP (cy) Page 52 test the water with them, they said it look good—you can get all way through and find out it is not going to happen because they have so many projects to manage, they cannot hold a spot for you for two (2) years. Mr. Rapozo: I understand that. We have not even gotten a looks good yet, right? Mr. Sullivan: We did a while ago but we have not checked back yet. Mr. Rapozo: That is my only suggestion. I would hate to go through the process, spend the money and say, "Oops, no Interconnect with KIUC." It is almost one million dollars ($1,000,000). Mr. Sullivan: Yes, fair point. Mr. Rapozo: Are there any other questions? If not, we will break for lunch and be back at 1:30 p.m. Ther e being n o objections, the department budget call-back was recessed at 12:28 p.m.