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DEPARTMENTAL BUDGET REVIEWS 2015-16
REVENUE FORECASTING
Revenue Forecasting
Honorable Mason K. Chock
Honorable Gary L. Hooser
Honorable KipuKai Kuali`i
Honorable JoAnn A. Yukimura
Honorable Arryl Kaneshiro
Excused: Honorable Ross Kagawa
Honorable Mel Rapozo
The Committee reconvened on April 9, 2015 at 9:06 a.m., and proceeded as follows:
Committee Chair Kaneshiro: Good morning. I would like to call back to order
the Budget and Finance Committee and the Fiscal Year 2015-2016 Departmental Budget
Reviews. Let the record reflect that Vice Chair Kagawa is excused and Council Chair
Rapozo will be in attendance after the lunch break. On schedule for today we will be
hearing from the Department of Finance and the Budget Team, who will take us through
the various areas of revenues, charges, and fees. As we do each morning, we will take
public testimony, but seeing nobody in the audience, we will move on. I think as far as
today goes, we will have...the Finance and Budget Team has a presentation and we will let
them do the presentation. Then we will answer any questions on the presentation. If there
are no other questions, we will move on to the list of revenue items. We will look at each
page of the revenue items and just take it page by page and then, if there is any remaining
questions about any other fees that are in our revenues, fees, rates, and assessments, we
can bring those up and take them on a case-by-case basis. So with that, we will take the
presentation.
KEN M. SHIMONISHI, Director of Finance: Aloha Chair and Members of the
Council, Ken Shimonishi, Director of Finance. Obviously one of the major revenue items for
our General Fund is our real property taxes, accounting for nearly 80% of our revenues.
Our Real Property Tax Manager Mr. Hunt has prepared a presentation to show us the
various segments of the real property tax by classification, as well as the changes between
prior year and current year. So with that, I will hand it off to Mr. Hunt.
STEVEN A. HUNT, Real Property Tax Manager: Good morning,
Councilmembers. For the record, Steve Hunt, Tax Manager. To understand the actual
revenue that comes from the real property taxes, I think you first have to look at the
valuation process, as well as the exemptions and other relief measures that weigh in to
what becomes the net taxable amount. Starting from the bigger picture, from a gross
valuation standpoint, the difference in gross value between Fiscal Year 2015 and Fiscal
Year 2016 is approximately $1.38 billion in value. That is about a 7.25% change from the
prior year. This is due to a combination of new construction, general market appreciation,
and the valuing of time shares as wholly-owned condo units for this year. Also in Fiscal
Year 2016 there was the creation of two new tax classes that being the Residential Investor
and the Commercialized Home Use, as well as continued increase in the property count for
the Homestead class, which saw a significant reduction in value. I am sorry; the
Residential class saw a significant reduction in value. Most of the properties have been
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moving, as you can see from the prior year charts, from this blue bar right here which is our
residential class, that is now a much smaller pie and we are seeing movement into the
Commercialized Home Use a number of those properties that were in the Residential that
had home use exemptions were moved into this new class. Also we have the Residential
Investor Class, which are properties that are over $2 million in value and do not have
owner-occupants or long-term tenants. That also absorbs some of the Residential class as
well as some continued migration into the Homestead class, which increased by 474 new
properties compared to Fiscal Year 2015. Between Fiscal Year 2015 and 2016, as I
mentioned the Residential class decreased by 10.7% in terms of the tax base, the value, the
gross value. It went from 32.2% of the value in Fiscal Year 2015 to 21.5% in Fiscal Year
2016. As I mentioned the Homestead class increased by 474 properties going to 11,466
properties. Which on a property count basis represents about 34.5% of the total 33,207
taxable properties that we have on the island of Kauai.
Councilmember Yukimura: Excuse me, Chair, Steve, may I just ask a
question? Whatever you have in writing will that be made available to us?
Mr. Hunt: I can make this available.
Councilmember Yukimura: There is so much information; it is hard to absorb
it all.
Mr. Hunt: Sure.
Councilmember Yukimura: Thank you. That would change how I try to do
my notes. Thank you.
Mr. Hunt: Do you want to stop and make copies now? What
would be your pleasure?
Committee Chair Kaneshiro: Yes. I think it would be a good reference.
Mr. Hunt: Okay.
Councilmember Yukimura: Thank you.
Councilmember Hooser: It is a lot of information all at once.
Committee Chair Kaneshiro: I am trying to write it down and running out of
space.
Councilmember Yukimura: Great.
Committee Chair Kaneshiro: Should we take a recess?
Mr. Hunt: I can continue and you can catch up and then
have notes.
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Councilmember Yukimura: Do you have an extra copy? You still have your
copy?
Mr. Hunt: Yes.
Committee Chair Kaneshiro: We will take a quick recess.
Councilmember Yukimura: Okay.
There being no objections, the Committee recessed at 9:10 a.m.
The Committee reconvened at 9:15 a.m., and proceeded as follows:
Committee Chair Kaneshiro: Thank you. Welcome back. We just have to get
caught up on our notes. Steve, you can continue on the presentation?
Mr. Hunt: To follow along, I am about sort of the middle of
bullet point number three at this point. For Fiscal Year 2016, the Homestead class now
represents about almost 31%, 30.9% of the gross value of the tax base, which is up 1.8%
from the prior fiscal year with this accounted for about 21.9%. I am going to move to slide
2, unless there are questions on the gross values?
Committee Chair Kaneshiro: We will go through the presentation first and
then ask questions.
Mr. Hunt: Slide two shows the gross value comparisons
year to year between Fiscal Year 2015 and 2016 and with the exception of the Residential,
which is the blue bar and the Hotel, which is the light-blue bar, those tax classifications
actually had decreases where every other class had either relatively flat or slight increases
to the assessments. And note, please, that the vacant multi-family land, which previously
was classified in Hotel & Resort, was moved to the Residential category. It was a big
reason why the Hotel & Resort category went down this year. Slide two also shows the
changes in property counts at the bottom. So there was a decrease of 1,691 within the
Residential category. Again, primarily these being moved to Commercialized Home Use
and to the Residential Investor class, as well as the Homestead class. And the other major
decrease in properties was in the Hotel & Resort, although we also had some in Ag as Ag
properties that are vacant land get developed with single-family residences they move into
the Residential category or potentially the Homestead category depending on how they are
used. So the Residential and Hotel & Resort saw the greatest loss in property counts while
Commercialized Home Use and Homestead saw the greatest increases. In total, this is
interesting; there were actually 166 fewer properties total year-over-year. A lot of this has
to do with consolidation and resubdivision but also canceling of CPRs. Many properties
that sort of rushed out to get entitlements for open zoning on density created CPRs, but
were not successful in completing some of that information. Another big project, such as
the one in Kealia, Kealanani had a consolidation drop for CPRs and now are subdivided
lots. So that reduced some of the property counts. Moving on to slide three. Slide three
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shows the changes in net taxable. So this is accounting for both exemptions that are applied
to properties, as well as appeals. When we get to the next taxable amount that is what gets
affixed to a tax rate to generate taxes. This is what we are comparing when we look at
where the revenue will be generated by class. So you see on the pie chart, Residential is
now...where Homestead was the greatest gross value, now Residential becomes the greatest
net value with about 24.9% of the base attributed to this class. Although this is down from
Fiscal Year 2015 because as previously mentioned a lot of the movement from the
properties out of the Residential class, this class had represented 34.8% of the tax base in
Fiscal Year 2015. Like Fiscal Year 2015, the Homestead class is still the second largest
percentage of the assessment base at 24.2% up from 21.8% in Fiscal Year 2015. The next
two largest categories are the Vacation Rental class, which is at 15.9%, although that is
down from 16.4% the previous year. This is primarily due to the migration of the properties
that were in Vacation Rental into the Commercialized Home Use class, those with owner
occupants. And next is Hotel & Resort at 11.8% and that is also down from 13.4% and
again, as mentioned the migration of the vacant land that had been multi-family land in
this class was moved to Residential. Slide four just shows the year-over-year changes and
consistent both the Residential, and the Hotel & Resort, much like the gross values show
decreases in the net value. Slide five shows the potential real property tax revenues. I say
"potential" because we do not always collect it. We do have some that remain in arrears
and we continue to try to do collections, but this is based for our budgeting purposes, where
we estimate potential. We are showing about a $5.3 million increase in potential year-over-
year. This does exclude the capped relief that was given, about $1.48 of the $1.9 million
was actually awarded to homeowners once we were able to calculate those that had loss of
exemptions, had sold their property, or had significant construction since that time of the
2013 tax. So those adjustments that were made for the 2014 taxes, which is our Fiscal Year
2015 is not part of this potential tax calculation. So comparing taxes between 2015 and the
proposed 2016, there were about 1,739 properties in the Commercialized Home Use. And
the aggregate difference is about $750,000 loss in revenues. So those coming out of higher
categories going into a lower proposed rate...again we are proposing $5.05 per thousand
assessed, when we compare that to the prior year taxes that actually comes down $750,000
in aggregate despite having the properties increase a little more than 4% in value. The
properties went up in value, but pay less in taxes from the prior use because of the
reclassification to the Commercialized Home Use. And finally on the last slide, changes in
taxes by categories. If we look at the proposed rates and the estimated taxes, we are
showing that Residential would still pay the greatest amount of taxes overall at about 23%
of the total taxes for Fiscal Year 2016. Vacation Rental would be the second largest at
21.6% of the total taxes. Hotel & Resort at 19.7%. Homestead at 4th with 11.3%.
Commercial at 7.1%. Residential Investor at 5.6%. Agriculture at 4.9%. Commercialized
Home Use at 3.8%. Industrial at 2.5%. Conservation at merely 0.5%. When you compare
that to the gross valuations, Residential is paying 23% of the taxes, with 21.5% of the value.
Vacation Rental would be paying 21.6% with 13.5% of the value. Hotel & Resort at 19.7%
with 10.4% of value. Homestead and this is again where we give exemptions and have
preferred tax rates would pay 11.3% under this budget with about almost 31% of the value.
And then Commercial, 7.1% with 5.5% of the value. The Residential Investor class at 5.6%
versus 5.1% of value. Ag, would be at 4.9% with 4.7% of value and Commercialized Home
Use at 3.8% with 6.0% of the value. Industrial at 2.5% with 1.8% of the value.
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Conservation on about par with 0.5% with 0.6% of the value. With that I will open up to
any questions that you might have.
Committee Chair Kaneshiro: Any questions on the PowerPoint presentation?
Councilmember Yukimura: Even with it in writing it was hard to absorb, so
much information.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: Your last slide, where you have potential taxes.
2016 versus 2015. So I wanted to know how much...before the home preservation limit and
very low-income tax credits, my question was how much? But I guess when you are doing a
comparison how much are we including? I mean what is the amount of home preservation
limit and very low-income credits?
Mr. Hunt: Right now we have home preservation at about
$51,310 in estimated relief.
Councilmember Yukimura: What?
Mr. Hunt: $51,310 and eight properties qualified for that.
Councilmember Yukimura: Okay.
Mr. Hunt: For the very low-income credits 172 properties,
with $83,353 in relief.
Councilmember Yukimura: Okay.
Mr. Hunt: There were actually more applicants. I believe
we had 239 applications, but many of the properties actually did better with the exemptions
than they did under the 3% of gross income. So although they applied, the actual market
taxes were lower than the 3% of gross income. So there were no credits in those cases.
Councilmember Yukimura: Well, I am really glad we have a variety of ways
to address so many different situations. That information that you just read, is that in this
information?
Mr. Hunt: No, it is not. I believe it came over on the
certified assessment list.
Councilmember Yukimura: Okay, great.
Committee Chair Kaneshiro: We have a question on the very low-income tax,
you mentioned 3% of gross income. Does that mean real property taxes cannot be more
than 3% of your gross income?
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Mr. Hunt: It cannot go below minimum tax. So that is the
floor. For those who have income exemptions, the floor is $75.00. For those who do not
have income exemptions the floor is $150.00 for minimum tax. You calculate what the
market taxes are, versus what 3% of gross income. I believe the cap was $35,100, if I am
not mistaken for gross income for the very low-income credits. If you were making close to
the maximum, say you made $30,000 gross income, 3% would be $900. So you are
comparing your market tax, say your market tax is $2,000, the difference between $900 and
$2,000 would be a credit. So your tax would be set at $900 and you would get a $1,100
credit.
Committee Chair Kaneshiro: Got it. So there is an income limit to it? It starts
at an income limit first?
Mr. Hunt: Correct. That is why we call it very low income.
We also have income exemptions for...well, the actual exemption itself. You get a reduction
of value if you qualify for the income exemption. $120,000 off the value. I believe the limit
was $62,000 gross income.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: Good morning.
Mr. Hunt: Good morning.
Councilmember Hooser: How much...so there is a net $5.3 million
increase in tax revenue in the budget. I believe that is what you said.
Mr. Hunt: Correct.
Councilmember Hooser: And how much of that is distributed in a dollars
and cents form in Residential, Vacation Rental...you have percentages, but how many
dollars and cents in each of these categories is represented by...
Mr. Hunt: I think the last slide has the distribution of
taxes.
Councilmember Hooser: In dollars.
Mr. Hunt: That is dollars, a little over $6 million for
Residential Investor, versus $7.7 in loss for the Residential. So those are dollars on the left.
Councilmember Hooser: Well, out of the 5...that adds up to $5.3 million?
Mr. Hunt: Yes.
Councilmember Hooser: But because of the shift?
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Mr. Hunt: Correct. You have the shift from...your lost
revenue in Residential, so the Residential Investor, Commercialized Home Use, and
Homestead all had increases offsetting the loss in Residential.
Councilmember Hooser: I am sorry, I am still not getting it. I am still not
getting it. For example let us look at Homestead in round numbers it is $2 million. So of
all the Homestead classification, their taxes went up $2 million?
Mr. Hunt: Well, first you have to look at the pool. There
were 474 new properties that were added to the Homestead as well.
Councilmember Hooser: Right.
Mr. Hunt: So there was a valuation increase and there was
a property count increase. And not all of the same properties that were part of that 11,000
change base are the same properties. Because there is always movement. People sell their
homes, move off, and some people pass away and move on. So it is not a stagnant base.
Just looking at the number, yes, over $2 million of the increase would be attributed to
Homestead. But it is not the same group of Homestead payers if you will.
Councilmember Hooser: I think I am getting it here. Do you have a
number if you take out new construction/new development, do you have a number?
Mr. Hunt: I do not. There is no way for us to take out new
construction and new development.
Councilmember Hooser: I am trying to estimate what regular
homeowners who have done nothing, what impact on the average homeowner...residential
is going to be.
Mr. Hunt: I do not have that information with me today. It
is a request that came over to account how many properties were impacted?
Councilmember Hooser: Right.
Mr. Hunt: I can probably provide that during a break. I can
go get that information if you need that today.
Councilmember Hooser: That would be helpful for this discussion. To be
clear, an individual homeowner, my property was in the Residential class and now is in...it
has shifted. So even though it looks like the taxes are going up, the individual
homeowners...I mean down...the individual homeowners actually may have gone up.
Mr. Hunt: For the Commercialized Home Use, all of those
properties are going down. Because at the proposed rate of $5.05 is lower than any of the
other rates in the past. So anyone who was an owner-occupant that had a vacation rental,
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a commercial, a second home that was rented, all of those, assuming the values stayed the
same, all went down. Even if values went up, the rate differential being greater than the
percent in value, most of the people in that category are receiving decreases. So 1,739
properties I would say...I say at least 1,600 or more probably got reductions in taxes.
Councilmember Hooser: And the Residential that went to the Investor or
whatever that classification was...all went up?
Mr. Hunt: Right. So those are non-owner occupants, $2
million and up valued properties that are not rented long-term. Those second homes would
have had increases, correct.
Councilmember Hooser: And any Homestead owner who rented out a
room, who rented out a room in their house, even at affordable rates, their taxes went from
$3.05 to $6.00?
Mr. Hunt: $3.05 would be the tax rate for Homestead. If
they were moved from Homestead to Commercialized Home Use, yes, actually they would
go up to $5.05.
Councilmember Hooser: Just for the record, just renting a room in your
house would trigger that?
Mr. Hunt: Yes. If you are generating income from your
. property and live on your property.
Councilmember Hooser: Regardless of the size of the income?
Mr. Hunt: Yes. Correct.
Councilmember Hooser: I will pass for now.
Committee Chair Kaneshiro: Councilmember Kuali`i.
Councilmember Kuali`i: Just to understand the bar graphs. On the first
one, you have red numbers next to them.
Mr. Hunt: Yes.
Councilmember Kuali`i: And those red numbers represent the change in
property count?
Mr. Hunt: Count, correct.
Councilmember Kuali`i: So the property count is each individual tax bill?
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Mr. Hunt: No, the count is...I guess it would be. Because
each particular property will get an assessment and a bill. There are some properties we
call multi-pitt that have multiple zonings that gets bills for each, but they would also be
blocked into the categories. You may have one property with a portion Residential and a
portion Commercial because of zoning.
Councilmember Kuali`i: So then this in the first bar graph is telling us
the change in that basically in the different categories whether it is increased or decreased?
Mr. Hunt: Correct.
Councilmember Kuali`i: So the bars are tied to the value?
Mr. Hunt: The bars are tied to value.
Councilmember Kuali`i: Where do you actually have that? Because we
have to guess based on the bar and the line what the values are. Is that in the pie earlier?
Mr. Hunt: You could look at the two values that are in the
pie and subtract.
Councilmember Kuali`i: The difference.
Mr. Hunt: Let us take Homestead for example it went from
$5.5 billion to $6.3 billion and that is the increase. And that would be the corresponding
number that you would see on the chart.
Councilmember Kuali`i: Okay. And then the Residential Investor did not
exist. So now it exists and it is 237 and just over $1 million.
Mr. Hunt: Yes.
Councilmember Kuali`i: Now in the next two bar graphs, why is it not
there, the red numbers?
Mr. Hunt: I just wanted to show them once to show what
property counts did. The counts by categories did not change. They are the same counts.
They are the same set of properties that we are analyzing and taking it from a gross-level to
net taxable-level to the actual taxes estimates.
Councilmember Kuali`i: I know for me and I will just do it for myself
later, I will just put it on every chart and put the dollars on every chart and that is how I
will look at it more closely, I think, instead of trying to look at multiple pages. Thank you.
Committee Chair Kaneshiro: Councilmember Hooser.
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Councilmember Hooser: The Residential Investor, how many property
owners does that include?
Mr. Hunt: I do not know owners because you could have an
owner that owns multiple properties. 237 properties are in the category.
Councilmember Hooser: 237 properties?
Mr. Hunt: Yes.
Councilmember Hooser: And those were properties that were previously
in the Residential classification for the most part?
Mr. Hunt: Yes.
Councilmember Hooser: They have shifted now to the higher
classification?
Mr. Hunt: Correct. I think the average price is $3.8 million.
Councilmember Hooser: And those 237 owners, their property tax rate
will go from what to do what?
Mr. Hunt: From $6.05 to $7.05.
Councilmember Hooser: So they have a rate increase of $1.00. And you
had mentioned and I kind of missed it, because I am not quite sure what I heard because
there is a lot of information coming. When you are looking at the $5.3 million, I believe you
said it did not include the $1.48 million.
Mr. Hunt: Correct.
Councilmember Hooser: And that $1.48 million was the...?
Mr. Hunt: The one-time credit that we used Unassigned
Fund Balance to cap taxes at a $250 limit for increase.
Councilmember Hooser: Does that mean with this budget there will
actually be another $1.48 million in revenue on top of the $5.3 million?
Mr. Hunt: If you are looking at what adjustments were done
on the credits, yes. Because we took away revenue, if you will, by giving that relief.
Councilmember Hooser: For that year.
Mr. Hunt: For that year. But it was a one-time. So now the
comparison is to...without the relief package, what revenues were estimated at last fiscal
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compared to this fiscal? We are comparing $5.3, but if you are comparing it with the credits
then it would be $1.48 million more.
Councilmember Hooser: More money?
Mr. Hunt: Yes.
Councilmember Hooser: So the net tax increase if you consider the credits
as a tax increase, because we lifted that cap, so therefore those property owners will have
that tax increase...so the net tax increase is actually $6.8.
Mr. Hunt: That would be a correct statement, I believe. Yes.
Councilmember Hooser: And so I think it is important information for us
to have. It was not as clear when you first kind of went through it.
Mr. Hunt: I think the majority of that is also within the
Commercialized Home Use and the combination of releasing the permanent cap which is
now at market value and market tax, combined with what had been done with rates for
certain categories, especially with Vacation Rental class. Many had started in Residential
and by the time they came out, they were in the Vacation Rental class because we did not
have that class even though they were vacation renting. It was a combination of the two
values released and the rates that had major impacts on those. So if we look 'at the
distribution of that $1.48 million in relief, the majority of that was to Vacation Rental and
some to Residential, but primarily Vacation Rental receiving the lion's share. I think less
than 10% got close to 80% of the relief.
Councilmember Hooser: Right. And what precipitated that relief was the
tremendous swings in property taxes that many of those people experienced. And one of
my main concerns is avoiding that again. And so what I really need to have is specifics on
who is coming down because the Home Use, Commercialized Home Use and now we are
talking about going up. And so how do we...you provided some really detailed information
TMK by TMK when we voted to remove the cap. And do some of this other stuff. And so I
would like to see that same level of attention and detail shown to the TMKs that are
impacted by this. So we can judge whether people are going to have a $5,000 increase or
$200 increase? Because it is a lot more. It is not $5.3 million. It is $6.8 million. Can you
provide that?
Mr. Hunt: Given time, I would be able to, yes.
Councilmember Hooser: • How much time?
Mr. Hunt: It depends on how quickly I can replenish some
of my staff. I currently do not have an Ag Inspector. I am down two Appraisers and have
another on worker's compensation so I am at least four people down, so a lot of the burden
of the day-to-day is falling on me. So that would be me preparing that information.
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Councilmember Hooser: Would we be able to get that information in time
to use it to base a budget decision on?
Mr. Hunt: The May budget decision?
Councilmember Hooser: The budget decision that yes...
Mr. Hunt: Yes, by the May 8th budget submission...yes I can
commit to having that information available.
Councilmember Hooser: Thank you.
Committee Chair Kaneshiro: Further questions? Councilmember Yukimura.
Councilmember Yukimura: Thank you for providing the comparisons on the
back of the information sheet. Just so I understand what it shows, it is showing the
percentage of taxes paid, compared to the percentage that this...that any particular class is
of the gross value?
Mr. Hunt: That is correct.
Councilmember Yukimura: Right. So arguably, Residential is paying 23% of
the taxes and gross value is 21.5%. So it is kind of they are reflecting what their
percentage of gross is. Vacation Rental is paying 21...almost...well, rounded off, 22% of the
taxes when their gross valuation is 13.5%. So it shows that there has been at least by tax
rates, we have made a policy decision that vacation rentals which are not owner-occupied
homes of local residents, would pay more than their gross valuation. Hotel is interesting.
You show 20% of the taxes are paid, and they are 10% of gross value. So they are paying
about double. Okay. And then when you come down and it is interesting "Ag" and even
"Residential Investor" are showing equitable or equal proportions. Commercialized Home
Use is paying less than their gross valuation by about half. And then Homestead is paying
less than their gross valuation. Those are local people/homeowners by about one-third. So
imbedded in this is a reflection of the policy that we have made if I can quote former
Councilmember Tim Bynum that "local people will pay less because they live here, they are
working here. This is their home." So they would pay lower tax rates and that is a policy
decision that we are making, which I think we want to perpetuate. But that really helps us
see what we are doing in terms of policy. Thank you.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: The chart that is up there now, that represents
$5.3 million?
Mr. Hunt: Yes.
Councilmember Hooser: Can we have a chart like that that represents
$6.8 million?
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Mr. Hunt: No. What you are asking for I am prepared to do
in May, which is the breakdown of applying the credits to each property and pull them into
class. Problem is that some of those properties for Fiscal Year 2016 may have gotten
credits and no longer in the same class. If they sold the property or doing another use, they
might have migrated. I wish it were an easy sample pool to say this continues to move and
year over year you can compare a snap shot to snap shot. We just do not have that
granular level of detail that we can provide. I can take those properties with exemptions
and break them into two categories...sorry, home use exemptions...there are other
exemptions. Those who have home use exemptions I can break them into two categories.
Those that are Homestead and only used as owner-occupied, no income, and those that are
in the Commercialized Home Use and do an actual comparison to their taxes and the
credits that those got and compare that to our estimated taxes for this year. That is as
much detail as I am able to provide.
Councilmember Hooser: Okay. I am puzzled that we were not including
the $1.45 in the $5.3 and in discussing additional tax revenue that come in, we have been
focusing on the $5.3 and this is the first of all the discussions that I have heard there is
actually $6.8. Is that extra money in the budget properly? Or is it somehow mixed it?
Explain why...
Mr. Hunt: The $112 million and change that we are talking
about in estimated real property taxes are based off the rate-setting and the net valuations.
So when we are comparing that to the prior year, we are also comparing to the same
certified roll. When Council makes adjustments after the fact and does it for...it affects the
certified roll, but we are not going back and re-certifying figures. So that one-time credit
was just a one-time credit and we view the $107 million in what the budget was last year.
So in comparison to the budget was still the $5.3 million.
Councilmember Hooser: You are comparing it to what before the
adjustment was made?
Mr. Hunt: Yes.
Councilmember Hooser: Okay.
Mr. Hunt: Because it was not an adjustment done at
budget. This is something that was done much later.
Councilmember Hooser: But the reality of it is there is a $6.8 million
increase in tax revenue.
Mr. Hunt: Which is I disclosed it on the sheet. It is right
there.
Councilmember Hooser: This is several weeks since the Mayor's budget
message and this is the first I heard that we have a $6.8 million increase in tax revenue. It
April 9, 2015
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has been $5.3 million all the way through and I think it makes a difference in the
conversation that we are having. Thank you.
Committee Chair Kaneshiro: Any further questions? Councilmember Kuali`i?
Councilmember Kuali`i: When you...I just missed some things. So I want
to go back, because you talk kind of fast. When you talk about the property counts and the
units, if you will and the total, you had said there is less total.
Mr. Hunt: Correct.
Councilmember Kuali`i: Because of consolidation, canceling of CPRs,
what else did you say? What other reasons?
Mr. Hunt: Those were the primary two.
Councilmember Kuali`i: Those were the primary two. And what was the
total?
Mr. Hunt: The total taxable property count for Fiscal Year
2016 is 33,207.
Councilmember Kuali`i: 33,207.
Mr. Hunt: Yes. And prior year was 33,373. Interesting
enough the prior year was also a reduction from Fiscal Year 2014. Of 751 properties. So it
is a continued trend at least for some of these CPRs to be canceled.
Councilmember Kuali`i: And then on that backside of your chart, you
explained a little bit about Commercialized Home Use, taxes 3.8%, gross values, 6.0%, and
you said there is...of the 1,739 properties, probably 1,600 or more got reduction in property
taxes. Can you say what that is for the Residential Investor?
Mr. Hunt: I would imagine all 237 are going to increase
both by value and by having a higher tax rate.
Councilmember Kuali`i: Okay. And then the other thing is so what was
the rate again for the Commercialized Home Use?
Mr. Hunt: Pardon me?
Councilmember Kuali`i: The Residential Investor went from $6.05 to
$7.05.
Mr. Hunt: Residential Investor had been in the Residential
category. So they went from $6.05 in Residential to $7.05 as Residential Investor, so a
$1.00 increase.
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Councilmember Kuali`i: So what is the same for the Commercialized
Home Use?
Mr. Hunt: Commercialized Home Use...these were not in
one category. These were pulled from Vacation Rental, from Residential, from Commercial,
from Industrial and lumped into one category and we said anyone who lives on their own
property with an owner exemption, but generates revenue, whether renting a room or
having a dental office below and living above, whatever the combination, they are not using
it solely as their principle residence but other uses, that rate is $5.05, which is the next
lowest rate to any rate. From the most minimal decrease, you are going from $6.05 to $5.05
but on the high side, if you are coming down from Vacation Rental, you are going from
$8.85 to $5.05.
Councilmember Kuali`i: Are they all decreases?
Mr. Hunt: I would say the majority are. There are probably
some close to breakeven. If they come from the Residential class and the value increased
more than the rate differential, they may be at par or a little bit above.
Councilmember Yukimura: May I follow-up?
Councilmember Kuali`i: Thank you.
Committee Chair Kaneshiro: Councilmember Yukimura. Follow-up question.
Councilmember Yukimura: There might be increases where they thought
they were Homestead, and they did not realize that income meant income from...activity on
the property. So there may be some increases.
Mr. Hunt: Well, if they were in a prior category from
Homestead and moving in, yes. Definitely there would be an increase on rate alone, even
without change in value. Or properties that may have started as Homestead last year,
built a second home and rented it and not only have just migration from Homestead to
Commercialized Home Use, but the fact that they have a new building on it too. That
moved them into the new category and created more value.
Councilmember Yukimura: Yes. Okay.
Mr. Hunt: It was likely offset by revenue from renting it.
Councilmember Yukimura: Go ahead.
Committee Chair Kaneshiro: Councilmember Chock.
April 9, 2015
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Councilmember Chock: Thank you, Steve. This is kind of premature and
we probably will not see it until later, but has there been a look at the budget and tax
impact on the potential homestay category?
Councilmember Yukimura: Did you say homestay?
Councilmember Chock: Homestay, and where that moves this.
Mr. Hunt: It would...my understanding of the draft
language is homestays would require home exemption with an owner-occupant on the
property and in that case they are already classified as Commercialized Home Use, they
are in here and it has been budgeted for. Likely they will be coming out of Vacation Rental
into this category. So they have already probably seen some relief.
Councilmember Chock: Okay, thanks.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: I am sorry, I find it interesting that you have
identified somewhat of a trend towards consolidation and fewer lots in total on this island.
I am thinking that is partly a response to the policy decision by the Council to lower the
density on open lands.
Mr. Hunt: I think that was the rush to get the CPRs. I
know of a few...large, local.family, owned companies that went and CPR'd a bunch of
property with the density. And then I am not sure...it was not the declaration, but there
was some language that said they had to have a little something more than the declaration
filed as of date and it did not meet the requirements and realized that they did not have the
density that they thought they had with the CPR. So they consolidated and canceled the
CPR. And with some of the other ones that are longer-term holds, I do not think...it creates
additional property taxes to have additional units. So I think some of those units were
becoming cumbersome when the developments were not proceeding and the market was a
little softer. With the Kealanani project, they just decided that they did not want to have
that many CPR'd lots to be paying taxes on when they were so far away from development.
Councilmember Yukimura: You know, CPRs have been in my mind a
subversion of our zoning and they subvert the minimum lot size in our agricultural lands.
They were, I think, a way to get around our zoning. So it is very interesting that when we
modified the density portion of our zoning, that created this kind of movement towards
fewer lots which I think is a positive. I believe that was the intention of the effort to
remove some of that excess density that was given to open, which you know is meant to be
open areas where the topography is steep, like valleys or river valleys, where it is really
good for ag and subject to flooding. So to put more density there does not make sense, but
these CPRs and our excessive density really created a lot of problems. It is just very
interesting for me to see some of the response to this policy decision we made several years
ago. Thank you.
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Committee Chair Kaneshiro: Any further questions on the PowerPoint
presentation? If not, I guess we can move on. We have a sheet that breaks down every
single revenue line item. And we also have our revenue section in our notes. So I am
trying to think what is the best way to go? I think our notes shows in general what the
changes are. This sheet shows in detail what the changes are. So I am open to going
through this sheet and we can use our notes as a reference, also. But we will go through
the sheet one by one, just through the pages. I think we can take it in sections. You have it
as accounts, real property taxes, licenses and permits...we will go through the sections and
go through it that way. We will keep moving through the pages. Then, when we are done, if
there are any questions on any of the fee rates throughout the County, we can go over that
also. So I do not think there is much of a presentation on this sheet. I guess,
Councilmembers...Councilmember Yukimura.
Councilmember Yukimura: So Steve, the potential taxes in Fiscal Year 2016
that does include what would be delinquent taxes or not?
Mr. Hunt: No. So what happens from a collections'
standpoint, we budget for the total amount of taxes. There is no bad-debt allowance.
Whatever we collect during the fiscal year we are operating in just goes into the cash flow.
Often, moneys that are collected in the fiscal year that we are budgeting for will be collected
from prior fiscal years as we catch up and that sort of augments or supplements, but we can
only project what the total tax is, not what we are actually going to collect during the fiscal
year. And on top of that we also collect penalties and interests, which is not incorporated
into the budget. Because again we do not know who is going to pay or when they will pay.
Councilmember Yukimura: So do you have...you must have a history of
delinquent taxes over the years?And is there any standard percentage that is usual?
Mr. Hunt: I believe we are running about 3-4%.
Councilmember Yukimura: And then you say that is offset by collection of
prior year delinquencies?
Mr. Hunt: For instance in May we have a foreclosure for tax
sale auction of five properties. It was a much larger list, but as you get to foreclosure, they
realize that they have to come and make do with their payment. We hate to foreclose, but
at some point we have to force that in order to collect. That usually happens when they are
three years in arrears in property taxes.
Councilmember Yukimura: So the offsets come from those prior year
delinquencies, plus penalties, plus interest...And so it does not hurt you to ignore the
delinquencies and just go by what the total tax projection is?
Mr. Hunt: Right. And again, we also have payment plans.
So people are making payment plans to work out stuff that is in arrears as well.
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Councilmember Yukimura: And the sheet that you are showing us is...what
are the different line items? You show current delinquent, escrow, current delinquent?
This is for a year? Oh, no, I see. Budget 2015 and budget 2016.
Mr. Shimonishi: Correct. So what we have provided are the
actual collections for Fiscal Year 2012, 2013, and 2014, as well as what was budgeted for
Fiscal Year 2015. Then now Fiscal Year 2016 and the far column on the right would be the
change between the 2016 and 2015 budgets. So as Steve was mentioning earlier, we budget
just based on assessed roll at the $112 million in real property.
Councilmember Yukimura: And this $5.3 is what Councilmember Hooser
was talking about.
Mr. Shimonishi: Correct.
Councilmember Yukimura: Versus the 6 point something.
Mr. Shimonishi: Yes.
Mr. Hunt: The credits that were given, I think, in December
or so, were not part of the May budget. So when we are comparing budget to budget, we are
looking at...where we estimated revenues last year and where we estimated revenues this
year?
Councilmember Yukimura: But is Councilmember Hooser's point that, in
fact, we have $6 million plus additional moneys.
Mr. Hunt: We ended up using Unassigned Fund Balance to
lower revenue projections, if you will.
Councilmember Yukimura: Yes.
Mr. Hunt: And unless we are going to use Unassigned Fund
Balance again as an offset or lowering projections or lowering rates, then there is going to
be an impact, obviously, whatever you take away. That is a revenue loss and there has to
be a corresponding expense cut.
Councilmember Yukimura: Okay.
Mr. Hunt: My understanding is that it was a one-time tax
credit. If it were a perpetual change or rate change or something that was done, then it
could have been incorporated. But much like when we had the cap going, we would
incorporate it into that, but because it was one-time and use of Unassigned Fund Balance
only, we thought comparing Fiscal Year 2015 projected to Fiscal Year 2016 projected was
the best way to look at this.
April 9, 2015
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Councilmember Yukimura: I see. Okay. You have under the last real
property tax line item "Kukui`ula CFD." Why is it in here?And you show a figure of$1,000
for Fiscal Year 2012.
Mr. Hunt: I believe it is revenue that we collect and send to
the Bank of New York as part of their payment of their bond.
Councilmember Yukimura: Okay. Because we do not collect anything from
the CFD?
Mr. Hunt: We do when they do new issuances. They have
not done a new issuance, but if they would, we would collect 15% of the issuance and that
does not show up as General Fund revenue. It actually goes into a special fund and would
be earmarked by ordinance for specific uses.
Councilmember Yukimura: Right.
Mr. Hunt: I believe just in the Koloa District as well.
Councilmember Yukimura: Right. Thank you.
Committee Chair Kaneshiro: Councilmember Kuali`i?
Councilmember Kuali`i: Along the lines of what Councilmember
Yukimura was asking there on page one at the bottom, there are several categories/line
items, but it just says all Os. Why are they there if no fees are being collected? Like,
business licenses, business licenses, auto driving instructor, auto driving school, auto
purchase sale, auto wrecking salvage? Are there fees and nobody is doing that and so they
are not paying?
Mr. Shimonishi: I think, again, it is probably something that
existed at one point and there was a need to budget or someone felt there was a need to
budget and recorded at that level. But more than likely that is imbedded into another line
item.
Councilmember Kuali`i: Because along those lines, too, on the other
report from you, Appendix A. In 001, bottom of the page, page two. It says, "business
licenses and permits. The following business license fees are levied primarily by the
authority of Chapter 445 HRS and shall be due and payable in advance on July Pt of each
year." And that is where it delineates several...it just shows annual fees of$10 it is really
minimal.
DAVE SPANSKI, County Treasurer: That is correct that. Is set by State law.
Councilmember Kuali`i: It is set by State law and we collect it, it is our
revenue?
April 9, 2015
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Mr. Spanski: For example, last year, June 30, 2014, we had 31
business licenses and collected $1,000.
Councilmember Kuali`i: 31 of various kinds?
Mr. Spanski: Yes. 13 firearms, 3 pawn brokers, 5 peddlers, 4
scrap dealers, and 6 second hand dealers.
Councilmember Kuali`i: 31 and we collected how much?
Mr. Spanski: $1,030.
Councilmember Kuali`i: So the State has this law in place for all counties
or different?
Mr. Spanski: Yes. These are all set by HRS 134-31. The only
one where the County has any leeway and we do, and we have used that, January 8, 2008
County Code, Section 23-3.4, page 811 of the County Code.
Councilmember Kuali`i: We have used that to collect what additional
revenues?
Mr. Spanski: You charge $100 to the peddler. You have five
peddlers, you have $500.
Councilmember Kuali`i: I would just query if the Administration would
not look into that and see what the possibilities are there? I know that when I lived and
worked for a city in California, we had significant revenues that came from business license
taxes as well. And it was a really tiny, tiny rate. There was some fraction of 1%. But there
was like a minimum of$25 or $100.
Mr. Spanski: You have to keep in mind these people pay
general excise tax to the State.
Councilmember Kuali`i: Yes and primarily they are paying for police and
fire and what have you through property tax, but often it could be a different landowner
from the business owner. And you just are assuming that the landowner is passing it on to
the business owner. But there is a legitimate cost to doing business. And it can be some
really small amount, but it can also add up with a lot of businesses. So just something to
look at, since there is something in place, but it is netting us nothing. It is almost not
worth the processing probably, like you have done with the minimum tax. I mean, just
saying 31 licenses, $1,030 and five licenses, $100, $500.
Mr. Spanski: It takes the staff about five minutes to process a
license or two and a half hours for the 31 licenses.
Councilmember Kuali`i: Okay. Thank you.
April 9, 2015
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Committee Chair Kaneshiro: Any further questions on the real property tax
section of this first page? We will move on to the taxes section. Any questions on the taxes
section? Licenses and permits? Councilmember Yukimura?
Councilmember Yukimura: Since the permit...we have dog and cats now that
is new since we passed...well, not new, but they are bringing in more revenue now, since we
updated the dog license fees, right?
Mr. Hunt: Actually it is part of the contract with the Kauai
Humane Society and shows up as a revenue line item because we have to pay it back as
reimbursement, as an expense. It is a wash and it is not net revenue to the County, but a
line item to help support the expenditure on the contract.
Councilmember Yukimura: But presumably they do not come in and ask for
more General Fund...I mean their ask for General Fund moneys is less?
Mr. Shimonishi: Just to clarify, the numbers on the budget, when
we are preparing the March, we did inquire with the Humane Society on what they
expected their collections to be and that is what they provide and I bumped it up by 5%. It
might be a little different from tomorrow when they do their presentation, but at the time
of preparation, these were the numbers.
Councilmember Yukimura: I know, they just submitted to us yesterday their
to-date financials. And then so vehicle weight taxes are in this area, too?
Mr. Shimonishi: No, the vehicle weight taxes would be in the
Highway Fund.
Councilmember Yukimura: Okay.
Mr. Shimonishi: So right now we are in the General Fund.
Councilmember Yukimura: Thank you.
Committee Chair Kaneshiro: Any more questions on licenses and permits?
We will keep going down the line. Business licenses. There is nothing in there. Licenses.
We will move on to page 2. Any questions on the licenses section? I have a question on the
fireworks. Are we not getting any permit fees for fireworks or is it showing up somewhere
else?
Mr. Shimonishi: Actually we are. However, there is...I believe an
ordinance passed to allow firework permit revenue to be used by the Fire Department for
their training and what not. But it is not shown in the General Fund, but rather as
another...not grant, but another project in the 251 Fund that is not part of the budget. But
the revenues....1 guess it is a special revenue fund you could say within the 251 Fund. So
the Fire Department does have access to those revenues for specific purposes.
April 9, 2015
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Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: How much is being generated?
Mr. Shimonishi: I do not know off the top of my head, but we can
get that information.
Councilmember Yukimura: Yes, could we follow-up on that? That is like the
209 Fund that Parks and Recreation, where the Spouting Horn rentals moneys used to go
straight to Parks and they used to be able to use it without any scrutiny or budget team
processes and we changed it and they tell us every year how they are going to use the
moneys and we get an accounting of it. Or we are trying to anyway.
ERNEST W. BARREIRA, Assistant Chief Procurement Officer/Budget Chief:
Good morning, Chair, Ernie Barreira, Budget/Purchasing Chief. The amounts are
relatively small, nothing like the 209 in terms of concession revenue. While you are correct
in that it had not been a part of the budget ordinance, there was due diligence in terms of
approvals through the Finance Director and Mayor, in terms of the expenditure of the 209
Fund.
Councilmember Yukimura: Right, but it by passed the normal budget
process, where the Council has some say in the budget. Otherwise, we would not have to
spend these three weeks every day. We would just let the Administration spend whatever
it wanted.
Committee Chair Kaneshiro: Councilmember Kuali`i?
Councilmember Kuali`i: I have a question on the last regular license, taxi
cabs. The State probably has a State taxi cab fee, but is it regulated island wide by the
State? Or they just do it at the airport? We do not get any revenues? Is it just the vehicle
weight tax, I guess then as far as roads and police?
Mr. Spanski: I do not have...I do not have that information for
you. I think it is $100 for a taxi cab permit. I do not know exactly where it goes or what it
is right now. I can get back to you, because I know Council Chair Mel Rapozo asks that
every year and I have that information and it is very minimal.
Councilmember Kuali`i: Thank you.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: At the very bottom is the famous or infamous
TAT moneys. Which is $14.9 million...let us say, is that this year's figure?
Mr. Shimonishi: That is correct.
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Councilmember Yukimura: So $14.9, almost $15 million. Steve, you are on
the committee?
Mr. Hunt: I am on the working group.
Councilmember Yukimura: And they are going to be filing a report next...?
Mr. Hunt: December of 2015 we have to file a report back to
the Legislature and they would have that discussion. We do not anticipate any action
being taken before the following year's budget, Fiscal Year 17's budget.
Councilmember Yukimura: Where there might be some action is in the GET,
right. And I understand Ken that you were there at the public hearing yesterday...no at
the budget committee hearing.
Mr. Shimonishi: It was the Ways and Means Committee on House
Bill No. 134.
Councilmember Yukimura: Did you get a sense of what the Legislature's
position was on the GET.
Mr. Shimonishi: Well, coming out of that committee was to allow
counties where the population of 500,000 or less, which is basically the outer islands, to use
that money for both operating and capital costs of public transportation, including...I
believe roadway improvements and such as well as ADA improvements related to that
area.
Councilmember Yukimura: Actually, sidewalks, too, I think.
Mr. Shimonishi: Yes. And that it was an extension of five years.
So from 2022 up to 2027 and I think with two ten-year extensions before the Leg...that is
my sense coming out of that committee.
Councilmember Yukimura: The bill that was being heard as amended was
only for capital costs, but I know the Administration testified to allow it for operating,
which was the original bill.
Mr. Shimonishi: Yes, the committee mentioned the ability to
improve road improvements in there and we testified to the fact that some of the road
improvements do not qualify as "capital" but rather"operating."
Councilmember Yukimura: Right, like paving?
Mr. Shimonishi: Yes and they went back to include both operating
and capital in the bill.
Councilmember Yukimura: They did make those amendments?
April 9, 2015
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Mr. Shimonishi: Yes, that is my understanding.
Councilmember Yukimura: Excellent. So there is a chance that I think for
me the problem was that it would take effect in January of 2017. But we would have to
levy the tax before the end of this year.
Mr. Shimonishi: Correct.
Councilmember Yukimura: I think those things are still in the bill, right?
Mr. Shimonishi: Yes. July 1st to December 1st would be the
window to enact.
Councilmember Yukimura: I know my testimony says please move it up, so
we can use it starting 2016. If we have to take the hits and actually levy the tax, we should
be able to start using the moneys is my position. But I am just asking this because it is
potentially a $5 million source of money...$7 million, but earmarked for transportation, but
could free up some General Fund money or even Highway moneys, right? For now and into
the next year, we are looking at pretty much this $15 million plus as the State assistance.
Mr. Shimonishi: The TAT, correct.
Councilmember Yukimura: Steve, when you are in that committee, do you
provide them with information, like we just heard with the Fire Department? Where our
rescues are...I do not know what it was...60-70% visitors? And we are doing it almost all
off of State land. I think it is like 90% of the rescues are off of State land.
Mr. Hunt: I think right now, and we have to go by what is
the language of the Act that passed, Act 174 and it looked at all public services. So it did
not necessarily say what was the nexus to visitors? And that is where we are having
somewhat of a challenge with the working group, I guess is trying to...we can all look at
levels of public service, but what is the nexus to visitors? And also if we are going to bring
in expenditures, we also have to look at revenues, because the State also receives revenues
in the form of GET in addition to the TAT from visitors, they also collect rental car fees, and
have airport and harbors collect fees. So if they are going to throw in airport as one of their
expenditures, we need to look at airport revenue as well. So we are still in sort of infancy of
boil down into what is really palatable in terms of how the TAT should be allocated based
on revenues and expenditures directly related to the impact of visitors.
Councilmember Yukimura: So that is what the arguments are getting down
to? How much the State versus the County...what portion of each budget is spent on
visitor-related?
Mr. Hunt: Well, it is not even looking at prior intent and
reimbursement. It is been about the impact. And measuring the impact. So that is kind of
what we are trying to get down to. But the Act itself does not necessarily give us a lot of
April 9, 2015
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Page 25
guidance on that. That has been somewhat of a challenge. Former Judge Simeon Acoba has
been our Chair and he is looking strictly at the language of the Act.
Councilmember Yukimura: Why?
Mr. Hunt: Because that...he is into the language. That is
what judges look at. So we are having those arguments now amongst ourselves. We have
broken into three investigative groups, a county group, and private sector group including
HTA members, as well as the State group. And we also have representation on each of the
committees, within the working group. So I am chairing the County's Committee, but also
on the State's Committee and when I can bring up those arguments that you are bringing
up expenditures, but look at the revenue side, too.
Councilmember Yukimura: Absolutely. It seems to me that you do not
necessarily have to go back to the past legislation. You could just say what is best policy for
revenue-sharing between the State and counties?
Mr. Hunt: And I think to a large extent some of the
Legislators, we could pass what we think is the fairest distribution, but if it is not palatable
to the Legislators, it would not go anywhere.
Councilmember Yukimura: Right.
Mr. Hunt: And part of that is incorporating what the State
believes is their share, which might include the additional 2% going from 7.25 to 9.25% that
they felt they bled for and the counties would just ride on coattails with the original
allocation percentage. So part of that is looking at what our portion is with the 7.25 with
the original distribution percentages, excluding that additional 2%? That might be another
way that would probably be more palatable.
Councilmember Yukimura: Well, one question that I have is what is the
amount we want to get? I mean, I heard last year we were saying $10 million. That will
help us balance the budget. And if that is what we want, but if we can get some of it
through a GET for transportation then how much do we want? You do not want to stay
there, because you have to grow over the years. Anyway, we need to keep our goal in mind,
I guess. Thank you.
Councilmember Chock: Follow-up question.
Committee Chair Kaneshiro: Councilmember Chock.
Councilmember Chock: The December deadline is to come over with the
report and recommendation?
Mr. Hunt: Correct.
Councilmember Chock: Thank you.
April 9, 2015
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Mr. Barreira: I guess Councilmember Chock, the concern is...I
guess the concern is when will we get word in terms of the execution of the annual budget?
Because March is our first submission and May is our supplemental. So there is concern
about that as well.
Councilmember Yukimura: Follow-up.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: For this year, TAT is not going to come, right?
So the possibility lies with the excise tax, I think, right now. If they would just change the
effective date, it could affect our next fiscal budget, Fiscal Year 2017.
Mr. Barreira: Yes, 2017, yes.
Councilmember Yukimura: I guess if it takes effect in January of 2017, we
can still incorporate it, but if we could have it by the 2016, then we could really have the
full benefit of it in our budgeting process.
Mr. Shimonishi: Yes. I would not anticipate the State being able
to implement a change to enact this and collect it on January Pt of 2016. That is just my
thought and I think they need time to...
Councilmember Yukimura: How long did it take them to implement the City
and County portion?
Mr. Shimonishi: That is just my thought.
Councilmember Yukimura: Why do not we find out? Because they already
have the mechanism in place. They get GET from every county, right? So I think if we
want to be persuasive, we should find out how long it took for them to implement City and
County's? Because maybe it takes three months and if we pass it early on, this year,
assuming they pass it this year, we can do it. But we have to think about that though, Ken.
You are right. Thank you.
Committee Chair Kaneshiro: Councilmember Chock.
Councilmember Chock: Steve, can you tell me, when you said we were
looking at measuring impact. Can you describe what does that really mean and what we
need to be thinking about?
Mr. Hunt: For instance, and I do not have my notes in front
of me. It is a whole other file. If we look at the current distribution 44.8%...prior to the cap
I should say, 44.8% went to the counties, after taking off the Convention Center funds at
the beginning and some HTA moneys. The remainder was split, 44.8% to the counties and
the balance to the State. We were getting of that 44.8% we were getting 14.5%. If you
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actually look at where the revenue is being generated, Kaua`i generated much, much less
revenue than the 14.5%. But our impact is if you look at the number of visitors relative to
residents, we are amongst the highest. City and County is the lowest, around 9%, 8% in
terms of proportion of visitor to resident. When we come here, it is over 25%. Maui is close
to 25%. We are both close to the top and Big Island 17-18%. So we are not just looking at
where the revenue is collected because you have consolidation of revenues coming from
Starwood, being accounted for in one area. Even though it may be sales of hotels on Kauai,
it is reported in Honolulu. And so if we just look at the revenue collection, we lose in that
game. So what we are looking at is finding metrics to say, if you look at revenue, that is
one way, but we also have to look at the impact. We have one of the largest percentages of
visitors to revenue and what we spend on public safety and what we spend on visitor
promotions-and we are spending in proportion to our residents 25%. So we are kind of
looking at defining it as a high-level of nexus, mid-level of nexus, and no nexus. Others are
minimal and others are moderate and some others are directly correlated. So that is what
we are doing is taking our CAFR and assigning based on the percentage of visitors as a de
facto population and applying that to our operating budget to see how much of that we
could assign, if you will, to the visitors and that is how we are measuring our impacts.
Councilmember Chock: Indirect cost...not costs, but impacts as well?
Mr. Hunt: I mean, I will take some...the private
investigation group within the working committee which Ed Case is steering and in their
committee they did surveys in the hotels, Outrigger and others to find out what visitors
wanted to enhance their experience. Some of the highest ones that came up were safety,
transportation, cleanliness of parks, homelessness, things like that that were coming out in
the surveys of what the visitors wanted, and if you want to continue to get our business,
these are things that we want to address. Part of it is not only a bundle of money generated
by visitors and should it go into enhancing the visitor experience and also the impacts on
the roads and sewer systems, to see things that directly enhance their experience. That is
another angle being looked at, too.
Committee Chair Kaneshiro: Any further questions? Councilmember
Yukimura?
Councilmember Yukimura: So how are they counting visitors who have a
second home or snowbirds that come 2-3 months?
Mr. Hunt: The numbers that we get from the Tourism
Authority and they incorporate flight loads in terms of the estimating the daily visitor on
each of the islands or counties. We are using that and dividing by 365 so on this day you
would expect this many visitors. It is length of stay and number of visitors and all that
weighs in how many people were here on any given day.
Councilmember Yukimura: Lenny Rapozo in his report on Parks says now
the elderly programs are attracting the second-home population and they are actually using
our programs. I would think elderly is one program that we think does not really get
impacted by visitors, but I, in fact, met them at the Valentine's party. There are people
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who come and stay at Pono Kai and use the bus system. They are sending so many
suggestions my way about how to improve it and I wondered how we were counting those
because they are increasing in number. They actually, they become part of the community.
So they come to our churches and donate money, they attend activities.
Mr. Barreira: From all you mentioned, parks, we focused on
Police and Fire in terms of rescue and public safety.
Councilmember Yukimura: Parks.
Mr. Barreira: But parks, all of the parks, our stadiums for
example, Hanapepe and Vidinha Stadium we bear all expenses for operations of those
facilities, including overtime, utilities and maintenance, and all the other requirements are
in place, even utilized by State entities. That is another...smaller, but still significant
consideration.
Councilmember Yukimura: That is a good point, thank you, but it is not
always visitor-related, but State functions that we support.
Mr. Barreira: Yes.
Councilmember Yukimura: Thank you.
Committee Chair Kaneshiro: Any further questions on page two of eight?
Councilmember Chock.
Councilmember Chock: In terms of...I was wondering how that burial
grant comes to us in terms of the amount annually? The amount is inconsistent over the
years.
Mr. Shimonishi: I am not quite sure exactly what the mechanism
is other than they reimburse us for the indigent cost of burials. And if I could just respond
to the fireworks permit, I have a note that revenue coming in is about $8,000 to $10,000 a
year on that.
Councilmember Chock: Thank you. Any further questions on page two?
We will move on to page three. Councilmember Yukimura.
Councilmember Yukimura: Intergovernmental revenues, Federal, pay in-lieu
tax. Okay, we actually get $14.9 million for that. Is it like $15 million. I am on the top of
page three. Are we on page three?
Committee Chair Kaneshiro: Yes, we have got 0. That would be like PILT
payments.
Councilmember Yukimura: It was a subtotal. I see. Do we know the
nature...? How come that is a line item, number one? This is ringing a bell where they
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have Federal facilities like national parks and even the lighthouse, which uses our roads a
lot. Is there not something that where they reimburse us? And is that not how the Big
Island gets some moneys for their roads? Because they service a lot of national parks? I
am just wondering if that is a potential source that we could claim, if we do our research
and figure out how it is granted. Maybe we can call the Big Island?
Committee Chair Kaneshiro: You know, when were in D.C. for NACo, this
payment was a big issue and a big issue for counties that have, say, Federal lands are 95%
of their county. And they do not pay taxes on it and they are trying to fund their county
with only 5%. So the Federal government would pay...I cannot remember exactly how they
did payments, but I know it was a big issue up there. When I asked people around at the
conference how much money it was, it really...even I asked the Big Island guys and they
really do not get that much money out of it. I think when you look at us and what Federal
lands that we have, which is barely anything, I think we would probably end up at zero. I
do not think we would get much money out of it, even if we tried. Because there are places
like the Big Island, that have huge Federal lands and the money that they got was real
minimal. Councilmember Kuali`i?
Councilmember Kuali`i: I cannot really add much to what Chair
Kaneshiro has added. Maybe if Chair Rapozo was here, he could add, but I will look into it
further as the NACo representative.
Councilmember Yukimura: Great, thank you.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: Since we are on the topic. I think most of the
Big Island's improvements were a result of Senator Inouye's earmarks with the nexus of
military training. And I think perhaps in the future moving forward, we could look at
PMRF, the lighthouse and other Federal nexus and try to come up with legitimate needs
that serve those facilities as well as our facilities and approach Senator Schatz and others
to help us move forward with that. It is a legitimate need. We just have to identify a
project and ask them for it. I think it is something that we should look for.
Committee Chair Kaneshiro: I think when I thought of PMRF, I realized that
the land is actually State land and it is not Federal lands. And I know these moneys are for
Federal lands. So we may have State land with a Federal facility on top, I am not sure if it
qualified for that PILT type of payment. Again, we can look further into it. Councilmember
Yukimura.
Councilmember Yukimura: I think we just have to find out what the
parameters are? And you know, maybe...I understand Senator Schatz was here last night
and maybe they can do the research for us and find out what the parameters are? And we
can see if we can fit them in any way? Thank you.
Committee Chair Kaneshiro: Any further questions on page 3? The $1.1
million for bus transportation. That is bus fares?
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Mr. Shimonishi: That is correct.
Committee Chair Kaneshiro: Thank you. Councilmember Yukimura.
Councilmember Yukimura: And the projections on the bus fares include the
increases that we are making to the rates?
Mr. Shimonishi: I believe so. I just inquired with Celia, and said
does this look reasonable enough and I am thinking that she thought of that as well.
Councilmember Yukimura: I do not know what the adjustment would be to
the bill that is going through based on the bill that is going through the Council right now.
There was a public hearing yesterday on the bulk purchase from the Community College.
And I think the revenues that we are getting from their bulk purchase is going to be less
than originally estimated. Because they are not going to the full cost of the bus pass. So I
do not know if that is a minor thing or a major thing, but I know it was not originally
anticipated, right? The lower, right? Okay.
Committee Chair Kaneshiro: If there are no further questions for page three
we will move on to page four. For the motor vehicle license and permits, the budget
number that includes what did not recently pass?
Mr. Shimonishi: It does not. And actually I think the note there
is it says "rate increase," but it is not an actual increase. It is at the $0.02 per pound on
vehicle weight tax for passenger. So that budget amount does not reflect any proposed rate
increases.
Committee Chair Kaneshiro: Okay and that goes for fuel tax also?
Mr. Shimonishi: Correct. That is the current rate.
Committee Chair Kaneshiro: Okay. Councilmember Yukimura.
Councilmember Yukimura: Are you saying, Ken, that the red writing does
not apply? The wording? The narrative?
Mr. Shimonishi: I am saying that the "increase" does not apply.
Councilmember Yukimura: But the $0.02 per pound is?
Mr. Shimonishi: Correct, that is the estimate that we have used.
Councilmember Yukimura: Okay. And if we had passed the proposed
increase, what would the revenues have been instead?
Mr. Shimonishi: Approximately $800,000 more.
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Councilmember Yukimura: $800,000 more. Okay.
Mr. Shimonishi: The effective date would have been January of
2016, so it would have been a half-year impact.
Councilmember Yukimura: I see. And then you had subsequent increases for
the next year. So there would be that downward spiraling without it...without the bill.
Mr. Barreira: Councilmember, the projected revenues were all
reflected within the presentation.
Councilmember Yukimura: Yes, I know, I just do not have it in front of me.
Thank you.
Committee Chair Kaneshiro: Steve, refuge revenue...Federal Refuge Revenue
Act. That is in the Highway Fund? Do you know what that is for? Councilmember
Yukimura?
Councilmember Yukimura: I am guessing that is what I was vaguely
recalling, for the traffic that goes to the refuge, the national wildlife refuge. Is there a way
to verify what that is?
Mr. Shimonishi: Yes, we can look at that. Thank you.
Councilmember Yukimura: I mean, it would be good to find out what it really
stands for. Because maybe it has not been updated for years. And maybe we have the right
to more, you know, based on whatever formulas in the Federal law. So it would be
worthwhile to check, I think. Thank you.
Committee Chair Kaneshiro: Any further questions on page four? We will
move on to page five. Between page four and page five we are starting to get into the
individual funds, Liquor Fund, Beautification Fund. I know that we have those on our
revenue sheets also. So if you want to use that as a reference. Any questions on page five
"revenues?"
Councilmember Kuali`i: What about just a basic description of the
acronyms. TCD/RPA. Top line.
Committee Chair Kaneshiro: That is the very top line of page five. Account
description. The acronym TCD/RPA?
Mr. Shimonishi: I do not think the RPA applies, but I am
guessing TCD is "Certificate of Deposit." Basically our estimates for interest earned.
Committee Chair Kaneshiro: Councilmember Yukimura.
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Councilmember Yukimura: The Beautification Fund is used for?
Mr. Shimonishi: I believe that is used in...with our derelict auto
recycling contract.
Councilmember Yukimura: This is about how much it costs to take care of
derelict automobiles every year?
Mr. Shimonishi: Yes.
Councilmember Yukimura: I know once I explored tagging on a...every time
you register a car, or a new car, tagging on a disposal fee.
Mr. Shimonishi: This is generated from that, in fact...I believe it
is $5.00 a vehicle. Yes.
Councilmember Yukimura: Okay. In some states they get it back and it has
to be more than $5.00, probably, but they get it back when they show their car has been
properly disposed of. To encourage proper disposition. It is a complicated thing. I do not
think I have ever solved that.
Committee Chair Kaneshiro: Any further questions on page 5? We will move
on to page 6. I got confirmation the Refuge Act was for the Kilauea Lighthouse.
Councilmember Yukimura: That is good to know, but what is the rate?
Committee Chair Kaneshiro: If there is more money available?
Councilmember Yukimura: Yes.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: On the Open Space Fund, there is no figure.
Mr. Shimonishi: That is correct. There is no revenue, I guess,
generated from the Open Space.
Councilmember Yukimura: Right.
Mr. Shimonishi: But we do a contribution, obviously, from the
General Fund, but as far as actual revenues, yes.
Councilmember Yukimura: So there is a...what do you call it? That would be
the amount that is in the fund, but not revenues generated.
Mr. Shimonishi: The amount in the fund and the annual
contribution by ordinance.
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Councilmember Yukimura: And the Open Space Fund does not get the
interest to the money?
Mr. Shimonishi: I guess it has not been recorded in there.
Councilmember Yukimura: But it does?
Mr. Shimonishi: Not according to the information that is
currently...
Councilmember Yukimura: Not according to the ordinance. The ordinance
does not direct it?
Mr. Shimonishi: I have to guess not, but we would have to check.
Councilmember Yukimura: What about the Highway Fund? Does the
Highway Fund get interest on its money? Does that go back into the Highway Fund, or
does it go into the General Fund? You have to come up.
Mr. Shimonishi: It is a revenue item on page four. If you look,
there is an interest line on there.
Mr. Spanski: With respect to the Highway Fund it goes to the
Highway Fund. Right now there are no investments with the Open Space Fund. It is just
sitting out there in the bank.
Councilmember Yukimura: So there is no interest?
Mr. Spanski: I am also using that...ma'am I am using
everything. We have a cash flow position. So what is in the bank...
Councilmember Yukimura: You are using our Open Space Fund for cash
flow?
Mr. Spanski: It is there. Yes, it is there. And it is...I think I
want to say $4.9 million sitting there.
Councilmember Yukimura: Interesting.
Mr. Spanski: Now if you request, I can make an investment
with that? Do you have any time frame you are going to use that money?
Councilmember Yukimura: That is what would be relevant, yes.
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Mr. Spanski: Correct. I would need to know...do you want me
to roll it every month? Do you want me to put it out there for five years? Do you want me
it put it out for two?
Councilmember Yukimura: You handle the Highway Fund per a statute?
Mr. Spanski: I am only investing our Highway Fund moneys,
what the County collects.
Councilmember Yukimura: Only the County's moneys?
Mr. Spanski: Yes.
Councilmember Yukimura: Because State Highway Funds goes to the State?
Mr. Spanski: That is correct.
Councilmember Yukimura: Is there a mandate or directive in the law or a
decision that you make, based on all of the things that you have to balance?
Mr. Spanski: Well, if you look at your own Council resolution,
and you look at...
Councilmember Yukimura: Okay.
Mr. Spanski: And you look at State law HRS 46-50, everything
goes to the General Fund except for specific funds. If you read the language. I do not have
it in front of me, but it is out of our own County resolution and State statute 46-50. Which
is investment of County moneys.
Councilmember Yukimura: Okay, thank you.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: How much revenue would be generated if that
was put into the minimum?
Mr. Spanski: It depends. You want to put it out 3 months you
get about 1 basis-point, six months, 2 basis-point.
Councilmember Hooser: A basis-point is a percentage of interest?
Mr. Spanski: Right. Say for example, if I invested $20 million
at 10 basis-points, it would generate $20,000 in interest for a year.
Councilmember Hooser: So this is $5 million.
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Mr. Spanski: Approximately.
Councilmember Hooser: And six months would get it 2%?
Mr. Spanski: No, two basis-points.
Mr. Hunt: 2/100th of a percent.
Councilmember Hooser: Okay. Right. Is that the problem of having too
much money?
Mr. Spanski: No, it is just that I have never...I have...someone
has to clue me in on when they want to use their money.
Councilmember Yukimura: You need direction and parameters.
Mr. Spanski: Exactly. If someone says Dave, take this out and
I am going spend so much in six months, so much in a year, and I will ladder it out in that
proportion or I can take out the $5 million and have $1 million this year, $1 million last
year. But I have a cap with State ordinance.
Councilmember Hooser: My question was not critical of the management,
but how little 2 basis-points is?
Mr. Spanski: That is the reality we are in currently.
Councilmember Hooser: Thank you.
Committee Chair Kaneshiro: Councilmember Chock.
Councilmember Chock: Are we limited in the investment choice?
Mr. Spanski: Yes, we are. We are limited to buy only debt
instruments only, if you will. You know, for example, could you guys, someone is going to
bring up the ERS gets 4% return or 5%, they can buy equities and stocks. We can only buy
CDs and the acronym of the RPA is a repurchase agreement. And we can buy government-
sponsored agencies, Freddie Mac, Federal Home Loans, those are the types of investments
we can use. We can also use commercial paper from a State point, but we have not put that
in our resolution. But again, it is getting very minimal stuff that is only less than 90 days.
Our duration cap is 5 years and cannot go out longer than five years. For money not
immediately available for use.
Councilmember Yukimura: Not needed.
Mr. Spanski: Correct.
•
April 9, 2015
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Councilmember Chock: Do we have the parameters written so can I
review?
Mr. Spanski: The parameters?
Councilmember Chock: Yes, for the options that you are talking about.
Mr. Spanski: I do not have our County resolution number, but
you can look at State statute 46-50.
Councilmember Chock: 46-50.
Mr. Spanski: And they will list them or I can E-mail them to
you.
Councilmember Chock: Mahalo. Thank you.
Councilmember Yukimura: If we could make that a request, so we can all get
that info.
Mr. Spanski: I think I have done that almost every year.
Someone has to have it.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: Steve that is the value of going page by page,
Chair. But these are relevant questions and it is just that we do not...the only time we
focus on this is during budget and we go on to other things, but thank you for bearing with
us. I want to ask Dave, is there a more conducive or facilitative frame work for investments
that you would suggest in terms of changes to the statute or resolution? I mean are there
new instruments that were not even anticipated at the time the statutes were created?
Mr. Spanski: There are some in there that have got either the
State and some of the counties in a lot of trouble.
Councilmember Yukimura: Yes, I do not want those.
Mr. Spanski: Auction rate securities.
Councilmember Yukimura: No.
Mr. Spanski: What is there, that is what is out there. There is
nothing...it is just that the rates are so poor.
Councilmember Yukimura: Yes, right now and that is not due to the policy.
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Mr. Spanski: If you are saver, it is not good. If you are a
borrower, it might be good. But right now, the rates are so low, it is not good for savings.
You are losing based upon even small as inflation is now, you are still losing out. Because
as far as we can go out five-year treasuries at 535. I think (inaudible) is 560.
Councilmember Yukimura: But if we are not doing it at all, we are losing,
too. If it is money that will not be spent within certain...
Mr. Spanski: Right. Again, we have our portfolio at the end of
the March is $157 million. That is all in, counting Water, and some of our bond money.
Reserves is probably $98 million. Again, you have got to think now our burn rate is $20
million a month. That is how much we spend a month and again you have to understand
your cash flow, peaks are February and August and run negative ten months out of the
year. So we front the money and have to spend-down. Say for example probably you
probably have cash flow position probably $20 million in the black because we had property
collections in February, but now historical in April we ran about a $7 million deficit in
May...there is $20 million in the negative. Cash flows, revenues versus expenses.
Councilmember Yukimura: Thank you.
Committee Chair Kaneshiro: Any further questions on page 6?
Councilmember Chock.
Councilmember Chock: Just wanted to clarify. I see the Spouting Horn
vendors in General and in Parks. I just want to make sure it is in the right...I am
assuming it is in the right place there.
Mr. Shimonishi: Yes. So the 209 Fund number, which is in the
left column is the fund that Councilmember Yukimura was referring to. This is a special
fund set up for the Parks Improvement and Maintenance for those vendors that generate
the rental income out in Spouting Horn and those funds are available for R&M
improvements in our parks.
Councilmember Chock: Okay. I see the General Fund as well. Thank
you.
Committee Chair Chock: Councilmember Yukimura.
Councilmember Yukimura: So about that 209 Fund, if we had not passed the
ordinance that is now governing it, this would not even be on this sheet, right?
Mr. Shimonishi: That is correct.
Councilmember Yukimura: It would be $300,000 that we would not even look
at in terms of revenues or expenditures. So by passing the ordinance that brought it back
under the budget and under Council purview, we now understand what is happening in
terms of the money that is coming in and how it is being used.
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Mr. Shimonishi: I would also point out that it is included in the
CAFR. All of the funds are. So there is that vehicle as well, that we look at all of the
revenues in and out of the County, again is in the CAFR. I understand Councilmember
Yukimura's position that it is not being, I guess, appropriated specifically in that manner,
but that has been corrected.
Councilmember Yukimura: So you are saying that even if we did not have
the ordinance, that now regulates this, even though it was not...it would not be printed or
shown here as "revenues" it would always be disclosed in the CAFR?
Mr. Shimonishi: That is correct.
Councilmember Yukimura: But we would not have a say in terms of how it
would be spent.
Mr. Shimonishi: Well, again, it was how the ordinance was
originally passed.
Councilmember Yukimura: Right.
Mr. Shimonishi: That provided that vehicle to the Administration.
Councilmember Yukimura: Right. And it is kind of two ways we can treat
funds, if you will, income. We can say it goes straight to the department for whatever
purpose specified into the ordinance or we can say it needs to be shown every year.
Mr. Barreira: If you look, Councilmembers, at the proposed
revenue or the existing revenue, in the 209, you can anticipate that looking at a
comparative analysis that number is going to stay relatively low for the next several years
because the concession contract runs for five years. The numbers did come in much lower
the last time we did award those bids.
Councilmember Yukimura: The Parks' intention to renovate the booths may
lead to higher bids. I do not know. To me it better if we are going to invest in it.
Mr. Barreira: As Mr. Spanski noted a lot is market-driven and
making it a more attractive area. And that would not occur until the current contracts
expire, which is several years out.
Councilmember Yukimura: Thank you.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: On the Spouting Horn. Why is it not the tenant's
responsibility to do their improvements? It seems fairly common in commercial leasing
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that you lease a space and they come in and build it out and it is all part of the contract?
Why are we incurring that obligation?
Mr. Barreira: I can only say that is part of the provisions
within the solicitation document now. I would like to refer that question to Mr. Rapozo,
who could probably comment more intelligently on it. You are right, in the private sector
that is common place. The improvements become the possession of the land owner.
Committee Chair Kaneshiro: Any further questions for page six? We will
move on to page seven. Any questions on page seven? I am looking at this, but I am also
looking at...we have another sheet that the Council prepared for us and we have Golf Fund
and contribution from General Fund of $1.2 million. Is that how much we are subsidizing
the Golf Fund?
Mr. Barreira: That is correct, Chair, for this year, for Fiscal
Year 2016.
Committee Chair Kaneshiro: And for Kalepa Housing, we need to put in fund
balance? Do we need to subsidize Kalepa also?
Mr. Shimonishi: No, we do not subsidize any of the Housing
funds.
Committee Chair Kaneshiro: Okay. Councilmember Yukimura.
Councilmember Yukimura: That is a great observation, and I am very proud
of the Housing Agency that they have set it up so we are not subsidizing it on an on-going
basis. They put aside reserves. I know now they are looking at some rent increases, just
like a lot of our divisions are looking at updating their fees. Because you have to do that
and there is always the limit on affordable housing that it cannot be more than 30% of
household income. So it is not like you can raise it beyond what people can pay. But it is
good management. It is good management.
Committee Chair Kaneshiro: Councilmember Hooser.
Councilmember Hooser: So is there a reserve fund for Kalepa for
depreciation and repairs? How much is that?
Mr. Shimonishi: I do not have that information off the top of my
head, but I am sure Housing could respond to that.
Councilmember Hooser: Is it millions? It kind of goes with the question of
the Open Space Fund, if it is a whole bunch of money sitting around, using it for cash flow
or using it for investing and income-production?
Mr. Shimonishi: I think any of those reserves would be specific to
the facilities that they manage.
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Councilmember Hooser: Just like the Open Space Fund. I understand
that. I am just saying that the Open Space Fund is used for cash flow apparently.
Mr. Spanski: In regards to the Open Space Fund, it is a fund.
Kalepa is also a fund, but has a dedicated bank account where everything is run out of
there. Off top of my head Pa'anau has $1 million, maybe $1.6 and I think Kalepa has $2.9
million, that is used only for housing expenses.
Councilmember Yukimura: Repairs, replacements?
Mr. Spanski: Right, and back again to Kalepa...Open Space,
years ago you had an Open Space Committee and they would call me in and at one point
talking about floating bonds, and at that time there was about $1.5 million and I had that
invested and they were talking about that. So I pulled it out and put it back in its fund and
I have not touched it since. Somebody has to give me direction of what you want to do with
that money and I can do that. You have a Section 8 bank account, you have a Housing and
Community Development bank account. You have a Pa'anau and you have Kalepa.
Councilmember Hooser: Are those bank accounts limited to the projects
that generate the income?
Mr. Spanski: That is correct.
Councilmember Hooser: And that is a part of the regular budgeting
process? If they are going to do improvements that will be reflected in their overall budget?
Mr. Spanski: That would be within their budget, nothing from
this panel, I believe. I want to say they are like a self-sufficient fund, theoretically like the
Golf Course is supposed to be self-sufficient, like a business. I am just thinking of the bank
accounts, because I see those. But I do not operate...I do not use their money. That is
strictly for Housing.
Councilmember Hooser: Thank you very much.
Committee Chair Kaneshiro: Councilmember Yukimura.
Councilmember Yukimura: So I just want to share when our Housing
Advisory Committee did a tour of all of the affordable housing projects and we spent one
day we spent going south and west and the other going north and east. There is a real
difference between State housing projects and County houses because some of the State
houses were boarded-up and looked really shabby and thanks to Sandra Kouchi, who is now
retired, she made a lot of noise and they have been fixing up the State housing. That is
because they did not have a fund and they did not put aside reserves. So it took a huge
appropriation, I think, of General Fund moneys from the Legislature and very expensive,
because they did not do preventative maintenance and just replaced. Across from Kalaheo
School there was a complete rental all boarded-up and now I see it is fixed and people are
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Revenue Forecasting (ss)
Page 41
living in it. It was a very big difference between how the County was managing its housing
and how the State has been managing its housing. So our Housing Agency really deserves
a lot of credit for think very good management.
Committee Chair Kaneshiro: Councilmember Kuali`i.
Councilmember Kuali`i: A separate item. I am just curious...on the same
page.
Committee Chair Kaneshiro: Okay. Because I need to take a caption break,
also. We will take a 10-minute caption break.
There being no objections, the Committee recessed at 11:01 a.m.
The Committee reconvened at 11:11 a.m., and proceeded as follows:
Committee Chair Kaneshiro: Welcome back. We will continue where we left
off. We are on page seven. Councilmember Kuali`i.
Councilmember Kuali`i: I think it is a fairly simple question. Having to
do with the Golf Fund and the different revenue. I noticed that the green and locker fees
are one line item for $937,000. But the golf cart concession is a separate line item for
$144,000. Is it because the golf cart concession is handled by subcontractor, a vendor?
Mr. Shimonishi: Correct.
Councilmember Kuali`i: And we handle the green and locker fees?
Mr. Shimonishi: Yes.
Councilmember Kuali`i: Do they go hand in and hand or you choose to
pay for green and not locker fees?
Mr. Shimonishi: You can just pay for the green fee and walk the
course.
Councilmember Kuali`i: It would be interesting to see how the $937,000
breaks down into the amount that is for greens and the amount that is for locker fees? Do
you know that?
Mr. Shimonishi: We would have to check with Parks on the split,
on greens versus locker fees.
Councilmember Kuali`i: Yes, if you could find out. Thanks.
Committee Chair Kaneshiro: Any further questions on page seven and we will
say the final page eight, because page seven is Kalepa Housing and page eight is Pa'anau.
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Revenue Forecasting (ss)
Page 42
So any questions on the remaining pages that we have? If there are no further questions, I
just want to make a statement that the Administration has informed us throughout the
year coming up they will be looking at fees such as park fees and other things, and
maybe...they have taken the advice that we have mentioned in the other meetings about
charging electrical costs or charging a water cost to it? I know they said they have things to
vet out on their side as far as speaking with the community about these fees before they
bring it up here. So we can be anticipating some changes in fees. Because I think the fees
have not been changed in a while for many items. Not to say that they going to change
every single fee, but looking at particular fees that are older and should be updated or
maybe taken into consideration, electrical and water charges. So we can be anticipating
that in the future. Councilmember Yukimura, you wanted to say something?
Councilmember Yukimura: Yes. It is very commendable that the
Administration is systematically looking at fees. Because I think about three years ago,
when we raised the vehicle registration fee, and even our planning fees. We had not raised
them for like 25 years and it is a disservice to our needs for revenues and our need to at
least make services pay for themselves wherever they can. And it is also a disservice to the
fee-payers, because to give them such huge jumps is not right. And I want to commend the
Transportation Agency, which has been taking into account and based on our Multi-Modal
Land Transportation Plan has a systematic way to raise fees over the years, to make sure
that we are not falling behind. I had something else to say, but that was it to fees.
Committee Chair Kaneshiro: I am going to finish the meeting.
Councilmember Yukimura: May I?
Committee Chair Kaneshiro: Yes.
Councilmember Yukimura: I wanted to thank the gentlemen here and the
Managing Director and the Mayor for this briefing, because even with all of this emphasis
on cost-cutting, revenues is an integral part of a budget and we have to look at those, that
side of it, too. So it is very, very important. And I appreciate the detailed briefing that you
have given us. Thank you, back there, Dave, too. Your knowledge is very impressive and
we have appreciated it today. I want to thank my colleagues around the table for being
here, one, so we would have a quorum and two, so we would also...this is such an
important part of the budget. And there are a lot of pieces to understand. Thank you,
Chair, for your excellent management of the meeting.
Committee Chair Kaneshiro: Thank you. I could not do it without you as well.
So thank you for being prepared with questions and we have been running...I would like to
say a smooth meeting. So I appreciate it and thank you for coming out. At this time I
would like to recess the Departmental Budget Reviews and we will reconvene at 9:00 a.m.
tomorrow, Friday, April 10th, 2015 and have the review of the Department of Finance and
the contract for the Kaua`i Humane Society.
There being no objections, the Committee recessed at 11:16 a.m.