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HomeMy WebLinkAbout06/15/2011 Regular Council MeetingCOUNCIL MEETING June 15, 2011 The Council Meeting of the Council of the County of Kauai was called to order by Council Chair Furfaro at the Council Chambers, 3371 -A Wilcox Road, Lihu`e, Kauai, on Wednesday, June 15, 2011 at 9:31 a.m., after which the following members answered the call of the roll: Honorable Tim Bynum Honorable Dickie Chang Honorable KipuKai Kuali`i Honorable Nadine K. Nakamura Honorable Mel Rapozo Honorable JoAnn A. Yukimura Honorable Jay Furfaro, Council Chair APPROVAL OF THE AGENDA: Mr. Chang moved for approval of the agenda as circulated, seconded by Mr. Rapozo, and unanimously carried. MINUTES of the following meetings of the Council: Council Meeting of May 18, 2011 Special Council Meeting of May 25, 2011 Special Council Meeting of June 1, 2011 Mr. Rapozo moved for approval of the minutes as circulated, seconded by Mr. Chang, and unanimously carried. Mr. Nakamura: Next matters are Communications. First communication for receipt is C 2011 -187. COMMUNICATIONS: C 2011 -187 Communication (05/10/2011) from the Director of Finance, transmitting for Council consideration, a proposal to set forth policy relating to retail use concession at the Pi`ikoi County Building: Mr. Rapozo moved to receive C 2011 -187 for the record, seconded by Mr. Chang. Council Chair Furfaro: Any discussion? Mr. Rapozo: Mr. Chair, are you going to be taking discussion here or at the bill? I understand the bill will be deferred or the request is for it to be deferred. Council Chair Furfaro: That is the request. Mr. Rapozo: Did you want to deal with the discussion at this point or during the bill? Council Chair Furfaro: I would think as we will come to a deferral on the bill again, that we will hold discussion before we defer. Mr. Rapozo: Thank you, thank you very much. COUNCIL MEETING - 2 - June 15, 2011 Council Chair Furfaro: Does that meet with all members? Yes? Okay. Okay, so we have a motion to receive and a second. All those in favor, say aye. The motion to receive C 2011 -187 for the record was then put, and unanimously carried. Council Chair Furfaro: Thank you, next item, Mr. Clerk. Mr. Nakamura: Next communication is communication no. C 2011 -188. C 2011 -188 Communication (05/31/2011) from the Council Chair, requesting the Administration's presence to provide the Council with a briefing on the Bike Path along Papaloa Road. Mr. Nakamura: I believe we have a request from the administration for a deferral, Mr. Chair, on this matter. Council Chair Furfaro: Yes, and I do know we have someone from engineering here, but I wanted to give all of you folks a little bit of a summary here. In researching this I have come across a particular concern that may require me to actually introduce going forward some discussion in the way of a new practice in the form of an ordinance. The particulars on this I will refer to a discussion that occurred in May of last year. This was with the old council in which a purchase agreement for this particular work was submitted along at what at the time was a $128,000.00 expense. I have since referenced this purchase agreement as the negotiation for the facility relocation of services was identified in that purchase agreement. Unfortunately, and a practice that we currently call now—what Mr. Clerk? It's called the... Mr. Nakamura: The apply, receive and expend. Council Chair Furfaro: Apply, receive and accept, that process is one that leaves a little bit of open interpretation. So I went to the purchase agreement, although we thought that the cost would be about $28,000 for these particular additions, and the minutes of that council meeting reconciled on December 15 that we were to get a report from engineering within about a three -day time. And the response from Mr. Haigh at that time was, "I'm going to have to work with my consultant. I can't get you the answer now or within an hour, but I could probably get to it in a couple of days. I don't know what his particular schedule is referring to the consultant. And we left it in some round numbers between about $28,000 but not to exceed $100,000. Unfortunately, it took the consultant five months to answer Mr. Dill's questions and there is summarized in an email totaling not what we thought was a not -to- exceed number, but a new number of $338,000.00. Now that is in addition to actual purchase of the easement. And we have to refer to the purchase agreement from May of 2010. It identifies all of the items, but in these purchase agreements it does not set the guidelines of what the spending limits are. And so I think this item has really brought to my attention that we need to probably work on a new bill that structures an estimated price with a small contingency. I think that would just be wise of the council because as we all know according to Section 3.1 of budget and capital improvements, that jurisdiction actually comes under the council. We don't leave an open -end purchase order, but it seems to be a flaw in the system. That's all I'd like to say now. So I'm going to open for some public testimony, but what I'd like to say to the members is the bigger problem is addressing what I reference as these approve, accept and spending approvals COUNCIL MEETING - 3 - June 15, 2011 without knowing what the estimated number is and that's not an acceptable practice and we need to come back with a new bill that corrects that and I will be working on that. So to answer the question, we have a $438,000.00 agreement on this easement which represents only about a hundred thousand of the actual land purchases. Mr. Bynum. Mr. Bynum: Was there a memo from the administration regarding this agenda item for today? Council Chair Furfaro: From them? They've asked for a deferral. Mr. Bynum: Was that in a memo form? Council Chair Furfaro: Yeah, just got it today. Mr. Bynum: Can we get a copy of that. Council Chair Furfaro: Sure. Mr. Bynum: Council Chair Furfaro: Thank you. Councilwoman Yukimura. Ms. Yukimura: Yes, Mr. Chair, I share your concerns and I did some phone calls and found that the actual figure is not yet determined, that there can be some negotiation and some reexamination of it. So we don't know yet what the figure is is my understanding. Council Chair Furfaro: Okay, I want to make sure we're all clear. When I, as council chair, ask for a response and the answer I get is I can get it to you in about three days and that was December 15th, I would expect a little more effort to be put into responding to the council. And I say that not just as the council chair but as a pretty seasoned manager. And five months go by and my answer isn't responded, so I go and look at the particular items that were negotiated to see if in this contract there's a not -to- exceed number, which to me ... I've done many construction contracts and renovations of hotels and it is clearly understood that that is a fair and reasonable requirement and we need to address that.. Ms. Yukimura: I see, okay. Council Chair Furfaro: Now, their response did come to us in the form of an email, which was dated May 9th. Ms. Yukimura: Do you have that? Council Chair Furfaro: And I have a copy of it and I'll be glad to circulate it for you folks and what I haven't heard from the administration is that's the base to begin the negotiations. Ms. Yukimura: Oh, actually we have it. Council Chair Furfaro: Do you have it? Okay. Ms. Yukimura: Sorry. COUNCIL MEETING - 4 - June 15, 2011 Council Chair Furfaro: So I see the issue as two parts. No. 1, yet to be negotiated as you pointed out is these cost control containment measures and No. 2, to prevent this from happening in the future, I think we need some dialogue about when we actually get to a point on any project that we're being asked to approve, accept and allow them to begin spending. I think it would be nice to know that we have something that puts that ceiling on it that this is not the platinum card from American Express, to say it bluntly. This council deserves answers that go back from a year, prior to this new administration, but this council deserves answers. And I'm just very concerned. If engineering comes to us and says, I can get it to you in three days or I don't think it's going to exceed that amount, I would much prefer they say to us, as a body, that they don't know versus trying to reconcile this. So I'm going to ask that we actually receive this item. I'll take testimony because I plan to put two new items on. One is to find out what they finally negotiated. And the second item is how do we correct this particular document, which will include having the discussion with the county attorney's office on a purchase agreement that basically has no ceiling on it. That, to me, is very concerning. And if that's how engineering was moving forward, then I can understand their concept of what the spending guidelines were. But we need to fix that going forward and therefore, I'd like to have two new items. So on that note, I'd like to take some public testimony first, then call back for some discussion amongst the members. So the rules are suspended. Is there anyone in the audience that would like to speak on this item? Mr. Mickens. There being no objection, the rules were suspended. GLENN MICKENS: Thank you, Jay, for the record Glenn Mickens. You've given a very good summary of this thing, Jay. I have my testimony from the audience's viewpoint, from my viewpoint. I'd like to read it for the viewing public and for you _members. I find it very interesting that on December 15, 2010 the council approved C 2011 -19 which ratified the purchase agreement to acquire property for the bike path along Papaloa Road. As usual our policy of ready, fire, aim was implemented and now, thanks to Councilman Rapozo, we are reviewing this action. And because of this review, we are finding issues that should have been considered before firing. On April 18, 2011, Mel wisely asked our county engineer a series of nine questions that were related to the cost of this project, common sense questions that should have been asked by all members before passage of this communication. I believe that the original cost estimate was answered rather vaguely, but I think it was projected to be minimal. I think it was, I think as you said Jay, $100,000 or $128,000.00. Now after getting a factual report from a reputable construction company, we find that this minimal cost will be $339,762.00, which includes construction fees and tax, and should also, as you pointed out Jay, should also include $100,000.00 for land acquisition. So now we're looking at about $439,000.00 or more. I do not believe that the people whose taxes— federal, state or local —pay for this recreational project consider over one -third of a million dollars to be minimal. We heard the same word used with the probable replacement of the path along Pono Kai when the seawall is repaired. And that project will probably cost hundreds of thousands of dollars. And we heard some members of this council justify the waste of money by saying that five years of use of the path was worth it. But ask the taxpayers if they think it will be worth it. Remember that there was already an asphalt path in front of Pono Kai, and Joe can confirm this, he's got records of it, running all the way to Otsuka's that the state had built in 1977 and was there for citizens to use as a walking or jogging trail. I used it. Dickie, you might have done the same thing; I don't know. COUNCIL MEETING - 5 - June 15, 2011 Please, councilmembers, I ask you to thoroughly look into every issue before you vote on it. But I'm glad this was deferred and Jay, I'm glad that you're pursuing it and I thank Mel for his input on this too, okay. Council Chair Furfaro: Glenn, first of all I want to make sure that we understand. We're not going to get into a discussion about Pono Kai and so forth. The agenda item is very specific that I sent a correspondence on. We're dealing with this area along Papaloa Road. Mr. Mickens: I understand, Jay. Council Chair Furfaro: I also want to make sure that you also understand that this fine detail is almost 18 pages long in the purchase agreement. Mr. Mickens: Yes. Council Chair Furfaro: And therefore, it is very clear that the purchase price shall be $100,000.00. That's fixed. What we had allocated was $128,000 in round numbers, thinking that the balance of that could go to these amenities. Mr. Mickens: I see. Council Chair Furfaro: But the amenities go on in four sections of which there is no reference to a specific amount and so therefore, without actually-putting a not -to- exceed number last May, the reality is we can't basically say engineering did not have the authority to do that because we approved it. Woe is us, we approved it, okay. But what I'm saying is going forward ... I'm not going to defer this item. I'm going to put a new item on the agenda that addresses the policy with the county attorney on what we ... when we approve if there's a not -to- exceed number, right? Mr. Mickens: Yes. Council Chair Furfaro: And another one that says, please reconcile how we spent all this other amount because as Councilwoman Yukimura pointed out, she made a phone call and found out that it isn't tied down to the number that we read from on the email. There's still some negotiating room, okay. Mr. Mickens: Well, the original estimate that they gave you, they hadn't done this research before they gave you that figure then of $128,000 or $100,000 whatever it happened to be at that particular time then, had they? Council Chair Furfaro: - I don't want to assume anything on the part of Mr. Dill and his new staff. I want to deal with how we fix negotiating going forward as I referenced Section 3.1. That spending of money, no matter if it's in a grant, federal money or so forth, is subject to the approval of the council. We have narrative here that doesn't come to a number. In the future, we should have a number with maybe a 10 or 15 percent contingency. That's what we need to fix. Mr. Mickens: True. Council Chair Furfaro: The second part of this is the point that Councilwoman Yukimura brought up is she's been doing some research and that number that we're now reading in this May 9th email a year later may not be the final actual amount. But we will put that on as a new item to reconcile what that spending is. So this will come back in two new items. COUNCIL MEETING - 6 - June 15, 2011 Mr. Mickens: Okay and I just want to say I appreciate your letting me basically go off of agenda to bring up the point. I think it's all connected. But I appreciate your diligence, okay? Thank you, Jay. Council Chair Furfaro: Thank you. Dickie has a question for you. Mr. Chang: Mr. Chair, I just wanted to get some clarification. Although he did sway a little off the agenda in regards to the Pono Kai wall, would I be able to ask him a question? Council Chair Furfaro: No, Pono Kai wall is not on the agenda. What's on the agenda is Papaloa Road. Mr. Chang: Okay, can I just say my reasoning? I won't ask a question. Council Chair Furfaro: back to order, how's that? Mr. Chang: Council Chair Furfaro: else that would like to testiffi Okay. I'll let you give your reasoning when I call our body Okay, thank you, thank you. Okay, thank you, Mr. Mickens. Is there anyone T on that? If not... are you going to testify, Mr. Rosa? JOE ROSA: Good morning, Members of the Council, for the record Joe Rosa. I've been hearing things of the pathway last week. I've always heard that word minimum. It comes up. But you cannot work a contract with the word minimum. You need brass figures, like how much will it cost you or the county to have the contractor to demolish the walls along that roadway, the sidewalks that are in existence over there. That's all cost items. Then to reconstruct the thing there, it's another cost item. Get figures so that you can get brass figures and you can get the correct funding for the project. Another thing, whenever contractors work with the general public, it costs the contractor an extra percent on expenses. I've worked with contractors that say that's the worst thing that you have to do is deal with the public when you're working on construction. You have to provide safety barricades so the pedestrians can walk around in that area. Also, you're going to have automobile traffic. How much are going to be using it? All these things are cost items. You cannot use that word minimum that was used so fluently by Doug Haigh and Mr. Bynum, who's always using it fluently, "the minimum." You cannot. Minimum doesn't give you money. You need figures to get your money. So those are the kind of things that you have to be solid coming from your engineering staff or your financing people before you get the bond money for it, so you have a figure. Let's say if it's $5 million, you get $5 million, not have $2 million and then you have to go look for $3 million. You want the figures set because in anything I know a contractor they have a percent plus for things that were overlooked or oversight. When I was with the state, they had a little on the side there. So anyway, that's all I have to say and like I also mentioned, later on maybe I could talk about it because Dickie Chang's question about the Pono Kai area there so. That's all I have to say. Thank you. Council Chair Furfaro: Thank you, any questions for Mr. Rosa? I'll discuss some of his comments about bid process when we get together as a body. COUNCIL MEETING - 7 - June 15, 2011 Mr. Rosa: Thank you. Council Chair Furfaro: Okay, is there anyone else in the audience? Okay, I'm going to all the meeting back to order. There being no one else wishing to testify, the meeting was called back to order, and proceeded as follows: Council Chair Furfaro: And I want to make sure that I revisit ... this item today is on Papaloa Road and the fact of the matter is when you look at a purchase document, as I indicated, we would like to have a not -to- exceed number that is negotiated plus a contingency of 10 -15 percent. Now we must be able to give engineering the ability in that contingency number to refine and negotiate what they need to as long as it doesn't exceed the agreed upon contingency. When we use the term "minimum," that's in the bid process where you have specifications that talk about depth of the wall or the thickness of the road or specific building parts and so forth, and when all the bids are typically in, you go to the minimum bid first to make sure that the process is comparing apples and apples. But what I'm saying is we're not putting on negotiable items when the engineering department leaves that as a specific amount that they negotiated in the bid plus a small contingency. This purchase price agreement has none of that in there and that is why we're in a very difficult spot as we are right now. For the future I want to say that when this council requests information from the administration, it's very important that we get a response in a timely manner, and we were promised more details of which as we went into the Christmas holidays and New Year holidays, something got lost on the radar screen. So we need to fix any future purchase agreements that have at least a summary to that effect. Now I'm asking you folks if I could receive this item so that I can put two new items on the agenda. And on that note, we'll start discussion amongst ourselves. Mr. Rapozo. Mr. Rapozo: Thank you, Mr. Chair. First of all, when we request the presence of the administration for an item, I expect them to be here, that's number one. So it's disappointing that they're not here. As far as the deferral, I mean the receipt, I'd much rather it be deferred. I'll be making a motion at the end of the discussion to defer simply because I had prepared or I had wanted to do a PowerPoint and I had spoken to you about this yesterday, Mr. Chair. And unless the new item ... I'm not clear on what the new item is that you want to put on, but I think what happened back on December 15th was really bad. And let me just say this council approved the ratification... let me preface that that Mr. Kuali`i was not here. He had not been appointed yet. But I think the six members that did support the ratification did so because —and you can correct me if I'm wrong — because it was inferred that the cost of these additional improvements would not exceed the $23,488. In fact, I think, Mr. Chair, you mentioned that. You said that "my assumption if the land is $100,000 in the appraised value, the cost of these improvements should not exceed $23,488" and that you had asked for a detail of that $23,488. My concern was that as I read the purchase agreement, it was clear to me that there's no way we would have been able to do all of those improvements for $23,000. I asked very simple questions and I have the minutes here, and I was going, again, I was going to put this on a PowerPoint and I'll just read it because I think it's important. Because I think ... I'm just going to call it like it is, we were deceived on the 15th by the administration. I asked a simple question, how much are the improvements going to be? You're talking about tank enclosure with moss rock walls, trash bins with enclosures of moss rock walls, signs, we have to expand the asphalt parking lot, 6 -foot aluminum fence, landscaping and irrigation. I said, I mean I think it's not unfair to ask. It looks like quite a bit of work that needs to be done and I could be entirely wrong, but I don't think that's unreasonable to find out COUNCIL MEETING - 8 - June 15, 2011 how much this scope of work is. Is it $100,000 or $200,000? Because I realistically believed it was between that number and Mr. Haigh said that he hasn't memorized it, he'd have to go back. And I said, well, fine, we have time, make a phone call, and call somebody. And he said that they did have an engineer's estimate and as Mr. Chair mentioned earlier, it would take a couple of days. Well, again it did take five months and in five months, the new total now is $338,500, in addition to the $100,00 for the land. I had asked for a deferral that day; I didn't get it. Because I felt we deserved that. I felt the public deserved to know how much was this going to cost before you ask us for an approval. I can tell you the discussion that came —and I have the minutes here if anybody wants them, I'll provide a copy — really was that it was going to be a minimal thing. It was not much. That in fact we could get it done. And yeah, we can get it done. But that's been approved now and we're going to have to pay another and I understand Ms. Yukimura says that she talked to somebody that said this number isn't accurate. Well, I'm referring to the consultant's email. I mean don't send me stuff if it's not accurate because I'm going to rely on this. This came from Steve Baginski from Kaikor Construction and this is all public record. My frustration is that if the administration is going to come across here and ask for an approval on anything, I can tell you right now, I mean I voted no on this, but I think this council, the body, the people, the public deserve to know the truth. And the way it was presented, to me, was very deceptive, the fact that I cannot remember the number. No, we're going to spend $340 grand, but I can't remember ballpark. It's frustrating. To defer this, I think ... I want to hear from the administration. I don't want to defer it if we're not going to have that opportunity and Mr. Chair, if your new item will provide for that opportunity, then that's fine. But I want Mr. Haigh, I want Mr. Dill, I want them here on camera so they can explain to me and the public why was it so hard to give me the number. parks. Ms. Yukimura: It's not Mr. Dill, yeah, it's Mr. Rapozo, this is Mr. Rapozo: I heard mister... Council Chair Furfaro: Continue, you have the floor. Mr. Rapozo: Thank you very much. I think Mr. Rapozo mentioned that it was not his department. We can bring him too. I think it's a public works issue and I think the numbers need to come from public works, from buildings. And it's frustrating, obviously, because we had to wait five months for an estimate that we were told we could get in three days. It's frustrating because from what seemed to be a very small project turned out to be nearly half a million bucks. Is it justified? It may be. My point is this: When the issue was on the floor asking for our approval, the number we were given was a very small number. And call me a nitpicker, call me what you want, but it was clear to me if we had just condemned the land, we would have gotten away cheaper. But to agree to do all of these moss rock walls and to agree to expand their parking lot, and to agree to do the landscaping and irrigation, to enclose the trash bins alone was $85,000. So I think the problem is a bigger problem than just the number. I think the problem is that this council should be given the proper information before we vote and if not, then we should not approve it. And granted it was done on a prior council and I can only assume after reading the minutes that former council was also under the same impression that the amount was going to be a small amount. And the purchase agreement was written in a way that kind of like said, you know, the number, the appraisal and related improvement. And it was only if you dug deeper into the agreement that you realized, my gosh, we really agreed to do a lot. And that number was not disclosed. So, again, Mr. Chair, I'm not sure and I guess you can help me understand what your new item will be, but if it doesn't provide an COUNCIL MEETING - 9 - June 15, 2011 opportunity for me to talk to Mr. Dill and Mr. Haigh here, then I'm just going to ask for a deferral of this item so we can have that discussion because I think the public has a right to know and I do agree with your suggestion that a new bill be introduced to protect the people from this kind of action going forward. Thank you. Council Chair Furfaro: Okay, before we go any further and I do want to make note that both Mr. Dill and Mr. Haigh are traveling. I also want to make note that Mr. Lyle Tabata is in the audience should we have any specific questions. I don't want us to perceive that no one from the administration was available today. To clarify my point, I want to put two agenda items, new agenda items on. Number one to handle going forward with the county attorney's office some perceived control over purchase agreements that don't use estimates plus contingencies. I mean we're entitled to that. The council approves federal grants, we accept federal grants, that's in our role, and it is the council that approves and provides these significant grants or revenues for the purpose of projects. No one else. And that doesn't seem to come across in an understanding that that responsibility is with us. So to cure that, I am going to work on a new ordinance. The other part is now that we understand from this email, who was either the consultant or the contractor, that there is room to negotiate that price, I want to put that item on as a new item to see what we actually ended up with. And those are the two items, so I hope I'm clarifying this for you folks. The two items that I want to put back on are to address the problem so we have some parameters that this doesn't happen to us again. So those are the two items. I'm going to recognize Councilwoman Yukimura. You have the floor, Councilwoman. Ms. Yukimura: All right, thank you. First of all, I think these figures, I mean I think $85,000 is a huge amount for trash bins and enclosure with moss rock walls, but they aren't the final figures. I mean I think, as I understand it, the administration thinks they're really high figures too and there is a negotiations process which I think comes —they call it value engineering —and I'm not real familiar with the process, but it comes after the contract is awarded, I think. And that's why until we know what the settled upon figure is, it's sort of hard to attack. We might be attacking a figure that is rightfully attacked but will be reduced. And the other thing is that these issues where we affect property are sometimes hard to estimate because I'm. not sure that condemning the property would have been cheaper. If you're removing a whole parking lot from a resort facility and you have to restore ... you have to make them whole again, that's huge. And even in these smaller issues, making them whole is a complicated process, so this, I think, takes a lot of back and forth. And so I would like to see what the exact ... the final figure would be before we have a lot of discussion about it. And also Councilmember Rapozo himself said $100,000 plus might be a justified figure for what we're doing. We still have to discuss that. I mean we have to see what is... the right figure is going to be determined by negotiations of the owner and the county. And if it is the right figure, then we need to pay it if we want this bike path. So I think we haven't gotten to the point yet where we can fully determine what the figure is and we kind of need to go there before we have a lot of discussion. Otherwise, we're sort of discussing general possibilities and not what's actually going to come down. Council Chair Furfaro: So with that comment, would you agree with me that I want to put that portion on as one of the separate items. Ms. Yukimura: I think that's fine. COUNCIL MEETING _10- June 15, 2011 Council Chair Furfaro: Okay and I just want to make sure that you understand because I heard the word "attack." I'm not attacking anybody. I'm saying, hey, we got a problem. We have an oversight problem, okay? Forget the stuff well we didn't respond to the chair in the time we told him. We have an oversight problem. And the county attorney needs to know also that a blank purchase agreement without some parameters is probably not the way we want to go. Whether they use the term "value engineering" or not, we need a not -to- exceed number. I mean we're entitled to that. We control the purse strings and so I would hope we could resolve the problem by putting that on as you've just identified it as a separate item. That's what I'm hoping for. Okay and Mr. Rapozo, you want to speak again? Mr. Rapozo: I want to make sure that the public understands the plan wasn't to take their parking lot, it wasn't. It was a strip of land to continue the bike path. That wasn't the problem and I think I said the appraisal for the bike path in the minutes, that wasn't the issue. The issue was these added improvements. We did not take their parking lot. It was not part ... I'm not sure if you read the purchase agreement, but we did not. Ms. Yukimura: No, I know. Mr. Rapozo: No, you referenced that oh, you know, when we take a parking lot we gotta pay. We didn't take their parking lot. The issue is not just this and I think, Mr. Chair, you encapsulated it by saying it's an oversight issue. They come to us with this request and we approve it and then the number comes up to here. You know, it's embarrassing now because look at what we've approved and we didn't even know it. And that's all I'm trying to say is a simple phone call, a simple email could have said well, it's going to be probably around $200,000. I would have felt better about it. But we didn't even get that. And we waited five months to be told that it's going to be... and again, I don't know who Ms. Yukimura spoke to, I don't know who said that we're in the negotiation process. I cannot rely on that, I can only rely on the information that's provided to me. And this information that's provided to me, does it seem high? Yeah, it seems high, but moss rock isn't cheap. To redo a parking lot isn't cheap, it's expensive today. So whether it's $300,000 or $200,000 or whatever it is, the fact remains the number needs to be here before we vote is what I'm trying to say. And to approve these open -ended blank checks is not a good way to do business and I appreciate the chair's attempt to try to fix that. I still , Mr. Chair, with all due respect, I still feel that this needs to be deferred and I'll make that motion and we'll obviously see what the council feels, but I want to stay on this topic because I think it's important and I...the overlying question for me is and I know in the minutes Mr. Haigh mentions that it's going to be paid by ... the plans have been approved by the department of transportation for us to proceed that it's going to be paid by somebody. I still haven't seen that answer and I believe that's one of the questions that you asked in your communication over was where are the funds coming from, where are the funds coming from and are they really approved funds for improvement outside of land acquisition. That I don't have and I'd like to have an opportunity to ask those questions. So again, Mr. Chair, with all due respect I'll be making a motion after the discussion and obviously the council will decide what action to take. Thank you very much. Council Chair Furfaro: It will be a council body decision, but I want to reiterate again I am not supporting the deferral. I would like the members to know or realize that I plan to put two new items on by receiving this today. So Mr. Bynum? COUNCIL MEETING -11- June 15, 2011 Mr. Bynum: I think Councilmember Yukimura said complex. I know that these issues are complex because I've watched them for many years now. And there are at least three different issues that's all being discussed and at some level it's apples and oranges. What was before us before was the purchase agreement and the purchase price for the acquisition of the land. Separate from that is the cost of the construction that occurs along the bike path. I welcome the idea of looking at process and about whether we need a different process, but I strongly object to people using words like "deceived" and calling our civil servants "liars" when they're not here to defend themselves and we haven't looked at this whole process. The transcripts that were supplied to us today is not the only time that this council talked about this issue and so I think the Chair's going down the right direction to say, let's look at the process issues, let's look at the specifics that fall in two categories: (1) the acquisition of the land and then separate from that is (2) the cost of the construction project itself, which this is only a very small part of. So I think the Chair has the right approach of separating those issues out, what are the oversight and process issues versus what was the cost estimates, and I need to see the deferral item that came ... the request memo that came. I haven't seen it. I don't know what the administration said. And I need to see transcripts from every council meeting that we discussed this issue because this isn't complete, so thank you. Council Chair Furfaro: Okay. Councilwoman Yukimura. Ms. Yukimura: Yes, I just want to say that I think the construction costs that Councilmember Bynum's referring to in part is related to the acquisition of land because we're paying also for how the land is being affected, the private land is being affected, and how we're restoring. So I don't see that division quite so distinct, but I do agree that I don't think a deception was involved here. I think it was an underestimation of how much the value is of the injury or damage we're causing to the land, how much we have to restore to it. And that part is complex because if you're taking a portion of the property, you're not only paying for the land part of the property, but the impact on the overall operation of that property, and you have to make sure that if the trash bin isn't here, it's somewhere else, and it's properly located and it gets really complicated, and can get expensive. But how expensive is the issue we're trying to determine. Council Chair Furfaro: I do think you summarized it appropriately that we're trying to find out what the actual cost for this acquisition was, and I thank you for that point. Mr. Kuah'i. Mr. Kuali`i: Mr. Chair, I just wanted to be clear on what your two new items would be in supporting the receipt as you recommend. The one about the process I understand, so it would be to address the oversight problem. That's pretty clear, so it's about making sure this doesn't happen again. But the other one about what was the final amounts or the negotiating, isn't that in fact then specific to what this item is today, having the administration here to provide us with a briefing on the bike path along Papaloa Road? So in fact Councilmember Rapozo's request for the deferral of this item would take care of that one item and then the other would be the process for the oversight. So I don't think there's real disagreement in what we're trying to do in our next meeting. Council Chair Furfaro: Well, I think my request to receive this item and have two new items is to have more descriptive narrative on what I'm looking for. For example, this question that Vice Chair Yukimura just raised, there is the acquisition of the land for which the path goes over and then there are certain costs COUNCIL MEETING -12- June 15, 2011 associated with ensuring that the land we acquire for the path is treated appropriately. Now, the next question seems to be is but then because we had this purchase agreement that quite frankly talked about how the association was handling its trash or what the aesthetic sped ... I mean this even specifies what kind of enclosure fence there should be so that it'd be in concert with the same fence that goes next to the swimming pool. I mean those are the aesthetics that are really the responsibility of the association of apartment owners, not the aesthetics that our engineering department is responsible for. It would have been better to say in the future these are the associated costs we've got. We evaluate the costs from the association, we vote on it and write a check. So what I'm saying is we need to have discussion about purchase agreements, more specific and therefore I want to put the new items on. I hope I've answered... Mr. Kuali`i: The only other thing is so the ... I'm clear on the process and oversight and that item. But the other item which Councilmember Rapozo was asking for deferring and you're saying to receive, in truth if we will be asking the administration to come before us and we want to specify detail on what they need to come, other than a general statement of a briefing, then it would probably be best if maybe you and Councilmember Rapozo send whatever questions in advance letting them know that there may also be other questions from the rest of us. And so then if that was the case, I could support the receipt. Council Chair Furfaro: And I would appreciate feedback from all of you on that. You know another point that Council Vice Chair Yukimura points out is we're looking at this number in an email, but we don't know if we refine that number that the $85,000 for the moss rock around the garbage disposal area turns out to be, oh, that's the overall remodeling of the garbage facility, but the county is only paying for 25 percent of it. We don't know that. You know the association might be taking these bids and doing some things with an upgrade, so questions like that I'd be very specific about. But I'm more concerned about the purchase agreement also going forward that we really have a clear understanding of what the parameters are when we sign off on something like that. So that's why I'm requesting these two new items. Mr. Bynum. Mr. Bynum: And I just want to clarify one thing and say that especially with your clarification, Chair, that I'm interested that we post an agenda item that allows us to have the whole discussion and not run into a thing like, oh no, well that's about this contract, not this contract. If you read the transcripts, the county attorney cautioned us that day as we were having a broad discussion saying, wait a minute, the agenda item is this. So I hear the Chair saying, I want to post this agenda item so we can discuss the improvements and the contract and how... and they are interrelated, but legally they're separate items. And so I think the approach that the Chair is taking... now if there's a process issue that's a really good thing for us to look at because I think we will find that this is a process that applies not just to this situation but to many situations that the county's involved in. And is it pragmatic or practical because there's a timeline to do this and then you start this, and then you start this. So it's an important discussion, but I think your approach is the right way to go to make sure we don't run into this Mr. County Attorney saying, wait, wait, wait, you can't discuss that because you didn't post it properly. And I think that's where you're coming from, if I've got it right. Council Chair Furfaro: Yes. Is there any more discussion? Let me let Councilwoman Nakamura speak. COUNCIL MEETING -13- June 15, 2011 Ms. Nakamura: I would like to say that it's ... I think Councilman Rapozo raises good questions that I think we still need answers to and I'm not sure when we will be getting responses to those questions. But what is the exact negotiated figure, I think, is an outstanding issue as well as who will pay for these additional costs. So I think as long as we get there, I want to make sure we get answers to those important questions that he has raised. I also believe that the Chair's recommendations to really look at the purchase agreements and how we structure them in the future is important because that is our oversight role and I would like to add that our internal process of placing items on the agenda with incomplete information is an issue for me and it's not just pricing information, but it's background information, and I believe that if ..I'm not sure what our screening process is, but when we don't have that complete information that means when the public comes to testify they don't have the complete information, and the process, to me, fails. So we need to, I think, I would like to see that built in on the front end of our internal process of having more information before we decide to put it on the agenda. Council Chair Furfaro: Vice Chair Yukimura. Ms. Yukimura: Thank you. I appreciate the questions Councilmember Kuali`i has asked because I think we all want to... and actually Councilmember Nakamura also raised that, we all want to make sure that Councilmember Rapozo gets the answers to his questions. I think Councilmember Bynum's point that we need a broader agenda item is also well taken. So my question is, to Councilmember Rapozo, can we possibly... do you feel that your issues and questions can be answered within a broader agenda item so we can defer and then restructure it so that not only do we get answers to your questions but also we're able to have a larger discussion as well? Mr. Rapozo: May I respond? Council Chair Furfaro: Yes. Mr. Rapozo: Sure. If in fact the... and that's why I asked the Chair a couple of time what is going to be the language, in fact would we be able to ask those questions of the administration with his planned posting and if the answer is yes, then definitely. Council Chair Furfaro: I think I've answered that, yes. Mr. Rapozo: Okay, then that's fine, that's fine and I guess I'll reserve my comments. Ms. Yukimura: Thank you because I think we want to have every councilmember's questions be part of the discussion. Mr. Rapozo: Would that be in two weeks? I'm sorry, in... would it go to committee? Council Chair Furfaro: I would hope to be able to... we don't have a meeting next week because we're traveling for the state conference. So I'd hope by early July we would have it. Mr. Rapozo: That would be my concern. I would like an assurance that it's going to be done within a month. COUNCIL MEETING -14- June 15, 2011 Council Chair Furfaro: agenda within 30 days. Mr. Rapozo: Oh, I can tell you we're going to have it on the Okay, thank you. Council Chair Furfaro: I just want to remind you we don't have a meeting next week and then there's a committee meeting left after that and then June is pau. Mr. Rapozo: Council Chair Furfaro Thank you. Okay, any more questions. Mr. Rapozo: I have one more question and I know Mr. Tabata is here and I'm not sure he's in a position to answer the funding questions. Council Chair Furfaro: Let's find out. We'll suspend the rules and ask him to come up, if you'd like? There being no objection, the rules were suspended. Mr. Rapozo: And Mr. Tabata, if you're not, that's fine. I wasn't sure if he was here for this item. Council Chair Furfaro: Yeah, I would like to give him a little background here first so we're all very clear. I think it's just fair with you coming on new with the administration. Everybody should realize that the allocation for the money to acquire the easement or the land purchase, it's not an easement, it's a purchase; that happened in May of last year. Subsequently we approved some moneys for that and a contingency because we knew there was some negotiations going on for the amenities as part of that negotiation. And then we arrived at the December 15th discussion which talked about these improvements. So there's a sequence here that goes from last year. So on that note, the rules are suspended and you're going to have to introduce yourself. LYLE TABATA, Deputy County Engineer: Council Chair, Council, for the record Lyle Tabata, Deputy County Engineer. As has been discussed, funding for this project, for construction and design is through the State of Hawaii, Department of Transportation's STIP funding with a match by the county and our match is either in funding or soft match via land. For the construction side, it's an 80/20 match. So for the whole project, it's either funded, it's broken down 80/20. So for the discussion of negotiations, we are in negotiations. It has been significantly reduced but at this time nothing has been concluded. So I think it's premature for myself to divulge the numbers. I .do appreciate the comments made and I will be taking them back. And I think, as mentioned earlier by Councilwoman Nakamura, information is the key and for the administration, our review of communications before leaving our office is also, we're finding, a key. So Larry Dill, the engineer, and myself have instituted a new protocol by which we review and identify adequate detail of the communication is completed before sending it out the door to the mayor, etcetera, to review. And we find that on the inverse, communications coming directly to department heads is also a challenge for Larry and myself not receiving. So if communications can be directed through the mayor's office, to Larry, then we will get it and we will assure a timely response and in adequate detail. COUNCIL MEETING -15- June 15, 2011 So I guess to answer the question that was asked, the funding is a combination of federal and county funds through the STIP process. Mr. Rapozo: Okay, thank you very much, Mr. Tabata, appreciate that response. I'll draft up questions, I guess, for your communication as we go... Council Chair Furfaro: (Inaudible.) Mr. Rapozo: Thank you. Council Chair Furfaro: Yes, go ahead. Mr. Kuali`i: Since you're here, aloha and mahalo, I just had one quick question. You made a comment about the negotiations you're currently in will reduce the numbers significantly. Is there any possibility that the negotiations could be concluded fairly quickly so that at our next meeting we have the new numbers, which could happen in 30 days. Mr. Tabata: I can't commit that because as stated, this is a parks project by which the administration has been redirecting all projects through public works. So every CIP project in this county will eventually run through public works for management oversight and construction. So we're getting up to speed on a lot of these projects and so this particular project is a parks -owned project of which we support the parks department. Many of the administrative decisions are made by them. We just supply them with objective facts and so we perform at their will. So if they say this number looks out of line, then we dive into those, sit down with the contractor and begin the process of negotiation. Mr. Kuali`i: Well, hopefully, just that you were able to say that it's happening, it looks like it's being significantly reduced, that means that they're getting pretty close, and we'll just put that in our questions and hope that they can push it and get it done so that we can talk about it in more specific detail at our next meeting. Thank you. Mr. Tabata: And I just wanted to confirm that several of the members have made the comment that there is the land purchase and then there's the construction cost. And so the land purchase is fixed, it's been agreed on previously; however, the construction, the contractor bids on, if I remember properly, this contract was not a line item bid for this section or it was a line item that was rolled up. So to have them break down line by line, the detail that you do have was a challenge for them and after we questioned things and said, are you sure this is our estimate, they went back. So the items that you see that are significantly out of line have been challenged and those are the ones that we are working on. So in line with that I comfortably say that it's a significant reduction. Mr. Kuah'i: Thank you so much, Mr. Tabata. Thank you, Mr. Chair. Council Chair Furfaro: I do want to also point out that in all fairness to the council and as recorded in minutes of which we send over to the administration, if the department pledges to get us an answer in three days, I think it's fair and reasonable to just send back a notice and say, we're revisiting the whole negotiation, we're not going to be able to fulfill that. COUNCIL MEETING -16- June 15, 2011 Mr. Tabata: I agree, I agree. Council Chair Furfaro: That's only fair and reasonable. That's part of living aloha. You ask a question, you tell me you're going to get an answer, send an answer. And then the other part was I will be putting in the question is nowhere does the contractor tell us in his response of this $338,000 and I led up to that discussion when I said the land is this, certain parts of that land acquisition encroaches on these amenities. We don't know if that's the whole project cost or we're only responsible for 20 percent of that bid, it's not clear. So that will be one of the questions as well, okay? Mr. Tabata: Yes. Council Chair Furfaro: Any more questions? Go ahead, Vice Chair. Ms. Yukimura: Thank you. I just want to thank you for being here and for acknowledging our concerns and for pursuing it in terms of the negotiations to try to get the costs more accurate, so thank you very much. Mr. Tabata: Thank you. Council Chair Furfaro: Thank you. Okay, I'm going to call the meeting back to order. There being no further questions, the meeting was called back to order, and proceeded as follows: Council Chair Furfaro: Members we're at a point where you're going to submit questions to me. I hope you can submit them before Friday. This will be an item that we hope to have some discussion on in July and then as I pointed out I will still send a second communication over dealing with land acquisition purchases that we can ... we need to have something that's more specific in an estimate with a contingency fee in the future because if not it kind of implies that we're giving out the Platinum American Express card here and that's not what we're doing, so. Mr. Kuali`i: Move to receive. Mr. Chang: Second. Mr. Kuali`i moved to receive C 2011 -188 for the record, seconded by Mr. Chang. Council Chair Furfaro: Any further discussion? Mr. Bynum. Mr. Bynum: Yeah, I welcome the idea to look at the process because these... anybody that sat on this council for a while knows that A happens, then B, then C and along the line you make estimates. And I've been here long enough to know that... and those of you who were here a few years ago, routinely the estimates were under and the thing was over. And we would have to move money around in the budget to complete the projects. Recently we've seen estimates where they came in under budget. But those estimates have to be estimated because they happen and part of the process where it hasn't gone out to bid and when it goes out to bid is when we get actual numbers. And so do we need to tighten up that process is, I think, what we're going to look at. Yeah, so I just wanted to say that. Thanks. Council Chair Furfaro: Okay, Mr. Rapozo. COUNCIL MEETING -17- June 15, 2011 Mr. Rapozo: Thank you, Mr. Chair, and I will be in support of the receipt and I will be submitting some questions, and I do agree with Mr. Bynum that oftentimes the estimates are off and you cannot help. But in this case, there was no estimate, zero estimate. That's what separates this project from all the rest. I mean there just was no...no number was provided and I think that is cause for some problem and concern. So with that I will be supporting the receipt, thank you. Council Chair Furfaro: Thank you very much for that support. And could we agree by midday on Friday your questions will go into the clerk's office because I would definitely like to get my memorandum off by the end of the business day on Friday. Would you so make that note, Mr. Clerk? Mr. Nakamura: So noted, Mr. Chair, we'll be looking for questions by noon on Friday. Council Chair Furfaro: Very good. We have a motion to receive and a second. All those in favor, say aye. The motion to receive C 2011 -188 for the record, was then put, and unanimously carried. Council Chair Furfaro: Thank you very much, everyone. We'll go to the next item here. Mr. Nakamura: Next item on page 1 is communication C 2011 -189. C 2011 -189 Communication (05/25/2011) from the Director of Finance, transmitting for Council information the following reports: (1) County of Kauai Bond Summary of General Long -Term Debt Amount Outstanding as of July 1, 2010, and (2) County of Kauai Bond Supplemental Summary of General Long -Term Debt Amount Outstanding as of June 30, 2011. Mr. Kuali`1 moved to receive C 2011 -189 for the record, seconded by Mr. Chang. Council Chair Furfaro: Thank you. I do want to say that whenever the county refinances debt, we as a body, the council who has oversight of spending and finance for the county's operating budget, we are required to get a briefing by the treasurer. That is by charter and I will be making a presentation in the terms of a trip report, because I want to set up a new standard for the council, a little bit later this morning. But we do have Mr. Spanski in the audience to reference this and any questions you may have, but some of it might be duplicated later in my trip report presentation. For general notice, the county carries about a $198 million worth of debt in round numbers. You may find that reconciliation on page 122, 123 and 124 of your CAFR, but Mr. Spanski has provided us correspondence via the finance director to comply with the refinancing requirements and briefing for the council. We did recently return from a trip refinancing about $32 million worth of the $198 million debt. People always kind of highlight the fact that we have a surplus, but they rarely highlight the fact that we have a debt as well. So we're here to hear from Mr. Spanski. If I can ask you to come up sir? I'll suspend the rules. And again, this is a requirement of the charter as I summarized. There being no objection, the rules were suspended. COUNCIL MEETING -18- June 15, 2011 DAVID SPANSKI, Treasurer: Dave Spanski, County Treasurer. Council Chair Furfaro: Thank you for being here. Mr. Spanski: You're welcome, sir. Council Chair Furfaro: Would you like to give us a real quick summary of the debt and the bond summary that we have here? I will go into more detail on my trip report. Mr. Spanski: Sure. Every time we alter our debt service or change it, we're required by HRS to present this to the council, okay. And what you have... it's a long drawn out process, but here we are at the end of June, okay, and the county overall, counting the department of water, housing has a piece with about a $205,000 left, so we have right now going into June 30th $194 million worth of debt. Now that's just principal, we're not talking about interest attached. But the principal is $194 million. Okay, now we are going to refinance a portion of the 2001 series and that's why this report is generated and we're going to save approximately ... we're going to refinance approximately $27 million and we will save on an average annual savings about $300,000 a year. So gross terms present value savings, we're going to save approximately $3.6 million. Okay now that combination of the $27 million is approximately $5 million of water, $22 million of the county. Now of our total debt of $194 million, $72 million of that is department of water. Ms. Yukimura: Can you repeat that? Council Chair Furfaro: $72 million. Mr. Spanski: Approximately $72 million is the department of water of our $194 million. The remaining $122 million is the county's portion. So water has about 36 percent of the debt. Council Chair Furfaro: Dave, and again just for the members, the purpose of that, obviously, is that the county, which you can find on page 124 of the CAFR shows our legal debt margin and our borrowing power is more significant than the water department for the purpose of financing. Mr. Spanski: That's correct. Council Chair Furfaro: Are there any more questions? Mr. Bynum. Mr. Bynum: I just want to, for the public, put that $198 million sounds like a lot of money and it is, but I want to put that in perspective. There are kind of governmental standards about what an appropriate level of borrowing is for our county. Mr. Spanski: That's correct and our governmental standards would be 15 percent of $20 billion. So we're not even close to doing that and we wouldn't be able to with our population. We wouldn't want to burden the taxpayer with that amount. Mr. Bynum: Right, so actually our amount of debt is fairly low compared to... COUNCIL MEETING -19- June 15, 2011 Mr. Spanski: Correct, comparatively, yes, but common sense tells you not to go that high either. Mr. Bynum: Of course, but compared to many other municipalities our level of debt is relatively low. Mr. Spanski: That's correct and that's why we maintain a very high credit rating. Mr. Bynum: Right and I think the public needs that perspective that it's routine for government to have bond funding of large public works projects and we really have kept that to a minimum and... Mr. Spanski: That's correct. Mr. Bynum: ...probably because we have a really sharp treasurer, right, so. Say, yeah, that's correct. Thank you. Mr. Spanski: You're welcome. Council Chair Furfaro: Just in quick numbers, our debt ceiling could be $2.2 billion. Mr. Spanski: That's correct. Council Chair Furfaro: Our actual debt is about 8.7 percent of that. Mr. Spanski: That is correct. Council Chair Furfaro: And that is the $194 million. Mr. Spanski: Yes, sir. Council Chair Furfaro: But in caution to everybody, and I'd like to get your concurrence, we earn only about 1.5 percent when we put money in the bank; we pay between 3.5 and 4 percent on what we borrow. Mr. Spanski: That's correct. If you want to go with our cost of capital for fiscal year 2011 was 5.45, okay? Our investment for 2011 is probably going to come in at about 1.2 percent. Council Chair Furfaro: Dave, after going through the reports, it looks like we have some favorable news on the revenue bonds that are associated with Pa`anau and it looks like we'll probably pay off that debt in about a year? Mr. Spanski: Yeah, there's $205,000 worth of principal and that principal payment is due in April 2012. So that way, then the county will now get the mortgage to the Pa`anau Project. Council Chair Furfaro: Very good news, very good news. Yes, councilwoman. Ms. Yukimura: Thanks for being here, Dave. Now in the thing you submitted it says amount of outstanding on July 1, 2010? Is that... COUNCIL MEETING Mr. Spanski: year. Ms. Yukimura: Mr. Spanski: Ms. Yukimura: -20- June 15, 2011 That's correct. That's the beginning of the fiscal Okay. That was the beginning of this... Yeah, that was the beginning of... Of the fiscal year that we're now ending. Mr. Spanski: That's correct, so I have to ... by state statute I have to show you here's how we started and on July 2010 we started out with $198 million in debt. Now at the end on June 30, 2011, we're going to be down to $194 million. So we spent $4.6 million on principal this past year. Ms. Yukimura: Okay. Council Chair Furfaro: Thank you, Dave. Ms. Yukimura: And the two portions of the debt, as you pointed out, are water and the county. Mr. Spanski: That's correct. Ms. Yukimura: So when you show that we had a $1.3 million debt in the golf fund, we've been paying the debt on that from our general fund. We have not separated that out as a debt to the golf fund. Mr. Spanski: No, we separate it out, internally we do, yes. Ms. Yukimura: We do separate it, but who's paying for the ... who's paying the note or making the payments? The general fund or the golf fund? Mr. Spanski: The golf fund, but again you know the golf is kind of subsidized by the general fund. Ms. Yukimura: So it's in... Mr. Spanski: Yeah, but we ... when we go through the accounting process, we debit the golf fund for their debt service. Ms. Yukimura: And then we, in order to make the golf fund work, then we subsidize it from the general fund. Mr. Spanski: That's correct. Ms. Yukimura: To the tune of about $1 million? Mr. Spanski: You know that's not my... Council Chair Furfaro: It's $1.2 million, Dave, and the fact of the matter is there is a difference in the discussion here because the golf course, as a stand -alone with these improvements, is an asset. Mr. Spanski: Right. COUNCIL MEETING -21- June 15, 2011 Council Chair Furfaro: Right? And we're charging the improvements to the asset to an operating account. I personally don't agree with that, but we'll leave it where it's at. The news is good, but people need to know. I mean if we ever had to sell the golf course, the improvements we made would add to the value. Mr. Spanski: Correct. Council Chair Furfaro: Right, which is the debt service. So, two different ways to look at that. Ms. Yukimura: And so what are the ... how are we doing in terms of paying off our debt and meeting the requirements of bonding in terms o£..well, I mean as I understand it there's some issues about how fast we're spending the bond money. Mr. Spanski: Well, that's not ... that has to go to whatever projects were approved, okay? That's something that I believe the mayor's administration is working on now. But again, the council approves the purse strings. If you're going to approve $120 million, you want to make sure you're spending that out. That's some due diligence that has to be done. Ms. Yukimura: And who's tracking that? Mr. Spanski: Well, they have a CIP manager, I believe. Yeah, but I can kind of give you an idea. Of the 2005 issuance which was approximately, $33 million, we've spent approximately to this point, six years into it, approximately ... there's a balance of about $9 million left that will probably end this fiscal year. So they've spent approximately $24 million for the six years. Ms. Yukimura: Is that good or bad? Mr. Spanski: Well, there's ... when we issue the bonds we have a reasonable expectation to expend the money within three years. Things change, priorities change, administrations change, councils change. Those change the priorities. And those are the things that are considered. Ms. Yukimura: And when the bonding companies look at our refinancing or our floating of a bond issue, do they look at this as well, our track record in spending the bond money? Mr. Spanski: That's correct. Council Chair Furfaro: Chair in my presentation. Mr. Spanski: Council Chair Furfaro: as well as Fitch. And I kno` favorable, but we don't have month, so. Dave, I'm going to have some of this detail for Vice Okay. On our road trip with Standard & Poor's, Moody's, v you have as I do the recent emails that are very the actual documents until about the 20th of the Mr. Spanski: Well, we've had ... we went to the rating agencies and we were reaffirmed or reconfirmed with our previous rating of AA. COUNCIL MEETING -22- June 15, 2011 Council Chair Furfaro: But what I'm saying is right now all I have is the emails from the trip. Mr. Spanski: That's correct. Council Chair Furfaro: I don't have the actual... Mr. Spanski: We don't have the actual ... we don't have that, the certified copy from the rating... Ms. Yukimura: Certifying document. Mr. Spanski: Yeah, but we have a confirmation via emails that they've reconfirmed our ratings at the AA. Ms. Yukimura: Well, that's excellent and a testimony to your work and our finance director and our budget chair and our chair, who wasn't chair. Mr. Spanski: And I think, I don't know if the council chair may have ... there is in the rating agency presentation, there was our spend down, how we accelerate our payments on our bonds and I think we'll pay more than 90 percent in the next 15 years, so that's fairly good. Our pay out of our debt service, not how ... not our projects, but the spend down of that $194 million, we're expending, we're paying it off faster, if you will. Ms. Yukimura: Okay. So the area that we need to look at is... Mr. Spanski: It's internal. Ms. Yukimura: It is internal and in terms of getting the projects built. Mr. Spanski: Correct, just not have a... for lack of a better term, a wish list with nothing in hand. Here's what we already planned, here's the design, here's the build, let's go, shovel ready, to use the term. Ms. Yukimura: We need to produce. Mr. Spanski: Instead of saying here's a wish list, and all the council agrees to this and the administration, and then we say, okay, it's going to cost this much and we go get that. If we're not ready ... like if our cost of capital is 5.4, we're only getting 1.5, you know, the arbitrage difference. Again, we covenant in the tax certificate that we, if we're going to spend down within those three years, we can invest at whatever level, okay. But if we don't spend down, then we also certify that within five years we will do an arbitrage analysis. And if we haven't met the three -year requirement of 85 percent expended, then we may have an arbitrage rebate, which I'm glad to report we do not have for either 2001, 2005, or 2010. Council Chair Furfaro: Dave, just for your general information, the particular questions on any penalty clauses for the bond money and so forth, we'll be asking for regular updates from Tommy Contrades on the capital spending and the critical path on those dates. So I just want to let you know that we will be doing that. COUNCIL MEETING -23- June 15, 2011 Ms. Yukimura: And one last question. So since water's financing is tied to ours, I mean we do it as one ... the same issue. Mr. Spanski: We do that as a cost savings, a cost of professionals instead of everybody going out separately. For the taxpayer it's just a cost saving purposes. Ms. Yukimura: Rate payer savings too in terms of the water. Mr. Spanski: Right and water's is called a general obligation reimbursable and that's good for the investor because they now have a double barrel. If the water cannot cover with their revenue rates, the county has said we will cover the water department. But water has covenanted in the tax certificate and to the county that they will make their revenue collections enough to pay their debt service and they have done that. Ms. Yukimura: Okay. And that's what I wanted to ask. So we need to be concerned about water's spend down, their rate of producing their facilities and so forth as well. But I guess, from what I understand, they're doing better than we are. Mr. Spanski: They're far ahead. Ms. Yukimura: Yeah. Council Chair Furfaro: Repeat that. They are far ahead. Mr. Spanski: They are far ahead. Council Chair Furfaro: So that there's some reassurance here. Ms. Yukimura: Oh well, maybe we should go learn what we can from them. Thank you. Mr. Spanski: In the basis of water, they come out with a 2020 Plan probably five to seven years ago. So they already had projects identified so on and so forth. Council Chair Furfaro: So in other words, they've had five or seven years to be working on getting them where they're at right now. Mr. Spanski: Right. Ms. Yukimura: But what you're saying is that it's according to a plan, that that was kind of the thrust of their ability to spend. Mr. Spanski: Correct. Council Chair Furfaro: We should also make note that their plan required $120 million. Mr. Spanski: Well, it's $60 million. We had $60 million. Council Chair Furfaro: We gave them $60 million, but they wanted $120 million. COUNCIL MEETING Ms. Yukimura: Council Chair Furfaro: department, okay. Mr. Spanski: Council Chair Furfaro: required to by law. Mr. Spanski: Council Chair Furfaro: -24- June 15, 2011 And they had to raise rates in order to do that. Okay, the subject item here is not the water Correct. We needed your report to the council because we're That's correct. Mr. Rapozo, then Mr. Kuali`i. Mr. Rapozo: Thanks for being here and a very understandable report. I like that. I have a question, though, and it does pertain to water, but it pertains to the bond issues. You talked about the debt ceiling being $2+ billion for the county. Have we figured out what the debt ceiling for the department of water would be? Mr. Spanski: Well we don't keep them separate. I mean it's just ... they're a part of the county when they want to be, I guess, semi - autonomous. Mr. Rapozo: Right, I understand that, but is that something we could figure based on their assets and their... Mr. Spanski: Well, they could go opposite where they could go out on their own and do a revenue bond. We don't have to—they don't have to be part of it. Mr. Rapozo: No, I understand. But I'm just looking at the $72 million, if we were to apply the same formula for what is an appropriate... Mr. Spanski: Again, I'd have to look at the state constitution, but it goes as far as the county issuing debt, they cannot exceed 15 percent of the assessed value of their property. Mr. Rapozo: Okay, I understand. Mr. Spanski: That's all encompassing. Council Chair Furfaro: Dave, I'd like to make sure you clarify for people too because as you answered on the water department, you were talking about revenue bonds. What we did was general obligation bonds. Mr. Spanski: Right. Council Chair Furfaro: And people need to know for us to have the borrowing power for the water, they have to prove that they have revenues enough to fund. And on the flip side, a general obligation bond is one that the bond companies don't look at a specific revenue stream to pay. It is a general obligation from property taxes and all other revenues. Mr. Spanski: We just have them affirm that they will reimburse us. COUNCIL MEETING -25- June 15, 2011 Mr. Rapozo: And I have just one more question and I don't know if the ... it's a question that I'll pose in writing, but I don't know if it's to you or to Tommy, but I guess what I'm interested in after hearing what you said about the 2005 issue, who would be the proper person to ask as far as reconciliation of all our issues and the percentage of spend down? can... Mr. Spanski: We can ... you know I mean finance /accounting, we Mr. Rapozo: You could do that? Mr. Spanski: We can give you here's how much we spent and here's what the projects are, but that's a report that public works has also. Mr. Rapozo: Okay, then I guess we could just make a note that's a question that I would like to send over. Council Chair Furfaro: That will be something that we'll be expecting from Tommy with finance on a regular basis. That's what I was expressing to Councilwoman Nakamura. Mr. Spanski: Because that's how I make sure that in the respective bond issues and the money that's invested that whatever their spend down is I can match their spend down. Council Chair Furfaro: Mr. Bynum, oh sorry, after Mr. Kuali`1. Mr. Kuali`i: Aloha and mahalo, so just one real simple question. In the past year, we reduced our debt by $4.6 million. At the beginning of this fiscal year is that what was planned or designed? Mr. Spanski: Mr. Kuali`i: Mr. Spanski: Mr. Kuali`i: Mr. Spanski: your house payment. Mr. Kuali`i: same or similar? Yes, well we have a debt service schedule, yes. And so that's right on schedule? We're right on... And for our next fiscal year? It's just like your house payment. Think of it as Yeah, for our next fiscal year will it be mostly the Mr. Spanski: It will be similar. Mr. Kua1i`i: So we can expect our debt to go down by another $4.6 million this next year? Mr. Spanski: That's correct. Mr. Kuali`i: Okay, thank you. Council Chair Furfaro: Thank you. Mr. Bynum. COUNCIL MEETING -26- June 15, 2011 Mr. Bynum: Real quick, you said our debt ceiling is 15 percent of assessed value. What is our debt right now? What percent? Mr. Spanski: 8 percent. Council Chair Furfaro: Me, I answered that, 8.7 percent. Mr. Spanski: Of... Council Chair Furfaro: Of the borrowing power. Mr. Spanski: Of our borrowing power. Okay, so you have to take the assessed value... Mr. Bynum: So that's less than 1 percent of the (inaudible). Mr. Spanski: It's like 0.006. Mr. Bynum: 0.006. Mr. Spanski: Right. Mr. Bynum: That's the answer I wanted to hear. Mr. Spanski: Okay, six tenths of one, yeah 0.006 is approximately, if you want to do the math. Mr. Bynum: Right, so I just wanted that clarification. It's not 8 percent of our debt ceiling, right? Mr. Spanski: No. Mr. Bynum: It's 0.006 of our... Mr. Spanski: Of your total assessed value of 15.9... Council Chair Furfaro: No, since I answered the question, it is 8.6 percent of the total available to borrow, okay. Mr. Spanski: That's correct. Council Chair Furfaro: Because the 0.006, you could never borrow that. They won't... Mr. Spanski: Right. Council Chair Furfaro: It's of the available borrowing power. Mr. Spanski: Right. Council Chair Furfaro: We can borrow $2.2 billion. So it's $2.5 billion we can borrow. We are at a debt level of about 8.6 percent. Mr. Spanski: 8 percent of that number. COUNCIL MEETING -27- June 15, 2011 Council Chair Furfaro: Mr. Spanski: Mr. Bynum: Not of the $15 billion, which is total property value. Right. Got you. Council Chair Furfaro: Any more questions of Mr. Spanski? Mr. Spanski, I want to say in front of the group here, our trip in San Francisco, I have to tell you how very, very pleased I was with your preparedness, your presentation and your ability to respond to questions from the bond companies. I think that Kauai County is very, very lucky to have you in that position and I certainly enjoyed the three -day discussions with the Q &A with the bonding companies and your familiarity with our financial picture was very well received by them. Thank you very much. Mr. Spanski: Thank you. Council Chair Furfaro: Okay, while the rules are suspended, do we have any questions from members in the audience? No questions, very good. Members, like I said, he is required to give us that report every time we refinance any portion of our debt, so. Mr. Bynum. There being no further questions, the meeting was called back to order, and proceeded as follows: Mr. Bynum: I want to take this opportunity to concur with the Chair about Mr. Spanski. I think he's an example of one of hundreds of outstanding civil service employees that do a great job for the county every day. We don't see him here very often but... and then generally commenting on the discussion here, we're in really good shape in terms of our finance and debt and our capital. That's the conservative policies that have been throughout several administrations and councils that have supported... that puts us in a very sound financial position as a county. Regarding the CIP projects, though, we dove into that a little bit. We do have a significant interest issue about getting the CIP Projects processed through the system and out on the street, and we discussed that a lot during the last term. The administration has created these project PIDs with much more detailed information about who's accountable and when, but we're still not up to speed about getting that out. And in the public works committee, as he said, public works has most of the CIP projects but is also the point where this administration is passing them through. We have a new CIP manager and we will be tracking that. Last year we went through all of the projects, the council did, and asked the administration to outline who was responsible, what was the timeline, what was their expectations, and we're going to have a kind of robust review of that on an ongoing basis because particularly right now it's important that we get these projects out. We're getting good bids right now in this current economic climate and we need to put people to work. We still have high unemployment and it's very important for the county to get these projects operating in our community and putting our people to work and we will have multiple meetings in upcoming committee meetings. Thank you. Council Chair Furfaro: So did I hear that in public works, which is your committee, you will be scheduling an update quarterly or... Mr. Bynum: I've already let the administration know that. COUNCIL MEETING -28- June 15, 2011 Council Chair Furfaro: So I will leave it to your appropriate decision on when you're going to schedule that. So Council Vice Chair Yukimura, you had a question? Ms. Yukimura: Well, no, I just want to second what Mr. Bynum said about Mr. Spanski and I'm actually very proud of the fact that he was hired under my administration when I was mayor. But I just want to underscore the fact that it's so important that we hire people with the qualifications to do the job. I said that when the mayor came to talk to us during budget session because that's where the work is done and that's where the county can move ahead. Thank you. Council Chair Furfaro: This is a motion to receive on this item? Did I have a motion? Yes and I had a second? All those in favor to receive, signify by saying aye. . The motion to receive C 2011 -189 for the record was then put, and unanimously carried. Council Chair Furfaro: Thank you, next item, Mr. Clerk. Mr. Nakamura: Council Chair, we're at the bottom of page 1 of the council's agenda on communication C 2011 -190. C 2011 -190 Communication (05/27/2011) from the Chief, Division of Wastewater Management, Department of Public Works, transmitting for Council information, the County of Kauai, Department of Public Works Affirmative Action Plan for the Lihu`e Wastewater Treatment Plant (WWTP), addressing issues raised in the State of Hawaii, Department of Health October 14, 2010 Operation and Maintenance (O &M) Inspection Report of that facility: Mr. Chang moved to receive C 2011 -190 for the record, seconded by Mr. Kuah'i. Council Chair Furfaro: Is someone coming over from wastewater or is that something you're going to handle, Lyle? Okay. So why don't we go ahead and suspend the rules and I want to revisit this first section. This is in response to some action that the state is expecting us to report on as it relates to a recent inspection on the wastewater treatment plant in Lihu`e. So on that note, can you give us a little bit of an overview on how we're responding to the state's queries. There being no objection, the rules were suspended. LYLE TABATA, Deputy County Engineer: Council Chair, Council, for the record Lyle Tabata, Deputy County Engineer. We have responded with an action plan to the state department of health on the corrective action for the deficiencies, which they noted in their recent plant inspection. The response included a corrective action and timeline. Council Chair Furfaro: Lyle, may I ask, is everything that might have needed or does need corrective action from a standpoint of having the appropriate funds available, there's no funding issues here? You folks have appropriate dollars to address these corrections? Mr. Tabata: Yes, the items that require funding are in the process of procurement right now. Council Chair Furfaro: Okay. COUNCIL MEETING -29- June 15, 2011 Mr. Tabata: They are out to bid and as soon as we receive the bids, the selection will be made and equipment will be replaced. There's two items, item no. 4, the DOH was in error and we pointed that out to them regarding our operator. And the last item, we have been challenged with hiring a fulltime electrician. So we have a designated contracting firm on -call available to meet our needs daily on request. Council Chair Furfaro: We have entered into a contract arrangement with an electrical company that has somebody available 24/7. Mr. Tabata: We have an on -call list and so we just go down the list in order. We call the contractors, are you available. We do not have a specific contract so to speak. Council Chair Furfaro: Oh. Mr. Tabata: Yeah, it's called an on -call list. Council Chair Furfaro: Is the wastewater department, are they going to be pursuing trying to place a fulltime electrician. Mr. Tabata: We are. Council Chair Furfaro: Okay. Mr. Tabata: We recently had and we found it did not work out. So we will have to go through the posting process again. Council Chair Furfaro: Council Vice Chair. Ms. Yukimura: Is that a problem of the salary range based on the private market? Mr. Tabata: I can't answer that; however, the qualifications require a licensed electrician and the rate is designated throughout the state through the union. So I understand that it is competitive. Ms. Yukimura: Well, I mean it would be ... if they can make more money out in the private sec ... if a licensed electrician can make more money out in the private sector, you're not going to get applicants. Mr. Tabata: That's true. I can't answer that right now. I haven't seen the recent applicant list. Ms. Yukimura: Well, do you know whether the other counties are having problems recruiting for this position? Mr. Tabata: No, I don't know. I can check. Ms. Yukimura: Because if they are then I think there are some procedures we can follow to ... I can't remember what it's called, but it's hard to fill positions, and there are some ways to increase the salary either temporarily or permanently for that position, I believe, based on the fact that you're not able to fill these positions easily statewide or maybe not even statewide. I'm not familiar enough, but I believe there are some alternative routes. COUNCIL MEETING -30- June 15, 2011 Mr. Tabata: Ms. Yukimura: Council Chair Furfaro I will speak to our personnel manager. Okay, thank you. Okay, Councilmember Nakamura. Ms. Nakamura: Lyle, I had a question about the first concern raised by DOH. The R -1 and R -2 reclaimed water, where is it used? Mr. Tabata: This was in the period when we were in transition. The facility is now an R -1 facility and that water goes to Kauai Lagoons for irrigation on the golf course. The distinction between R -1 and R -2 is the level of quality as designated by the department of health for recycled water reuse. And previously the plant was an R -2 facility and we went through, in partnership with Kauai Lagoons, the process of upgrading the Lihu`e Wastewater Treatment Plant to an R -1. We transitioned from chlorine injection disinfection to ultraviolet (UV) disinfection and through this process, there were some bumps on the road which we had to work through and some of it was with the mechanical device for filtering, the final filtering of the wastewater effluent. And so the control mechanisms during this period caused some malfunction and we report ourselves. We're bound as professional operators to self- report and so they take the findings from our reports and make it official. So these have been worked out and are things that we just had to work through. And so the water is reused on the Kauai Lagoons golf facility. Ms. Nakamura: And on the days where the maximum fecal coliform exceeded the DOH limits that was because of the construction and the changeover. Mr. Tabata: The control mix and so when we exceed, the discharge does not go to the golf course. We have automated devices that send the discharge directly to the injection wells, and we have a series of injection wells as the backup disposal facility for the effluent. So the public is protected. Ms. Nakamura: So after the construction and the changeover to the R -1 treatment, did the numbers then go down and you're back in compliance? Mr. Tabata: Yes, we're back in compliance, yes. Ms. Nakamura: Okay, thank you. Council Chair Furfaro: Lyle, let me ask you, we are... chlorine is now no longer part of the Lihu`e Plant or... Mr. Tabata: That is correct. Council Chair Furfaro: So we're all ultraviolet. Mr. Tabata: Ultraviolet. Council Chair Furfaro: Okay and the reality here is you only disperse to the golf course on the R -1 category by health codes. Mr. Tabata: Exactly, right. Council Chair Furfaro: If you fall to that secondary level, the injection wells that were there are all currently functioning? COUNCIL MEETING - 31 - June 15, 2011 Mr. Tabata: Council Chair Furfaro They are, yes. They're all functioning? Mr. Tabata: Yes. The injection well is the secondary discharge facility for effluent and is automated that if we do not meet the R -1 standard in coliform particulate, it diverts to the injection well until we do meet the standard. Council Chair Furfaro: Am I right, we have three injection wells? Mr. Tabata: I understand ... I think that we have five. Council Chair Furfaro: Oh, five, okay. Mr. Tabata: I could be wrong. Council Chair Furfaro: But the intent is to keep them all operational as a redundancy. Mr. Tabata: Yes, yes. Council Chair Furfaro: Okay, great. Mr. Tabata: Every year we do an inspection and we have to provide a status update to the department of health of all the injection wells. Council Chair Furfaro: Terrific. I'm glad the project worked out as Councilwoman Nakamura summarized. I know we've been working on that for a couple of years, so terrific, good news. Any more questions on this item for Lyle? No? Thank you very much for being here today. Is there any public testimony on this item? Seeing none, I call the meeting back to order. There being no further questions and no one wishing to testify on this matter, the meeting was called back to order, and proceeded as follows: Council Chair Furfaro: We have a motion to receive and a second, right? Mr. Nakamura: Yes. Council Chair Furfaro: Members, do we have any more discussion? If not, all those in favor of receiving, please signify by saying aye. The motion to receive C 2011 -190 for the record was then put, and unanimously carried. Council Chair Furfaro: Thank you very much, next item please. Mr. Nakamura: Council Chair, we're on page 2 of the council's agenda, communication C 2011 -191. C 2011 -191 Communication (06/03/2011) from the Mayor, transmitting for Council consideration and confirmation, his appointment of Julie Simonton (partial term ending 12/31/2012) (Engineer Appointee) to the Building Board of Appeals: Mr. Chang moved to receive C 2011 -191 for the record, seconded by Mr. Kuali`i, and unanimously carried. COUNCIL MEETING -32- June 15, 2011 Council Chair Furfaro: Thank you. This is a trip report, the next item, I'd like to keep that because we've got other people in the audience and do the trip report towards the end of the day. I'm going to ask if we can go to ... I want to hold the presentation on the trip report on the bond, the claim items, and the committee report, and I see we have people here for the feral cat population, and I'd like to go to that in the section called resolutions. I'd like to do that now. And I did have questions posed to the county attorney. Is he still in the building? Okay. Shall we take a quick recess here? Okay, we're in a 10- minute caption break and when we come back we're going to deal with Resolution 2011 -51. There being no objection, the meeting was recessed at 11:16 a.m. The meeting was called back to order at 11:31 a.m., and proceeded as follows: Council Chair Furfaro: We're back from our recess and Mr. Clerk, may I have the next item read? I think we're in resolutions now. There being no objection, Resolution 2011 -51, Draft 1 was taken out of order. Mr. Nakamura: Council Chair, we're on page 2 of the council's agenda under Resolutions, Resolution No. 2011 -51, Draft 1. RESOLUTIONS: Resolution No. 2011 -51, Draft 1, RESOLUTION SUPPORTING THE TRAPPING, NEUTERING AND RETURN METHOD OF CONTROLLING KAUXI'S HOMELESS AND FERAL CAT POPULATION Council Chair Furfaro: Thank you very much. May I have... Mr. Rapozo: That was the resolution, right? Somebody needs to make a motion. I'll make a motion to receive. Mr. Kuali`i: Second. Mr. Rapozo moved to receive Resolution No. 2011 -51 for the record, seconded by Mr. Kuali`i. Council Chair Furfaro: Okay, on that note we will open for any public testimony on Resolution 2011 -51. Please come right up. There being no objection, the rules were suspended. SKIP SCHAEFER: Aloha, my name is Skip Schaefer and I live in Wailua Houselots. Thank you, Council Chair Furfaro and fellow Councilmembers, for allowing me to speak today. I do not believe that the TNR program is an effective way to manage our county's overpopulation of feral cats. I have an indoor cat and have been a cat owner all of my life. On November 26, 2006 an article was written in the Garden Island newspaper, you all have a copy of that. A Kauai based animal support group called Animal Sanctuary of the Pacific, which practiced TNR, was banned from feeding cats at the Kauai Village Safeway Shopping Center. The original ten spayed or neutered cats were joined by 12 more feral cats, so the cat colony more than doubled. The reason for the ban was the property owner's concern about the lack of sanitation and leftover food attracting vermin. One cat was locked in a container and another cat died in a vat of used cooking oil. Linda Pasadava, who was then the Vice President of Animal Sanctuary of the Pacific, said they COUNCIL MEETING -33- June 15, 2011 planned to build a no -kill facility and began fundraising to make the shelter a reality. About that time, our next door neighbor and a fellow member of Linda's group expanded her cat cages from 120 square feet to over 500 square feet. These cages housed up to 83 cats as documented by the Kauai Humane Society in December of 2010. Is this the no -kill facility that Linda was referring to? Will this facility be expanded to over 1,000 square feet and house over 300 cats? Will the Salt Pond feral cat colony be relocated next to us or to you? Currently, there are no state or Kauai County laws to prevent this. Here are the facts. The feral cat population in Hawaii is a problem. Whether or not cats are fed, they are still hunters and will prey on birds and other wildlife. Feral cats can spread infectious diseases. In conclusion, I am confident with strong leadership from our county's councilmembers, our county administration, we can become a role model for the other islands. We need to draft proactive policies, enforce laws to prevent animal hoarding, require mandatory sterilization of pets, impose fines on animal owners who refuse to control their pets, prohibit feral cat colonies and feeding stations on public lands or sensitive refuge areas, and acknowledge the role of trap and remove when necessary. Last week our county council and Humane Society did an excellent job of educating the public in regard to services provided by the Kauai Humane Society. They will pick up, sterilize a pet, and return it to the owner for free. The number is 632 -0610. The time to take action is now. Council Chair Furfaro: Excuse me, Skip, that's your first three minutes,' you'll have your second three minutes. Mr. Schaefer: I'm almost through, thank you very much. The time to take action is now. Let's continue to work together and we can show our island neighbors how to effectively reduce our feral cat population and protect our aina. Mahalo. Council Chair Furfaro: Thank you. Is there any questions? Vice Chair Yukimura. Ms. Yukimura: I just want to thank you for your thoughtful testimony and ask if we could have a copy of it or do I have a copy here and I don't see it. Mr. Rapozo: You only have the article. Mr. Schaefer: I'd be happy to. Ms. Yukimura: All right, thank you very much for the real -life examples you've given us. Council Chair Furfaro: Mr. Rapozo, did you have a question? No? Thank you very much. Mr. Schaefer: Thank you. Council Chair Furfaro: Can you give... one of my staff members can get a copy of what you read from? There's Eddie right there. We'll make a copy and we'll get that back to you. Thank you very much. COUNCIL MEETING -34- June 15, 2011 Mr. Schaefer: . No problem, mahalo. Ms. Yukimura: Thank you. Council Chair Furfaro: Hi Nancy. NANCY SCHAEFER: Aloha, Councilmembers, my name is Nancy Schaefer. On May 25, 2011, I testified to the council regarding an indirect consequence of the TNR program. A certain individual started by feeding feral cat colonies on the island. She was not able to separate the concept of returning the cats to their colonies and chose to locate her own colony of up to 83 -plus cats in our residential area of Wailua Houselots. Who allows an individual to commit this inhumane act when Hawaii has a law that limits the number of animals to 15 per household in a residential area? The Humane Society has stated in a previous council meeting that I attended that they abide by this law, but when we reported this case to them, we were told they were not able to remove any of the animals because the cats were provided food and water. What is the difference of having a colony of cats being cared for in a residential area or in our public parks, beaches, parking lots, hotels, or anywhere else on this island? There is no difference because we do not have laws to protect the public whether it is in their homes or out on public property. I have read that TNR programs support animal hoarding without walls. Whether it is an individual cat or a colony, we all know that cats are reservoirs, and are you ready for this? and hosts for cat scratch fever, distemper, histoplasmosis, leptospirosis, mumps, plague, ringworm, salmonellosis, toxoplasmosis, tularemia, and various endo and ecto parasites. They carry hookworms, roundworms, tapeworms and fleas. What is going to happen when TNR volunteers, if recognized by this council, are out feeding cat colonies in our public and private properties and there is a need to remove any of the cats because of disease, poor sanitation conditions, or the colony has grown too large and has a negative impact on the environment. These animals are given food and water. Who is going to enforce the law? Are TNR volunteers going to relocate the colony to another area to protect the cats? Who will be the governing body to protect Kaua`i's citizens and wildlife from the reservoir of diseases that cats carry? Does Kauai have a law that clearly states that 15 animals are allowed per residence with no exceptions? No, it doesn't. We need a law that would give the Humane Society the authority to carry out what their job requires them to do. I have devoured numerous articles written by many agencies in the United States that clearly enumerates the fact that TNR programs do not effectively lower cat colonies. There are global concerns about how feral cat populations are decimating endangered species and what actions are being taken to address this problem. Mr. Nakamura: Three minutes, Mr. Chair. Council Chair Furfaro: Excuse me, Nancy, that's your first three minutes, go right ahead. Ms. Schaefer: Three minutes, thank you. And I'd like to share a letter and you all have copies of a letter from Dr. Brecht. I'll read parts of it because I won't be able to cover it in three minutes and I want to stay by those guidelines. And this is a letter that is addressed to the state department of health here in Hawaii, attention: Loretta Fuddy. I am a retired physician and was Okanogan County Health Officer for five years in Washington State. My wife and I COUNCIL MEETING -35- June 15, 2011 live six months of the year at our home where she grew up. My concern is our house is five feet and downwind from two large open wire cages housing up to 83 cats removed from feral colonies. The owner has not responded to our request to move or decrease the population to the state law which allows 15 animals per owner. We have spent the last six months seeking, but not getting any help from our Kauai County agencies. Cats can transmit multiple diseases to humans. I am concerned about the disease potential of toxoplasmosis, a parasite found mainly in cat feces. It can be spread by vectors such as cockroaches, fleas and flies, hand -to- mouth, and is airborne when the dry cat litter is sifted. We are down trade wind from the cat cages and our window screens are covered with dust and cat fur requiring frequent cleaning. The flies are attracted to the food and water as well as the litter boxes in the cages. This presents a huge problem for us living so close. The flies are constantly coming into our house and I worry about them contaminating our food with toxoplasmosis. The wash water from the litter boxes is dumped on the lawn 10 to 15 feet away from our home. There is improper sanitation and cleaning of everything in the cages. No boiling or hot water is used for cleaning the cage, dishes, litter boxes, or washing the multiple soiled towels and blankets. Proper sanitation must be done because the toxoplasmosis oocytes (which are eggs) can live in the soil for up to a year or more. The toxoplasmosis oocytes in cat feces start to become infectious one to five days after the contaminated feces are deposited in the litter boxes or on the floor of the cages. The Center for Disease Control recommends that litter be changed daily and the litter boxes sanitized and cleaned with boiling water to prevent the spread of toxoplasmosis. The cat litter boxes in these cages do not get changed, nor are they properly sanitized daily. There is a constant movement of new feral cats into the cages, increasing the potential of reinfection of the resident cats. The people cleaning the litter boxes wear masks. Does that mean we too must wear masks in our house especially since it is five feet away and downwind from all of this activity? We live in a residential area in close proximity to other families and they too are affected by this health risk. This is no place for 80 -plus cats with their constant waste and health threat to those who live next to this atrocity. Council Chair Furfaro: Excuse me, Nancy. Ms. Schaefer: That's it. Council Chair Furfaro: Six minutes. Ms. Schaefer: Yes. Council Chair Furfaro: You want to summarize. Ms. Schaefer: Sure, this is a serious environmental health problem and we would appreciate your help in changing the situation. We feel that the county of Kauai agencies listed above have not been much help. Sincerely, Don Brecht, M.D. COUNCIL MEETING -36- June 15, 2011 Council Chair Furfaro: testimony? Thank you, are there any questions on this Ms. Yukimura: I just want to say thank you for the graphic and hard to take examples of the problem, but I guess we need to know about it, so thank you. Council Chair Furfaro: Thank you, Nancy. Maka`ala, are you going to come up now? Okay. MAKA`ALA KXAUMOANA, Hui Ho`omalu I ka `Aina: Mahalo. Aloha, Council Chair and Members, I am Maka`ala Ka`aumoana, Vice Chair of Hui Ho`omalu I ka `Aina. I testify today for the third time on this agenda item. I have provided this council, through the clerk's office, information referencing scientific data and evidence in support of my position that a trap, neuter, release or return program for feral cats on Kauai is at the least a poorly conceived notion and most likely the death now for our protected sea and wetland birds. It has not been difficult to interest our state and federal officials in this matter, although their ability to provide direct testimony is limited by procedures of their departments and divisions. For the department of health, the protocol for requesting their opinion must include written request from this council. This process does not allow time for that to occur. If this council is determined to ignore the expert advice and testimony offered in this matter, there is little I can do to change your direction. I have offered you the experience of traditional practitioners, the perspective of one who is actively engaged in the fight to save endangered birds on the brink of extinction, and my personal testimony that this resolution is short - sighted, misguided, and a mistake. In spite of my deep disappointment with your last vote on this matter, I am compelled to tell you today that I stand ready to participate in the development of a scientifically sound management plan to eradicate feral cats on Kauai. This must be done. This is not a story about Pus N Boots. This is not a fairytale. This is not about one hotel's experience with a friendly neighbor. This is about the last of several species. Kauai is home to birds that literally exist nowhere else and this resolution will seriously limit their ability to survive. If you don't believe me and you don't believe the U.S. Fish and Wildlife Service and you don't believe the DLNR Division of Forestry and Wildlife, I don't know what I can say to change your mind. There are many options, some of them in place already to educate and encourage our residents to spay and neuter their cats. This resolution is not needed for that. This resolution is about returning cats to areas that are not controlled. Well -fed cats hunt. They kill endangered birds and not all those birds are on refuges. They piss and poop and the bacterium their waste contains finds its way into our storm drains and rivers and ocean. One seal death has been confirmed as attributed to this waste. This is not a resolution about nothing but education. This resolution states that TNR is a viable option for the control of feral cats and it is not, certainly not on Kauai. That is the wrong lesson to be teaching. History is replete with stories of well - meaning folks negatively impacting our world. This is another example. This is not about our furry friends. This is about the last of some of our feathered ones. COUNCIL MEETING -37- June 15, 2011 I will say once again that if this county is funding the free spay and neuter services for the TNR program, I believe that we are all complicit in the act of "take" of endangered species via the use of our tax dollars. I fully support free spay and neuter services funded partially by this council. But I do not support funding this service for cats that will be returned to our public places, streets, and neighborhoods. This resolution is misguided and not benign. Council Chair Furfaro: Excuse me, Maka`ala, that's the first three minutes. Ms. Ka`aumoana: Mahalo. I question the motivation for its introduction. If the purpose was to provide a bully pulpit to promote spay and neutering of all cats, you have accomplished that fourfold. It is time now to face the facts that have been provided to each of you, not the declaration of Kauai Feral that they can match the data. They have had that opportunity and have not done so. Where is the credible evidence that feral cats do not predate on our birds. Where are the studies that show that feral cats will be eliminated with TNR. Not in all these years has the cat population been reduced. To quote the Chair, any action taken by this council that leaves a huge scope of work to be done that is not the scope of the council, is an incomplete product. Receive this item and do the work. I will help and so will all the agencies who told you this is a bad idea. We are all seeking a solution that fits Kauai. This is not it. Mahalo. Council Chair Furfaro: Thank you, Maka`ala. Questions for Maka`ala? Ms. Ka`aumoana: Mahalo. Council Chair Furfaro: Thank you very much. Is there anyone else that wishes to speak on this item? Ms. Ka`aumoana: Hang on. Sorry, I just received an email from Andrea Erichsen saying that you had rescheduled this item for after lunch and so she was coming back after lunch and so I just ... I did email her saying... now she said your agenda had shi ... anyway, it may have been an assumption on her part. But I did just email her and tell her it's on now. I don't know where she is. So I don't know how fast she can get back. Council Chair Furfaro: Just for clarification, the only item I changed on today's agenda was my own presentation regarding my bond trip to San Francisco with the finance department. Ms. Ka`aumoana: Right, I understand. I don't know where she got it, but I'm just letting you know that I did receive that communication from her and I did respond saying it was on now. Council Chair Furfaro: Thank you. JOE ROSA: Good morning once again, Members of the Council, Joe Rosa. As an old kama`aina here, I'm going to speak about cats. It's been a problem from way back yonder when I was a youngster in high school. And after I came back from the Korean War, we used to go hunting in the Lihu`e mauka lands. That was set aside more or less for hunting pheasants, quail, whatever the game was. Today you cannot see any quails in the wilderness in back of Uihu`e. All the way from Isenberg tract (inaudible) going mauka, you don't see any quail any more COUNCIL MEETING -38- June 15, 2011 once you see cats running around in that area. While we were young at times I might sound cruel, but when we seen stray wild cats way up in the mauka lands, we shot them because we said, eh, they going eat the baby chicks of the quail and the pheasants. It's high time that the cat population is getting to be a problem and is destroying the wildlife which. people pay a hunting license to go to hunt pheasants and whatever wild game is available. It's not there and yet they're paying a fee for a license to go to (inaudible) wild game. Also the wildlife people up Kilauea Point had to fence up the area so that they keep those cats out where all those gooney birds and the shearwaters and all that that nest can survive. The cats, as I say, they're wild. Three weeks ago I was in Las Vegas and the state of Utah was going to get rid of hundreds of horses because they were running wild and (inaudible) in the state parks. So here on Kauai, the cat population is a problem. So you have to get to the source of it. And that means if you have to get rid of cats, you get rid of them. The Humane Society says they're going to take care of that, have them neutered and spayed, but yet I know there'll come a time they'll come before you, the council here, and ask for funding. It's free now, but yet somebody has to pay for the services of having them spayed and neutered. So think about it too. Upfront you can say it's free, but later on they're going to come over like they always do. The Humane Society always comes before the council here for funding in whatever way. Also, while they're out there, they have to feed them, that's another expense. So think about it. If it's a problem, nobody owns them, nobody wants them, they're going to spay them, have them neutered and throw it out in the community again? But yet they'll have to feed and eat. So what are you going to do? They're going to go out in the wilderness and attack the birds, the pheasants, the quails? Mr. Nakamura: Three minutes, Mr. Chair. Mr. Rosa: So you know, I know it's three minutes, but I don't think anybody else... Council Chair Furfaro: I'll give you another three minutes, so go ahead. Mr. Rosa: Yeah, so like as I say, it's not a matter of cruelty. I'm an animal lover. I had a cat that I had up to 12 years. She just passed away. And that cat used to wait for me like a little dog. When I go out she knows I'm out, she'll wait by my doorstep until I come home. Then she'll come in and she'll purr and come against me. So I cannot say or they cannot say that I'm not an animal lover. So, as I say, if it has to be done, it's a problem, get rid of it. And you know while I was working at one time when it wasn't a state just yet, it was the territory of Hawaii, the health department used to have members to go out into the wilderness, set traps, catch rats, and get rid of them. So it's high time DLNR maybe could do something, trap them and put a bounty on them to help get rid of that problem because you know nothing comes free. But there's something, they ask for people's help, but what are they doing themselves? It's just like the federal government. They ask for funding for the shearwater, but the federal government never did come about and give a penny for the community here that's trying to protect the shearwaters. So it's high time same thing that, you know, you don't get no funding. So it's high time the county council, as a member, as a body, go before the state and tell them there is a problem. You have a health department here,.you have a DLNR department, do something about it. So, as I say, I don't have written statements like some of these people have, but those are the facts that I have to say that should be considered. After all, you're here to COUNCIL MEETING -39- June 15, 2011 represent the people and we are the people back here, so consider it. It's not a matter of cruelty. It's something that has to be done. I sincerely mean what I say and that goes for a lot of things I've talked in the community. They say, yeah, what you say is true. They eat all the pheasant chicks, the quails, like we say, in Lihu`e. There's no quail nowadays out there. So please show a little bit that you care and in caring you'll try to get rid of those cats and not have them spayed, neutered and thrown back into the public again. I thank you. Council Chair Furfaro: Thank you, Mr. Rosa. Any questions for Mr. Rosa? No. Thank you very much. Mr. Rosa: Thank you. Council Chair Furfaro: Mr. Taylor, did you want to testify? No. While the rules are suspended, I had sent some questions over to the county attorney. May I ask the county attorney if he could come up and summarize the response to my questions. ALFRED B. CASTILLO, County Attorney: Good morning, Council Chair, Councilmembers, Al Castillo, County Attorney. I guess I would like to begin by saying that I did receive a request by the Council Chair and basically to determine if the county of Kauai would have any liability under the Endangered Species Act as a result of the passage of the resolution. And I would like to begin by reading pertinent parts of the resolution. It basically says, and I'm looking at the resolution, "whereas once released these former pets or their unwanted offspring have litters of their own continually increasing the homeless cat population," "whereas the second and subsequent generations of the cats are called `feral' because they are typically fearful of people," and then it talks about "be it resolved that the County of Kauai supports, encourages TNR." So I guess when I looked at this resolution I highlighted those words. The term feral as identified or defined in the resolution, it says "feral because they are typically fearful of people," but as your attorney, I would like to advise you that feral also means because the cat is wild. It also means that, and let me read, "feral: of or characteristic of wild animals, ferocious and/or brutal." Let me read to you a short portion of the United States Fish and Wildlife Service Publication and this publication is dated October 2009. I took that to mean that this is not just a recent concern. It says here (and I can give you copies of these later), "Nearly all native Hawaiian bird species are in danger of extinction if urgent conservation measures are not implemented immediately." It goes on to say here that "feral cats are contributing to this problem by killing native Hawaiian birds, including burrow nesting seabirds. The impacts of introduced predators, like cats, are especially severe on islands where neither the prey species nor the predators can readily disperse to new areas. Under such conditions, even low numbers of predators can cause great destruction of prey populations." Now in determining my legal opinion to the council, these are matters that I have to take into consideration before giving you the opinion. And last week you had testimony from Michael Mitchell from the Kauai National Refuge, who is the deputy project leader. He talked about the Hawaiian moorhen, the Hawaiian duck, the Hawaiian Nene, the Hawaiian Stilt, and the Hawaiian Coot. These are birds that he was concerned about. I'm not sure if he mentioned the Shearwater or the Petrel, but these are birds that we all should be sensitive about. COUNCIL MEETING -40- June 15, 2011 I'd like to remind this council that the county of Kauai is on probation with the federal government and we started our probation in September of 2010. The probationary period is 30 months. Council Chair Furfaro: I'm sorry, Al, how long? Mr. Castillo: Thirty months. We are in the process of completing a Habitat Conservation Plan and the mention of Andrea Erichsen earlier, just for everyone's information, she is the Seabird Habitat Conservation Plan Coordinator for the State of Hawaii. I think her discipline is a wildlife biologist. But anyway in going through the Habitat Conservation Plan and applying for an Incidental Take Permit, which is a very costly permit, we, the county, must show, must demonstrate sensitivity to the Endangered Species Act. And in doing so, we have to ... and part of the terms of the probation is we have to complete a monitoring plan. And part of this monitoring plan includes the county's plan for predator control. The definition of "take" within the Endangered Species Act is... "take" is defined under the Endangered Species Act as harass, harm, pursue, hunt, shoot, wound or kill or attempt to engage in any such conduct, trap, capture or collect. Harass means an intentional or negligent act or omission which creates the likelihood of injury to wildlife. Harm means an act which actually kills or injures wildlife. The reason why I'm going through these definitions is because, and I'll give you two examples of the tenuous situation that we are in right now, is that Kauai is ... Kaua`i has ... well, I played football and there was a big difference in playing day games and night games. So a large population of Kauai enjoys doing night games. Well, not only night games in football, we have lights that light at night baseball fields, tennis courts, recreational areas like that. An example of a "take" is for instance a Shearwater that is flying around a county light, like a stadium light. So just to see a Shearwater flying around the Hanapepe Stadium light, if you will, is considered a "take." It's considered a harassment of the endangered species because it takes the bird out of its natural habitat. A "take" is a violation, which a fine could be as high as $10,000 and this is just one fly around. That's how seriously we should pay attention to the Endangered Species Act. Let me give you another example. Another example is in Palila versus Hawaii State DLNR. In that case ... this was on the slopes of Mauna Kea. Council Chair Furfaro: Did you say Pauila? Mr. Castillo: Palila, p- a- 1- 1-1 -a, the Palila bird. Council Chair Furfaro: The bird? Mr. Castillo: Yeah, the Palila bird... Council Chair Furfaro: Not the town? Mr. Castillo: I'm sorry and I wouldn't know where Palila town is, but I know about the Palila bird and it's pictured here. The state DLNR was accused of taking the endangered Palila bird by the act of maintaining herds of feral sheep and goats for hunting purposes within the Paula's critical habitat. The feral sheep and goats destroyed the habitat and the court found that harm caused by the feral herds constituted a "taking." It should be noted that in this case what the state wanted to do or in mitigation, they said, well, what we will do is we will build fences around the Mamane tree or the Naio tree, and the Ninth Circuit said no. You have to do everything that you possibly can to help the endangered bird to get COUNCIL MEETING -41- June 15, 2011 to a plus amount rather than a minus amount. However, we do not know what the plus amounts are. Our dialogue, and what I mean by our, our dialogue is your legal team with the county attorney's office, we are in constant dialogue with the state and the feds. And it has always been in talking about the stadium lights, it has always been our position that the lights do not kill the birds and how we balanced that argument is we basically said that the predators do, which are the cats. So in this case, if the county were to engage in any conduct that does not show efforts towards assisting the endangered birds, I think, it's my legal opinion for this body that we would be in serious liability concerns. That's because compliance with the Endangered Species Act, the fact that we are on probation, to me that takes priority. And too that would outweigh the passing of a resolution. Basically what I'm saying is the ESA (Endangered Species Act) is a law, a law with dire consequences and that takes precedence over a resolution or an intended resolution. Council Chair Furfaro: Thank you, Al. Mr. Rapozo has a question for you, then Mr. Bynum, and Mr. Heacock, I just want to make sure. I saw you walk in. Are you here for this item? DON HEACOCK: Yes, sir. Council Chair Furfaro: Okay, I'll call you up after the county attorney, thank you. Mr. Rapozo, the floor is yours. Mr. Rapozo: Thank you, Al, for being here and appreciate that testimony. I guess I had a question on the Palila bird. What was the ... what did the Big Island have to do? Mr. Castillo: Well, what they wanted to do was increase the animals for hunting purposes. Mr. Rapozo: I understand that part, but what was the remedy? You said the fencing wasn't sufficient. So what was the final... Mr. Castillo: The final outcome was they could not do any legislation to protect the game that they wanted to protect, which is the sheep and the goat. Mr. Rapozo: Right. Was eradication part of the... Mr. Castillo: I don't know if eradication was part of that. You mean the feral sheep and the goat? Mr. Rapozo: Right. Mr. Castillo: I can find that out for you. Mr. Rapozo: Well, I guess my concern is that... because one would argue that the fact that nothing is done by the county to stop these feral cats attacking birds would be violating the law. In other words if we know that there's a problem with feral cats out there killing the endangered species and we do nothing about it, whether it's through legislation or actual eradication, does that rise to the level of a violation of the federal law? I think that is my concern. So I guess the question is for the Palila bird, if we could find out what were the remedies that the Ninth Circuit Court... COUNCIL MEETING -42- June 15, 2011 Mr. Castillo: I guess the way that I would reconcile what you're telling me and trying to reconcile the Palila with the instant action that this body wants to take, I would say, here where we are, the county is being asked to do something. In Palila, the DLNR did something. The protectors of the Palila bird filed suit against the state. So here, say if we engage in some sort of conduct, and I'm not going to say it's a violation or if it's not a violation, but because we are on probation and because we have to show a sensitivity towards the Endangered Species Act, for us to follow through ... we can do TNN: Mr. Rapozo: TNR? Mr. Castillo: No, no, we can do TNN. But to do TNR, trap, neuter...we can do trap and neuter. But to do trap, neuter and release, what we would be actively participating in is releasing a predator and these are known predators to the endangered species. Mr. Rapozo: Yeah, no, you've made your point. You've convinced me that this needs to be received, no doubt in my mind. Mr. Castillo: Okay. Mr. Rapozo: But I guess the bigger concern for me and I guess this is a question that you can come back later is now that it's obvious that we know that these feral cats are going out and attacking the wildlife (inaudible), are we obligated because we're on probation to do something because I think you could stretch it that far? Mr. Castillo: with our probationary status. evidence on our part that we Mr. Rapozo: Mr. Castillo: Council Chair Furfaro: Mr. Bynum. We are doing whatever we can legally to comply I think if we were to do more that would be material Lre sincere about protecting our endangered species. Thank you. You're welcome. Thank you, Mr. Bynum, you were next. Mr. Bynum: Yeah, I appreciate the input. I think the motion was to receive, that's a likely outcome today. I still believe that having this discussion may have positive outcomes for Kauai and I'll save a lot of my comments, because this is for questions, for when we call the meeting back to order. But you know what testimony we heard today is if the county supports neutering and releasing, we could have some liability. But that's what ... whether it's in a feral colony or a homeowner who brings a cat in for neutering, they release them back into the environment, right? Mr. Castillo: Yeah, but the county is... Mr. Bynum: I mean if I take my cat in and have it neutered, my cat still is in the environment, you know, and I'm feeding it and caring for it. So I don't need you to answer this now but does that mean we can't fund spay and neutering because sometimes these discussions get so compartmentalized that we lose the big picture? So I don't want you to respond to that now, but in the way this is being framed, I don't see a lot of difference between releasing them back into a COUNCIL MEETING -43- June 15, 2011 colony at shopping center or releasing them back into a neighborhood in Hanalei or Hd'ena, and that's what we do, right? Mr. Castillo: Let me tell you how seriously concerned that I am because that we're going through the Habitat Conservation Plan and we are going through an Incidental Take Permit. What you say here might make a really big difference in the cost of our incidental take permit. If what is received by good people like Andrea Erichsen and the federal government that Kauai County Council has a certain level of sensitivity, the Incidental Permit Take per year might be anywhere between $500,000 to $1 million for us to be able to run our county lights. If we show serious deference to the Endangered Species Act, it might be lower than that. So I can only give you my legal opinion, but be cautious from what we say here because they read the paper and they pay attention to what we—basically the Endangered Species Act, what we should be doing if you wholeheartedly believed it and followed it, you would do everything that you possibly can to not only protect the bird, but to bring it to some population level that I don't know. And you have to do everything that you can to take it off of the endangered species list. So if whatever you do is towards taking it off the list, then I'm comfortable legally. Mr. Bynum: So if this council takes action that increases the dialogue that may lead to some programs to diminish the number of feral cats on the island that would be a positive thing. Mr. Castillo: Yes and I cannot speculate how and what you do, how it will be received by those who govern us in terms of the Endangered Species Act. Mr. Bynum: Thank you. Mr. Castillo: You're welcome. Council Chair Furfaro: Al, I want to thank you for responding to my questions and I want to thank you for the willingness to be here to give oral testimony to the questions I posed to you about the county's exposure, so thank you very much. Mr. Castillo: You're welcome. Council Chair Furfaro: Mr. Heacock, did you want to speak? DON HEACOCK, Department of Land and Natural Resources, Aquatic Resources Division: Mr. Chairman, Members of the Council, I first want to say that I agree with everything your legal counsel just told you. The only thing that was ... Don Heacock, I'm with the Department of Land and Natural Resources, Division of Aquatic Resources. The only thing that was left out of that discussion, and I must confess I came in late, was that there is another obligation we all have and that's either Article 11 or Article 9 of the State Constitution that states, "the state and all of its political subdivisions, including the counties, are to protect all of Hawai`i's natural resources." It goes on further to define natural resources as "naturally occurring plants and animals." Feral cats are not only natural but they are also invasive. We've known for over 60 years that they are the primary predator of what are now endangered Hawaiian water birds, things like the `Alae `ula, the Hawaiian Stilt, and the Koloa ducks are literally sitting ducks (no pun intended) to feral cats because they nest on the ground. COUNCIL MEETING -44- June 15, 2011 I think Mr. Bynum's question about he sees no potential difference between spay and neutering a cat and releasing it in his backyard versus releasing it down at say Lihu`e Post Office, where an apparently very nice lady feeds about 30 cats every evening. But when she doesn't show up, Nawiliwili Stream and the endangered water birds are only 200 yards away, and I do concur with Mr. Castillo that these ... even if you weren't on probation, I would strongly suggest voting no on this resolution. What we should do and what is the most humane thing to do is to trap and euthanize feral cats. They cannot be tamed. If you just release them, you are basically, and I got this from three veterinarians early this morning that I spoke to on the phone, you are releasing them into very crowded conditions that they—disease, especially internal parasites, will spread very quickly and they will die a slow and painful death rather than being euthanized. You will never train a feral cat. Now back to Mr. Bynum's premise that there is perhaps no difference between releasing feral cats into a public place like the Lihu`e Post Office, for example, or somebody's neighborhood backyard. There's a big difference between those. In those backyards I would hope that people are attempting to keep their cat in their backyard and they're feeding it regularly. Mr. Nakamura: Three minutes, Mr. Chair. Mr. Heacock: In the case of feral cats, you also have another inherent problem and that's when non - neutered or non - spayed cats join that population that's being fed perhaps every day or every night. You're now feeding feral cats that are reproductively active. The only logical thing here to do would be to pass a resolution supporting the trapping and euthanization of feral cats, which are known disease carriers, not just for other cats but for humans and monk seals. We know this. Thank you. Council Chair Furfaro: Don, Mr. Bynum has a question for you. Mr. Bynum, you have the floor. Mr. Heacock: Yes, sir. Mr. Bynum: Hi Don, thanks for being here today. I'm going to have several questions and first of all I want to say I posed a question, what's the difference. I didn't say there's no difference. Mr. Heacock: Hi, thank you. Mr. Bynum: But let me start with this, if you have a colony of feral cats and there's lots of them, right, ones that TNR people aren't involved with at all. Mr. Heacock: Mr. Bynum: happens? Mr. Heacock: morning said that dramatically in... Yes. What happens to the colony when nothing Well, actually all three vets that I talked to this in the last 10 years, colonies of feral cats have increased Mr. Bynum: Increased dramatically? COUNCIL MEETING -45- June 15, 2011 Mr. Heacock: Mr. Bynum: Mr. Heacock: Increased. Right, so when you do nothing, they increase. That's correct. Mr. Bynum: You have a colony of feral cats, right, that nobody's feeding, but they're not being neutered either, they're not being trapped and neutered, and so that colony increases, correct? Mr. Heacock: That's right. Mr. Bynum: Okay, so now you said for 60 years the state has known that feral cats were a primary cause... Mr. Heacock: If not longer, yes. Mr. Bynum: Okay, tell me about DLNR's efforts, the feral cat programs to control the feral cat population. Mr. Heacock: Well, that would probably be handled by our Forestry and Wildlife Division. We have seven divisions within the Department of Land and Natural Resources and... Mr. Bynum: To your knowledge, is there a program to control feral cats? Mr. Heacock: At the state level? Mr. Bynum: Yes. Mr. Heacock: I do not know that. I hope there is. It would be logical to have one from my personal, professional viewpoint. There is one on my farm. There has been for 30 years. Mr. Bynum: Okay, I've learned a lot about habitat conservation plans. How much habitat conservation programs are actually occurring? Mr. Heacock: On a statewide basis or here on Kauai? Mr. Bynum: Either. Mr. Heacock: Well, conservation programs to trap to fence feral sheep out of Nu`alolo Kai, I would consider that a conservation program. There are many. Our programs to protect our monk seals and Hawaiian honu on our beaches I would consider, which is focusing on education of course, I would consider a conservation program. Its end result is to conserve these animals.. Clearly, if I were to answer your question in a general way, there's not enough. We need to go beyond government. We need to form strong partnerships with our watershed community to be able ... for example, my division alone has lost 66% of our staff. We have three people now. You're talking to all three of them, me, myself and I. And so I didn't answer your question probably as well as you'd like me to, Tim, because there aren't enough. There isn't enough staffing or enough money to do this. Mr. Bynum: Don, and I don't want to give you a hard time. COUNCIL MEETING -46- Mr. Heacock: Sure. June 15, 2011 Mr. Bynum: Because I appreciate your work and I've learned so much from you, but one of the things that I was dismayed was I got into this issue because the county, in my opinion and maybe I'll get in trouble for saying this, didn't address their lighting concerns until we were on probation. I know this council funded retrofits that didn't happen for the next three to five years. And so there's plenty of blame to go around, so I'm not here to blame but... Mr. Heacock: Neither am I. Mr. Bynum: When I started learning about ... so when I learned there were two state employees on Kauai to help do habitat conservation, right, and we were learning all about hey, we have to get a take permit and the whole ideas that some human activity is going to cause some take and so we need to make sure that we are allowing the population to grow, that our efforts to conserve habitat allows the population to grow and not continue to diminish, right? That's the whole plan of it. And there are state employees involved in that and so KIUC, after many years, finally just got their HCP and that's going to mean $11 million or $12 million, as I understand it, to help conserve habitat. And so when I met with all of these people, they showed me the statistics and I'm convinced it's our responsibility to protect these species and see that they don't become extinct, that in fact they get off the endangered species list. So I said tell me about your habitat conservation efforts? We've known this problem for 60 years. You just showed me how over the last 20, tell me what you're doing. And the answer was nothing, nothing. It's like oh, so we're spending five or six years talking about trying to get a permit, but there's no efforts. We're spending money ... I said, boy, isn't that going to be interesting that on the curve you're on, this population's going to be extinct in two or three years and for 60 years we have done nothing, right. And so, the point I want to make here is that the problem is this big and when I go to find out what we're doing about it, it's like we're doing nothing. We're talking about it, we're planning for it, we're filing lawsuits, we're talking about ... but the only person, the last time I checked into this, that was doing anything of significance was National Tropical Botanical Gardens who their motivation was to protect plant species, right. And the good news is you protect the plants' conservation area, you protect the birds at the same time. Mr. Heacock: That's right. Mr. Bynum: So there's a fundamental problem here. DLNR has the responsibility to protect the `aina, okay, and they're failing. Would you disagree with that? Mr. Heacock: I would just add to it that we're all failing. The county has a responsibility as well. UP... Mr. Bynum: Absolutely, no question. Mr. Heacock: We're all failing and rather than us beat each other Council Chair Furfaro: Excuse me, Don. Mr. Heacock: Sure. Council Chair Furfaro: The subject here is feral cats. COUNCIL MEETING -47- June 15, 2011 Mr. Heacock: Council Chair Furfaro: Feral cats, yes. Not grading the DLNR. Mr. Bynum: I'd appreciate an answer. What has DLNR done and I don't mean from you right now because you've already answered, but what has DLNR done if they've known for 60 years that this was the problem to address the problem? Mr. Heacock: Not enough. Mr. Bynum: And I think the answer may end up being nothing. There is no feral cat DLNR program on Kaua`i., is there right now? Mr. Heacock: There is a...in the animal control at the state animal control office, which is next to the department of health, they do trap lots of different kinds of animals. It's primarily rats, but I know they set out cat traps. I know they set out, I think, cat traps near the nesting colonies of Nene. They work closely with our Division of Forestry and Wildlife. You're a little bit out of my realm in that although these are water birds and that it does overlap in my division a little bit, they still are birds. I'm not an ornithologist. But I do know that I would encourage you to vote no on this resolution. Mr. Bynum: And I think that's the likely outcome today and I understand why. In your testimony, Don, you said if you have feral colony and it's left alone it will increase. Mr. Heacock: Absolutely Mr. Bynum: Okay, so where this all came from because I don't want to lose sight of these people who care deeply about animals, both cats and birds, who said you know what, I'm going to adopt this colony, right, and I'm going to make sure that all of those... they're already there and it's increasing. I'm going to make sure that they're neutered and I'm going to monitor this colony and if new cats come in I'm going to capture them and neuter them as well. And I've been doing this for, not me personally but the people I talked to, I've been doing this for five years and I've seen the colony go from 12 to 6, okay. And by your testimony if they did... if nobody did anything, that colony of 12 would probably be 20 after a few years. So this resolution, as initially written, it said that this is a component, right, that could be used. Now we're not going to pass this resolution because of all of the legal reasons and stuff, but the bigger picture is there's a huge problem that nobody's really addressing and on the bird issue in particular. I'm glad KIUC finally got an HCP because they're going to actually and in fairness to KIUC they have been doing the save our Shearwaters for quite a while, but now they're going to actually conserve some habitat, right, which we weren't doing because I asked that question, eh, we have all of these agencies worried about this, what are our efforts. And the answer at least a couple of years ago is oh, we don't have any. You understand what I'm saying about the bigger picture? Mr. Heacock: Yes, I do. Mr. Chairman, may I just say one thing in response to his... Council Chair Furfaro: I want to make sure we all understand. Mr. Bynum will have his opportunity to give a summary when we call the meeting back to order. COUNCIL MEETING -48- June 15, 2011 Mr. Heacock: Yes, sir. Council Chair Furfaro: He should pose you questions. If you're saying you have a response to one of his questions, then go right ahead. Mr. Heacock: I do. Council Chair Furfaro: But don't start new dialogue. Mr. Heacock: No, it's not new dialogue. It's the same dialogue. With respect to someone feeding a wild colony of feral cats on public land, as I just heard you say Mr. Bynum, they see a decline in the population and that they will trap any new cats that enter them. It took me two and half years to capture one feral tomcat on my farm. I'd see him, my pit bull would chase him, couldn't catch him. It's not as .easy as it sounds. Mr. Bynum: I've heard a lot of talk about fencing cats and you said, Don, I hope that that owner keep their cat in the backyard. Have you ever tried to fence in a cat? Mr. Heacock: Yeah, it's like herding cats, thank you. Mr. Bynum: You gotta have a top to the fence, yeah, and obviously from testimony we've had here, people bringing 80 cats into their neighborhood and putting them in an enclosure is not the answer either, right? Mr. Heacock: It becomes animal hoarding on public lands is what it becomes. Council Chair Furfaro: Thank you very much, Don. Mr. Heacock: Thank you. Council Chair Furfaro: In all fairness we have Mike Mitchell, who came all the way back to testify, and we're getting ready to go on our lunch break. So Mike, it would be appropriate that we extend a little bit beyond our time so we can take your testimony. MIKE MITCHELL, Deputy Project Manager, Kauai Wildlife Refuge Complex, USFWS: Thank you, Council, Mr. Chair... Council Chair Furfaro: Thank you for coming back. Mr. Mitchell: ...Vice Chair, Council, thank you very much. I just wanted to, especially in respect of your time, I'd like to just be very brief. I just wanted to sincerely thank you all for taking up this issue for bringing this to light and thank you, Mr. Rapozo, for authoring this. This has been a real learning experience for all of us and I think we're in this mode where it's a lot more complex than we thought it was and we're all learning about this and I just sincerely thank you. I appreciate your leadership and this idea that we're going to move forward with a task force or a committee to further investigate this and hopefully come up ... result in a policy that's good for the island. So I just wanted to thank you very much. Council Chair Furfaro: Thank you, Mike. Mr. Rapozo. COUNCIL MEETING -49- June 15, 2011 Mr. Rapozo: Mike, thanks for being here last week. I know you're a very busy guy. I was told that to get you here even on one meeting day is a miracle and for you to come back, I do want to say thank you for your information and your data. I know you weren't here earlier when the county attorney spoke, but it's quite clear that your testimony had a lot of impact and your data was very helpful and the county attorney has ... I'm not sure how long you're going to be here, but he has advised us to receive this resolution, not to proceed and I'm going to support that recommendation and a lot of it has to do with what your testimony was and I appreciate that. I appreciate you coming back again today. Mr. Mitchell: Thank you and I just wanted to add that the U.S. Fish and Wildlife Service is committed to this and that our agency, whether it's our biologist or myself or anyone else, we're committed to helping on this issue. Thank you. Mr. Rapozo: Thank you. Council Chair Furfaro: Okay, Mr. Bynum, you have one really quick... Mr. Bynum: Very quick, are you aware of any state program to address the feral cat problem? I know you on your wildlife, you've testified, are trying to protect the birds in your sanctuaries. Are you aware of any state program to address feral cats? Mr. Mitchell: Between the years of 2009 -2010, there was a biotechnician hired by DOFA, Division of Forestry and Wildlife, State of Hawaii, who did predator control down at Hule`ia National Wildlife Refuge. She trapped nine cats, one of them was a recapture. All of those cats were taken to the Kauai Humane Society. It was interesting that one of those cats ended up back at Hule`ia National Wildlife Refuge. And at the same time during that same period, she found a dead Nene gosling. That gosling was given to a vet, a health lab in Honolulu, and it was positively identified that the cause of death was toxoplasmosis, during that same period. So the answer is yes, but... Mr. Bynum: So there was a state program that trapped nine cats. Mr. Mitchell: For this one period at one location and that's all I know. I imagine there was more. Mr. Bynum: Okay, thank you. Council Chair Furfaro: Thank you, Mike, thank you for your testimony. Members, I'm going to call our meeting back to order here. There being no further testimony on this matter, the meeting was called back to order, and proceeded as follows: Council Chair Furfaro: And I believe that there has been discussion about moving to receive this item. But we do not have a motion? Mr. Rapozo: We did. COUNCIL MEETING -50- June 15, 2011 Council Chair Furfaro: We did? And did we have a second? Okay, my apology. So we have a resolution to receive and a second. Is there any further discussion? Councilmember Kuah'i? No? Councilmember Chang? Mr. Chang: I was going to just ask you are we going to have further discussion? We just want to end it before lunch? Council Chair Furfaro: We want to call for a vote here. If the vote is to receive, it literally ends it. Councilwoman Yukimura. Ms. Yukimura: I'll be quick. We're ending the resolution, but we're not ending the problem solving to the problem, as I understand it. And we're going to try to pull together a group of stakeholders, right? Council Chair Furfaro: Thank you for broadening that query by Mr. Chang, but we're voting on the resolution. To receive it ends it, but we're not saying that we wouldn't revisit this with other stakeholders. Any additional testimony, Councilwoman Nakamura? Ms. Nakamura: Also very briefly, I just want to recognize Councilman Rapozo for putting this on the agenda to raise our awareness as a council and also the community's awareness of this issue and I think that there seems to be some commitment to take a leadership role because we know this problem is not going away. But I think we need both the council and the administration to say that we need to work together to make sure that this habitat conservation plan is just something not in writing, but it's something we're working toward seriously. So I just wanted to say that. Council Chair Furfaro: Okay, I think that also broadens the answer to Mr. Chang as well, so. If not, I would like to do a voice vote one time. All of those in favor of receiving, please signify by saying aye. The motion to receive Resolution 2011 -51, Draft 1 for the record was then put, and unanimously carried. Council Chair Furfaro: We are going to recess for lunch. We have a public hearing at 1:30 p.m. or thereabouts. Thank you, everyone. Thank you for those that'came back to testify. There being no objection, the meeting was recessed at 12:35 p.m. The meeting was called back to order at 1:40 p.m. Mr. Nakamura: Council Chair, we're back on page 2 of the council's agenda, on a Claim, communication C 2011 -193. CLAIM: C 2011 -193 Communication (05/26/2011) from the County Clerk, transmitting a claim filed against the County of Kauai by Roger Matias, Jr., and Dorene Golden Matias for property damage, loss wages, and medical bills, pursuant to Section 23.06, Charter of the County of Kauai: Mr. Kuah'i moved to refer C 2011 -193 to the Office of the County Attorney for disposition and/or report back to the council, seconded by Mr. Rapozo, and unanimously carried. Council Chair Furfaro: Thank you very much. Next item, Mr. Clerk. COUNCIL MEETING -51- June 15, 2011 Mr. Nakamura: Next matter for approval is a Committee Report from your Committee of the Whole, Committee Report No. CR -COW 2011 -20. COMMITTEE REPORT: COMMITTEE OF THE WHOLE REPORT A report (No. CR- 2011 -20) submitted by the Committee of the Whole, recommending that the following be approved: "Resolution No. 2011 -51, Draft 1, RESOLUTION SUPPORTING THE TRAPPING, NEUTERING AND RETURN METHOD OF CONTROLLING KAUA`I'S HOMELESS AND FERAL CAT POPULATION," Mr. Rapozo moved for approval of the report, seconded by Mr. Chang, and unanimously carried. (See Resolution No. 2011 -51, Draft 1) Council Chair Furfaro: Thank you very much. Next item. Mr. Nakamura: Next matter on page 2 is a resolution. This is Resolution No. 2011 -63. RESOLUTION: Resolution No. 2011 -63, RESOLUTION CONFIRMING MAYORAL APPOINTMENT TO THE BUILDING BOARD OF APPEALS (Julie Simonton Engineering designation): Mr. Kuali`i moved to adopt Resolution No. 2011 -63, seconded by Ms. Yukimura. Council Chair Furfaro: Thank you, members. Any discussion following the interview this morning. Mr. Chang. Mr. Chang: Thank you, Chairman, yes. I just wanted to say thank you to Julie Simonton. We did have her interview in the morning, so I just wanted to say to the public, she's very, very well qualified and we're glad we have her coming on board as a volunteer. So I just wanted to say thank you to Julie for making herself and her expertise available to our county of Kauai. Thank you, Chair. Council Chair Furfaro: Thank you, any further discussion? I too, I also want to recognize Julie stepping forward and some excellent credentials for this role on the Board of Appeals. This will be a roll call vote, please. We'll get to that in just a moment when the clerk is ready. Mr. Nakamura: My apologies, Mr. Chair. The motion to adopt Resolution 2011 -63 was then put, and carried by the following vote: FOR ADOPTION: Bynum, Chang, Kuali`i, Nakamura, Rapozo, TOTAL — 7, Yukimura, Furfaro AGAINST ADOPTION: None TOTAL — 0, EXCUSED & NOT VOTING: None TOTAL — 0. Mr. Nakamura: Seven ayes, Mr. Chair. COUNCIL MEETING I Council Chair Furfaro: Mr. Nakamura: Draft Bill (No. 2409). BILL FOR FIRST READING: -52- June 15, 2011 Thank you. Next item. Next matter is a Bill for First Reading, Proposed Proposed Draft Bill (No. 2409) — A BILL FOR AN ORDINANCE TO AMEND KAUAI COUNTY CODE 1987, AS AMENDED, BY ESTABLISHING A NEW ARTICLE RELATING TO A RETAIL USE CONCESSION AT THE PIIKOI COUNTY BUILDING Mr. Nakamura: Mr. Chair, I believe we have a deferral request from the administration, which is being distributed. Ms. Yukimura moved to defer Proposed Draft Bill (No. 2409), seconded by Mr. Kuali`i. Council Chair Furfaro: Thank you. We did receive a deferral request today and the motion was made by... Ms. Yukimura: To defer. Council Chair Furfaro: Okay, all those in favor, signify by saying aye. The motion to defer Proposed Draft Bill No. (2409) was then put, and unanimously carried. Council Chair Furfaro: Thank you very much. Next item, please. Mr. Nakamura: No further business ... oh, I'm sorry, Mr. Chair. Back to page 2 of the council's agenda, communication C 2011 -192. COMMUNICATION: C 2011 -192 Communication (06/09/2011) from the Council Chair, requesting agenda time to provide a trip report on municipal bond rating agency presentations on County of Kauai General Obligation Bonds, Series 2011A (May 31— June 3, 2011; San Francisco, CA): Mr. Chang moved to receive C 2011 -192 for the record, seconded by Mr. Kuali`i. Council Chair Furfaro: Thank you. I'll have a short presentation for you folks, if you don't mind. I want to establish a new process here on trip reports that when someone goes to represent the council that there's an opportunity to provide an update to each of you on what happened. This is in a PowerPoint presentation, but there are documents here for you. So I'm going to run through this very quickly in the PowerPoint presentation, but before I do, let's take a quick recess so BC, you can change your tape. There being no objection, the meeting was recessed at 1:45 p.m. The meeting was called back to order at 1:48 p.m., and proceeded as follows: COUNCIL MEETING -53- June 15, 2011 Council Chair Furfaro: We're back from a tape change. This particular piece is kind of a follow -up on our earlier report from the treasurer on our bond process, the general obligation refunding in the financial term references refinancing, but the term they use is refunding. This is the series 2011A obligation bonds and the team that we went up with ... I went as the chair of the legislative body. The bonding agencies, obviously, wanted to hear from our perspective some of the goals and future financial programs for the county. The mayor led our group. Wally Rezentes, finance director, really did a very nice presentation on financial accountability along with the treasurer, Mr. Dave Spanski, and then of course the forecasting and economic development questions, the opportunity was posed with myself and Mr. George Costa, who handled economic development. So you have a complete packet of what is in this presentation and I just wanted to go through it very quickly, as I said establishing a new standard that if we wanted to have a trip report on somebody who goes to represent the council as a body, especially in something dealing with finance that we should require an understanding of the key points. I want to share with you we met with Bank of America representatives that meet with the county of Kauai, and we put most of this presentation together on that Tuesday at their offices and then we met with the agencies on Wednesday and Thursday. So the reality is we only need two bonding companies to acknowledge our rating and our willingness and our financial credibility. But we have always gone to three for those ratings. The good news is I do have emails that I can make available to you as we have now heard from the various bonding companies that in fact acknowledge that they reaffirm Kauai County's AA rating. This was on the heels of the week before where the State of Hawaii was actually downgraded one notch. So this was a very good accomplishment for us. The general information we gave as a team, we had introductions of all the players at the table for each group, an overview of Kauai County, the economic forecast, a tourism section, then a construction/real estate section, the county's financial profile, proposed financing structure and restructuring the debt covering the existing information, which you heard from our treasurer today we're at $198 million of debt associated with funding our bonds and he is projecting at the end of the year that will be more like $194 million. Then also we always hear about our surplus, but in the same breath we should also be talking about not just what we have in reserve but what we also have as far as indebtedness and payment. So that was pretty well covered in the financial summary schedule that Mr. Rezentes did. We then had presentation themes about the commitment to economic growth and our willingness to diversify. There was a lot of discussion here about the steps we're taking on the important ag lands and commitment to agriculture. We have a resilient visitor industry, and between George and I, we covered a good portion of that. I have a slide that talks about some of the specifics, although we're seeing fewer visitors, the reality is we're having longer stays. So it does not have the same impact on our overall tourism volume. We have a discussion on the stabilization of the assessed real estate values for our tax base. We wanted to indicate that we have very affordable property taxes based on the fact that we have not had any major increases. We also talked about some of the existing legislative exemptions that have been passed by the council and we also wanted to promote the fact that as there was discussion today and Mr. Bynum queried Mr. Spanski, it is relatively correct for us to be able to show off a strong conservative financial management style of the county of Kauai. As we pointed out, we have 8.7 percent of debt associated to what our borrowing power really is and that's covered in the low debt burden with relative rapid payout ratio COUNCIL MEETING -54- June 15, 2011 as Dave Spanski expressed and I do have a schedule for you that we could pay off our debt inside of 15 years. Kaua`i's population, total resident population versus defacto population, here's a reference over the last 11 years. The residents have a very small growth margin as covered in the deep blue over that period of time and then you can see the de facto population as it relates to visitors, timeshare owners and so forth. We have a de facto population of about 18,000 added to our 64,000 population base. So at any one time, the island probably supports a de facto population of about 82,000. The overview of Kauai County, again, highly centralized government providing a broad range of municipal services. Discussion came up about our charter. One of the comments I made earlier, we have a very strong mayoral base, but we also have a very strong council charter that leaves a lot of the financial decisions and funding at the decision process with the council. We also talked about the fact that all of the services that really come under us including the borrowing power for the water department and the provisions we're governed with with the Charter of 1969, we have a county council serving as the legislative body, seven members at -large to serve two -year terms, maximum four going forward. We approve the county budget; we establish all the fees, rates, assessments; and the term of the councilmembers expire this time around December 3, 2012. I introduced all of you folks, even though you were not present. I made this presentation of the council structure and the various committees that are served. We also presented the employment breakdown for the County of Kauai, which you all have in the packet there and it really references- some information from the state DBEDT on our allocation of employment on this chart. The economic overview, we did one particular piece and George did a very nice job on the agricultural and its important component to Kaua`i's and our recommitment through the important ag lands. Everything from our growing period and we had quite a bit of discussion about Kaua`i's cattle industry or exportation of about 6,000 head a year and the opportunity about reinvesting in water management. We had also visited some of the stable brands that have purchased assets on Kauai for different... Hills Brothers Coffee and some of the opportunities with perhaps looking at wine development and a very strong tropical flower industry that's being launched. And all of these particular pieces are being identified also in our CEDS program. And the CEDS effort was, I know, a discussion with the mayor and I circulated to you some of my commentary, but the main effort here was sharing with the bonding agencies that we needed to do this evaluation, therefore the grants. Because if there's opportunity to grow our economy outside of just the visitor industry, we need some third parties to take a look at it and they were very pleased to hear that we were doing that. The tourism overview, I circled a couple numbers over here that they had questions on. In 2007 we had about 1.2 million visitors to the island of Kauai. The most current full period of time that we had to report was actually the year 2010 . of which we had 963,500 visitors. The most important part I wanted to bring to your attention here is ... was the fact that although we're down about 300,000 visitors, when we were at 1.2 million per year, the average stay was 4.8 days. We are currently with 963,000 at an average stay of 7.1 days and a lot of that change is related to our allocation of people who look at Kauai as their vacation home in COUNCIL MEETING -55- June 15, 2011 interval ownerships and so forth, and a strong repeat destination visit. So the green number is referencing our international visitors. A big part of that is the eastbound. visitors from Japan and we found their concerns with that number dropping, but the offset to that was typically the eastbound visitor to Kauai only stayed about 2.1 nights. So our goal and mission is to have stronger length of stay. Here's a little chart here and as you can see Kauai, I wanted to point out the fact that over the period of time that we had discussions from 2006, in this year we actually had a $14.00 increase on the average daily rate. In addition to having a more prominent length of stay, we're also getting a few additional dollars from the average daily rate. These charts now reference construction and real estate development on Kauai. The real comparison here was really also going along with the national comparisons and the state comparisons. And Kauai, although during this weak time of construction and employment, we at least followed the trends that people expected. The county council's real estate assessed valuation, as you see here in the discussion, our real estate total value on Kauai is at 15.9. Although it's declining, it still provides us a very healthy base on our borrowing power as we talked more this morning with David Spanski on what represents the total potential borrowing of 15 percent of the assessed valuation. So they could see the charts that although we are slowing appropriately based on the assessed value, we are still within some pretty good ranges for a need to borrowing to go back to the well. Tax delinquencies remain low despite the growth in assessed valuation and a soft economy. We were showing about a 3 point ... is that 3.8 on the end? Yeah, 3.8 percent of collection needs for our delinquent taxes, which is actually a bit down from the previous year. So they saw that as kind of a leveling off of the collection issues, comparing quite well with what the other counties have. We did have a lot of discussion about establishing a formal reserve policy. I spoke to this with Wally that in fact this budget and this council, we acknowledged setting aside a reserve. They were very positive about our efforts there. They also seemed to agree with my commentary that we didn't have a $183 million operating budget, $24 million is actually set aside in a reserve and it's actually a reclassification. It's an accounting reclassification. It's not an operating budget and if we had to visit it, this is what we presented to them as far as the reserve based on the following estimates and appropriate categories, and I think you're aware of this discussion we had during the budget with Wally, and we will be seeing an ordinance coming over that firms this allocation of percentages in an actual ordinance coming up soon. So this was presented to them as well. The. refunding of the bonds we're talking about right now as Mr. Spanski spoke about today, we are looking at this issue of refunding or refinancing we always used the term refunding —about $26 million worth of debt. What we wanted to portray to the group was that refinancing these 2011A bonds, these general obligation bonds will save us about $300,000.00 a year on what we currently pay. And what was very important was to portray to them that we had to look at controlling other costs as we looked at losing about $2 million of the TAT. So, here's an explanation on how we're addressing about $300,000 of that, and I believe in year nine the savings jump up to about $450,000 a year. So that was very self - explanatory about this restructure of our debt. COUNCIL MEETING -56- June 15, 2011 Financial schedules and summaries we had for them, you have some of those in your books. Key points, we have a commitment to an economic growth and diversification and again, this is the discussion about CEDS. This is why the council felt we needed to do that. We have a resilient visitor industry and notable new investments in the tourism industry. I had given a little overview and some of it has been in the press may not have followed it, but the Hyatt is now a Grand Hyatt after a $35 million reinvestment. The public areas for the Marriott have all recently been refurbished. The Courtyard, the previous Sheraton Coconut Beach, is going through reinvestment in the facilities of $16 million. The St. Regis opened after a $65 million refurbishment. There's a new brand in Po`ipu, the Wyndham, although it's a condominium resort, those individual investments really portray that operators and investors are refurbishing what assets they already have and it showed a good picture for keeping our units fresh and of high quality while at the same time stabilizing the visitor industry with our share of about 33% interval ownership. There is continued construction activity and in the main thing, the mayor's real push on our CIP this year is about reinvesting some of this bond money, whether it's water projects, public use, public facilities, that is, during this period of time, seen as a continued effort to stimulate construction activities. We have a strong asset base valuation, as we talked about with Dave today. You know $15 billion total value of real estate, of which we're only using 8.6 percent of what we could on allocation of a base valuation. Also, we know from our particular piece dealing with a strong and conservative financial management program, the biggest piece here was our effort to continue to fund the OPEB, that's other payroll and employee benefits, for our pooled negotiation with all counties and the state. The County of Kauai, we do fund our liability 100 percent and that was very well received. And we have demonstrated expenditure controls as we continue and even this year we may see a little bit more contributions into the surplus, which once we've established the reserve policy, we can now think of a year from now on what we might earmark should we have surpluses again. And I think I hit the wrong button again. No, that was it. That was it. There we go. So that's a quick overview for all of you on the trip to San Francisco and as I said, we have emails now that confirm what I would say was very well received and a very reasonable and stable outlook for Kauai County. And when we get those actual letters, we'll have them circulated. So, anyway, that is my trip report for you folks and if you have any questions on any particular information that's there, I'll be happy to answer. And this might bring us to the end of the day, I think. Ms. Yukimura: Yes, Mr. Chair, I just want to thank you for this report. I don't remember ever getting a report like this on other bond financing or refunding and I think it's a really good overview, very informative and sets a high standard. Thank you. Council Chair Furfaro: Thank you, thank you. Mr. Bynum. Mr. Bynum: I just want to echo that last time there was a meeting like this, I had to pursue the information and it took several weeks to get it and so this is quite a change. Thank you. Council Chair Furfaro: Well, we will attempt to do things different and better a little bit at a time each time. But again, I only have emails that are really directed at Dave Spanski as we heard from the bonding companies. I would say to you they looked very favorable on Kauai and some of the conservative policies we have. But I thought it was important to do this, you know, I was finance chair of the council for six years and then certainly had an opportunity to put some faces with names that I've talked to over the last 10 years, so. COUNCIL MEETING -57- June 15, 2011 Ms. Nakamura: I have a question. What will it take for Kauai to have a AAA rating? Council Chair Furfaro: You know, I think you need to look what the ratings are overall. The different bonding agencies have different schedules. Like there's some that have AA and some that have Aaa, but we are within probably the 85 percentile of ratings, if you look at it overall. What would it take? Well, I think the intent is you never get to a point that your debt or the amounts you have outstanding in loans exceeds what you could pay off relatively quickly with your surplus. And so there's that kind of discussion as I know we just had a reading about a tax bill today. There's a couple ways to look at that. I said it earlier, if we borrow money that costs us 3.5 to 4 percent. If we put the money in some kind of earning at this time, we'll probably only recover about 1.5 percent, maybe 2 at best. And then of course, there's that discussion about potential tax holiday for taxpayers, but I think we've taken the position all the time about trying to keep it consistent, conservative, but having that reserve which now we're putting into an actual reserve policy which was received very favorably, but it did not, even with that, it didn't move our credit rating. It only reestablished a strong rating that we have right now while at the same time the state went down a notch, so. I think it's a variable. I don't know what it would take. But they all graded a little different. Ms. Nakamura: (Inaudible.) Council Chair Furfaro: I think that's a question for Dave Spanski and I think you'll get a pretty similar response. I think the City & County of Honolulu chose this year only to go after two agencies. And like I said, you only need two to get your financing, but we've always practiced by trying to get three, but they vary in differences that only kind of reflect their grading sheet. Mr. Bynum. Mr. Bynum: Yeah, thanks for ... I just wanted to respond to that question because I think it's a really good one and some of the factors that impact that are out of our control, i.e., what is your economic base, what is that industry, what are its long -term prospects, and a strong thing that I know you're promoting, Councilmember Nakamura, as the council agreed, is to look at diversifying our economy. Amd so those efforts, I think, helped. There's only so much we can do in terms of our financial policies, then some of these factors are just where you are, who you are, what your economic base is, that kind of thing. Council Chair Furfaro: Thank you for those comments. I think that is correct and it was a way to justify the CEDS process, that we're looking at this diversification. But another thing, I think, gave us a notch over the others was the OPEB and the fact of the matter is they look and it's us and say, oh, and so you're funding your total employee benefit package 100 percent, and that was very well received, so. Councilmember Kuali`i. Mr. Kuali`i: Chair, I just also want to thank you for this report, for the detail, and for the valuable information throughout. I see myself perhaps using this information for a long time to come in the next several months or so. One thing I did think about when you talked about how the hotels are reinvesting and doing upgrades and satisfying the ... and attracting the tourists in that way, it makes me think about how we as a county need to think about that too in the sense of upgrading our public facilities and there's a double whammy there because the public ... the tourists can benefit from our beach parks and our parks, but also our local people. And so we should make it a point to invest in a way to make our public parks and beach parks and facilities the best, so that it is part of the attraction. COUNCIL MEETING -58- June 15, 2011 Council Chair Furfaro good. Council Vice Chair. I agree, that's a very good parallel comparison, very Ms. Yukimura: You know, we talked during budget about following up to make sure that our act of funding all our long -term obligations fully would be secure because we are part of a state system, and I would like to follow up on that if we could and do some requests for confirmation or assurances that we actually are protected that way because we are doing the right thing, but because we're a part of a larger system that hasn't been always doing the right thing, we need to find out if we've done everything possible to secure our efforts. So can we have staff... Council Chair Furfaro: I think that's an excellent observation. It's something I've already started having dialogue with the mayor and Wally on. And what we're doing is we are funding our obligation, but what we want to see is within that employee structure that the oversight is saying, oh and Kauai has fully funded their exposure and we need to see that in a document. So that will be a very near item. As you go through the pamphlet and I didn't put it on there, you'll find a series of questions. If I can, you'll see a summary of the reserve policy, which is tied to the Fitch questions as it relates to... oh and how do you expect to have some guarantees about these escrow funds that you have. And it's something that from these questions we will be pursuing, so. Ms. Yukimura: So actually they give us a hint here by saying, has an irrevocable trust been established. I'm not clear about all the legal requirements, but I think that's what I'm trying to talk about. Council Chair Furfaro: No, that is what you're talking about. Ms. Yukimura: And that we need some really good legal and financial advice for securing our financing. Council Chair Furfaro: So if you go to that page, you'll see, and this is a sample of the questions that the bonding people talked about. And yes, they would like to see how we're dealing with that trust account and it does take someone to initiate that, of which I've had this discussion with the mayor and Wally, and I can assure you that both gentlemen are both equally interested in making sure that these questions are answered. But you may want to go through- those questions because over the next year there might be some of these things that we pop up and put in Mr. Bynum's committee. But that's a test sample of the kinds of questions what we're being asked. Ms. Yukimura: Okay, thank you. Council Chair Furfaro: Mr. Chang. Mr. Chang: Thank you, Mr. Chairman. I wanted to say that I wanted to thank yourself personally for going and being a part of the great team that we had along with yourself, the mayor, of course, Wally Rezentes, Jr., and Dave Spanski and also with George Costa. I wanted to say thank you very much for this very comprehensive report. I love the report. I love the pie chart. It's so easy to read, you know the different colors are a nice separation, and I want to thank you because the font, sometimes we receive reports and it's really small, but it's very, very legible and you can read that, so I just wanted to say that. Also I wanted to say and I'm not sure if I missed it, but I don't remember in your presentation under the economic overview seeing the slide of the Pacific Missile Range Facility at COUNCIL MEETING -59- June 15, 2011 Barking Sands. But I do want to say that one of the things that you highlighted and I wanted to just say this to our people here on the island of Kauai is within that slide, I think it's very important to let people know that it's an estimated $135 million annual impact and the base actually holds 900 jobs, which is incredible because obviously people are employed but that money goes back into the community, and it is one of Kaua`i's largest employers. Also the (inaudible) ships and the Terminal High Altitude Air Defense System brings in $85 million a year annually, so I believe that's a really big point that the community should be aware of. And when we do our approximately 6 -8 large test evaluation events at Pacific Missile Range at Barking Sands, it does bring in an average of anywhere between 300 and 500 people over the week and that directly injects $11 million in the visitor industry. And over the past couple of weeks, Stephanie Iona at the Taste of Waimea did say that they did solidify a contract that's going to be bringing hundreds of people over to the Westside in some of the homes out over there, the rental homes, the infrastructure that they have out there, so that also is going to be a long period of time that they're going to be there, particularly not just the Westside but on the island of Kauai, so again I thought this slide was very important to put in. And also I want to thank you especially with your tourism background because you did mention the renovation of the Courtyard by Marriott, which should be completed, I believe, early to mid - September. Also you mentioned the Kauai Marriott Resort and Beach Club, that whole public area has been really, really beautified along with the golf course there. They've completed their new golf course with all that renovation. The golf course and the greens have been also really replaced there at Po`ipu Bay Resort Golf Course and that's a lot of money that they invested within the golf course. And you also mentioned the Grand Hyatt Kauai with their millions and millions of dollars of renovations, so I wanted to add that. You mentioned, of course, Koloa Landing, the Wyndham, which I think is huge because they continue to move forward despite very, very difficult economic times, so, and I just also wanted to say that you and I personally had an opportunity to do a hardhat tour and I think a lot of the councilmembers did the hardhat tour in an evening function. But Mr. Chip Bahouth explained to us about the millions of dollars that they're investing within the porte cochere, within the brand new pool area, the brand new rum fire area, which was formerly Shells, The Point, and Naniwa. So I wanted to mention that and you may, if I can ask you to share, because in my understanding, next year they also have plans to renovate the rooms and I think that's really key to let people know that we are certainly investing back into our economic future for the island of Kauai. Thank you, Mr. Chair. Council Chair Furfaro: Well, I did not intend to cover every slide that I gave to you folks, but I wanted to share with you. I mean you're a great marketer as you covered all of those particulars, but the main message we wanted to share with the bonding agencies was the value of CEDS to diversify our economy, those owners and brands that are here are reinvesting. You know I didn't even touch on the slide that's in your packet about the four golf courses that have been ... because the intent wasn't to summarize this for all of you because we know those pieces. The idea was to say to the bonding company, the agencies, and I must say the working experience that I had with Wally and the mayor and George and Dave, and the first day Al, our county attorney, joined us. I mean it was a very good team and we all participated. I wanted to just touch on the main points that we shared with the agencies, not all of that detail because we know it. They got that detail; I can share that with you, very specific, but again it was to demonstrate that because of managing our efforts and our island and our frugal approach to spending or conservative — however you want to say that —we got a good bond rating. And I COUNCIL MEETING -60- June 15, 2011 wanted to personally thank the mayor and his team that I joined. We had a very successful trip, so. On that, oh, there's Mr. Castillo. Would you agree we had a very successful trip? Please come up. There being no objection, the rules were suspended. ALFRED B. CASTILLO, County Attorney: Sorry, County Attorney Al Castillo. I was there for another bond matter, for the CFD, but I had the privilege of being part of the group for the first day and I can tell you from my perspective in many years of law practice, the level of the presentation, the professionalism, and, Council Chair, you being an addition, I was ... to me the word that comes to mind is impressive. The presentation, the preparation, everything was impressive and that's the reason why I think we got the results that we did, so. For me, you did a fantastic job, our group did a fantastic job, and that's from me being an observer. Council Chair Furfaro: We really appreciated having you there that first day, Al, thank you, thank you. There being no other questions, the meeting was called back to order. Council Chair Furfaro: Okay, that concludes my report and a big mahalo to the mayor and his team and Wally and Dave and like I said, we prepared this over at the Bank of America offices when we first got there, so everything was very current. Can I have a motion to receive my trip report? Mr. Rapozo: We just have to vote. Council Chair Furfaro: Oh, we have it already? Okay, all those in favor to receive? The motion to receive C 2011 -192 for the record was then put, and unanimously carried. Council Chair Furfaro: Thank you very much. We have completed our business for the day. ADJOURNMENT. There being no further business, the meeting was adjourned at 2:26 p.m. /wa Respectfully submitted, PETER A. NAKAMURA County Clerk