HomeMy WebLinkAbout11/06/2019 Council minutes COUNCIL MEETING
NOVEMBER 6, 2019
The Council Meeting of the Council of the County of Kaua`i was called to order
by Council Chair Arryl Kaneshiro at the Council Chambers, 4396 Rice Street,
Suite 201, Lillie, Kaua`i, on Wednesday, November 6, 2019 at 8:38 a.m., after which
the following Members answered the call of the roll:
Honorable Mason K. Chock
Honorable Felicia Cowden
Honorable Luke A. Evslin
Honorable Ross Kagawa
Honorable KipuKai Kuali`i
Honorable Arryl Kaneshiro
Excused: Honorable Arthur Brun
APPROVAL OF AGENDA.
Councilmember Chock moved for approval of the agenda, as circulated,
seconded by Councilmember Kuali`i.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify on the agenda?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none. Any final comments from the
members?
The motion for approval of the agenda, as circulated, was then put, and
carried by a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: The motion is carried. Next item, please.
MINUTES of the following meetings of the Council:
October 23, 2019 Public Hearing re: Bill No. 2740, Bill No. 2741,
Bill No. 2742, Bill No. 2743, Bill No. 2744, and Bill No. 2745
Councilmember Chock moved to approve the Minutes as circulated, seconded
by Councilmember Cowden.
COUNCIL MEETING 2 NOVEMBER 6, 2019
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
the Minutes?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none. Any final comments from the
members?
The motion to approve the Minutes, as circulated, was then put, and carried
by a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: The motion is carried. Clerk, please read the
next item. Consent Calendar. May I have a motion to remove C 2019-239 from the
Consent Calendar?
Councilmember Kuali`i moved to remove C 2019-239 from the Consent
Calendar, seconded by Councilmember Chock.
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Anyone in the audience wishing to testify?
Seeing none. We are moving this item off the Consent Calendar so that we can
discuss it.
The motion to remove C 2019-239 from the Consent Calendar, was then put,
and carried by a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: The motion is carried.
CONSENT CALENDAR:
C 2019-238 Communication (10/25/2019) from the Director of Finance,
transmitting for Council consideration, a Resolution providing for the issuance of
special tax revenue bonds for public facilities relating to County of Kaua`i Community
Facilities District No. 2008-1 (Kukui`ula Development Project), for the purpose of
funding the costs of public facilities relating to the District, including the costs of
certain transportation improvement projects in Koloa and Po`ipu as identified in
Figure 4-4 of the South Kaua`i Community Plan and Pa'anau Village Phase I & II
energy self-sufficiency upgrades through the issuance of special tax revenue bonds
payable solely from and secured solely by special taxes levied on taxable properties
within the District pursuant to Chapter 26 and certain funds held in trust for the
bondholders under the bond indenture.
Councilmember Kuali`i moved to receive C 2019-238 for the record, seconded
by Councilmember Chock.
COUNCIL MEETING 3 NOVEMBER 6, 2019
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
the Consent Calendar?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, any final comments from the
members? We will be seeing this as a resolution later on our agenda. Any comments?
The motion to receive C 2019-238 for the record was then put, and carried by
a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: The motion is carried. Next item, please.
COMMUNICATIONS:
C 2019-239 Communication (10/24/2019) from the Director of Finance,
transmitting for Council information, the Condition of the County Treasury
Statement quarterly report as of August 9. 2019: Councilmember Chock moved
to receive C 2019-239 for the record, seconded by Councilmember Kuali`i.
There being no objections, the rules were suspended.
Council Chair Kaneshiro: Reiko, you will probably need to come up.
Councilmember Cowden, you have questions on the Treasury report?
Councilmember Cowden: Yes. Good morning.
REIKO MATSUYAMA, Director of Finance: Good morning.
Councilmember Cowden: I want to first thank you for all of the hard
work that you are doing and recognize that as we switch from one Administration to
the next, there is always a little bit of turbulence. Thank you for meeting with me
periodically on this. Can you just explain briefly what we are seeing here?
Ms. Matsuyama: This is mandatory for us to submit every
quarter to you folks.
Councilmember Cowden: Yes.
Ms. Matsuyama: This is to show you how much cash and how
many investments are basically on-hand at the County at any given point in time.
This is an audit done randomly. Treasury does not know that they are coming down
to do a cash count. Someone from Council Services and someone from Accounting
actually goes down and counts all the drawers to ensure that there is what we say
there is down there. We also have to make sure that we are in balance according to
what the general ledger (GL) says and what is actually in the bank accounts.
COUNCIL MEETING 4 NOVEMBER 6, 2019
Councilmember Cowden: GL means?
Ms. Matsuyama: General ledger.
Councilmember Cowden: Okay, so I noticed that we have a negative
cash variance in both our investment and just our cash account. Can you just explain
that?
Ms. Matsuyama: Yes. What this shows is the last quarter that
you folks had seen was May 7, 2019. The next quarter that you are seeing is
August 9, 2019. There was a decrease in cash between May 7, 2019 and
August 9, 2019. We did have semi-annual debt payments that occurred during that
period. That probably was a big factor in the decrease in cash holdings.
Councilmember Cowden: Our cash flow is sitting pretty solid and
comfortable, basically?
Ms. Matsuyama: Yes. Keep in mind that August 9, 2019 is
right before the real property tax deadline. From August 9, 2019 through
August 20, 2019, we received a significant amount of cash.
Councilmember Cowden: Okay, thank you.
Council Chair Kaneshiro: Councilmember Kagawa.
Councilmember Kagawa: Thank you, Reiko. During the audit I think
the Auditors said that we had some problems doing regular bank reconciliations or
something like that.
Ms. Matsuyama: Yes. This was a finding in the Fiscal
Year (FY) 2018 Comprehensive Annual Financial Report (CAFR). Basically, we had
not even submitted these reports to you on a quarterly basis. I do not think you got
any reports in FY 2018 until the end of FY 2018. We are correcting it. This should
not be a finding come FY 2019.
Councilmember Kagawa: Are we all caught up? Or are we still catching
up?
Ms. Matsuyama: We are still catching up. We are in a much
better position than we were.
Councilmember Kagawa: Like how far back are we? A year? Six (6)
months?
Ms. Matsuyama: No. Closer than that. We are in FY 2020 now.
That is a good thing. FY 2019 is just about closed and we are ready to do the CAFR.
Councilmember Kagawa: Thank you.
COUNCIL MEETING 5 NOVEMBER 6, 2019
Council Chair Kaneshiro: Any other questions from the members?
Councilmember Cowden.
Councilmember Cowden: Not for right now. We will have a more robust
conversation in about a month. I just want to thank you for all the work that you
have been doing and I have been paying attention as we have been going along.
Ms. Matsuyama: Good. Thank you.
Council Chair Kaneshiro: Thank you. Anyone in the audience wishing
to provide testimony? Seeing none.
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, is there any further discussion
from the members?
The motion to receive C 2019-239 for the record was then put, and carried by
a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: Motion carried. Next item, please.
C 2019-240 Communication (10/04/2019) from the Prosecuting Attorney,
transmitting for Council consideration, A Bill For An Ordinance Amending Ordinance
No. B-2019-856, As Amended, Relating To the Operating Budget Of The County Of
Kaua`i, State Of Hawai`i, For The Fiscal Year July 1, 2019 Through June 30, 2020, By
Revising The Amounts Estimated In The General Fund, to reallocate a portion of
funding in the "Regular Salaries" account appropriated for Position No. 2804, Victim
Witness Counselor II, to other Victim Witness Counselor II positions, identified in the
Operating Budget as Position Nos. 2824 and 2825: Councilmember Chock moved to
receive C 2019-240 for the record, seconded by Councilmember Kuali`i.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, again this is just the
Communication. The Bill will be coming up later on the agenda. Any comments from
the members?
COUNCIL MEETING 6 NOVEMBER 6, 2019
The motion to receive C 2019-240 for the record was then put, and carried by
a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: Motion is carried. Next item please.
C 2019-241 Communication (10/21/2019) from the Mayor, transmitting for
Council consideration, the cost items for the Hawai`i Government Employees
Association (HGEA) Bargaining Unit 13 for the period July 1, 2019 to June 30, 2021,
pursuant to Hawai`i Revised Statutes (HRS) Section 89-11 and Kauai County Charter
Section 19.13B. The terms of the Collective Bargaining Agreement were recently
ratified by the employees of Bargaining Unit 13: Councilmember Chock moved to
receive C 2019-239 for the record, seconded by Councilmember Kuali`i.
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
this Communication?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none. Any comments from the
members?
The motion to receive C 2019-241 for the record was then put, and carried by
a vote of 6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: Motion is carried. Next item.
SCOTT K. SATO, Deputy County Clerk: The next item are Claims.
CLAIMS:
C 2019-242 Communication (10/16/2019) from the County Clerk, transmitting
a claim filed against the County of Kaua`i by Anne Laurel Bennett, for personal
injury, pursuant to Section 23.06, Charter of the County of Kaua`i.
C 2019-243 Communication (10/21/2019) from the County Clerk,
transmitting a claim filed against the County of Kaua`i by Margret Louise Gullikson,
for personal injury, medical bills, and loss of income, pursuant to Section 23.06,
Charter of the County of Kaua`i.
C 2019-244 Communication (10/24/2019) from the County Clerk,
transmitting a claim filed against the County of Kauai by Gregory T. Preston, for
damage to his personal property, pursuant to Section 23.06, Charter of the County of
Kaua`i.
C 2019-245 Communication(10/24/2019) from the County Clerk, transmitting
a claim filed against the County of Kaua`i by Norm J. Canis, for reimbursement to
remove dead animal carcass, pursuant to Section 23.06, Charter of the County of
Kaua`i.
COUNCIL MEETING 7 NOVEMBER 6, 2019
Councilmember Chock moved to refer C 2019-242, C 2019-243, C 2019-244,
and C 2019-245 to the Office of the County Attorney for disposition and/or
report back to the Council, seconded by Councilmember Kuali`i.
Council Chair Kaneshiro: Councilmember Kagawa, did you have a
question?
Councilmember Kagawa: Just a comment on C 2019-245. It looks like
it was a dead animal carcass on the road.
Council Chair Kaneshiro: This one was washed up on the beach.
Councilmember Kagawa: It was washed up on the beach? Okay. I
thought it was having to do with being on the road. The animal that they were talking
about was what kind of animal?
Council Chair Kaneshiro: A horse.
Councilmember Kagawa: A horse that washed up on the beach?
Council Chair Kaneshiro: Yes.
Councilmember Kagawa: Interesting. Thank you.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify on these items?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
The motion to refer C 2019-242, C 2019-243, C 2019-244, and C 2019-245 to
the Office of the County Attorney for disposition and/or report back to the
Council was then put, and carried by a vote of 6:0:1 (Councilmember Brun was
excused).
Council Chair Kaneshiro: Motion carried. Next item.
COMMITTEE REPORTS:
PUBLIC WORKS & VETERANS SERVICES COMMITTEE:
A report (No. CR-PWVS 2019-07) submitted by the Public Works & Veterans
Services Committee, recommending that the following be Approved as Amended on
second and final reading:
"Bill No. 2743 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 25, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING
TO WASTEWATER TREATMENT CAPACITY ASSESSMENT,"
COUNCIL MEETING 8 NOVEMBER 6, 2019
A report (No. CR-PWVS 2019-08) submitted by the Public Works & Veterans
Services Committee, recommending that the following be Approved as Amended on
second and final reading:
"Bill No. 2744 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 12, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING
TO BUILDING PERMIT FEES,"
Councilmember Chock moved for approval of the reports, seconded by
Councilmember Kuali`i.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify on this?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
The motion for approval of the reports was then put, and carried by a vote of
6:0:1 (Councilmember Brun was excused).
PLANNING COMMITTEE:
A report (No. CR-PL 2019-14) submitted by the Planning Committee,
recommending that the following be Approved as Amended on second and final
reading:
"Bill No. 2740 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 8, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO
ADDITIONAL RENTAL UNITS,"
A report (No. CR-PL 2019-15) submitted by the Planning Committee,
recommending that the following be Approved on second and final reading:
"Bill No. 2741 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 11A, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING
TO ENVIRONMENTAL IMPACT ASSESSMENT ON LAND
DEVELOPMENT,"
Councilmember Chock moved for approval of the reports, seconded by
Councilmember Kuali`i.
Council Chair Kaneshiro: Sorry, I had my paper halfway up, so I only
saw Planning. The previous reports were for the Public Works & Veterans Services
Committee. This is for the Planning Committee Reports. Is there anyone in the
audience wishing to testify on this?
COUNCIL MEETING 9 NOVEMBER 6, 2019
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Any final discussion from the members?
The motion for approval of the reports was then put, and carried by a vote of
6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: Motion carried. Next item.
HOUSING & INTERGOVERNMENTAL RELATIONS COMMITTEE:
A report (No. CR-HIR 2019-02) submitted by the Housing &
Intergovernmental Relations Committee, recommending that the following be
Approved on second and final reading:
"Bill No. 2742 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 6, ARTICLE 9, KAUAI COUNTY CODE 1987, AS
AMENDED, RELATING TO THE HOUSING DEVELOPMENT FUND,"
Councilmember Chock moved for approval of the reports, seconded by
Councilmember Kuali`i.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify on the Committee Report for the Housing & Intergovernmental Relations
Committee?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, any final discussion from the
members?
The motion for approval of the report was then put, and carried by a vote of
6:0:1 (Councilmember Brun was excused).
Council Chair Kaneshiro: Next item.
COUNCIL MEETING 10 NOVEMBER 6, 2019
RESOLUTION:
Resolution No. 2019-54—RESOLUTION APPROVING THE ISSUANCE OF
UP TO $23,000,000 AGGREGATE PRINCIPAL AMOUNT OF SPECIAL TAX
REVENUE BONDS OF THE COUNTY OF KAUAI FOR THE COUNTY'S
COMMUNITY FACILITIES DISTRICT NO. 2008-1 (KUKUI`ULA DEVELOPMENT
PROJECT); AUTHORIZING THE APPLICATION OF THE PROCEEDS OF THE
BONDS, TOGETHER WITH CERTAIN OTHER AVAILABLE FUNDS, TO FUND
THE COSTS OF CERTAIN FACILITIES RELATING TO SUCH DISTRICT;
APPROVING THE FORMS OF THE FIRST SUPPLEMENTAL TRUST
INDENTURE, SECOND AMENDMENT TO ACQUISITION AND FUNDING
AGREEMENT, PRELIMINARY OFFICIAL STATEMENT, BOND PURCHASE
AGREEMENT AND CONTINUING DISCLOSURE AGREEMENTS RELATING TO
THE BONDS; CLARIFYING CERTAIN MATTERS RELATING TO THE RATE AND
METHOD OF APPORTIONMENT FOR THE DISTRICT;AND AUTHORIZING THE
TAKING OF FURTHER ACTIONS RELATING TO THE BONDS AND THE
DISTRICT: Councilmember Chock moved for adoption of Resolution No. 2019-54,
seconded by Councilmember Kuali`i.
Council Chair Kaneshiro: I will suspend the rules. I believe there is a
presentation. We will hold all of our questions until after the presentation.
There being no objections, the rules were suspended.
Ms. Matsuyama: Reiko Matsuyama, Director of Finance. This
is the Community Facilities District (CFD) that we have been talking to you folks
about for the last six (6) months or so. This is to approve the Resolution. I know you
folks received hundreds of pages of information to read. Basically, there is nothing
new in there that we have not gone over. Our consultants, we have Brian Hirai, who
is our Bond Counsel and Anna Sarabian, who is our Financial Advisor, and they have
prepared a presentation, a high-level presentation, the things we have already talked
about. They will be here to answer questions as well.
BRIAN T. HIRAI, Bond Counsel, McCorriston Miller Mukai & Mackinnon
LLP: Thank you. Chair Kaneshiro, and Members of the Council, I am Brian Hirai
with the law firm of McCorriston Miller Mukai & Mackinnon in Honolulu. It is our
privilege to serve as Bond Counsel to the County in connection with this proposed
issuance. Our role as Bond Counsel is to represent the County in making sure that
the legal proceedings and the documentation complies with both State law,
Chapter 26 of the County Code, and also with the requirements of the Federal tax
laws. If I may, my colleague here, Anna Sarabian, is with the financial advisory firm
of Fieldman Rollap & Associates in California, and they are providing financial
advisory services, because this kind of bond issue depends on ratios, tax levies, and
the like, so they are advising on the financial aspects of the transaction to the County.
If I may, I would like to start with a bit of background just to bring everyone to a
common ground here.
COUNCIL MEETING 11 NOVEMBER 6, 2019
The County is authorized by Hawai`i Revised Statutes (HRS) Section 46-80.1
and also Chapter 26 of the County Code. Those authorities authorizes the County to
establish Community Facilities Districts, referred to as "CFDs," to provide a means
of funding infrastructure projects through the levy of a special tax on properties
within the CFD. The special tax is in addition to the real property taxes and is levied
annual on taxable property within the district bounds based on pre-determined
procedures and formulas which are all part of the background documentation that
formed the district. The collections of this special tax are used either to pay for
infrastructure projects directly or to pay the debt service on special tax revenue bonds
that are issued to fund the project initially. Under this authority, back in 2008, the
County enacted Ordinance of Formation, Ordinance No. 872, referred to as the
Ordinance of Formation which formally established the Kukui`ula CFD and
authorized the levy of taxes for infrastructure projects serving the CFD. At that time,
there were fourteen (14) projects that were identified, proposed by the developer of
the CFD, Kukui`ula and approved by the County, which included four (4) water
projects, transmission lines, reservoirs, et cetera, and eight (8) major road projects.
(Councilmember Kagawa was noted as not present.)
Mr. Hirai: The Ordinance of Formation also reserved to
the County the right to designate additional projects up to fifteen percent (15%) of
the net usable proceeds of bonds or the taxes after all the expenses. Also in 2008, the
County passed Ordinance No. 875 which was the Bond Ordinance which authorized
up to one hundred twenty million dollars ($120,000,000) of special tax revenue bonds
in multiple series to fund infrastructure projects that would serve the district. The
first levy of taxes was in FY 2011-2012 and the first bond float was in May of 2012.
There was a lag between 2008 and 2012 as you may all recall, that was the time of
the recession and the difficulties, especially in the real estate markets.
The first bond float, which was completed in May of 2012 was for a total of
eleven million eight hundred seventy-five thousand dollars ($11,875,000). Let me go
back there. Eleven million eight hundred seventy-five thousand
dollars ($11,875,000.00). The projects proposed by the developer which were
approved for funding with that particular bond issuance were two (2) water projects,
the Piwai Wells and the Oma`o sixteen (16) inch transmission line. The County also,
as I said, had fifteen percent (15%) of the usable, available proceeds for its designated
projects and used that to fund the Kaneioulouma Heiau in the Po`ipu area. The Heiau
complex. There were other projects that were authorized, but that was the principle
one that was funded.
(Councilmember Kagawa was noted as present.)
COUNCIL MEETING 12 NOVEMBER 6, 2019
Scroll forward, the documents that set-up that bond issue allowed for
additional series of bonds to be issued, also secured by the special taxes, provided
that some benchmarks were met, specifically debt service coverage ratios, other taxes
healthy enough to support, and the value-to-lien ratio, which is the valuation of the
properties that are subject to the tax in relation to the tax burden of the bonds or the
taxes that are required to support the bonds. It took us from 2012 to now to come
back before this Council, because as you know, with large developments like that, the
values increase as the development occurs and as properties are sold off to end users,
and related to that, the tax base grows. To be able to safely issue additional bonds,
you have to make sure your special tax base has grown. We are here today, because
through further research and analysis it has been determined that we are in a
position to have the County consider an additional bond issue.
The CFD Bonds, just to be clear, they are different from the County's General
Obligation (GO) Bonds. The CFD bonds or the special tax revenue bonds are secured
solely by the special taxes. They have no claim on the General Fund, so the County
has no liability to fund the bond payments outside of those special taxes. The
responsibilities of the County are limited to levying and collecting the special taxes
annually. The County retains a special tax advisor, one that is very experienced on
the matter to help with the annual levy process. There are also covenants to enforce
delinquency proceedings to make sure that the revenues continue to be sufficient to
support the bond issue. As a result of some Securities and Exchange rules, there are
some continuing disclosure obligations that both the County and the developer are
required to meet. Those are taken care of annually. The security for the bonds are
the CFD special taxes. Because it is a limited recourse just to the CFD special taxes,
we also setup a bond reserve. That is money that is set aside from the bond proceeds
and it is held as a reserve in case there is a temporary shortfall that would be made
up while enforcement proceedings are underway. Capitalized interest is also
available. The tax base gets stronger as more development and more sales occur. To
provide a little more cushion and a safety net, capitalized interest can be funded from
the proceeds of the bonds and used to take care a portion of the debt service and ease
the burden of the special taxes on a temporary basis. CFD taxable property, is
actually part of the security packet, because ultimately, if there is a failure to pay on
the part of a property owner, then there is a foreclosure right and an obligation to
take action when it is material to the safety of the bond issue.
At this point, I would like to turn it over to Anna for some of the financial
aspects of the transaction.
ANNA V. SARABIAN, Principal, Fieldman Rollap & Associates: Thank you,
Brian. Good morning. It is a pleasure to be here again. As Brian mentioned, the
original legal documents authorized subsequent issues for consideration by the
County if certain conditions are met. I will dive into those conditions in a minute
here. I wanted to take a step back and tell you that one (1) of the reasons why, as
COUNCIL MEETING 13 NOVEMBER 6, 2019
Brian explained, we are in front of you having you consider this second bond issue is
because of the development that occurred at the property, and also there are very
favorable bond market conditions. As I am sure you have all followed, the Federal
Open Market Committee cut its interest rates last Wednesday by twenty-five (25)
basis points. They lowered the interest rates. As a result overall this year, we have
seen a lot of issues like the County's, enter the market and take advantage of
attractive interest rates. Just to give you some statistics, the municipal calendar for
this week throughout the entire United States, is estimated that thirteen billion
dollars ($13,000,000,000)worth of bonds was issued by state and local agencies. That
is the supply side. On the demand side, are there investors out there with sufficient
cash available to invest and purchase these bonds? When we talk about those
investors, we focus on municipal bond funds. Those funds reported one billion one
hundred sixty-one million dollars ($1,161,000,000) in net inflows last week. This
means they still have cash coming in and available, sitting there to invest in
municipal bonds. When we issue these bonds, they are issued on a tax exempt basis.
The interest rates for our issue is a term of thirty (30) years. We looked at statistics.
What have thirty (30) year benchmark rates been going back to 2009? For the
thirty (30) year term, only two percent (2%) of the time going ten (10) years back,
rates have been lower than they are today. So very attractive market conditions.
Based on these conditions right now and the ratios that I will cover on the next
few slides, we are at present, looking at issuing approximately nineteen million nine
hundred thousand dollars ($19,900,000) in par size of bonds. Those are currently
projected to generate approximately eighteen million eight hundred thousand
dollars ($18,800,000) in total of net project fund proceeds, fifteen percent (15%) of
which, about two million eight hundred thousand dollars ($2,800,000) are for
County-designated projects.
So, let us jump to the required bond ratios. As Brian explained so eloquently,
these bonds are secured by the property in the district and the special taxes levied on
those parcels. There are certain requirements as summarized here. One (1) of them
is the undeveloped property, when you value that property its value-to-lien, which is
the value of the property divided by the share of bonds attributable to that property,
should be at least 10:1. The developed property, and I will explain what developed
property means. Essentially, that is the property that has a final map issued. That
value-to-lien needs to be at least 7:1. The special taxes being collected from these
kinds of properties together in aggregate should generate at least one hundred ten
percent (110%) coverage of the debt service. Since we met with you earlier this year,
a lot of activities have happened. The formal appraisal by an appraiser to represent
the County was conducted. They appraised the property in the district. As a result
of that appraisal, the value of the property was very strong. That resulted in an
aggregate value-to-lien of almost 19:1. The breakdown between improved and
undeveloped property value is provided here. Very, very strong. To further satisfy
the legal documents requirements, the second bond float is structured so that special
taxes from improved lot property will be covering debt service or will be responsible
for seventy-five percent (75%) of the debt service. The remaining twenty-five
percent (25%) will come from special taxes levied on undeveloped property. As a
result of the mix, as of right now, for FY 2021, the debt service coverage from all of
COUNCIL MEETING 14 NOVEMBER 6, 2019
the taxable property within the boundaries of the district is projected to be over four
hundred percent (400%). Again, this is very strong.
Moving on to next slide, I will hand it back over to Brian.
Mr. Hirai: I would like to take a few minutes to go
through what is being authorized by this Bond Resolution. First of all, it is
authorizing up to twenty-three million dollars ($23,000,000) of special tax revenue
bonds for the Kukui`ula CFD. Again, these are the limited obligation type bonds. The
Director of Finance is authorized to enter into a purchase agreement to sell the bonds
to the public subject to some parameters that are imposed in the Resolution. Again,
twenty-three million dollars ($23,000,000) is the maximum. The maximum interest
rate cannot exceed six percent (6%) per annum. The maximum underwriting
discount, there is an underwriter who will purchase the bonds from the County for
re-offering to investors, and they are compensated by way of a discount off of the full
amount of the bonds, and that is limited to two percent (2%) of the underwriting
discount. Also, there is a requirement that there be certifications from independent
experts verifying that the financial ratios that Anna just went over, have been
complied with. Finally, the maximum maturity, the longest maturity of the bonds
will not exceed thirty (30) years. In fact, the latest maturity cannot be beyond
May 15, 2049.
The Bond Resolution then goes on to approve various documents that relate to
this issue. The original documents authorize additional bonds, but these additional
supplements, if you will, are required in order to implement that broader
authorization.
The First Supplemental Trust Indenture authorizes this specific series of
bonds and the use of the proceeds from this specific series of bonds and establishes
an additional reserve for the debt service.
The Second Amendment to Acquisition and Funding Agreement...Acquisition
and Funding Agreement is the basic document by which the County and the
developer agreed what would be funded, what would be reserved to the County to
designate, and how the funding would occur. The amendments are for a couple of
different purposes. First of all, the Second Amendment extends the period of time
during which special taxes can be used directly to pay for capital improvements or
projects for the district. That has been extended by five (5) years. It had been
January 1, 2024. Under this Amendment, it will be January 1, 2029. There was also
a clarification in the Amendment of how we define net construction proceeds, which
is the net project fund proceeds that Anna referred to that is divided up eighty-
five percent (85%)/fifteen percent (15%)between the developer proposed projects and
the County-designated projects. Finally, it provides for an exchange...this is a
technical matter, as I had said that the original set aside of fifteen percent (15%), the
primary project was the Heiau. Other projects were designated and there were
unexpended moneys...the most expeditious and tax compliant way of dealing with it
is...there is going to be a substitution, we have pending some from the original project
we still owed the developer from proceeds, so we will use the unexpended bond
proceeds for that purpose in exchange for which the developer has ceded to the County
COUNCIL MEETING 15 NOVEMBER 6, 2019
their eighty-five percent (85%) of the special taxes to be collected over the next couple
years until the unexpended proceeds are made up. It is a substitution of funding
sources. It is an issue that needed to be dealt with and this is a tax compliant means
of doing so.
It also approves the Official Statement. The Director of Finance and the Office
of the County Attorney have been involved, along with Anna and myself in going over
this document on behalf of the County. It is the offering document for the bonds,
when they are offered to potential investors. It is a disclosure document as well as a
marketing document. It explains risks and a structure to make sure the buyer knows
what they are purchasing. It will include the appraisal that Anna referred to. As I
had indicated, there are obligations under the Securities and Exchange
Commission (SEC) rules to provide additional disclosure on an on-going basis. There
are two (2) agreements that provide for that. This is done through a dissemination
agent. Currently, that is Bank of New York Mellon Trust that coordinates the filings
of these continuing disclosure statements. They consist of the CAFR annually and
statistical data about the tax base and funds in the indenture.
Finally, there is the Bond Purchase Agreement that is the document that will
officially sell the bonds to the underwriter for re-sale to the public. It is in standard
form with normal securities law disclosures and disclaimers.
The Resolution also authorizes the use of fifteen percent (15%) of the net
construction proceeds to fund designated County projects. Attached to the Resolution
is Exhibit A, which identifies the projects that are eligible for funding out of this
fifteen percent (15%). They are primarily the transportation improvements in Koloa
and Po`ipu as identified the multi-modal network in the South Kaua`i Community
Plan and a number of specific projects are enumerated there. Secondarily, there is
authorization for the Pa'anau Village Phase I and Phase II energy self-sufficiency
upgrades. Those are the kinds of capital projects that are contemplated to be funded
out of the fifteen percent (15%) of the bond proceeds and going forward fifteen
percent (15%) of the tax revenues net usable.
Finally, the Resolution does provide a clarification which bears some
explanation. There are some properties that are exempt from the tax. One (1) of the
kind of properties is the golf course parcels. Unfortunately, what happens is, some of
that land that is used for golf course purposes have not been subdivided. You can
either consider them all golf course or all taxable. Because of the golf course use, they
had been identified as exempt. The taxation was not necessary to support the bonds
up to date. The developer has identified some near term plans for subdivision and
ultimate development of portions of the golf course parcels. For scale, we are talking
about three (3) parcels that are partially used for golf course purposes totaling three
hundred seventy-nine (379) acres, approximately. Of which one hundred
forty-one (141) acres are currently used for golf course purposes. The remaining two
hundred thirty-seven (237) acres are just unimproved. The clarification, because of
the lack of subdivision, it had to be either one (1) or the other. Because of the near
term development plans of the developer, they have requested a clarification and in
fact the clarification results in a reclassification of the golf course parcels to taxable
until such time as they have completed the subdivision. Then, only the golf course-
COUNCIL MEETING 16 NOVEMBER 6, 2019
specific subdivided parcels will then be exempt. That is the purpose of that
clarification...it required a clarification and under the tax levy documents,
clarifications are provided by this Council. Hopefully I have explained that it was a
choice, one or the other, and because of the development plans, the logic sways in the
other direction of treating it as taxable for now.
Ms. Sarabian: So, what are the next steps in the
process...today, we are introducing the Bond Resolution. If the Council moves
forward and adopts the Resolution, the next step is finalizing the Preliminary Official
Statement, which as Brian explained, is the offering document. You could look at it
as the marketing material that is provided to investors describing the project and
explaining the credit worthiness of the bond issue. Once we finalize it, we will have
the underwriter distribute that to various investors. It typically takes two (2) weeks
for their pre-marketing period. They can answer investors' questions and make sure
that they talk to a wide investor base. Based on the current schedule, if we were to
have that Preliminary Official Statement distributed later this week, we are looking
after that two (2) week period of pre-marketing by the underwriter to price the bonds
right around November 21St. That is the date when the actual interest rates and final
size of the bonds will be locked in. Afterwards, it takes two (2) to three (3) weeks to
prepare all the closing documents and create from the Preliminary Official
Statement, the Final Official Statement which essentially just fills in the bond
information, the rates, the bond percent, and updates the tables to reflect the debt
service. Based on current plans, we are looking to close the financing right around
December 17th. It is at the closing when proceeds are available.
Mr. Hirai: The money is in-hand at the closing.
Subsequent to the closing, the bond proceeds are then used for the authorized
projects. The remaining proceeds are deposited into various bond funds. I mentioned
the reserve fund and capitalized interest fund. Special tax levies will go on as they
have in the past. The collections will be used to pay debt service on these bonds as
well as the 2012 bonds. We will continue to monitor the continuing disclosure
obligations and make sure that those disclosures are filed annually. There may be
future bond floats. We are not at that point, on the same kind of basis as we come
before you today, with the developments and the increase in the tax base.
Ms. Sarabian: This slide just shows all of the members of the
financing team. It takes a village to get bond issues in the right shape and form, to
make sure that they are structured appropriately, and to make sure the County's
interests are protected. We would be happy to answer any questions.
Council Chair Kaneshiro: Okay, any questions from the members on
that? Councilmember Cowden.
Councilmember Cowden: Okay, thank you so much. There is a lot of
information in here. I am going to ask a few questions even if they seem simple. You
said we have a great interest rate. I am looking, but what is our interest rate? Did
you tell us what that was?
COUNCIL MEETING 17 NOVEMBER 6, 2019
Ms. Sarabian: I can tell you as of when these numbers were
run, the true interest cost, which is the average rate on the bonds, is about four point
three six percent (4.36%). The rates will be locked in at pricing. These are
preliminary rates based on current conditions. That is why you do not see details,
because the market is changing every day.
Councilmember Cowden: Okay. When we look at this, the capacity that
you could be adding to this goes all the way up to one hundred twenty million
dollars ($120,000,000)? So we have learned during our first bond float, it was
basically the water well and the transmission lines. I keep looking through here
trying to understand what this next twenty million dollars ($20,000,000) is for.
Mr. Hirai: The next twenty million dollars ($20,000,000)
as far as from the developer-proposed...there were fourteen (14) projects that were
approved at the original formation of the district. There are still some unpaid
amounts owed on account of the transmission line. The next project that was teed up
at that point was the Western Bypass Road. They were all pre-identified and so it is
a matter of making sure they are ready to be dedicated, they are up to standards
ready to be dedicated, and actually dedicated, ready for funding.
Councilmember Cowden: Okay, so the Western Bypass Road?
Mr. Hirai: Yes.
Councilmember Cowden: I am thinking that has already been built,
right?
Mr. Hirai: Yes.
Councilmember Cowden: So this would be paying for that?
Mr. Hirai: The Acquisition Agreement if you will, it says
"If the County accepts it, it is agreeing to pay the purchase price subject to the
availability of funds from special tax collections or bond proceeds." It is already owed
and is a payment on account of what is already owed.
Councilmember Cowden: Okay, alright. So when I look at these
numbers, and it says forty-one percent (41%), the taxable amount, or almost forty-two
percent (42%), it is coming from the developer that means Alexander &
Baldwin (A&B), is that correct? Is A&B the developer?
Mr. Hirai: The developer is a joint-venture between A&B
and DMB out of Arizona.
Councilmember Cowden: Arizona, okay.
Mr. Hirai: They are one (1) of the principals.
COUNCIL MEETING 18 NOVEMBER 6, 2019
Councilmember Cowden: So, this is going to be my last question for the
moment. I have two (2) actually, sorry. I presume there is a property owner's
association and all these people are getting taxed, and they are all signed on to this.
They know what is coming up?
Mr. Hirai: Yes. They do. In the original formation of the
district, there were full-disclosures. We made sure all the sales materials had
disclosures and in fact, the properties were all identified in the tax records as being
subject to this tax.
Councilmember Cowden: They have gotten some sort of notice that this
is coming up and there is an increase going on?
Mr. Hirai: Yes. Well, actually, as the tax base has
grown, this is capacity without artificially increasing the taxes.
(Councilmember Kagawa was noted as not present.)
Mr. Hirai: It is just that there are more properties that
are subject to the tax and when a parcel becomes "improved property," that is when
the valuation is determined specifically. Other than these kinds of appraisals that
we do to check on things. The value is established based the purchase price to an end
user or by an estimate if it is still held by the developer pending sale to the end user.
It is at that point that the tax is set. As they have developed more and more
properties and they have become improved properties, there has been this additional
tax, but not on account of the bond issue. It is the other way around. The additional
taxes enable the County to consider another bond issue.
Councilmember Cowden: Alright. Okay. So, thank you. I believe we
covered this in our meeting, but just for the viewers who are listening, in the unlikely
event of the failure of this development...if something happened and for some reason
it did not work, who is taking the loss? It is not the County or the taxpayers?
Mr. Hirai: That is correct. The County though would be
obligated to in a major default to exercise the foreclosure and enforcement remedies.
It would not be out of pocket for what is owed. That is what the investor is accepting.
There is all this value and so if foreclosure is necessary on large portions of the
development, then we will maybe not get it right away. That is what the reserve fund
is for. They are looking at it from that perspective and saying, "Well, it is a risk, but
I accept that risk."
Councilmember Cowden: Okay. I just want to appreciate this robust
list of designated County projects for that two million five hundred thousand
dollars ($2,500,000). Looking through it, I am happy to see a number of the projects
that are on there. So, thank you.
Council Chair Kaneshiro: Councilmember Chock.
COUNCIL MEETING 19 NOVEMBER 6, 2019
Councilmember Chock: Thank you, Chair. Thank you for the
presentation. Reiko, I think we talked about this before, but I wanted to see if we
had information on this. I know this is the first of its kind. Do we know if the CFD
has an impact on our bond rating, if at all?
Ms. Sarabian: Can I answer that? So, the CFD has
absolutely no impact on the County's rating. These CFDs are ninety-nine percent
(99%) of the time issued without a rating. They are non-rated, because they are a
special type of borrowing secured by the properties in the district. As Brian explained
in the very beginning, the payments, the debt service, and the structure relates solely
to the properties and the special taxes levied in the district, and has no bearing on
the County's credit.
Councilmember Chock: Thank you.
Council Chair Kaneshiro: Councilmember Evslin.
Councilmember Evslin: Thank you for that presentation. We talked
about this a little bit when we met earlier. You mentioned that the taxable value is
based on when the property first sells or if the developer develops it based on an
assessment of when it was developed? The value is just set once, right in the
beginning?
Mr. Hirai: Yes.
Councilmember Evslin: That holds continuously?
Mr. Hirai: Yes. The tax provisions provide that that is
subject to annual increases of up to two percent (2%).
Councilmember Evslin: Okay.
Mr. Hirai: But, that is just an increase on the amount
that can be assessed. There is no re-determination of the value.
Ms. Sarabian: The value is set at the beginning and it can
only increase.
Councilmember Evslin: It cannot go down?
Ms. Sarabian: It cannot decrease.
Councilmember Evslin: So, in the event of a recession or a hurricane
that wipes out all these houses and there assessed value declines, we are still
collecting based on the sale value?
Mr. Hirai: The assessed value for other purposes may
decline, but it is a one-and-done for these.
COUNCIL MEETING 20 NOVEMBER 6, 2019
Councilmember Evslin: Okay. Does it end up having the effect of...so
people who got in earlier, maybe when the market was not as hot, end up kind of
getting a little better deal? You had said that as the market expands and these
properties are worth more and more...
Mr. Hirai: I am not making the comparison of being
worth more necessarily than ten (10) years ago...
Councilmember Evslin: Okay.
Mr. Hirai: They are certainly worth more as "improved,"
than they were as undeveloped land.
Councilmember Evslin: Okay. In the event of a default, the County
can foreclose like we can on any property tax default?
Mr. Hirai: Correct.
Councilmember Evslin: Is the lien on that...do we have a paramount
lien? If the bank is also trying to recover money, how does that work?
Mr. Hirai: This lien is on the parity with a real property
tax lien, so they are co-paramount.
Councilmember Evslin: Okay, great. You mentioned unexpended
funds from the last float, but you also talked about us owing the developer...could you
just talk that through a little bit? I did not understand that all that well.
(Councilmember Kagawa was noted as present.)
Mr. Hirai: Okay, the Oma`o transmission line, I think it
was a total of one million nine hundred thousand dollars ($1,900,000). Because of the
size of the 2012 bond issue, we could not fund it fully. In fact, there was roughly one
million seven hundred thousand dollars ($1,700,000) out of the one million nine
hundred thousand dollars ($1,900,000) that still remained to be funded. Some of that
was taken care of with continuing collection of special taxes. They still owed a bunch
of money on the Oma`o transmission. That is somewhat seven hundred thousand
dollars ($700,000) still. That is a project, since we already owed the money, the
expenditure of the unexpended proceeds can happen instantaneously. That is the
cleanest way to deal with it from a tax perspective rather than dealing with it over a
further amount of time. In exchange for that, they have given up their eight-five
percent (85%) going forward and by historical collections, it should take
about...unless things change, the historical collections have yielded sufficient moneys
that they should be able to take care of it, or have the County receive it back in about
three (3) years or so.
Councilmember Evslin: In about what?
Mr. Hirai: Three (3) years.
COUNCIL MEETING 21 NOVEMBER 6, 2019
Councilmember Evslin: Okay.
Mr. Hirai: That will give time to the County to stage all
these projects without the pressure of having to spend it right away.
Councilmember Evslin: Okay. That is all the questions I had. Thank
you.
Council Chair Kaneshiro: Councilmember Kuali`i.
Councilmember Kuali`i: I too want to say thank you for your
presentation. My question is more for the Administration and is more of a curiosity.
When you talk about the fifteen percent (15%) and you talk about the three million
found hundred thousand dollars ($3,400,000) or three million five hundred thousand
dollars ($3,500,000), to have a sense of what the value of that is...you gave us this list
of projects, and it may require a follow-up with the folks behind these projects...as an
example, the Pa'anau Phase I and II energy self-sufficiency upgrades, if that was
fully-funded, what would that cost?
Ms. Matsuyama: I know that for Phase I, they actually did
receive a bid. It was for about six hundred forty thousand dollars ($640,000). The
list that you have there, we know that the money that we have from this bond float
is not going to cover the project. What is listed there are things that we can fund with
these proceeds. If we wanted to go outside of this list, we would have to come back to
you to get approval.
Councilmember Kuali`i: Okay. As another example, the third bullet,
Shared-use path along an existing cane haul road from Koa`e Housing to Ala Kinoiki.
Do you know if that item includes cost for land acquisition and how much that is?
(Councilmember Chock was noted as not present.)
Ms. Matsuyama: I am not sure, but I would imagine that within
this it would be...we could spend this money on land acquisition if needed. All of
those projects were approved through the South Kaua`i Community Plan. We kind
of wanted to focus on value-added projects that we would have a difficult time getting
funding for elsewhere.
Councilmember Kuali`i: Right.
Ms. Matsuyama: That was kind of our focus there.
Councilmember Kuali`i: Someone could give me a dollar figure on
these, correct?
Ms. Matsuyama: They are actually working on it. Brian
actually needs it for tax purposes.
COUNCIL MEETING 22 NOVEMBER 6, 2019
Councilmember Kuali`i: I am interested in having it.
Ms. Matsuyama: Okay.
Councilmember Kuali`i: The third one is Hapa Trail improvements
from Hapa Road to Po`ipu Road. The only other thing about this whole list is, is it in
any kind of priority order?
Ms. Matsuyama: No, not that you see there.
Councilmember Kuali`i: So as those projects come up and you need the
funding, you would go to this pot of money?
Ms. Matsuyama: Correct.
Councilmember Kuali`i: Mahalo.
Council Chair Kaneshiro: Any further questions from the members? If
not, thank you. Anyone in the audience wishing to testify on this item?
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Any final discussion from the members?
Councilmember Kagawa.
(Councilmember Chock was noted as present.)
Councilmember Kagawa: Yes, I would just like to thank the
Administration and the professionals that took time to meet with us individually. I
think I had two (2) meetings with them. It made me feel comfortable that the risk is
minimal with this request and as complicated as this is, Kaua`i is the only island that
is supporting these types of requests. I feel comfortable enough that with the
Administration's support and with the professionals that were hired, who have
expertise in these types of complicated bond floats, I feel comfortable in supporting
it. I just want to thank them for taking the time to meet with us. Hopefully, it is a
win-win for both sides. Thank you.
Council Chair Kaneshiro: Anyone else? Councilmember Cowden, then
Councilmember Evslin.
Councilmember Cowden: I am also going to say how much I appreciated
the time that was taken to work with us on our own to be able to answer a lot of our
questions. I want to recognize the competence and the breadth of the group that came
to discuss it. It was a learning process. I appreciate the couple few months of heads
up to be looking at it. It seems like a good pathway to be dealing with some of our
challenges. I thank you for that as well. I, like Councilmember Kagawa, it gave me
a lot more confidence in being able to see this. Thank you.
•
COUNCIL MEETING 23 NOVEMBER 6, 2019
Council Chair Kaneshiro: Councilmember Evslin.
Councilmember Evslin: Yes, just to repeat what Councilmembers
Kagawa and Cowden just said. Thank you for meeting with us. It definitely did help
spending the time to walk us through this. I think...at first glance, it is easy to
misunderstand what is going on here...floating a County bond for a private developer.
It really is a win-win for the County in a lot of ways, because all of the risk is on those
landowners within the area. The County gets fifteen percent (15%) off the top of it
for our own uses. It is a little like free money that does not come around that often.
When you get a group of landowners willing to pay a tax on top of their current taxes
to fund their own infrastructure and County infrastructure, it works out great. It
seems like almost non-existent risk on our part because that lien is paramount. It
sounds great. Thank you.
Council Chair Kaneshiro: Councilmember Chock.
Councilmember Chock: Yes, thank you again for the presentation. I
appreciate the diligence and competence behind the work that you put together. It is
so complex in putting the package together with all of our partners. I appreciate you
taking the time to walk us through it over the last few months. This is pretty big.
Not only is this new territory, but what I really like about it is that it serves the whole
community when I see it. Particularly, I look at the projects that are listed here,
Shipwrecks parking lot, the multi-use path, Pa'anau Village, and the energy
sustainability initiatives there, are not only looking at the residents who have paid
in to this, but looking at everyone in the surrounding area. That is the benefit when
we can look at that from a broad perspective and apply this kind of funding to serve
the whole community. I appreciate that. Thank you.
Council Chair Kaneshiro: In a nutshell, the County gets an estimated
two million eight hundred thousand dollars ($2,800,000) or fifteen percent (15%) of
the bond float. I believe we collect some administrative fees and again, our risk has
been mitigated a lot. This is based on our reserve account, the ratio of valuations
between improved and unimproved lots, and of course, ultimately, our ability to
foreclose and lien properties. It is a pretty good deal for us. These are very
complicated documents, but in the end, it is a good deal for us. We have money that
we can spend in the community and we have a list of those projects in the Resolution.
With that, we will take a roll call vote.
The motion for adoption of Resolution No. 2019-54 was then put, and carried
by the following vote:
FOR ADOPTION: Chock, Cowden, Evslin, Kagawa,
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST ADOPTION: None TOTAL— 0,
EXCUSED & NOT VOTING: Brun TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused.
COUNCIL MEETING 24 NOVEMBER 6, 2019
Council Chair Kaneshiro: Motion passes. Next item.
BILLS FOR FIRST READING:
Proposed Draft Bill (No. 2762) —A BILL FOR AN ORDINANCE AMENDING
ORDINANCE NO. B-2019-856, AS AMENDED, RELATING TO THE OPERATING
BUDGET OF THE COUNTY OF KAUAI, STATE OF HAWAII, FOR THE FISCAL
YEAR JULY 1, 2019 THROUGH JUNE 30, 2020, BY REVISING THE AMOUNTS
ESTIMATED IN THE GENERAL FUND (Office of the Prosecuting Attorney, Victim
Witness Counselor II Positions — $23,069.00): Councilmember Kagawa moved for
passage of Proposed Draft Bill (No. 2762) on first reading, that it be ordered to print,
that a public here thereon be scheduled for December 4, 2019, and referred to the
Committee of the Whole, seconded by Councilmember Chock.
Council Chair Kaneshiro: Any questions from the members on this
item? Seeing none, anyone in the audience wishing to testify on this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Any final discussion from the members?
Councilmember Kagawa.
Councilmember Kagawa: I feel like I am likely to support this request
throughout the process. We keep hearing lately about the increase of crime on Kaua`i.
For us, we need to support not only the Police side, but we have to support the Office
of the Prosecuting Attorney side when they have requests to keep the community
safe. We need to make sure that justice is served. For us, we are lay people. We do
not know the nuts and bolts of what is entailed to do their job efficiently. This type
of request is a small request when you compare to them doing their job well and the
importance of that. I feel comfortable that I will be supporting whatever requests
come in these types of amounts that they require. Thank you.
Council Chair Kaneshiro: Councilmember Cowden.
Councilmember Cowden: I just want to thank the people from the Office
of the Prosecutor Attorney who came and also met with us. It was really good. It is
a small amount of money that is actually just being moved. I appreciate the intention
of what is happening there with the victim witness counseling to be able to have more
latitude to help people who are not just...certainly very important that we help the
people who are victims of the more violent crimes, but it is also important that our
Counselors have the flexibility to be assisting the victims of property crimes and other
things that are frightening whether they were physically hurt or not. I really like the
intention of our prosecutors to be looking at how we do not have to send our victims
to two (2) or three (3) different locations to have support for this, that, and the next
thing. We are able to give them comprehensive service, from caring people, at one
COUNCIL MEETING 25 NOVEMBER 6, 2019
time. Very good job for what you folks are working on. It is an excellent way to bring
that forward to us and I commend you.
Council Chair Kaneshiro: Anyone else? I have to agree. This is thinking
outside the box, allowing us to spread the grant around to different positions, and
allowing those positions to be able to work on the specific services that come with that
grant. If we fund the grant all to one (1) position, only that person can deal with
specific items associated with the grant. If you spread it out, then all of those people
can provide more services in their Office. I think it is a great deal for us. We are not
asking for additional moneys. It is a grant that is there and it is just spreading the
money out to different positions. Councilmember Kuali`i.
Councilmember Kuali`i: I just want to add one (1) quick thing. I, too,
want to say mahalo nui loa to the folks from the Office of the Prosecuting Attorney
that came over. This is a pretty vote. I like their explanation about how basically,
some of the grant funding and the requirements there changed, so the eligible
expenses meant that they had to look at things a little differently. They were
primarily interested in being able to continue to serve all of the public. When some
of the counselors were having to be in Court, and not back at the office, other
counselors needed to be available and eligible. This funding needed to be
reconfigured. It is the same amount of money. It is just being reconfigured. Good
work in continuing to serve the public.
Council Chair Kaneshiro: Anyone else? If not, roll call vote.
The motion for passage of Proposed Draft Bill (No. 2762) on first reading, that
it be ordered to print, that a public here thereon be scheduled for
December 4, 2019, and referred to the Committee of the Whole was then put,
and carried by the following vote:, seconded by Councilmember Chock.
FOR PASSAGE: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST PASSAGE: None TOTAL— 0,
EXCUSED & NOT VOTING: Brun TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused.
Council Chair Kaneshiro: Next item.
Proposed Draft Bill (No. 2763) —A BILL FOR AN ORDINANCE APPROVING
A COLLECTIVE BARGAINING AGREEMENT FOR BARGAINING UNIT 13
BETWEEN JULY 1, 2019 AND JUNE 30, 2021: Councilmember Kuali`i moved for
passage of Proposed Draft Bill (No. 2763) on first reading, that it be ordered to print,
that a public here thereon be scheduled for December 4, 2019, and referred to the
Committee of the Whole, seconded by Councilmember Chock.
COUNCIL MEETING 26 NOVEMBER 6, 2019
Council Chair Kaneshiro: Any questions on this one?
Councilmember Kagawa: Yes.
Council Chair Kaneshiro: I will suspend the rules. Janine.
There being no objections, the rules were suspended.
Council Chair Kaneshiro: Councilmember Kagawa, then
Councilmember Cowden.
JANINE M.Z. RAPOZO, Acting Director of Human Resources: Good
morning, Janine Rapozo, Acting Director of Human Resources.
Councilmember Kagawa: Thank you. If you can just explain in a
nutshell, what bargaining Unit 13 is, who they are, what type of work do they do for
the County. In a nutshell, what does the contract call for?
Ms. Rapozo: Okay, so our Unit 13 members are part of the
Hawai`i Government Employees Association (HGEA). They are our scientific and
professional employees. This would be people with a college degree. Your
accountants, your program specialist, your procurement specialist...any type of
specialist type of positions. Human Resources specialists. The negotiation committee
for Unit 13 put the employer's proposal out to vote for ratification and they did ratify
it in early October to go ahead with the proposal that was in front of them. It is a
two (2) year agreement. We are already behind. We did not have a contract as of
July 1, 2019. The first year proposal is to have two point one five percent (2.15%)
increase across-the-board for the salary scale that the Unit 13 members already have,
and a seven hundred fifty dollar ($750) lump sum for those that do not have a step
movement. For the second year, on July 1, 2020, we would continue the step
movement plan, and it would be a two point zero three percent (2.03%)
across-the-board increase, as well as a seven hundred fifty dollar ($750) lump sum
payment for those that are not getting a step movement within the contract period.
Other things that are part of the agreement include increases in a uniform allowance
and increases in the meal allowances that are already a part of the contract. There
is also a change in the way that standby pay is paid out.
Councilmember Kagawa: I have a question. The uniform allowance, are
we increasing it by twenty-five dollars ($25)?
Ms. Rapozo: No. It will be twenty-five dollars ($25) now.
Councilmember Kagawa: Per?
Ms. Rapozo: If you have a full uniform, it would be a shirt
and trousers. The allowance is per month.
COUNCIL MEETING 27 NOVEMBER 6, 2019
Councilmember Kagawa: Twenty-five dollars ($25) per month?
Ms. Rapozo: Yes.
Councilmember Kagawa: What kind of uniform are we talking about?
Describe a position that this applies to.
Ms. Rapozo: I am not sure if there are any Unit 13
members that we would have a full uniform for. For another unit, it could be like our
security officers that have a shirt and trousers that we would provide. I am just
trying to think who else would have a uniform in our bargaining unit. This is
statewide so there may be other positions within the State that have that.
Councilmember Kagawa: So if they are not required to wear a uniform
then they will not get this?
Ms. Rapozo: Correct.
Councilmember Kagawa: Only people that are required to wear a
uniform gets that?
Ms. Rapozo: Correct.
Councilmember Kagawa: Okay. Do they get all of it? Twenty-five
dollars ($25) plus fifteen dollars ($15) plus ten dollars ($10)?
Ms. Rapozo: No. It depends on the type of uniform. If you
only get a t-shirt as part of your uniform that you have to wear, then it would only be
ten dollars ($10) a month. If you have a button shirt, trouser, or jacket, then it is
fifteen dollars ($15) a month. If it is the full uniform, then it is twenty-five
dollars ($25) a month.
Councilmember Kagawa: Is that comparable to the Fire t-shirt? That
kind of allowance? I would think if you have one t-shirt that is ten dollars ($10) right?
They can get one (1) shirt a month?
Ms. Rapozo: Actually they get the uniform. This is
basically an allowance to launder the uniform.
Councilmember Kagawa: Really?
Ms. Rapozo: Yes.
Councilmember Kagawa: Okay. Is this something new? We have
never...
COUNCIL MEETING 28 NOVEMBER 6, 2019
Ms. Rapozo: Nope. It has always been...it has been in the
contract for a while. It is actually increasing the amount. This has not been increased
since 2007.
Councilmember Kagawa: Okay. I do not even know if it was really
necessary in the beginning. But, anyway. I guess if they had it, I have no problem
with it going up a little bit. It is hard to...I guess for the legislative side, when we
approve it, and not seeing the picture of what workers it applies to. At the end of the
day, I kind of worry if it is across-the-board fairness. I have been a school teacher for
nineteen (19) years now and we do not get anything for washing our clothes. We are
told that we have to wear shoes and we have to wear pants. At some schools they
wear slippers. It all depends. I do not recall getting a uniform allowance for teachers.
Then we get for others and they get money for washing their clothes. It just seems
odd. I am good, thank you.
Council Chair Kaneshiro: Councilmember Cowden.
Councilmember Cowden: When we look at this having been really
starting July 2019, do they get a retroactive payment?
Ms. Rapozo: Correct.
Councilmember Cowden: When we are looking at this, this is about a
six hundred thousand dollars ($600,000) increase for the budget coming up for next
year and almost one million three hundred thousand dollars ($1,300,000) the next
year. Five hundred ninety two thousand ($592,000) for 2020. I am just framing that
for the people who are listening. Thank you.
Council Chair Kaneshiro: I had a question on the meal allowance. Is
that comparable to the other bargaining units?
Ms. Rapozo: Yes. This meal allowance is basically when
the employee has to work overtime and they run into longer hours where we would
either have to provide them a meal or give them a meal allowance. It is comparable.
Another unit coming up that just ratified as well is Unit 2. You will see the same
amount that is going up. Again, this has not gone up for over ten (10) years.
Council Chair Kaneshiro: I would assume if those come up, they would
try to make it consistent with everyone else. I was just asking the question. I would
not see why one (1) bargaining unit would get fifteen dollars ($15) and another
bargaining unit gets two dollars ($2) or one (1) gets ten dollars ($10). I would think
they should all be the same.
Ms. Rapozo: Going back to the uniform allowance, this is
actually what Unit 14 got on the last round, which are our Ocean Safety Officers.
That is why this came with this round for these units.
COUNCIL MEETING 29 NOVEMBER 6, 2019
Council Chair Kaneshiro: Okay, any other questions for the members?
Again, this is just first reading. We will see it again in Committee and at the full
Council. Okay, thank you.
Ms. Rapozo: Thank you.
Council Chair Kaneshiro: Is there anyone in the audience wishing to
testify on this item?
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none. Any final discussion from the
members? Councilmember Kagawa.
Councilmember Kagawa: For me, a lot of these things we say, "It is in
and you are getting it. We are just going to increase it and it is okay." From the
union side, it is always, "Well, it is arbitrated, it is agreed upon, it was ratified and
voted on, et cetera." For me, at some point, when is the legislative side going to have
a say on what is in the package that is being voted on? Once it is voted on, it is
accepted as it is done and complete. The package is done, and they have voted on it.
It seems kind of late for us to say that we want to make changes. If we make any
changes then they will come back and say, "We have to vote on it and what if we do
not agree?" It is almost backwards, the approval process. The legislative side is blind.
We do not know what the particular situation is. Regarding meals. Regarding
washing your clothes. Comparing with other unions that do not have it in. All the
unions in the end, they all stand together. There is this brotherhood where HGEA
supports the firefighters, the Hawai`i State Teachers Association (HSTA) supports
HGEA, et cetera. HSTA does not have this kind of benefits in their agreement. The
HSTA does not even have overtime. You can work until...some teachers work until
6:00 p.m. or 7:00 p.m. preparing for the next day or closing up the current day. They
do not get overtime. These other unions get overtime, they get fed, and they get their
clothes washed. I am just thinking...you do not have to scratch your head. That is
why HSTA is short two thousand five hundred (2,500) teachers. We have a lot of good
students, our local students, not even going into teaching because the packages are
so bad. WalletHub has us last in the nation. Dead last in the nation. You do not
have to scratch your head and wonder why we do not have our youngsters going into
the teaching profession. I am not saying that this package makes HGEA or this union
way above. I am just saying in general, I wish the State Legislature would try and
figure it out. There is a reason why we have unqualified teachers teaching our kids
reading, writing, and mathematics. It is because the pay package for the HSTA is
horrible. I am an advocate here. That is the way to fix the problem. Some of these
others seem a little too generous. It has been in from before. The unions, they are
all going to support each other with their brotherhood. With that attitude, nothing
is going to get fixed. Thank you, Chair.
COUNCIL MEETING 30 NOVEMBER 6, 2019
Council Chair Kaneshiro: Anyone else? Councilmember Cowden.
Councilmember Cowden: I appreciate the information that is put in
here where we see the step numbers and the dollars. Some of these are pretty low
paying positions. I am looking at the highest paid position at one hundred forty one
thousand dollars ($141,000) for the most experienced and most skilled employee. I
recognize the value of being able to pay our people more, especially when we see how
we are short engineers, accountants, lawyers, et cetera. We are really struggling to
be able to populate our positions. I am recognizing what we are saying about our
teachers as well, Vice Chair Kagawa. Something else I am looking at is what has
been going on at our correctional center. Some of those people there are working
twenty-four (24) hour shifts without even a nap. To me, that seems like something is
really, really broken in that system. We have to figure out how our unions both help
with the pay, but it should be that they should be able to demand something like a
work schedule that is not that unbearable. It seems like an inhumane requirement.
I am in agreement that we need to be learning more about how the unions work and
how we can influence it. It does seem like it is a powerless situation. I will be voting
yes on this, as we do want to be able to hold on to our people. We will be hearing from
the United Public Workers (UPW) in the not too distant future, who are also very
important.
Council Chair Kaneshiro: Councilmember Kagawa.
Councilmember Kagawa: Yes, I also want to point out...if you have
better teachers and you have better instruction and more of them motivating the
children, maybe you will get less of them going into prison.
Councilmember Cowden: Yes.
Councilmember Kagawa: For a lot of the prisoners, they made their
choice. If they are miserable in there, then you feel bad. The Legislature has to help
the kids. That is why I keep pleading for them to keep looking at the overall pay
packages of teachers because they are still innocent and have a chance.
Council Chair Kaneshiro: Anyone else? Councilmember Evslin.
Councilmember Evslin: I support this package. I support
Councilmember Kagawa's plea for higher pay for teachers and whatever we can do
there.
Council Chair Kaneshiro: Unfortunately, we do not control teachers'
salaries. Anyone else? If not, roll call vote.
The motion for passage of Proposed Draft Bill (No. 2763) on first reading, that
it be ordered to print, that a public here thereon be scheduled for
December 4, 2019, and referred to the Committee of the Whole was then put
and carried by the following vote:
COUNCIL MEETING 31 NOVEMBER 6, 2019
FOR PASSAGE: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST PASSAGE: None TOTAL— 0,
EXCUSED & NOT VOTING: Brun TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused. At the top of
page five (5) we are at Bills for Second Reading.
BILLS FOR SECOND READING:
Bill No. 2740, Draft 1 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 8, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO
ADDITIONAL RENTAL UNITS: Councilmember Kuali`i moved to approve Bill
No. 2740, Draft 1, on second and final reading, and that it be transmitted to the
Mayor for his approval, seconded by Councilmember Evslin.
Council Chair Kaneshiro: Any questions from the members on this Bill?
We went through it in Committee already. Anyone wanting to testify on this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Any final discussion from the members?
Councilmember Cowden.
Councilmember Cowden: I just want to say that we have discussed this
rather robustly and I think we are all in agreement. These are important. When I
do not have questions it is because it has been spoken about.
Council Chair Kaneshiro: I think we went through all of them as one (1)
whole package. They needed to be individualized based on where it went in the rules.
I think we are in favor of pretty much all of them. Roll call vote.
The motion to approve Bill No. 2740, Draft 1, on second and final reading, and
that it be transmitted to the Mayor for his approval, was then put, and carried
by the following vote:
FOR APPROVAL: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST APPROVAL: None TOTAL— 0,
EXCUSED & NOT VOTING: Kuali`i TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
COUNCIL MEETING 32 NOVEMBER 6, 2019
Mr. Sato: Six (6) ayes, one (1) excused.
Bill No. 2741 —A BILL FOR AN ORDINANCE AMENDING CHAPTER 11A,
KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO ENVIRONMENTAL
IMPACT ASSESSMENT ON LAND DEVELOPMENT: Councilmember Kuali`i
moved to approve Bill No. 2741, on second and final reading, and that it be
transmitted to the Mayor for his approval, seconded by Councilmember Kagawa.
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, any final discussion from the
members? If not, roll call vote.
The motion to approve Bill No. 2741, on second and final reading, and that it
be transmitted to the Mayor for his approval, was then put, and carried by the
following vote:
FOR APPROVAL: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST APPROVAL: None TOTAL— 0,
EXCUSED & NOT VOTING: Kuali`i TOTAL — 1,
RECUSED & NOT VOTING: None TOTAL — 0.
Mr. Sato: Six (6) ayes, one (1) excused.
Bill No. 2742 — A BILL FOR AN ORDINANCE AMENDING CHAPTER 6,
ARTICLE 9, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING
TO THE HOUSING DEVELOPMENT FUND: Councilmember Kuali`i moved to
approve Bill No. 2742, on second and final reading, and that it be transmitted to the
Mayor for his approval, seconded by Councilmember Kagawa.
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
COUNCIL MEETING 33 NOVEMBER 6, 2019
Council Chair Kaneshiro: Seeing none, any final discussion from the
members? Roll call vote.
The motion to approve Bill No. 2742, on second and final reading, and that it
be transmitted to the Mayor for his approval, was then put, and carried by the
following vote:
FOR APPROVAL: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL — 6,
AGAINST APPROVAL: None TOTAL— 0,
EXCUSED & NOT VOTING: Kuali`i TOTAL — 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused.
Bill No. 2743, Draft 1 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 25, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO
WASTEWATER TREATMENT CAPACITY ASSESSMENT: Councilmember Kuali`i
moved to approve Bill No. 2743, Draft 1, on second and final reading, and that it be
transmitted to the Mayor for his approval, seconded by Councilmember Chock.
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, any final discussion from the
members? Councilmember Kagawa.
Councilmember Kagawa: Thank you, Chair. I received a complaint
about the whole package. They pointed toward the sewer...only helping those who
are connected to the County's sewer system. I just want to clarify that I think a lot
of these people already have a connection. The Additional Rental Units (ARUs) is
going to connect...instead of having that big charge, they are going to connect for free.
If you look at it, if they are local people, right, wherever they are living, and now they
have a chance to live affordably in this new ARU, you are getting the same amount
of volume going into the sewer system. Basically, you are not adding...all of these
bills are not adding to new people moving in. It is more about helping the ones that
are already flushing toilets, affordable, local people...hopefully they will have an
opportunity to rent cheaper or build cheaper and still provide the same. I think
regarding septic systems and cesspools, the Hawai`i State Association of
Counties (HSAC) is pushing for in this next session, to help with...we are following
COUNCIL MEETING 34 NOVEMBER 6, 2019
Maui's request, but of course, all of us want the State to provide tax credits or some
means of helping and addressing this problems. We want to convert all of our
cesspools to septic systems. Or if not, to expand our sewer system to have them in
place. When that benefit comes, with tax credits or what have you, then you could
say on the other side if you have a sewer connection, "Why are you only helping
them?" It is not about helping particular people. Right now, I think the push came
from Councilmembers Chock and Evslin, and the rest of this Council, wholeheartedly
supporting some big changes to try and get more affordable housing out for local
people. Sometimes you can look at it as fair or unfair, but I think when you are
addressing a huge problem like affordable housing, sometimes you just have to take
a holistic approach and do whatever you can. This is what we did. We are taking a
homerun swing and we are hoping that we do make a difference in affordable housing.
We all agree and the whole island agrees that affordable housing is a problem. This
is taking a big swing and I wholeheartedly support this effort. Thank you.
Council Chair Kaneshiro: Councilmember Cowden.
Councilmember Cowden: I just have a clarification. I believe what I was
understanding when you said "local people," it is not really an ethnic designation, it
is regional residents that are right there already. So what we are doing is not adding
more burden to the sewer line, we are creating more comfortable accommodation in
these already highly densely resided neighborhoods. We are just giving them a
different little structure, so it is not adding to the density. It is not an ethnic
comment, it is regional. Regional residents.
Council Chair Kaneshiro: Councilmember Evslin.
Councilmember Evslin: I think that was well said, Councilmember
Kagawa. Just to put it into context in my own situation. We bought an existing
four-bedroom house with an illegal kitchen in it. We only put the offer in when the
ARU bill passed. We knew we could make that kitchen legal. In doing so, there was
no new sewer connections that we had to physically do, but we had to pay the three
thousand nine hundred dollars ($3,900) sewer connection fee just to make that
kitchen a legal unit. I think that is part of the reason why a lot of people have illegal
units. It is cheaper to do it illegally and not get the permits for it. The County is not
collecting property tax revenue as they should for that property. I think that is
bringing an equity to the whole system. Again, as we have discussed, it ends up
raising money for the County pretty quickly, because of increased property tax
revenue from properly appraising these properties with rental units. Yes, I think we
do need to figure out mechanisms to work with the State to try and incentivize or
help for people to pay for conversions to septic or to expand our current sewer system
to deal with exactly what you are saying. A lot of people cannot take advantage of
building an ARU if they do not have the septic...or if they have a cesspool and they
do not have thirty thousand dollars ($30,000) or twenty-five thousand
dollars ($25,000). I do want to say that for those not on sewer who do have the septic
COUNCIL MEETING 35 NOVEMBER 6, 2019
capacity to expand, this package of bills can still help, especially if it is new
construction. If you are doing a newly constructed ARU, you are going to be subject
to the fourteen thousand dollars ($14,000) Facilities Review Charge (FRC). This
package can still incentivize those with the wastewater capacity to do something.
Council Chair Kaneshiro: Anyone else? Councilmember Cowden.
Councilmember Cowden: In alignment with what Councilmember
Evslin has just said, this is something also that I have put to Housing. We know we
have had a shift, so I hope that we get a chance to bring this up again as being able
to apply some of this Housing Revolving Fund to potentially help with taking these
houses that are maybe "illegally having ARUs" on them and helping them to become
complaint. That might include a septic system. Where can we do that so that there
are more Housing and Urban Development (HUD) available houses? If we put in fifty
thousand dollars ($50,000) or seventy-five thousand dollars ($75,000) into creating
something, it is a whole lot less of an investment that would be the case if we had to
build a standing unit. When we have had this aggressive compliance law, I appreciate
all the work that Councilmembers Chock and Evslin have done here to help bring
people into compliance so that we will not be having an unintended consequence to
laws that were meant to be working on transient vacation rentals (TVRs) or other
dwellings that we know we do not want, as a use. I am really looking forward to
working with the Housing Director to be able to work further on this particular idea
of how we can use the Housing Revolving Fund to apply for that. We need to make it
equitable across the areas. It is definitely a less expensive way. Certainly, if we had
public moneys going into that, we would have more robust commitments on long-term
affordability.
Council Chair Kaneshiro: Anyone else? If not, roll call vote.
The motion to approve Bill No. 2743, Draft 1, on second and final reading, and
that it be transmitted to the Mayor for his approval, was then put, and carried
by the following vote:
FOR APPROVAL: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST APPROVAL: None TOTAL— 0,
EXCUSED & NOT VOTING: Kuali`i TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused.
Council Chair Kaneshiro: The motion passes.
COUNCIL MEETING 36 NOVEMBER 6, 2019
Bill No. 2744, Draft 1 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 12, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING TO
BUILDING PERMIT FEES: Councilmember Kuali`i moved to approve Bill No. 2744,
Draft 1, on second and final reading, and that it be transmitted to the Mayor for his
approval, seconded by Councilmember Chock.
Council Chair Kaneshiro: Anyone in the audience wishing to testify on
this item?
There being no objections, the rules were suspended to take public testimony.
There being no one present to provide testimony, the meeting was called back
to order, and proceeded as follows:
Council Chair Kaneshiro: Seeing none, any final discussion from the
members? Councilmember Evslin.
Councilmember Evslin: I know we have talked about this pretty in
depth, but I just want to take a moment to thank everybody up here. This was a
really collaborative effort. We have some really robust conversation and good
amendments, which I think helped the bills positively. I think we all have the
same...we are trying to do what we can to address the housing crisis. This is one (1)
small component that will hopefully make a difference. I would to thank everyone
from the Administration that we worked with. Councilmember Chock and I, in trying
to develop these...which was Planning extensively, Housing extensively, Public
Works extensively, to try and make something that everyone could get behind and
support. It was definitely a hugely collaborative effort. It took basically eleven (11)
months since we started until this moment. It was a long process. I also want to,
because we did not talk about it today, just a super quick overview for anyone
watching of what it does. Everyone on Kaua`i, if you live in a residentially zoned
district, outside of Rice Street or West of the Hanalei River, you have the option to
add an ARU onto your dwelling. Council passed that in 2018, the last term. It has
to be under eight hundred (800) square feet. It cannot be a condominium property
regime (CPR). All this is doing is saying that if you are going to commit to keep it
affordable for five (5) years in compliance with the Long-Term Affordable Rental
Program...the Housing Agency is going to develop rules, hopefully in the next six (6)
months or so, to promulgate this. You will come in, they will certify you as affordable,
and you get total fee waivers across-the-board. This include fee waivers on a fine. If
you come in with an as-built unit, a kitchen that you are trying to legalize within your
unit, you should be able to do that at no permitting fees. Those permitting fees can
be between six thousand dollars ($6,000) and twenty thousand dollars ($20,000). It
should be a big reduction across-the-board. Lastly, I just want to address the five (5)
year affordability. I think this was kind of the biggest subject of contention amongst
us in deliberation. How did we land on originally three (3) years? It changed to five
(5) years with an amendment from Councilmember Cowden. And why is it not
permanently affordable? One, it is because we are giving some money to private
COUNCIL MEETING 37 NOVEMBER 6, 2019
landowners to add on a unit to their home. If you require that to be permanently
affordable and the way it is written right now, if it falls out of affordability and they
do not repay those fees, then the County could put a lien on that property. With the
threat of that lien, I do not think anyone would do it. It would not be worth it for a
landowner to enter into that kind of permanent agreement. There are problems if
they sell or pass the property down and there are restrictions on its deed. The five
(5) year program is I think enough to try and incentivize lots of people to come in.
Then we have a constant circulation of affordable units, even after the affordability
compliance runs out. People still have every incentive to stay in because you get a
property tax break through the Long-Term Affordable Rental Program. They are still
incentivized to stay in the program and they know the process and how the program
works. Even if they are coming out of the program by getting much more rental units
online, we should be putting downward pressure on the market cost of rent.
Hopefully this still helps all around. Anyway, thank you again for the work on this
and I am excited to see it pass.
Council Chair Kaneshiro: Anyone else? Councilmember Chock.
Councilmember Chock: Everything he said. I think what I want to
say is, this is not the save all or answer to our housing crisis, at all. It does provide
a step in the right direction for us to look at how it is we can increase some inventory
for our families. I want to put the plug in...but I think the next steps that this Council
needs to look at as we are looking at the gaps, are definitely in our infrastructure.
Our water discussion is something that we need to put on the table. Of course, as
Vice Chair mentioned, cesspools and its transition, while also increasing our sewer
system. These are all areas that I think we can as a Council and as a County, increase
capacity so that we cannot be solely responsible for increasing affordable housing, but
to at least provide the opportunities for existing build-out from our own people. I
appreciate all of the help and good work that Councilmember Evslin has put in, as
well as the Administration and this Council, including all of the other agencies as
well, to get this off the ground. Thank you.
Council Chair Kaneshiro: Anyone else? If not, roll call vote.
The motion to approve Bill No. 2744, Draft 1, on second and final reading, and
that it be transmitted to the Mayor for his approval, was then put, and carried
by the following vote:
FOR APPROVAL: Chock, Cowden, Evslin, Kagawa
Kuali`i, Kaneshiro TOTAL— 6,
AGAINST APPROVAL: None TOTAL— 0,
EXCUSED & NOT VOTING: Kuali`i TOTAL— 1,
RECUSED & NOT VOTING: None TOTAL— 0.
Mr. Sato: Six (6) ayes, one (1) excused.
COUNCIL MEETING 38 NOVEMBER 6, 2019
Council Chair Kaneshiro: That concludes the business on our agenda.
Not seeing or hearing no objections, this meeting is now adjourned.
ADJOURNMENT.
There being no further business, the Council Meeting adjourned at 10:14 a.m.
Respectfully submitted,
,-VtWI.
SCOTT K. ATO
Deputy County Clerk
:ks