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HomeMy WebLinkAbout05/07/2014 Economic Development & Intergovernmental Relations Committee minutes MINUTES ECONOMIC DEVELOPMENT (SUSTAINABILITY/AGRICULTURE / FOOD / ENERGY) & INTERGOVERNMENTAL RELATIONS COMMITTEE May 7, 2014 A meeting of the Economic Development (Sustainability /Agriculture / Food / Energy) & Intergovernmental Relations Committee of the Council of the County of Kaua`i, State of Hawai`i, was called to order by Gary L. Hooser, Chair, at the Council Chambers, 4396 Rice Street, Suite 201, Lihu`e, Kaua`i, on Wednesday, May 7, 2014, at 10:50 a.m., after which the following members answered the call of the roll: Honorable Mason K. Chock, Sr. Honorable Ross Kagawa Honorable Mel Rapozo Honorable JoAnn A. Yukimura Honorable Gary L. Hooser Honorable Jay Furfaro, Ex-Officio Member Honorable Tim Bynum, Ex-Officio Member PUBLIC COMMENT. Pursuant to Council Rule 13(e), members of the public shall be allowed a total of eighteen (18) minutes on a first come, first served basis to speak on any agenda item. Each speaker shall be limited to three (3) minutes at the discretion of the Chair to discuss the agenda item and shall not be allowed additional time to speak during the meeting. This rule is designed to accommodate those who cannot be present throughout the meeting to speak when the agenda items are heard. After the conclusion of the eighteen (18) minutes, other members of the public shall be allowed to speak pursuant to Council Rule 12(e). There being no objections, the rules were suspended to take public comment. YOSHITO L'HOTE: Good morning, Council. Thank you very much. I am Yoshito L'Hote from the north shore, Kilauea and I am here today to represent the Kilauea Agriculture Committee which you have signed that stewardship agreement with regarding the agriculture park. I am here to support George and to ask for your continued support in this matter. We are very excited and we have engaged in getting the ball rolling and it is looking really promising. We have some legislative moneys coming in witha Grant-In-Aid (GIA) Bill. It is not signed yet but it looks really good to address, I think some of the concern that we have heard from the Council and there are ninety thousand dollars ($90,000) for a strategic plan in there and at that point when that is done last year we will have all the little nitty EDR COMMITTEE 2 MAY 7, 2014 gritty questions but it is moving forward, the community is very excited and I just wanted to say mahalo again. That is all. Chair Furfaro: Merci beaucoup. LORI L. MARUGAME, Council Services Assistant: Next speaker, Ray Maki. RAY MAKI: For the record, Ray Maki. Thank you for hearing our testimony this morning. I am also speaking today in support of the Kilauea Agriculture Park and want to thank the Council for their support of this community stewardship of this project, just a new idea and a new innovation in developing agriculture parks, not only here on Kaua`i but also across the State. I realize that this is not your grandfather's agriculture park. Those things use to cost eight million dollars ($8,000,000) and obviously the budgetary constraints that have delayed this project for the last thirty (30) years are still in place and supporting the community and picking up the ball to develop this important project in the Kilauea community, is already seeing results and we are building on the past successes that we have had in community stewardship of important agriculture projects and bringing in the ideas of sustainable production here on island is really the focus of this project. Just on no money a few months ago we did a permaculture design training for twenty-five (25) people that looked at the project and developed a map in a matter of weeks that of course would have continued community review and input from not only the community but the local experts at College of Tropical Agriculture and Human Resources (CTAHR) and other planning agencies in the County to punch holes in our design but I think the budget that George is going to submit later on today will demonstrate the fact that with very little money in relative terms to what agriculture parks have cost in the past. We are going to be able to show that the community is able to manage this project and leverage every dollar that we get at least five to one (5:1). I think that will continue to be articulated as time goes on but I ask the Council to recognize that expertise to manage this project, design it, and administer it is here on the island and already being demonstrated in various other community projects that we have been able to develop in the Kilauea area and across the island. Thank you for supporting this project and of course I recognized that the due diligence of the Council will be a guiding star for us in managing this project and we look forward to living up to those standards in the future. There being no further public comment, the Committee recessed at 10:50 a.m., to convene in the Finance & Economic Development (Tourism / Visitor Industry / Small Business Development / Sports & Recreation Development / Other Economic Development Areas) Committee. The meeting was called back to order at 3:35 p.m., and proceeded as follows: EDR COMMITTEE 3 MAY 7, 2014 EDR 2014-01 Communication (04/21/2014) from Committee Chair Hooser, requesting the presence of the Director of Economic Development to provide a briefing on the County's initiatives (current and proposed) relating to agriculture, including, but not limited to, any funding requirements of the project and available grants and restrictions thereto. Mr. Kagawa moved to receive EDR 2014-01 for the record, seconded by Mr. Chock. Chair Hooser: I am going to suspend the rules and we are going to ask the public that are here, if there is any public that would like to speak first before we have the Director come up. I know we have cattlemen, we have cattlewomen, and we have cattle children and so whoever wants to come up first come up and speak and then we can talk more about the grants and that as Director gives his presentation. So if you would like to speak now you are welcome to. You can just introduce yourself for the record. There being no objections, the rules were suspended to take public testimony. BOB FARIAS, JR.: Good afternoon. First of all thank you folks for all of your dedicated efforts for our community issues. My name is Bob Farias, local rancher, second generation. Mr. Furfaro: Excuse me, Bob. Mr. Farias: Yes, sir. Mr. Furfaro: There is a Council rule about hats. Mr. Farias: I am sorry. I apologize. Mr. Furfaro: I know it portrays your personality as a rancher but... Mr. Farias: I apologize. Mr. Furfaro: Thank you. Mr. Farias: We run a cow/calf herd here on Kaua`i with our family and also I am the President of the Cattleman's Association. I would like to just first of all thank you folks for all the support. Kaua`i proudly owns the only County partially funded with a local partnership holding and shipping facility, the EDR COMMITTEE 4 MAY 7, 2014 only one in the State currently. Seven (7) years ago it was put together late 2006 with the Economic Development Office. There was a change in our protocol at the pier and so there was a worry of the...we were not going to have the ability to ship calves out so the Council quickly reacted by putting some funds together. We had donated the land and whatever facilities we had owned at the time and put the public/private partnership together with the funds and in kind had produced, like I said the only shipping facility to date that is in operation. We do not have an operating budget. The Kaua`i Cattleman's Association (KCA) tries to put together whatever funds they can. With the continued support over the years from the Economic Development Office and the quick numbers, I just wanted to go over really quick to show how that money has really given the ability for the Cattleman's Association on Kaua`i to grow. Over the last seven (7) years the money generated to the local ranchers out of that shipping facility is upwards of ten million six hundred and thirty-seven thousand dollars ($10,637,000). That facility has allowed the buy price of cattle to go from seventy cents ($.70)a pound to one dollar forty-five ($1.45) a pound today, the highest it has been on record. Proteins are as high as it has been ever across the United States and therefore we see it here. The problem is that same calf here that we get one dollar forty-five ($1.45) ships to the mainland is worth two dollars ten cent ($2.10). The difference is we are far from market and all kinds of other things. The good thing is that it is a viable business again at ten million six hundred thousand dollars ($10,600,000). That is local money to a local rancher for his local efforts. That is a calf born on island, raised by a local rancher that was bought by a broker, and so there are no other fees in that. That is their money to take home to run the ranch with. Coupled with that we have trying to keep the shipping industry viable for the ranchers so that we can keep our ranch herds up. We have been trying all my life, my dad's life to be able to try to keep the local market going and the facilities are not available yet in the volume that Kaua`i produces cattle and so that is the other part of this today is that the slaughter and process facility infrastructure build out that we so dearly need here that ties hand in hand with the shipping industry. Not to jump around but going back to the shipping industry, if we were to not ship that same twenty-two thousand (22,000) head that was shipped since late 2006 to date, that produced ten million six hundred thousand dollars ($10,600,000) for local ranchers, if we were to keep them here and feed them out to their full size between one thousand to eleven hundred (1,000 — 1,100) pounds, utilizing our grasses here that nobody has found a way to utilize, that is the only thing is that bio-digester we call a cow is the only thing that we found on Kaua`i to be able to turn grass into dollars through pounds of beef. So back to the numbers, twenty-two thousand (22,000) head shipped out since late 2006, if we were to keep that cattle here that would have produced one hundred thirty-two million dollars ($132,000,000) of retailed red meat. That one hundred thirty-two million dollars ($132,000,000) of red meat that would be produced here would be consumed by local consumers. So that would replace the two hundred seventy thousand plus (270,000+) carcasses that are shipped into Hawai`i a year to service our protein/red meat needs. We all know that one dollar ($1) spent at home is the strongest dollar we can spend. There is no better place than to reinvest in your own back yard. That is stuff we can use, we can use with our own money. The EDR COMMITTEE 5 MAY 7, 2014 difference is, just to explain really quick is when we sell our calves here at four hundred fifty (450) pounds because they have to get on a Matson ship in a double- deck container and so we are limited by size because of the way we ship cattle, that is the only way to ship cattle. There is no other way. We have in the past brokered an airplane and as you know what an airplane ticket costs, it is just cost prohibited. So, we are having to sell our calves a year earlier than we should. That is the difference between the ten million dollars ($10,000,000) and the one hundred thirty-two million dollars ($132,000,000). The difference, currently the cattle all go to Lovett, Texas so there is a broker in Lovett, Texas that makes the difference between ten million dollars ($10,000,000) and the one hundred thirty-two million dollars ($132,000,000). It is not his fault, but we sold it before it was ready so he says, "I am going to buy them unready then and I am going to buy them discounted" and then probably send them back to us and then he will charge us full price. We do not get to come and explain this too often and it has been a long going process. It is two (2) different worlds, the agriculture world and the business world they just kind of run in two (2) different circles and so it gets further and further away from the point. We all want it we just do not know how to get to that. I have said this to the Governor's office too. They say what do you want? You guys want a grant, you guys want help? It is a bankable business plan. We do not have any term. That is our problem. Our leases are thirty (30) days highest, best use. I have four (4) leases that all read thirty (30) years and it is four inches (4") thick. The only page that matters is the first page, who is to and the last page that says what it really brings you. Highest and best use, sixty (60) days notice. It is sixty (60) days. There is no institution that will loan you money on sixty (60) days. I do not care how great you profit and loss (P&Ls) look. I do not care what the margins are. Everyone wants it but nobody will touch it because you can hardly...in sixty (60) days you cannot get what you put back into the cow herd. So term is really what the problem is. Infrastructure build out would solve all of the problems. It would be locals producing a local product that go to locals. That is all of us getting the most out of our weak dollar. Allowing the ranchers to not only be profitable but take their product to full term, to get the most out of it. At four hundred fifty (450) pounds, like I said, one thousand (1,000) pounds give or take is your target market. We are getting rid of them at four hundred to five hundred (400 — 500) pounds so we are only half way there and again we are not utilizing our best resources as far as ranching goes is this voluntary grown forage product, all this grass out there. Mitigate fire field, help create open space, all of the above, I do not see a negative to it really and it is a mobile crop. If anybody finds a better use for it; a school, a parking lot, or a park, we can load them and move them. It is not like you buy into this problem for the rest of your life because infrastructure will not allow you to move it. Again, I really want to urge that number, it is a big number, ten million dollars ($10,000,000), one hundred thirty-two million dollars ($132,000,000). That is primal cuts at one hundred thirty-two million dollars ($132,000,000) so let us say we are half right, let us say it is just hamburger at sixty-six million dollars ($66,000,000). One out of ten will be a primal but still it is somewhere between sixty-six to one hundred thirty-two million dollars ($66,000,000 — $132,000,000). I EDR COMMITTEE 6 MAY 7, 2014 appreciate all of you folks efforts. I know there is a lot of buzz and I know today, I think a part of why we are here is should or should there not be the continued support that we have been getting between the slaughter house facility build-outs for local market beef and some of the facility build-outs for the shipping facility. I really urge you folks to remember the amount of income that it produces for local taxpayers. The ten million dollars ($10,000,000) went to local ranchers that live here, that go to school here, shop here, and lease land from here. Yes. Chair Hooser: I want to just, interrupt you here for a second and get some clarification and maybe we can open up to questions. Mr. Farias: Sure. Mr. Hooser: I think this is a great opportunity and I really appreciate all of you being here today because we need to hear directly from you and it is just a great opportunity. Just to restate, ten million dollars ($10,000,000) now of outside money is coming into the economy of Kaua`i going into ranchers and their families and into our economy today? Mr. Farias: Yes, sir. Chair Hooser: And we are helping out modestly, if you would by helping with that facility to help ship. If you are able to keep the cattle here longer and raise and slaughter the cattle here then that would be upwards to one hundred thirty-two million dollars ($132,000,000) in the local economy? Mr. Farias: Yes, sir. Chair Hooser: To follow up on that, can we eat that much? Do the people, the residents here consume that much beef? Mr. Farias: If you took it all to hamburger, it would not fill the school and if you talk about a school and hospital contract that is not enough. Chair Hooser: So there is plenty of market? Mr. Farias: Oh yes. Chair Hooser: Finally, and then I will open up to other questions from the Councilmembers, you mentioned this as a bankable thing that your biggest need is land and long term leases. Mr. Farias: Term to leases, yes, sir. Ninety percent (90%) of the ranchers, like myself, all six thousand (6,000) acres that we are on are all leased. EDR COMMITTEE 7 MAY 7, 2014 Chair Hooser: So it is month to month lease, most of it? Mr. Farias: It says thirty (30) years against highest and best use. Sixty (60) day revocable. So if you really cut all the pages from the front and the back page out it is a sixty (60) day lease. Chair Hooser: So you need long term solid leases? Mr. Farias: Because there is some infrastructures like the holding facility, the initial County money that was put into it was sixty thousand dollars ($60,000), that was the initial. Whether that was private of not and then our family owned farm put up the land, put up the facilities that are there and we ran it for nothing for seven (7) years just to...I mean we all needed it, it was not about income, it was about staying in business. Without it we could not do it and yes, it gave the ability for the buyer to have a stable place to view the cattle and to guarantee that the delivery has already happened before they called for the shipment reservations to be made. Typically we would just all meet at the pier the day of the shipment, a flat tire, traffic, whatever have you miss the boat the buyer say "Hey, you guys never showed up on sale day. We do not want them." This stabilized all of that. If you are the buyer you can say, "Before we send for the trailers how many are standing there ready to go?" So it just evened out the playing field a little bit. We went from seventy cents ($0.70) to today's one dollar forty-five ($1.45). Some of that has just been the market. I would say at least twenty cents ($0.20) to that margin has been the stability of the buy and sell place which would be what we know of everywhere else as a sale ring. The buyer and the seller meet at a common area. If you need meat today, you want them alive then you go to sale barn as a buyer. If I have a product to sell, live to a buyer I go to the sale barn. There is not anything like there in Hawaii. So, again proudly to say that Kaua`i is the first version of...Hawai`i's version of that. We are open seven (7) days a week so when a rancher as a hobby happens to catch a few of them, he can call us, and then in half an hour he can be there dropping them off. They run them over the scale, it burns the sale ticket and their duties are done as a farmer. Then we collect them and call the broker and say we have so many saleable pounds ready and as long as they still want them, like they always do we set up a ship date but it has been a common ground to meet like a sale ring - Kaua`i's version. Chair Hooser: Thank you very much. I did not mean to cut off your overall presentation but I wanted to ask to get clear on that and if it okay if we take some other questions from Councilmembers? Mr. Farias: Absolutely. Chair Hooser: Any Councilmembers have questions? Councilmember Bynum. EDR COMMITTEE 8 MAY 7, 2014 Mr. Bynum: I try to do the best I could to keep track of all of these issues and in terms of support in the budget for the Cattleman's Association that has been there for years at least for me that is just a given. It is really fascinating to hear you say that part of the increase of the value was the consistency of delivery and just helping and so thank you for all of that work to help establish that on behalf of all of the cattle people. The other thing, we have these Comprehensive Economic Development Strategy (CEDS) initiatives that try to help the industry we thought it might be slaughter but we are going to do other things, that is also part of our ongoing commitment and that is all working good from your perspective or is that...I have not talked to you specifically about it but I want to make sure we are putting our ducks in the right place. Mr. Farias: Again, I am representing me, not personally, but me as the President of the Kaua`i Cattleman's Association so it is the bigger picture and the bigger picture is all of the above. It is partly shipping and it is working towards the finish line or the goal to be to keep them all here. We all want the same thing. Some of us want black cattle, some of us want red cattle but at the end of the day we all want the same thing. We want them to be marketed here on island. We under utilize our facilities when we ship them early. Given where we are right now, now this is going to be my personal opinion, we are not short so much slaughter, we are short chill and process. Mr. Bynum: And I think that is where we moved, right? We got that message, it is not slaughter, it is more... Mr. Farias: And it is not to say that we do not need support and slaughter but the choke point today is chill and process. Not customer base, not kill capacity but specifically chill and process. Mr. Bynum: So sticking with that big picture for a minute, I have been told for years that we have a much better opportunity because of our climate and grasses to bring more to market and that is why this is a great plan for Kaua`i. As opposed to Big Island, who we traditionally think of as a "cattle," they are limited because of their climate and grasses, do I have this correct? Mr. Farias: Absolutely. The Big Island, we buy a lot of cattle with a partner broker too on the Big Island but the Big Island is always in a drought. It just moves around the island. I am from Kaua`i so I guess I am partial but when this came up statewide, once, I sit on the Hawai`i Cattleman's Council, also and the Big Island always gets the biggest votes because they have the most cattlemen but they will agree too, they have the least ability to finish cattle for that same reason. You can only finish the amount of cattle that you can feed. It is a finite thing. EDR COMMITTEE 9 MAY 7, 2014 Mr. Bynum: Another key element then is consistent and assured availability of the land, correct? Have I got that right? Mr. Farias: Yes, and availability is not the problem. As we all know driving around there are a lot of open, un-grazed areas, fire field or other. You hate to see it left for not. A lot of it has to do with nobody wants to put a commercial infrastructure together because you just do not know the long term outcomes that you want and I think that the perfect fit for ranching comes into these...if you were to put into hold parcels. There are no large infrastructure in a business plan, I mean there is fencing, conventional fencing is eleven cents ($0.11) a linear foot...I mean eleven dollars ($11) a linear foot but that is really miniscule compared to the amount of income it produces and the amount of maintenance that it mitigates, cost wise. Mr. Bynum: One last thing and I could go on but we have to move on...I was in Costco and I saw this product in the freezer section. It was gourmet grass-fed beef and it was a bunch of cuts and I thought why would anybody buy that when we live on Kaua`i. We can get those same cuts fresh at Kojima's and Country Store, right? Have you seen that product? Mr. Farias: Costco as a store is set up for...the way it works is it tries to be a one-stop shop. So they hate for you to leave Costco to go to another store to buy a product and you may end up buying four (4) products and therefore they could only sell you the other six (6) you came for. I guess their marketing plan is the more products they have the more full service they are that you may not go to any other store. Mr. Bynum: I just found it ironic that we were importing frozen grass-fed beef when I eat grass-fed beef raised here all the time so I will move on. Thank you. Chair Bynum: Council Chair Furfaro. Mr. Furfaro: Yes, thank you. Bobby, thank you. I think it would be appropriate for me to also recognize that when you got the sixty thousand dollar ($60,000) grant it would be appropriate to recognize Mr. Kaneshiro, Noble Kaneshiro because I was the Chairman of Economic Development and he encouraged me to co-introduce that Money Bill but what I am understanding right now is there are a couple ways that we can help you. Number 1) is getting longer terms on the lease. That would certainly make you to be in a better position financially to borrow some money which might help you with CIP improvements and so forth. This is mostly State land... Mr. Farias: Yes. EDR COMMITTEE 10 MAY 7, 2014 Mr. Furfaro: I am going to say it, I can say it. It is mostly State land. What can we do to help to get these terms so these terms actually relate to maybe a thirty (30) year lease in increments of seven (7) or ten (10) years each one? Does it just require us to be lobbying them longer term? Do you want us to talk to the agribusiness department? What can we help with that? Mr. Farias: There are two (2) ways we can go at it. Static available land...if they lease us one hundred (100) acres for ten (10) year term and they happen to need three (3) of the ten (10) we own if they could find us three (3) match acres...static land available. What I cannot do is buy one hundred (100) head because I have one hundred (100) acres to find out next year I have fifty (50) acres. I mean what am I going to do? The ranchers are even willing to say we are not saying we will not move around but in our business plan given what we do for business we need a certain mass of land that produces a certain pound on forage so the other thing is we cannot be in Princeville in the grass rolling hills and they take five (5) acres and then send us to Kekaha where it does not...as long as it is relative acres or animal units per acre (AUMs) then we are not opposed to that. We cannot get run out of business because we are eight (8) acres short. That really is a problem. Mr. Furfaro: But your investment is into the cattle that gets nurtured on making sure that you have long term lease lands to graze those animals on. Mr. Farias: Correct. So if we had to say our asset list, what sits at the top is the cow. She is our highest cost asset. Now fencing, there is a lot of labor, I am not saying that is not a cost but jumping up and down with these cow numbers are really expensive. If a person had to reinvest in his herd today, we have to buy them at one dollar forty-five cents ($1.45) where we should have invested in it seven (7) years ago at seventy cents ($0.70). So the cow becomes this unit that you cannot just jump around on this animal size. It is the most expensive and it is if you would, the golden goose, right? Our mama cows produce for us our offspring calves which become our marketable product. We do not market our cows we keep them and try to nurture them for as long as we can. Mr. Furfaro: So that is one item that we could help with trying to secure these longer term leases. Number 2) you are talking about the refrigeration portion and I just want to understand part of that holding and refrigeration will also participate in helping you age some of the beef? What is it besides refrigeration after slaughter that is important? Is it twenty-one (21) days of aging of the cattle or is it just storage until the shipping? Mr. Farias: The point is, and it depends on what you want but once they have been slaughtered and processed, they obviously need to be kept chilled from then on through. The chill capacity right now dictates the amount EDR COMMITTEE 11 MAY 7, 2014 of kill days. The bigger the chill capacity the more slaughter days we can add. Mr. Sanchez here, they kill...how many days of the week do you kill? WILLIAM SANCHEZ: Just one right now. Mr. Furfaro: First of all, Mr. Sanchez, you have to introduce yourself first. Mr. Sanchez: William Sanchez, Sanchez Slaughterhouse. What do you want me to answer first? Mr. Furfaro: The value of the expanded refrigeration, is it related to being able to slaughter more product or it is available to age product? Mr. Sanchez: Both of those have to work together, the processing and the chilling. Well, actually the slaughtering too. All three (3) works together, you slaughter the animal, they want it chilled at least two (2) weeks, and then you have to process it. All three (3) have to work together. We have been...I do not know if I should go to the dairy now. Mr. Farias: I think we can stick to ours but it is a build out... Mr. Furfaro: Let me throw another question out there. The inspection done by the State Agriculture Department... Mr. Sanchez: Federal. Mr. Furfaro: Federal, I am sorry...is it done by them flying somebody in or is there someone already here? How is that inspection done? Mr. Sanchez: There is someone here. Yes. Mr. Furfaro: There is someone here. So it is not a time issue, there is someone always here to do the inspections. Mr. Farias: Yes. Mr. Sanchez: They have to be here all of the time. They look at the animal alive, then we slaughter it and they inspect it and then when you process it, they have to be there too. Mr. Furfaro: And some of the looking at the animal and interpreting the animals weight and fat content has to do with them establishing the price because they feel it meets a certain grade before slaughter? EDR COMMITTEE 12 MAY 7, 2014 Mr. Sanchez: No, after. After it is chilled. Mr. Furfaro: It is only after slaughter? Mr. Sanchez: Yes. What they do is check the animal health wise that is all. Mr. Furfaro: That is all? Mr. Farias: So there is no contamination. So back to the layman term of the chill for just a little bit, so the chill has dictated our amount of kill. For instance, we raise nine hundred (900) head pairs, our family does, we may slaughter ten to fifteen (10 — 15) a year locally. We want to change that, right. We would like to ship ten (10) and have the rest here. The reason is that there is limited amount of kill days because of chill. If the slaughterhouse instead of one (1) day slaughtered seven (7) days and then went to two (2) shifts seven (7) days, if for some reason we went outside of our consumption here like everything else Hawai`i produces, everybody else wants it. There is never...you would never be left with product. Once it is chilled it can be packaged and it can ship. So let us go back really quickly, live cattle travel for sixty-seven cents ($0.67) that is all the cost. That is trucker here, trucker there, all of that. If you sent a box of beef animal, it would travel for fourteen cents ($0.14). Mr. Furfaro: Okay. Mr. Farias: I do not have any chill though. Mr. Furfaro: I think that is what I was trying to get at. So your philosophy is with the chilling you can slaughter, grade, package with cryo-vac, and keep more product on Kaua`i for a better price. Mr. Farias: Roughly...rough and tough there are one hundred (100) feed lots that want cattle from Hawai`i, right? There is the whole population that is looking for meat. Everything is cheaper by volume, right? If I bought one hundred (100) pick-ups for the ranch a year, I would by the cheapest pick-ups except there are ninety-nine (99) of them I do not need. But there are a lot of ranches, I mean King Ranch will probably by one hundred (100) pick-ups a year so they get the best pick-up price, so it is by volume. So we have to go at the market where the most buyers are looking for product. When there are alive there is only one percent (1%) of the world that is looking for them because there is only one percent (1%) of the world that wants to go through the process to get them to market. If we had chill, we are now ready to go anybody's market. The Asian market, highest commodity market buyer for red protein, would pay more for Hawai`i meat than any place else. The only State that is quarantine by the ocean with all of efforts of the agriculture department we do not have any Bovine Spongiform Encephalopathy (BSE) or Mad Cow Disease, no tuberculosis, no black EDR COMMITTEE 13 MAY 7, 2014 hoof, there are no needs for hormones or antibiotics or other. So by default and by our seclusion we have a product that compares to no other. The whole food glass cases have five (5) tier criteria. When you read them Hawai`i is oddly enough the only one that could actually qualify for all five (5) of them all of the time. Source verified, age verified, and ranch verified. By default we qualify we just cannot get it to market that way. This twenty-two thousand (22,000) head we ship off, once they leave they do not qualify. We have given up all of the marketing ability that it had when it was here. Once it leaves it loses it. It has to stay in the State to be able to keep that label that way. Mr. Furfaro: Thank you, Mr. Hooser. Chair Hooser: This is a great discussion and I am really glad you are here and we will have a little bit more of it. We do have to get to Mr. Costa shortly also. Councilmember Chock. Mr. Chock: Just a follow-up question. Can you talk about chill capacity we are looking at? What the needs are and put that into perspective numbers or space or cost maybe? Mr. Farias: I do not have any extrapolated numbers that way. I think that the bigger outcome to that would be is the continued growth in it. I think we keep bottoming out. We talked about this facility we are potentially going to put together here at the old Big Save and stuff and I guess the point is that we need to maybe on a longer term pick a growth pattern we want to try to stick to and be able to keep that commodity here and then utilized the profits that it can produce instead of sending them off. That could be a long discussion but I could prepare something and then have it turned in so that you folks could review it so that there is some cohesive number that goes along with it but again, the slaughter capacity, I think we have not tapped into yet. Locally owned, been in business, the two (2) slaughterhouses for years with all of your support, with all of the upgrades, and the build outs, and the repairs, and stuff it is working fabulously. It is increased quite a bit, Willy could tap on that but the point is we are not there yet, I guess and part of this long lengthy discussion for me is the efforts have been utilized, I think really well. The growth pattern in the local cattle industry, and I am talking Kaua`i has grown a lot even though the price of land has gone berserk. 2006 land lease prices and now have gone double, triple but yet it is still becoming profitable because everything is ramping up. Chair Hooser: That was good. Other questions? Councilmember Yukimura. Ms. Yukimura: The twenty-two thousand (22,000) head, is that the total of cattle shipped out of this island, it represents all cattle? EDR COMMITTEE 14 MAY 7, 2014 Mr. Farias: It is roughly. There are some private producers that also ship some cattle out and that Kaua`i Cattleman's Association do not have those numbers. If we dug around I think we could by Matson records. It is ninety percent (90%) of it. It is the easiest facility to utilize and it is the cheapest. So it does funnel the larger number through. Ms. Yukimura: That is what I need. I just needed to know kind of what the big picture was in terms of what it represented. Mr. Farias: It is between three thousand to thirty-five hundred (3,000— 3,500) a year, calves that are shipped. Ms. Yukimura: Because the twenty-two thousand (22,000) is since 2006 so you were saying between three and five thousand (3,000 — 5,000) a year? Mr. Farias: Between three thousand and thirty-five hundred (3,000— 3,500) or so through the facility. Ms. Yukimura: The Cattleman's Association are how many operators or ranchers? Mr. Farias: We have been as high as twenty-three (23) members and not everyone is a member. The ranchers are pretty quiet folks. They do not need to belong to a club or anything else. It is hard to find these benefits for membership. We are working on that vigorously because I keep trying to preach to them that there is strength in numbers. That is not a lie. It is not just a slogan. Ms. Yukimura: Yes. Mr. Farias: The more we know about the industry's changes we are a consumer based business, we can say all day long we know what we are doing but we are not buying it. So until we admit we need to grow what they want to buy we are just going to be another produce. My term this year as president is trying to make sure that we are a consumer driven business as ranchers, 1, and 2 by being members we will be able to keep our member base or our rancher community better informed better that way, quicker if they are members. We just know how to get a hold of them and tell them what is coming down the pipes. Ms. Yukimura: Okay. It is mostly State land that you are all on? Mr. Farias: I would say it is a split. There are a lot of private owner leases and there are, of course Grove Farm leases and then there are the State Agribusiness Development Corporation (ADC) lands but I would not say it EDR COMMITTEE 15 MAY 7, 2014 is mostly State but there is a lot. And there is a lot of it that is not leased, ADC lands that is not currently leased. Mr. Sanchez: ADC is coming out with leases now but it is ridiculous what they are doing. Ms. Yukimura: Yes, that is not surprising. Mr. Sanchez: They are giving us a thirty-five (35) year lease and I got one (1) piece from them that is eight hundred (800) acres and they said that this parcel is qualified for farming, for vegetables and stuff. So they wanted fifty dollars ($50) an acre for me to raise cattle on. I told them that I could not. They said, "Well, what can you do?" I told them I could give them fifteen dollars ($15) an acre. So I did not get my thirty-five (35) year lease. I got a month to month lease on that and I had that place for ten (10) years. Mr. Farias: It always comes back to term. It really does. And then again, land is worth what it will yield. That is an agriculture term and it really is. If you can grow almonds on it, it may be worth one hundred fifty dollars ($150) an acre but if all you can grow is grass on it than that is what it is worth. And that is not me just saying your land is not worth anything, that is what it is worth. It is like the Kelly Blue Book. I do not make it up, it is an industry index that makes it so if I were to ask from the executive level how does this organization help ours I guess that is it. It is worth what it will yield and that is different everywhere. That is relative market index and if some infrastructure changes where the index goes up well I guess I will get that my lease went up. But ranchers tend to get the land that nobody else wants. It is off the oil roads, it has got no water, you cannot get to it, it is full of trees and then we stay there clean it up and then all of a sudden its index has gone up then we get the boot because they go for the higher, best use guy. Not to whine, it is business, and it is not easy. Self proprietorship is not for everybody but when we raise grass on a parcel that produces a certain amount of income that is regulated by a commodity board the facts are the facts. Ms. Yukimura: Last question, the two (2) choke points or the two (2) problem points or limiting points are your insecurity with the lease and then the chill facility. Mr. Farias: Yes. Ms. Yukimura: The County was doing work on that and have you been working with them on that? Mr. Farias: Yes. Mr. Sanchez: They dropped us out of Big Save already. EDR COMMITTEE 16 MAY 7, 2014 Ms. Yukimura: Right, Big Save is not happening but are there...they were trying to address the chill issue, yes? Mr. Farias: Yes. Ms. Yukimura: And so the question is whether there is another site and the capital required to build a chill facility but who would own and run it or control and run it. Mr. Farias: It all comes back to the commitment for product. If you can think of a slaughterhouse and a chill facility as a fee for service...it is like the post office. Their income is designed around how much mail they can move because they do not own any of the mail. That is a slaughterhouse. You cannot turn P&Ls on a positive if you do not have enough volume to run through the business. So everybody gets nervous there, who is going to commit? So the rancher was asked to commit, to commit to a certain amount of animals every year. I declined the commitment because there is no facility. How am I going to commit to something that is not here? Now what if there is a snag? God forbid and it does not get built. Who is now going to commit to me to my commitment? It is the chicken before the egg. That is a bad business plan so term would show volume because I would up my herd because I could afford it. Volume would show the profitability to own a kill floor and a chill floor. We probably would not have this discussion, right? So an entrepreneurial person would say, "I have a checkbook. I would like to make my ten dollar ($10) bill worth twenty dollars ($20)." He would build a kill, chill, process. That is just economics. It sounds too simple. It comes back to term. If there is term and there is a lot of animals that need a home that could be process to have a profit margin between ten million dollars ($10,000,000) and one hundred thirty-two million dollars ($132,000,000) I think this would be done. We could stick a fork in it and call it done. Somebody would put together the tire shop for all of the flat tires that need air in them. It would be done. It would already have been built. Ms. Yukimura: Alright. Thank you very much. Mr. Farias: Absolutely. Chair Hooser: Any other questions? Yes, thank you. It was a very useful discussion, I think, for myself and for all of us. It is clear that term, long term leases land that you can count on is the number 1 priority and that everything follows that it seems like. Thank you very much and we will see if anybody else wants to speak. Mr. Farias: Again, thank you for your time and effort on all of this. Appreciate it. EDR COMMITTEE 17 MAY 7, 2014 Chair Hooser: And before I call the Director up, is there any other people from your group or from...that want to speak? If you can, introduce yourself for the record. TIERRA RAPOZO: Tierra Rapozo, Sanchez Slaughterhouse. For the last five (5) years the County has been funding the two (2) slaughterhouses, Sanchez and Andrade slaughterhouse. The first year we got funded, I believe it was fifty thousand dollars ($50,000). We split twenty-five thousand dollars ($25,000), twenty-five thousand dollars ($25,000) within the two (2) slaughterhouses. It is basically to upkeep and maintain the slaughterhouses. After the first year it dropped down to twenty thousand dollars ($20,000) so we have been stuck at ten thousand dollars ($10,000), ten thousand dollars ($10,000). Which any money that the County can help us with is always needed, and wanted, and appreciated, and now it seems like the County wants to lower that amount or take it away for good. Yes we need help with putting up a processing facility for chilling and everything else. Sanchez slaughterhouse as a whole, we donate and we help out a lot organizations. We do pop warner. We do baseball. We do campaigning for Council, and Mayor, and Governor. We give to senior citizens and wherever we can help out. We lose this grant money from the County it makes it that much harder for us to help and support the kids, the seniors, campaigning, whatever it may be. In terms of finding money to help us put up this processing facility we have been working very closely with the dairy that they are trying to build out here. Everybody keeps going off of numbers, saying that we do not have enough cattle on the island of Kaua`i to supply the island of Kaua`i. The dairy coming in is so important to us for 1, they are going to double the amount of numbers we have on the island. Their big picture is for every bull calf that is born will be cut, which ever word you want me to use, sent out to the Farias family, finish the animals, then they want to send it to us, the Sanchez slaughterhouse to process and keep that meat on the island. That is the big picture of what we are going for. They were, at one point thinking of giving us the money. I went and I put together the information that they needed. How much it was going to cost to put up the processing facility, the chill boxes, delivery trucks, and all of that and it pretty much ran down to one million five hundred thousand dollars ($1,500,000) is what they were going to give us to build on his, on Mr. Sanchez's private land, adjacent to the slaughterhouse and with all of the bad press that they have been having and everything else they just said we cannot stamp our name on anything right now. So now we are back to square one again, down to nothing, no processing facility, no chill space, none of that. If we lose this money through the County, we stop slaughtering, Kojima's store is gone. That is our meat. Wailua Country Store is gone. That is our meat. And a lot of other places, a lot of other small markets that we take care of. We are just here to make sure that you are on the same page as us. Knowing that we are not using this money foolishly, it is helping us maintain the slaughterhouse. We donate to 4-H, we donate the slaughter, the chill, and the cutting for all of the kids. We go there, we support them. We buy animals every year. So that is kind of where we are sitting right now as far as keeping you EDR COMMITTEE 18 MAY 7, 2014 informed and hoping you will still fund us. Like I said, the numbers has dropped from the first year till now. I do not want it to drop any more. If anything, help us more because there are always upgrades and things we need to be done. We lock cows in a pen before we slaughter them, they are constantly busting it up and it cost money to fix. We are under federal so we have to keep things to a certain par. We cannot be having holes in cement and all of those things, cruelty to animals and all of those things. We have guidelines that we have to follow and you really do help us out a lot with that. I think that is all. Chair Hooser: Thank you very much for that. It is really helpful for us to understand what the money is being used for so I appreciate you being here and it is my understanding that in the Mayor's budget there is twenty thousand dollars ($20,000) budgeted right now and if it goes through that is what the administration has in their budget for the slaughterhouse. Questions from members? Councilmember Rapozo...we have a caption break...do we have a few minutes to take a few questions before the caption break? Okay...go ahead. Mr. Rapozo: Thank you for being here. You mentioned the one million five hundred thousand dollars ($1,500,000) was what you penciled out to chill boxes and...could you go over that one more time just so that I understand? Ms. Rapozo: That is the number that we came up with. Yes, it was on the high side because I was asked to put up a proposal on the high side which was, I think my ending product was a sixty by one hundred foot (60' x 100') building. It included three (3) chill boxes. It included all of the band saws, the hamburger machines, the delivery trucks, all of that, septic, everything. Everything was included in that price. Is that what your question is? Mr. Rapozo: Yes. So one million five hundred thousand dollars ($1,500,000) would produce chilling facilities that could process...I am intrigued with the numbers Mr. Farias brought up. The one hundred million dollars ($100,000,000) versus the...that is like a no brainer, right? Ms. Rapozo: Now, this is what I drew up and I had actually had Ian Costa draw my plans up for me...was pretty much to fulfill what we already do plus to take care of the numbers that the dairy gave us. Mr. Rapozo: So not the Cattleman's Association numbers. Ms. Rapozo: No. We take care of not only our markets but a lot of the other ranchers that do not ship our all of their animals. So all of those are included in that but I went on the high side, like I said so we would have room to take care of more. Not just us and the dairy but more. That was just on numbers...fake numbers I should say because no one really knows once the animals stay here. Bob's numbers is just what people ship out. That is not including the EDR COMMITTEE 19 MAY 7, 2014 other five hundred to six hundred (500 — 600) head that we slaughter throughout the year that we keep that is on the books. We slaughter a lot of stuff for custom people. A lot of ranchers come to us, we kill their animals, we chill it, we cut it, and they take it home. A lot of the custom stuff are not on the books from what Bob's numbers are. Mr. Farias: I do not mean to butt in right quick again but so back to those numbers, if you were to talk about twenty-two thousand (22,000) over seven (7) years broken back down fifty-two (52) weeks, thirty (30) days that only would be killing three (3) a day. It is not this sixty million dollar ($60,000,000) facility to run these astronomical scary numbers through. When you break it all backwards the quick math says three (3) a day on a seven (7) day kill or any way you can mush them around however you want but it would not grossly put a big business swing where you would have to ramp up thirty to fifty percent (30% — 50%) and that is thing, that moderate growth. That is one thing with farming, it has to be moderate growth because there is no way to force any numbers into the system but that one million five hundred thousand dollars ($1,500,000) would put the dairy's numbers at about six hundred (600) kill units a year along with their market and what the infrastructure of the KCA's total ship numbers would be is to fill that. Efficiencies would be for an eight (8) hour day versus partial days. Mr. Rapozo: And I apologize, I guess, this discussion could go on and on and it is probably not for today but I would definitely want to sit down and we could probably do this offline at some point because I am just amazed and when we talked about the Big Save, facility we were not provided those numbers. We were not provided a lot of that and I guess, to me it is just an opportunity but I will chat with him offline at some point. Chair Hooser: Other questions? We will take a caption break but I just want to say thank you so much again for being here. Thank you. We will take a caption break. There being no objections, the Committee recessed at 4:26 p.m. The meeting was called back to order at 4:36 p.m., and proceeded as follows: Chair Hooser: Welcome Director and Mr. Spitz. What we are going to so is...the communication was fairly specific and we are going to ask them to cut to the budget items that are listed on one of the hand outs on page 7. It is the upcoming budget items. The prior budget, many of them are duplications so what I was going to suggest and I have spoken to the Director that we just go down each one, they say a few words, we ask questions, and then if we have time or another time we can talk about the goals, and vision, and objectives, and long term planning discussion but because of the limited time we thought it was best served to EDR COMMITTEE 20 MAY 7, 2014 start and just go item by item down the list so Director if you would like to say a few words or introduce yourselves. GEORGE K. COSTA, Director of Economic Development: Mahalo for you time. For the record, George Costa, Director for the Office of Economic Development here with our Economic Development Specialist for Agriculture, Bill Spitz. So we will go right into the 2014-2015 budget portion of our budget presentation. For a number of years we have been supporting several agricultural organizations and if you will notice, at least since I have been here for the last five (5) years these that you see here have been funded every years starting with the Hawai`i Tropical Flower & Foliage Association (HTFFA), Kaua`i Chapter. Some of you may be familiar with Mr. Johnny Gordines. That funding helps with the marketing and maintaining of their website for the Kaua`i Chapter, the first five thousand dollars ($5,000). The second one this coming year they are hosting a floral design workshop and they have asked for a five thousand dollar ($5,000) grant to help defray some of the expenses of hosting that workshop. They will be having members, other Tropical Flower & Foliage Association members from other parts of the State and the U.S. mainland as well. Chair Hooser: Maybe since it is grouped together, we have the Tropical Fruit & Flower Association, maybe if there are questions about that group...for example I have a question. How many members are in the association? Mr. Costa: I do not know the exact number. Do you know off hand, Bill? BILL SPITZ: Good afternoon, I am Bill Spitz. About twenty (20). Chair Hooser: So there are about twenty (20) growers in the Tropical Flower & Flower Association. Mr. Spitz: Many of them also ship. Chair Hooser: I am sorry? Mr. Spitz: Many of them also ship. They have retail businesses and they ship to the mainland and sometimes overseas. Chair Hooser: Which of these two (2)...are these recurring grants or are these one time? Mr. Costa: The first one is a recurring. That is helping them with their marketing and maintaining their website. The second one (1) is a one time. EDR COMMITTEE 21 MAY 7, 2014 Chair Hooser: Other questions on the tropical fruit...okay why do you not move on then. Mr. Costa: The next one is what Bobby Farias, Jr. had just mentioned, the Kalepa holding pens. Basically we fund them on an annual basis to help them with ongoing repairs of that facility because it is needed. That is where they herd up the cattle and put them in those shipping containers, and take them down to Nawiliwili. Chair Hooser: And as you go through it, if this is a reduction in prior years or if it is a repeat grant, if you could just maybe just say that. Mr. Costa: This is the repeat. Same amount as last year. Ditch irrigation, again, same amount as last year. This is Jerry Ornellas, Les Milnes, and the East Kauai Water Users' Cooperative. This is matching funds that they use with State funds that they receive to help maintain ditch irrigation systems, mainly in the Kaphi, Kapa`a, Wailua area. Diversified agriculture, basically this fund has been reduced, at one time there was twenty thousand dollars ($20,000) then it was reduced to ten thousand dollars ($10,000), now it is five thousand dollars ($5,000). This is basically our fund in the Office of Economic Development where we have any last minute grant request from agriculture that we try to help that organization out. Then the grading permit, East and West Kaua`i Soil and Water Conservation Districts, six thousand dollars ($6,000), this is a repeat funding request. Bill, can respond on that one and what that is for. Mr. Spitz: The County is a founding member of this. It is a statutory...I think it is Hawai`i Revised Statutes (HRS) Chapter 180. The East and West Soil and Water Conservation Districts provide farm planning services for producers which in turn are taken by the producers to the County Engineer for review for grading and grubbing exemptions. This goes for administrative money. The Soil and Water Conservation Districts are citizen groups and some Ad hoc members. They meet, I believe monthly, pretty much. They have a part-time administrative person so this goes towards...some for funding that and a lot of it for the meetings. Preparation, materials, and things like that. Mr. Costa: The next one is the Sunshine Market Monitor. We have Terry Phillips who is our monitor. She does an excellent job and going to all of the sunshine markets. She is the one who provides us with revenue reports on a monthly basis. Mr. Kagawa: Question on sunshine markets...so is that thirty-two thousand dollars ($32,000) the amount we have been giving over... Mr. Costa: For the last three (3) or four (4) years. EDR COMMITTEE 22 MAY 7, 2014 Mr. Kagawa: The same amount? Mr. Spitz: The same amount for the last... Mr. Kagawa: And she monitors...they pay a fee, right the sunshine market vendors. Mr. Spitz: No, they do not. Mr. Kagawa: Oh, no fee? Mr. Costa: One time five dollar ($5) fee. Mr. Kagawa: One time five dollar ($5) fee and does her job involve checking if any complaints, like perhaps, another vendor may say they are selling things from Costco. Is it Terry's job or your job to check or validate those complaints? Mr. Spitz: We usually know where to look and she will speak to the vendor. Mr. Costa: She does an excellent job. We get a report, a monthly report but she does it on a weekly basis and so for every market she reports concerns that are happening and so we have already visited a couple of farms to validate they are true farmers. They are not getting it from Costco. Being a farmer herself, she knows what is real, grown fruit or crop or what is store bought. She does an excellent job. Mr. Kagawa: Thank you. Thank you, Chair. Chair Hooser: Councilmember Yukimura followed by Councilmember Rapozo. Ms. Yukimura: I know Terry, I have seen her at the Sunshine Markets, I think she is performing a very valuable service and keeping the Sunshine Markets true to its purpose. Is that all she does or does she have a function to make suggestions about how the Sunshine Market can better operate? Look at how to improve the situation, whether it is parking or inviting a new location or those kinds of things. Is there somehow this continuous improvement kind of idea in that functioning? Mr. Costa: As part of her report she makes recommendations. I have to be honest, it is us finding or making the time to follow through with them. If it is inspecting farms, or addressing the traffic situation that is happening in Kapa'a so she does provide feedback. EDR COMMITTEE 23 MAY 7, 2014 Ms. Yukimura: So she does not do the inspections at the farms herself. You folks have to do it? Mr. Costa: I do not think I can assign that to her. It is either Bill or myself that is required to do that. In fact they are having the County Attorney review that to make sure we have the authority to go on the property. I have asked twice and been afforded permission to enter the farmer's property. Ms. Yukimura: So this is. not an ongoing working thing already, where we have this procedure, we go there, we check it out, if they are not real farmers they are off our list, if they are real farmers they continue...I mean we do not have a regulatory system that is working perfunctorily sort of? Mr. Costa: We are doing that presently. With the request that she does we issue a letter to the farmer. In this one case this farmer, a couple was suspected for purchasing from Costco, an elderly couple and what it turned out to be is that they are farmers, they have the product but it was easier for them because they were close to their nineties (90's) to go buy at Costco. So basically I wrote them a letter saying that we would basically evict them from the market if they continue that practice and since then they have hired somebody, a younger person to help them with the harvest of their farm. They have an abundance of fruit but they just thought it was easier for them to buy some fruit from Costco. It is those types of situations that we have to monitor and follow-up on. Ms. Yukimura: I would like to ask to get a copy of the monthly reports for the last year please. Thank you. Chair Hooser: Councilmember Rapozo. Mr. Rapozo: Thank you. What is the difference between item number 7 where you are talking about this thirty-two thousand dollars ($32,000) and on page 7 the budget payroll benefits (OPEB) which you list one hundred sixteen thousand dollars ($116,000) for the enforcement of the sunshine market administrative rules. Mr. Costa: What I was trying to show there is...we often refer to the budget and the various line items and what they represent. There is a lot that we do, Bill does, or I do that...this represents Bill's salary and his benefits and so these are things that are not budgeted by we perform the functions. So it is a part of their duty and I listed what he does under that section as part of his salary. Mr. Rapozo: But, you mean that is his full salary? I guess what I am trying to figure out is how much does it cost the County to manage the Sunshine Market Program? EDR COMMITTEE 24 MAY 7, 2014 Mr. Spitz: At the core of it would be Terry's so...the thirty-two thousand dollars ($32,000) then in addition to that would be any of the follow-up. If you prorated it to that if you were going to fully cost something like that it would be that and if we actually get to the point where we actually throw someone out, they are entitled to an administrative hearing, under the Ordinance, I believe and the rules so and we are not sure what that would be because we are looking into that on another matter now if we are required to have an administrative hearing. Mr. Rapozo: We are not charging them, though? Mr. Spitz: We are not charging the vendors anything. It has been that way for thirty plus (30+) years, from the early days. Mr. Rapozo: And I guess that is where I am trying to figure out the cost to the County, to the taxpayers to allow a private business owner to go to a County facility, operated their business, make money and be subject to an appeal process if they are selling Costco fruit and not even pay a fair share. I guess that is where I am headed. Mr. Spitz: I could probably give you a number that would be a base to work on. The Sunshine Markets offer between seven thousand and eight thousand vendor days (7,000 — 8,000). One vendor in a market is a vendor day per year. So you can play with that one with fees if you were to do that and come up to cover the cost. You would suffer some attrition in your number of vendor days. I am not sure exactly what that would be. Mr. Rapozo: I mean I do not have a problem subsidizing, the County subsidizing, but I think if in fact this is going on, the Costco vegetables, and I hear a lot of complaints about that, that they are selling stuff that they are not farming, that they are buying and selling, that we need to kick them out, they need to leave because they are utilizing everything free and selling store bought. That is not fair. I think if we can somehow bring in some fee structure that can at least pay for the enforcement of the illegals I think it is well worth it but that is, I guess something we can look at. Maybe if you can print us out the numbers at a later time. Thank you. Chair Hooser: Council Chair Furfaro. Mr. Furfaro: Gentlemen, tell me is the roll of monitoring and the marketing program, is that done by one in the same person? Mr. Costa: Between Terry and Bill. EDR COMMITTEE 25 MAY 7, 2014 Mr. Furfaro: But Terry is a part of this marketing allocation as well? And is this a contract services or Payroll, Taxes & Benefits (PT&B)? Mr. Spitz: It is a grant funding through the Garden Island Resource Conservation and Development, Inc. (GIRC&D). Mr. Furfaro: So she is a contracted employee? Mr. Spitz: She is contracted by Garden Island RC&D. Mr. Furfaro. So she is a contracted employee? Mr. Spitz: Yes, sir. Mr. Furfaro: Thank you, Mr. Hooser. Chair Hooser: Yes, I had a question on the same item. So the cost of the Sunshine Markets...so the one hundred sixteen thousand twenty-four dollars ($116,024) that is... Mr. Costa: That is Bill. Chair Hooser: Your salary? Mr. Costa: And benefits, yes. Chair Hooser: And benefits so that is everything in terms of benefits. Now on top of that is thirty-two thousand dollars ($32,000) for this other individual. Mr. Costa: The monitor, right. Chair Hooser: And what percentage of your time is spent on the Sunshine Markets? Mr. Spitz: It is hard to tell. A lot of it has to do with the number of permits per month. Chair Hooser: Just like on a weekly/monthly basis. Mr. Spitz: Maybe fifteen percent (15%) Chair Hooser: Fifteen (15)...one (1) five (5)? Mr. Spitz: One (1) five (5). EDR COMMITTEE 26 MAY 7, 2014 Chair Hooser: Okay. So the inspection of the farms...have you inspected the farms or who has done the inspections? Mr. Costa: I have gone twice and I know Bill has done some. Chair Hooser: You have done some also? Is that twice this month or twice this year or twice forever? Mr. Costa: It was twice last month. Chair Hooser: Twice last month. Mr. Costa: So that was done on a Saturday, pretty much six (6) hours. Chair Hooser: The vendors must be required to sign an affidavit or something saying that they are only selling things they grow? Mr. Costa: Yes. Chair Hooser: They have to sign something like that? Mr. Costa: That is part of their permit application. Chair Hooser: So if they are not they are breaking their permit application? Mr. Costa: Yes. Chair Hooser: We are quickly running out of time. Let us try to cover some more and then we may have to reschedule another time to come back. Wait, Councilmember Kagawa. Mr. Kagawa: Has there been any thought of maybe selling some fresh beef or fish? They do it on the side of the road by Hanamd'ulu. They have their own little Sunshine Market with their sign and I do patronize them occasionally when I am not given fish. Has there been any thought. I know there are concerns about refrigeration or what have you but they have it chilled down and stuff. Mr. Spitz: We actually do have a live farmed fish permit. We granted two (2) of them at one time but they stopped coming and the reason for that is...I do not want to take a lot of time on the background on that...ciguatera was a concern for fish live farm...that is why we have that. We EDR COMMITTEE 27 MAY 7, 2014 have never had beef in the market and I think one of the reasons we do not is we wanted to offload the liability of carrying those things. Mr. Kagawa: Okay. Thank you. Chair Hooser: You know what I think I am going to do, I think the reason I asked you here was because at the prior budget presentation I did not feel that there was adequate attention and time spent toward the agricultural component of the County Economic Development initiative. I find myself in the same position now that we are rushing this through to get this done. It is late in the afternoon and so maybe we will take a few more questions and then we will reschedule for another time. I really think we need to take the time and we had a good discussion with the cattlemen and I think we need to have that kind of quality discussion and not just run through and bang, bang, bang. So if you could, we will work staff and reschedule it and give you time. We will want to spend some time on your goals and objectives and priorities and I did spend some time looking over the material that you gave and noticed that there were twenty-six (26) different priorities. I would encourage you to kind of narrow the focus if you could because twenty-six (26) is just too many in terms of you can itemize them, maybe put them in order if you wanted to have all twenty-six (26) but really try to come up with a more coherent presentation and maybe less pages to say where the focus is going to be. Councilmembers before we conclude and go to our public hearing does anyone have any specific questions while we still have time? Councilmember Yukimura. Ms. Yukimura: Thank you. On your agriculture park system of one hundred thousand dollars ($100,000), all of that is slated for Kilauea? What about the other four (4) parks? They do not have any needs? Mr. Costa: Right now with Anahola we are still in discussion stages with the Department of Hawaiian Homelands (DHHL) so there is no out-of-pocket cost right now. There probably will be as we continue with our discussions with them. With Kalepa, and that is basically the...I think one of the ranchers made reference that is ADC lands that the Kaua`i County Farm Bureau is negotiating with ADC and we are basically working with the Farm Bureau to facilitate them hopefully obtaining those lands from ADC. With Koloa, we have been in conversation with a new Knudsen trustee, Kanan Hookano and again it is basically discussions right now to see if there is an opportunity that Knudsen Trust may be able to dedicate some land for an agriculture park and then the last one in Kekaha, we have had discussions with Kekaha Agricultural Association and they are basically asking for a non-monetary support from the County because one of the ideas of taking ADC land again and creating thirty (30) half acre lots. It is in an area where their idea is moving the Sunshine Market in Kekaha from the neighborhood center to the lands adjacent to where the Kekaha Sugar offices were once located. EDR COMMITTEE 28 MAY 7, 2014 Ms. Yukimura: So what does it have to do with fifteen (15) half acre lots? I mean is that an economical size for farmers, for commercial farmers? What is the goal of this agriculture park? Mr. Costa: This is a plan from the Kekaha Agricultural Association and so we are working with them to support them. Ms. Yukimura: But still, these are public lands and so I would think that the County has a vested interest in a successful agricultural park so you would want to know what the goal is, what production levels they are aiming for, how they are going to select farmers, and will they get economies of scale? All of this has to be part of a clear plan that we need to assert as having an interest in our Comprehensive Development Strategy (CEDS) goals, our self-sufficiency goals all of this. I do not have a feeling that we have got any clarity on that. The meeting was called back to order, and proceeded as follows: Chair Hooser: I am just going to...we have a lot of people here for the public hearing and I agree with Councilmember Yukimura that I also have a lot of questions. There was a motion to receive and I do not know if we could retract that motion and then...we cannot? We have to repost? Ms. Yukimura: Defer. Chair Hooser: So we can defer and that would be the next Committee meeting, is that soon enough? Mr. Furfaro: Excuse me. Mr. Hooser, may I suggest that you make a motion to defer date specific and we do not get through the budget until really the 28th. I do not know if June 4, 2014 would work for you in Committee and if that is too far off but clearly when I am digesting what has been given us this is four (4) units, this is two (2) hours of dialogue here and if we want to allocate the right amount of time to have a real healthy discussion I would suggest the deferral to June 4, 2014. Chair Hooser: I appreciate the suggestion, Chair. I am just not sure how much of this discussion relates to the budget coming up. Any other comments? Councilmember Rapozo. Mr. Rapozo: I think a lot of the information is required before the budget. Just looking at number 14, the Food Production Center Feasibility Studies, prior to hearing Mr. Farias today that sounds pretty attractive, the one hundred ten thousand dollars ($110,000) but I think we just save the one hundred ten thousand dollars ($110,000) today, listening to Mr. Farias because he told us exactly what we needed and it started with the leases which we have no control of. So that is the kind of dialogue I would like to have. Is it necessary to put EDR COMMITTEE 29 MAY 7, 2014 one hundred ten thousand dollars ($110,000) in that right now and the choke point, as he called it is was the leases and regardless of what plan we have there is still some external factors that this County still does not have any control of. I think the dialogue is important, I would even suggest maybe a workshop format may be even better. I am not sure what the June 4, 2014 Committee agenda looks like. Mr. Furfaro: Let me just say right now the agendas for the rest of the month of May are actually full and I actually had to take two (2) of my own items off and defer them to June but I think this is important and we will make the room if Councilmembers realize that ultimately the agenda is in my hands and if I have to approach you about moving something that is not connected to budget decision process please kokua me and we can refer to a Committee meeting in two (2) weeks. Chair Hooser: I think that would be my suggestion, is the Committee meeting in two (2) weeks. Councilmember Yukimura. Ms. Yukimura: I do agree that some of the discussion is related to the budget but I do not think that we have any more time between now and budget decision making which is essentially Monday and Tuesday of next week. And so I think where the proposals do not come up to satisfactory knowledge we may have to defer them to next year's budget but in terms of the discussion and having enough time I would like to suggest that maybe we take another...instead of the regular Committee day, actually do a separate day with a special workshop so that we could really have focus time and sometime in June would be fine with me. Chair Hooser: Yes, Chair. Mr. Furfaro: I am willing to make two (2) weeks available to you in May if you would like but also if this is a decision for a workshop the workshop decision and date is the Committee Chair's call and not mine. Chair Hooser: Okay. Yes, Councilmember Kagawa. Do you have a suggestion? Mr. Kagawa: I am okay with two (2) weeks from now and perhaps we could put it up soon in the agenda. Chair Hooser: Okay. Does that work, two (2) weeks from now? We will try do to it early in the agenda and do the best we can. Mr. Furfaro: Yes. Chair Hooser: Thank you. So that would be my recommendations. I should have called the meeting back to order but the meeting is back to order. The recommendation is to defer to two (2) weeks from today. EDR COMMITTEE 30 MAY 7, 2014 Upon motion duly made by Councilmember Rapozo, seconded by Councilmember Kagawa, and unanimously carried, EDR 2014-01, was deferred. There being no further business, the meeting was adjourned at 5:05 p.m. Respectfully submitted, 1 J Lori L. Marugame Council Services Assistant I AP."ROVED at the Committee Meeting held on May 21, 2014: L. HOOSER .' IR, EDR COMMITTEE