Zoning & Planning - Regular Meeting

Bye.

Aloha and good morning, everyone. It is Tuesday, August 25, 2026, and the time is 9.06 a.m. Will the Committee on Budget please come to order? Welcome to the committee. Members who are present in the chamber today, Committee Vice Chair Nishimoto, Council Member Cordero also joining us. I'd like to welcome Council Member Tupoula. Although remote oral testimony is being... Oh.

I do.

Pursuant to Council Rule 8D, I designate Council Vice Chair Tupola as a temporary voting member. Thank you for helping us to achieve quorum. Although remote oral testimony is being permitted, this is a regular in-person meeting and not a remote meeting by Interactive Conference Technology under HRS section 92-3.7. Therefore, this meeting will continue notwithstanding loss of audiovisual communication with remote testifiers or loss of the public broadcast of the meeting. Members of the public will be allowed to provide oral testimony on all items on the agenda in two ways, in person in the council chamber and remotely via video conference or phone. Remote and in-person oral testimony will be allowed when each agenda item is taken up. Before testifying, each person shall state their name, Each speaker may not have anyone else read their statement and is limited to a one-minute presentation on each item. As both English and Hawaiian are official languages of the State of Hawaii, pursuant to Article 15, Section 4 of the Hawaii State Constitution and Section 1-13 of the Hawaii Revised Statutes, members of the public may testify in their language. For all testimonies offered in Olalo Hawaii, additional time, as may be necessary, will be allowed for the testifier to provide an English translation of their testimony. All persons who have registered to testify in person will be called upon first. When your name is called, please come up to the testifier podium. Persons who have not registered will be given an opportunity to testify following the registered testifiers. After in-person testimony has concluded, I will proceed to remote testimony via video conference or phone. When I call your name, please monitor your screen and follow the prompt to unmute. For those who are joining us by telephone only, please press star nine if you wish to testify, and I will identify you by the last three digits of your phone number. When your number is called, please listen for the prompt to unmute and press star six. Some friendly reminders and tips, video conference from a quiet location if possible. If you're also watching the proceedings on Olelo, please mute your television at the time you're called to testify. When the timer on screen reaches zero, please conclude your remarks promptly. Written testimonies including the testifier's address, email address and phone number will be available to the public as described on the posted agenda. As a courtesy, please turn off or silence all cell phones for the duration of this meeting. Members, item number 6, Bill 44-2026 on page 8 of the agenda has been cancelled and will not be considered today. Agenda item number one for action, resolution 26-166. This resolution approves the wage and non-wage cost items for the unit 15 collective bargaining agreement between the employer and the Hawaii Government Employees Association for the period from July 1st, 2025 to and including June 30, 2029 for employees in bargaining unit 15 of the City and County of Honolulu. Before we call up the administration, we'll proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item?

Chair, there are none.

Thank you. We'll now proceed with remote testimony. Clerks, do we have any remote testifiers for this item?

Chair, there are none.

Thank you. We'd like to welcome from the administration the Director of Department of Human Resources, Director Nola Miyazaki. Good morning, Director Miyazaki.

Good morning, Budget Chair Okamoto, members of the Budget Committee. Thank you for this opportunity. I'm Nolan Miyazaki, Director of the Department of Human Resources. The administration respectfully requests your positive consideration of the collective bargaining cost items for Bargaining Unit 15 water safety officers. And I'll just give a quick rundown of the cost items. The total costs for fiscal year 26 are $727,000 and $839,000. That consists of a 2.61% monthly across the board salary increase to the salary schedule, including any step movements for those employees who are eligible that year, a one-time lump sum of $2,000 for all BU 15 employees. That's retro to July 1, 2025. July 1, 2026, a 2.49% monthly across the board increase and continuation of the step movement plan for those eligible in that year for a total cost of $1,633,116. Effective July 1, 2027, a 2.47% monthly across the board increase to the salary schedule and continuation of the step movement plan for those eligible in that year. The total for fiscal year is $2,768,390. And finally, in fiscal year 29, effective July 1, 2028, a 3.12% monthly across-the-board salary increase plus continuation of the SIP movement, and the total cost for fiscal year 2029, $3,973,000. six hundred fourteen dollars for a total four year contract period cost nine million one hundred and two thousand nine hundred fifty nine dollars and there are a total of just wanted to show two hundred ninety nine water safety officers

Thank you, Director Miyazaki. Members, do we have any questions for the Director? Council Member Tupoula.

Aloha, Director. Good morning. Good morning. A question about the retroactive 2025-2026. Is the reason because the duration of the collective bargaining lasted so long that we're now doing the two retroactive years?

Yes. We went to arbitration with the water safety officers, BU 15, and that arbitration did not take place until this calendar year. I believe it was, it might have been as late of March. So that's why by the time the arbitration award came out and we've, you know, that's why it's taken so long, but we reached impasse last year. And so by the time the arbitration was scheduled, we had another, we had two other arbitrations that we had to go to SHOPO and HFFA. And so this one was the last one.

I see. And off the top of your head, do you know how many contracts we still have for ocean safety? I know there's a small handful that we're still operating under contract that weren't necessarily FT. I'm not sure how many contracts we have yet.

No, I'm not sure, but, but you're, you're right. Most of them are also low service.

Yeah, thank you. Thank you, Chair. Thank you, Council Member Tupola. Members, any further questions for the Director? Okay, seeing none, I'd like to welcome to the Chamber, Council Chair Waters. Thank you. Seeing no further questions, members, we are in discussion. Okay, seeing no further discussion, the Chair recommends that Resolution 26-166 be reported out for adoption. Any further discussion? Any objections or reservations? Hearing none, so ordered. Moving on to agenda item number two for action, resolution 26-170. This resolution authorizes a transfer not to exceed $692,800 in general fund monies from the provision for grants partnerships and security activity, current expenses character of expenditure to the Department of Community Services, community-based development activity, $33,514 of which will be transferred to the salaries character of expenditure and $659,286 to the current expenses character of expenditure to meet the local match grant program needs of the Department of Community Services. Before we call up the administration, we'll proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item?

Chair, there are none.

Thank you. Proceeding on with remote testimony, clerks, do we have any remote testifiers for this item?

Chair, there are none.

Thank you. We'd like to welcome, joining us here today from the administration, from the Department of Community Services, Director Anton Krucke. Good morning, Director Krucke.

Good morning, budget chair and budget members of the council. Anton Krucke, Department of Community Services, here to answer any questions you may have about this transfer.

Thank you, Director. Members, any questions for the Director? Council Member Tupola.

Aloha, Director. For the salaries category of the transfer for the $33,000, is that for a staff member that's already on staff, or you guys are getting someone in to work with you on the local match?

It's continuing funding for a staff member that's already on staff.

And then for the local match grant, are there specific ones that we already have been awarded or you guys are putting it in there in anticipation of matches that we're going to do?

It's for the grants that are in the action plan. So it makes the whole process whole to be able to execute them.

I see. Thank you, Director. Thank you, Chair. Thank you, Council Member Topola.

Any further questions for Director Krecke? Thank you, Director Krecke. Seeing no further questions, members, we are in discussion. Seeing no further discussion, the chair recommends that resolution 26-170 be reported out for adoption. Any further discussion, any objections or reservations? Hearing none, so ordered. Moving on to agenda item number three, for action resolution 26-173. This resolution authorizes a transfer of up to $280,000 in general fund monies within the patrol activity from the current expenses character of expenditure to the equipment character of expenditure to enable the Honolulu Police Department to purchase essential equipment, all terrain vehicles for use by community policing teams. Before we call up the administration, we will proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item?

Chair, there are none.

Thank you. Proceeding now with remote testimony, clerks, do we have any remote testifiers for this item?

Chair, there are none.

Thank you. I believe joining us today in the chamber from the Honolulu Police Department, we have Major Henry Roberts. Good morning, Major.

Good morning, Chair. I'm also here with Assistant Chief Elgin Arcuero. Council, we do request that that $280,000 in general fund monies be transferred to within the patrol activity from the current expense, the character of expenditure to the equipment e character of expenditure for 2027.

Thank you, Major. Members, questions for the department?

Council Member Cordero. Thank you, Budget Chair. Hi, Major Roberts. Thank you very much for being here as well as Assistant Chief Arquerio. I definitely miss Assistant Chief Arquerio in District 5. Anyway, since this is a request for transfer of funds for equipment, are ATVs that will be purchased with this funding solely going to be used for the community policing teams?

Yes.

And all eight patrol districts, community policing teams have requested for these ATVs.

Yes.

I understand that the bulk of the last round of ATVs were purchased maybe during the COVID time era. Yeah. And so I get that, you know, with use and the elements. They need to be upgraded or updated. But since that time, how has HPD, HPD Finance built up on their ATV updating program? How have you folks been able to support that?

Hi, Elgin Arcaro. I'm an assistant chief for Central Patrol Bureau. I can answer that question. The lifespan of the ATVs are roughly five to six years. And the last purchase of ATVs was in April of 2020, or August of 2020. So since then, the wear and tear and just the conditions of Honolulu and the salt area really wore down the frames of the ATVs. And some of them are deemed unsafe.

And Assistant Chief, I know that we talked a little bit about it before, but because we just had our budget process, I know there were ATVs requested and approved in the fiscal year, this most recent fiscal year budget, but how come a $280,000 amount request wasn't added to that additional ATV funds?

It didn't make the budget for fiscal year 27. We requested it again for fiscal year 28 and we're in the process of building that budget.

Thank you. Budget chair, if it's okay if I can ask, I'm now directing to CPT. Okay, thank you. First off, I wanna thank both of your support and the whole department's support. As you know, just as us council members have to communicate with our communities differently, each community within each patrol district are different, yeah? So the reason for community policing teams to hopefully expand both training for the officers but also the communities that they serve and, they all have unique needs. And I understand that they are under the patrol division when it comes to budgeting. I understand that we don't want to take away from the rest of our patrol. But with that, and along with working with different divisions and commanders in each district, how has each community policing team within their own communities been able to successfully request for such programs, efforts, and any training material that basically this proviso requests? How can they be supported?

So as council members know, Patrol Bureau or the activity of patrol is one big pot of money. And each patrol element is a, they do have unique needs. When one element is a little short, we can grab from another element to support that. Last fiscal year, we were able to support all the needs of CPT. without using any of the provisional funds because those provisional funds were used to procure vans and for District 8, a pickup truck. Because in prior fiscal years, the CPT teams are asking for vehicles. So thankfully last year, we utilized those funds for vehicles for each patrol element.

Okay, thank you. Sorry, I know I took up a lot of time, Budget Chair, so maybe I'll just defer my time and come back around or talk during discussion. Okay. Thank you, Assistant Chief and Major.

Mahalo, Budget Chair. Thank you, Council Member Cordero. Council Member Tupoula.

Aloha. Thank you so much, Council Member Cordero, for the line of questioning. So with this amount, it'll probably be between 20, 48 TVs. How many are you guys planning on getting?

Between 18 to 20 ATVs. So it depends. We expect the price to go up as time goes, but between 18 to 20 ATVs.

And then back in the day, you guys were running Beach Task Force on the North Shore. You guys were running a parks crew on the West Side, and you guys had these for Waikiki. Those were like the main areas where the ATVs were being used. Are those the same districts that you guys are going to renew the ATVs that we have?

It's expanded island-wide. Oh, good. So in Kalihi, in District 1 into Waikiki, the coastlines of District 4 and you can see use of ATVs out in District 8 as well.

Yeah, we definitely have in District 8. So thank you very much. Thank you, Chair.

Thank you, Council Member Tupola. Any further questions, members? I do have a couple of questions, and then I can circle back if any of the Council members would like to ask any follow-up questions. Thank you for explaining. I did have some questions when this was presented to my office. And you did mention one of the top questions was why this was not placed in the budget request. You said it was, but it wasn't met. So now you're doing it here in this avenue and you're preparing to also have it for the next fiscal year. Is that what I understood?

Every year, each department has a budget ceiling, and it didn't quite make that budget ceiling. So we're requesting it again for fiscal year 28 ATVs, and we're in the process right now of prioritizing administration's goals for the year.

And the last time, again, if you could repeat, the last time ATVs were purchased was what year?

2020. 2020. 2020, 2021. That was with the CARES Act funds.

Okay. And those ATVs were used for patrol or for CPT?

With federal funds, there's some restrictions. So because we use federal funds to purchase those ATVs, we used it mainly for COVID-related operations. So once that kind of winded down, we couldn't use the ATVs for any other function until it was released by the feds for us to, it was authorized by the federal government for us to use them. And since then, we've redistributed those ATVs out to the patrol districts.

Okay, which is what I would assume they would be used for. So that was my question. I don't understand how this is gonna be used for CPT. I'm not sure if it was your major that mentioned that you said these will be used for CPT in all districts. Can you explain to me which districts? I have two police districts in my city district and I've never seen my CPT officers have the need or the use of ATVs. in their line of duty and what they're doing in our communities.

This is in Mililani, correct?

Mililani, Pearl City, Waipahu, Aiea, yes. They come from the Wahiawa Station and the Pearl City Station. And I understand when you say that this would be used in all CPT districts. I can't understand how this would be used in mine. I've never seen it used in mine, and I don't understand how it will be used in mine. I could see how in other areas, but that, again, is patrol, not CPT.

In District 3, a lot of the complaints was in the bike path. because there's a lot of RCPs there. So it addresses some of those issues there. And the ATVs, they may not be visible on the roadways, but they're used mainly to the areas that our regular patrol vehicles cannot access.

And the officers who are using those ATVs on the bike path, are they the CPT officers or the patrol officers?

A lot of the CPT officers are ATV trained.

Are the other ones patrolling the areas like the bike path?

Yes. Yes. The kids also love it. You know when we do the Say Hi programs? The kids love the ATVs and they love sitting on it, playing with the lights and the sirens.

I've never seen it in my district. Okay. So I'm trying to understand. I see them on the bike paths when we're cleaning it. They're not always there, but I would assume those are patrol ones. And you mentioned that they're trained. So all the officers in the CPT, they already receive training or they will receive training? What's the plan for them to have?

Most of them are ATV trained. They're also bike trained. They're also e-bike trained. So they have training in all these, the use of these vehicles.

Okay. I have one question and I'll turn it over to Council Member Cardero for any follow-ups. What assurances can you give to us that the ATVs will not be transferred to the Major Events Division and will remain with the CPTE?

The Major Events Division falls under a different bureau, so the funds used for patrol will stay within patrol.

Mm-hmm.

Because there's seven activities in HPD. And major events divisions fall within a different bureau. So we cannot use patrol funds to fund special fields ops or that activity. There are strict rules with that. That's why we have to ask you guys first before we buy for MED. This is strictly for patrol and CPT.

So is it mainly going to be used for patrol or for what the community policing team division needs? Because you did mention that you're looking at how utilizing these funds will not impact The community policing teams ability to fulfill their their plans and their programs will this impact what they're doing in the communities there is there's fun there's enough funds in Current expense in patrol bureau to support every single elements needs for CPT expenses Okay, but you need this but not for the ATVs and the ATVs are necessary in your mind right now the

The proviso is in current expense, so we want to put it inside equipment so that we can get these ATVs. Since our operations have evolved a lot because of the rise of quality of life issues and RCPs, and one of the mayor's priorities for the budget is to address homelessness. And we're going to utilize, our CPT teams are going to be utilized to address some of these issues as well.

Okay, thank you so much. Council Member Cordero.

Thank you, Budget Chair, Assistant Chief Arquero, or Major Roberts. So I have a question relating to if we do transfer this 280,000 to equipment, are you looking to not a request for further ATVs in any near future fiscal years then?

We've put it in a request for fiscal year 28 as well. This 18 to 20 ATVs that we are planning on purchasing with these funds will only refresh about maybe half, up to half of what we have in our fleet right now.

Yeah, I would love to see the 280,000 requests in equipment for specific use in ATVs during our fiscal year budget though. Because while it is unfunded, we've seen the positive impact of allowing for at least specific funds dedicated to community policing teams. And I know that you're already working with the different commanders on that. So I want to mahalo you and the whole department for that. But definitely want to highlight that it's it's beyond just like the patrol and this and even supporting special events but especially changing the tune of how hvd is viewed in our communities yeah like um for our seniors for for youth and teens so um i really stand by wanting to keep it in for use in in current expenses um and i do want to work with you to have a better discussion on how we can use these funds, whether it be a systematic way to work with the different CPTs and the different neighbor security watches, business security watches. So I know I actually asked Assistant Chief before, and I know this is not discussion right now, it's just questions at the moment, but I did want to see if there was time to maybe work or talk with assistant chief and major and the rest of finance, see if there's a way for that. I know that they have a timeline on procuring the ATVs, but I mean, I don't know, if we really needed the ATVs this year, we should have added to the budget, you know? So that's where I'm coming from. I hope you understand, but that's my current request, budget chair. Thank you, Council Member Cordero. Council Member Toba.

Thank you, Chair. Hi, guys. I really appreciate the CPT team in my community. I rely on them a lot. Other than the ATVs, what are other CPT budget requests? For example, we heard that they may need supplies for programs, the school presentation, or community events like KKID. Is there any other...

There's enough funds inside the current expense to support that. So we usually utilize cost savings when particular object codes are kind of short. We'll grab cost savings from the other object codes to support all of that.

And I do see the need of the ATVs in pulling out homeless encampments in my area. There are hills, and sometimes the easiest and the fastest way is to use the ATVs to drag things out of the area. But, you know, the program is amazing. One of the things, we attended something last week, and everybody said how good the CPT teams are in our district. So I want to just make sure that they're taken care of and having all the supplies that they need because it is a huge need in our community.

Thank you, Council Member Tobol. Members, any further questions? Okay, thank you. Thank you so much, Assistant Chief and Major Singh. No further questions. Members, we are in discussion.

Council Member Cordero. Thank you, Board Chair. As I sort of mentioned, you can see that I would like more time to discuss it with HPD. We've been discussing this type of allocation in the budget for the past few years, Nya, like four years or so. Some was funded, the last two unfunded, but still allocated. And we saw really positive impacts through that. And we felt it, especially at the schools, but especially within our business communities too, as they face, like Assistant Chief O'Carroll mentioned, an increase of impacts of homelessness in their areas. So with that, I actually really wouldn't mind any transfer of funds but it would be after a reasonable discussion instead of one full swelp or swoop or sweep of funding to go to just all train vehicles. So I trust your motion, but if it were to be passed out, I would oppose it. But yes, that's my opinion. Thank you, budget chair. Thank you, Council Member Cordero. Council Member Tupola.

Yeah, just briefly, I think with CPT, some of the, I guess, larger picture is what are the needs, right? Because in my district, now we have school resource officers. They're approaching me like we need additional things for our schools that now we're over. Can we have a golf cart? Can we have this? All of it's great. But I think what we're trying to do is cut a budget that is given and then is followed up on and is spent. So I do agree with Council Member Cordero, we've actually allocated money for this prior. Now, whether or not it was actually spent or encumbered, I do not know, but apparently it hasn't been since 2020. So the discretion is yours, but I think CPT is near and dear to all of our hearts. I think all of us just want to see that it is getting what it needs and that we can appropriately budget for it and that every year when we come around to the discussion, we're not kind of piecemealing it out through different transfers. Thank you.

Thank you, Council Member Cordero. Members, any further discussion? I want to thank you guys. I do agree. I had concerns. I continue to have some concerns about why this wasn't done in the budget process, especially since we just came off the heels of that. I'm hearing the discussion and the questions. I do want to, first of all, thank you guys. I know that what you guys do every day We've always been supportive of the department and continue to do so. And as was stated, we were at an event where CPT and the community police teams are the ones where we feel the most impact directly in our communities. Now we know that what you guys do on patrol is essential for our public safety as well. But I would like to have some further discussion. I still have questions about where this is exactly going to be used. The statement that this would be used in all districts today, that's confusing to me. I would like to follow up on that because I still, I don't understand how that's going to be used in all districts. Like Council Member Tupola mentioned, if we need certain things in certain parts of the island, then we would specify those things, and that should be done through the budget process. I agree. I want to make sure that when we're doing these transfer funds that we can make sure that the CPT has the funds that they need. It was stated that they will have the funds, but I have questions just to make sure that we're meeting their needs with what they're asking for. We're in discussion right now, but my plan is to meet with you guys offline. I would love to have further information to understand. So based on the discussion that we're hearing today and my questions, I would like to meet with the department. Again, like I stated, the chair recommends that action on resolution 26173 be postponed to a date and time to be determined by the chair. Any further discussion, any objections, any reservations? Hearing none, so ordered. Thank you, we look forward to meeting with you. Moving on to agenda item number four for action resolution 26-181. This resolution authorizes a transfer not to exceed $338,000 in general fund monies from the provision for grants, partnerships, and security activity. Current expenses character of expenditure to the Department of Transportation Services administration activity, Current Expenses Character of Expenditure, to cover the city and county of Honolulu's matching contribution required by the U.S. Department of Transportation Federal Highway Administration for the U.S. Department of Transportation Federal Highway Administration Candidate Project in the federal fiscal years 2025 to 2028 Oahu Metropolitan Planning Organization Transportation Improvement Program. Members, I am proposing a verbal amendment to remove the Oxford comma after partnerships in the table in the be it resolved clause to comport with ordinance 26-18. Before we call up the administration, we'll proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item?

Chair, there are none.

Thank you. Proceeding now with remote testimony. Clerks, do we have any remote testifiers for this item?

Chair, there are none. Thank you.

Seeing no testimony on my agenda. Oh, okay. I see from the Department of Transportation Services, Renee Espiao. Sorry. Thank you for joining us today and welcome to the chamber.

Good morning, Chair Okimoto, members of the committee. Renee Espio, Complete Streets Administrator for City and County of Honolulu. This is local match for a discretionary grant that we applied for through Federal Highway Administration under the Safe Streets and Roads for All program that is intended for quick build safety improvements at roughly 50 crosswalks and intersections along our high injury corridors across the island. This piece in particular is for the design and evaluation contract, and then there will be a separate contract. Actually, we'll probably use our master agreement, but some separate funding once we're ready for installation and for construction. Happy to answer any questions or provide more details if desired. Thank you.

Members, any questions for the administration? Thank you. Council Member Topola.

Aloha. Thank you for being here. So recently I just asked Director Morton, you know, the ability for DOT to just drop speed bumps out of the sky is amazing and we take maybe three to four years to get that done. Is this going to help in that initiative that we can maybe move faster when there is dire, I guess, safety improvements that are needed on our streets?

It's a good question. We have taken some notes from our state DOT and last year I actually executed a master agreement for various quick build safety improvements such as signing, striping, including speed humps, raised crosswalks. So I now have a shell contract that I can use. We have royal contracting on board to provide any of these services. All we need is money.

Oh, okay, so separate from what we're voting on, you guys need money to execute what we're discussing, because the master contract could be very useful for you guys. Yes, 100%. Yeah, we don't need to go through each budget process every time we know there's a danger and we need to address it right away. So I'm looking forward to that. Thank you, Chair. Thank you, Council Member Tupoula. Chair Waters.

Thank you. I think you might have answered my first question. What is a quick build safety demonstration improvement? So you're saying signing, striping, speed humps, bumps, that type of thing?

So we generally have two categories of locations that we're looking at. One is uncontrolled crosswalks. Those are those that don't have a traffic light or a stop sign, right? They're kind of just on the driver to see the pedestrian waiting to cross and stop. We know we have safety issues with those on multi-lane roadways. It's something we've been working to address for years now. So about half of those locations will include upgrades to those uncontrolled crosswalks. So the solar-powered rectangular rapid flashing beacons that we've been experimenting with, I think we're ready to kind of scale up and install those at dozens of locations. It's possible if that solution isn't right, we could have some raised crosswalks or speed humps on approach to those crosswalks. Usually we'll look at curb extensions, things to kind of shorten the crossing, bring the pedestrian out closer to the travel lanes to be visible to the driver instead of hidden behind parked cars. So those are the kinds of things we'll look at for uncontrolled crosswalks. The other half of locations are signalized intersections. Obviously signalized intersections are very busy. That's why they have traffic signals in the first place. So we do see a lot of conflicts there. Things that we're looking at at signalized intersections are going to be different. We hope to be able to experiment with some leading pedestrian intervals to give pedestrians a head start. Things like, what do they call them? There's also a way where you install delineators to make the left turns kind of turn very slowly and very intentionally so they don't take the turns too quickly. So probably some different configurations of kind of the crossings, make them narrower, and make sure particularly left turns are a big safety challenge for us. Those guys go slower. So a little bit different toolbox when we're looking at something with a traffic signal versus something that doesn't have a traffic signal. but basically everything that doesn't require a trenching permit through DPP kind of things that can be done quickly without major permitting requirements.

Well, thank you. Your department is probably one of the best in the city for applying for and receiving federal funds, so good job. You said that it's for 50 uncontrolled crosswalk and signalized intersections. So if you have a specific number, do you have specific projects that you can share with us?

The list that we submitted to Federal Highway Administration is sort of tentative and subject to change. We've been adding ones that have known issues and then removing ones maybe we can address sooner. But like in your district, for example, Kapahulu Avenue is a huge one for us. School Street in Kalihi needs a lot of flashing beacons for the crosswalks there. We do have one in Wahiawa, we have a location out in Kapolei, but most of them are in the urban core where our high injury corridors are. King Street as well, Kapi'olani Boulevard, so kind of the busier places where we see a lot of crashes. We do have a longer list that we can share. but I don't have it this morning. It also depends on how much money we have, right? We've got about 1.7 million, I believe, for installation. So by the time we design them, add it all up, we may only have money for 40, not 50 or something. So we're still sort of, this is the money just to start the design contract and do the evaluation. So going out, doing data collection, are people stopping for pedestrians, things like that. and then we will go and do those measurements after the installation as well. So we'll know more once we get into design, but we do have an initial list that we can share.

Yeah, that'd be great because we go to neighborhood boards every month, as does the administration, and people ask us all the time about safety improvements, and it'd be nice to be able to share that with them and let them know that we are actually getting things done. So if you can share that with each of the members, that'd be really helpful. Just a shout out on the corner of Kīlauea and I think 22nd Avenue is a really, really dangerous crosswalk. It's a four lane road. And I know during complete streets, you're talking about reducing it down to two lanes, but it really is dangerous. And I think it is in the project zero or vision zero that this intersection was identified. So to the extent that we could try to fix that, that'd be great.

Okay, I'll take note of that. Yeah, the rehab of streets project for Kilauea Avenue by DDC is pretty long ways off. So we'll see if there's anything near term we can do.

Yeah, great. Thank you. Thank you, Chair.

Thank you, Chair Waters. Members, any further questions? I just had a quick question. It was mentioned about the expedition of, I guess, the time from start to finish. So what are we looking at? When this is hopefully able to go through, what kind of processes will be faster? What timelines are we looking at to have things more effectively or efficiently done in our areas?

So it looks like we're planning to start installation in 2028 and complete installation of all the locations in 29. This is pretty aggressive for us. This is, I mean, 50 intersections is a pretty, ambitious scale for kind of our small staff. But we hope with our design consultant and with our master agreement contractor, we'll be able to get through them quickly. We are in consultant selection already for the design contract. So once we get the funding in place and we finalize negotiations with them, we should be able to start design near the end of the year, early next year.

Thank you. We look forward to that as well. Members, any further questions? Okay, thank you very much. Seeing no further questions, members, we are in discussion. Last chance to ask for a plug in your area. No, we're thankful for DTS and all that you guys are doing to keep our streets safe. Seeing no further questions or discussion, The chair recommends that resolution 26-181 be amended to a CD1 as discussed to remove the Oxford comma after partnerships in the table in the be it resolved clause. Any discussion, any objections, any reservations? Hearing none, the resolution is amended to a CD1. The chair then recommends that resolution 26-181 CD1 be reported out for adoption. Any discussion, any objections, any reservations? Hearing none, so ordered. Moving on to agenda item number five for action, bill 33-2026 CD1. This bill amends provisions related to city and county of Honolulu funds. I will at this time defer to the introducer of the bill, Councilmember Tupola.

Aloha. Thank you, Chair, for listing this today on the agenda. Specifically, this is creating a fund where other fees that will be charged perhaps in the future could be deposited. This fund will be specifically used for the parks within the county. We do have other special funds such as the Passy Mink. We have the Central Oahu, which there are certain parks in our county that are taken care of better because they have their own fund. that keeps the contracts going. So the idea here with this is that we would be able to create a fund that then wouldn't have to go through the general budget and then the director could keep our contracts going annually where things wouldn't lapse and we'd have more care for our parks. So I did work with the director specifically on this so that we could address a lot of the issues that we have with the grass not getting trimmed, with bathrooms not getting fixed because we have contract lapse. because we have a one-year cycle of the budget in the city. So hopefully today we can have a broad discussion about it and any questions, the director is here. Thank you. Thank you, Council Member Tupoula.

Members, please note that the committee approved a proposed CD2 version of the bill, OCS 2026-0422, and postponed action on the bill at its July 14, 2026 meeting. Members, we have also posted to the agenda a proposed CD2-OCS-2026-0481 submitted by myself. For your information, the amendments are listed on the agenda. Before we call up the administration, we will proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item? Chair, there are none. Thank you. Proceeding on with remote testimony, clerks, do we have any remote testifiers for this item?

Chair, there are none.

Thank you. Joining us in the chamber today, we have from the administration, from the Department of Parks and Recreation, Director Laura Thielen. Good morning, Director Thielen.

Good morning, council members. Laura Thielen on behalf of the Department of Parks and Recreation. We greatly appreciate your support for this bill. I know we've had prior discussions. I'd be happy to answer any questions. But in a nutshell, there's two things that can be done with this bill. One is, as Councilwoman Tupola said, by having a special fund, if funds are dedicated for a purpose, but for some reason it's taken us longer than the one budget year to be able to get the contracts moving on that. The funds won't lapse and they would continue and allow us to complete the project. The council will still be making the determination about how those funds are spent because we have to put those things into the budget. It just would be noted that it would be under the special funds as opposed to the general funds. So the council will still retain its role in making determinations about how those funds are deployed. But the other thing that having the special funds will do is I know we've all heard people say time and again, I wouldn't mind paying for helping to improve the parks if I was guaranteed that the money would stay in the parks and not go into the general fund and end up being used for a different purpose. So this would then set up those funds where we could work with community on areas that they could provide additional support for parks. So thank you and happy to take any questions.

Thank you, Director Seelan. Members, questions for the director? Chair Waters.

Thank you so much. My understanding is that the fund is going to be made from camping permits. Is there anything else that's going to be contributing to the fund besides camping permits?

So under the enabling legislation, which is what Bill 33 is, is it would create two special funds, one for parks, maintenance, and recreation services, one for the botanical gardens and urban forestry. The revenues that would go into parks special funds would be all of the revenues generated on park property with two exceptions. One is Hanama Bay would remain its own special fund, and the other is the revenues that are generated by DES through their existing concessions would remain with DES. So it would just take the existing revenue streams that are generated by parks, part of which is the camping permits, part of it is the attendant fees, the YPO, the corp charges would stay in YPO and corp accounts. And then if there are new funds that come into play, then we would have those revenues go into that if it was a park fund. So for example, we've been having discussions with the community about tennis lessons being allowed in parks provided that we protect the recreational park users. And so there would be a fee assessed for the commercial tennis lesson permits that would help maintain the tennis courts. That would have to go through the process to be implemented, but in that case, those fees would go into the Parks, Maintenance, and Recreation Fund. Similarly, the Botanical Gardens and Urban Forestry Fund, as you know, part of the long-range master plan for Hoʻomaluhia is to charge an entry fee for tourists, not for local residents, similar to Hanama Bay. Then those revenues would go into that special fund and be used for the purpose of managing the botanical garden collection.

Thank you so much. I'm happy to support. But one last question. So for years we've been talking about charging non-residents parking fees at traditionally hot spots that are popular amongst tourists. Does this bill authorize that?

Yes, the bill does authorize that if parking revenues would go into the special fund, you have a separate bill in front of the parks committee that would be allowing administrative rulemaking to charge fees. I think we also have to figure out the technical aspects of how you would charge a visitor and not a resident at a park where you don't have an isolated entry point. Panama Bay, Ho'omaluhia have isolated entry points. It's relatively easy to assess who's coming in, who's a visitor, and who's a resident, whereas Ala Moana, Kapi'olani, you know, those places, it would be much more challenging.

Right. You may have been the director of the Department of Land and Natural Resources that implemented paid parking at various sites like Topali Lookout, where you have this machine and people just go and pay on the machine. I think the state generates about $16 million a year on these parking machines. So if you could do the same here, like maybe even like at the blowhole, tourists are gonna pay it, you know. But anyway, yeah, that'd be great, thank you.

I like your thinking, Chair. Thank you, Chair Waters. Council Member Topola.

Yeah, thank you, Director, for bringing up Hoʻomaluhia. You know, it's one of our most popular botanical gardens. And I think in 2025, we had 729,000 visitors, which easily, even if it was only $1, could have helped us to generate some revenue to care for the botanical gardens. I think in the other bill that we'll be discussing later this afternoon, it'll give you the ability to do that. But aside from the ones you brought up, which we have... Hanauma Bay, it has its own fund. But I'm speaking about Ho'omaluhi and all the five botanical gardens. So what do you foresee as far as the actual revenue that could be generated in this fund? I mean, just hypothetically, because you'd have to sit admin roles. And then how would that benefit you in the budgetary process to not have to go to the general fund for the ask?

Thank you. So as you know, you have a lot of competition for the limited general funds. And so what is really important is, you know, we don't want to take money away from first responders, from other agencies that are, you know, that work to make the city work. And so the idea would be with, like, Hoʻomaluhia, by looking at entry fees for visitors, not residents, you would be creating a new revenue source that's not coming at the expense of any other operations. When we did the Hoʻomaluhia long-range management plan, which is being finalized right now, we asked for a portion of that planning to include a revenue generation review. And we brought in planners that have experience with botanical gardens and other types of similar operations around the nation. And so they did an analysis of if you charged a fee based upon fees that are standard at botanical gardens around the nation, what would you expect and how much would you be able to generate given the visitor base that we have now with an expected downturn from the numbers because if it's not free, fewer visitors will go there. So they projected that in there, and they're thinking that would probably be in excess of a couple million dollars of revenue, and then it would probably creep back up again. It is a very unique site. I don't think there would be that much downturn in the visitors, but it would bring it down to a level that would be more manageable and a better experience, similar to Hanama Bay. when we put a cap on the number of visitors there. And by having that annual revenue stream that can be relied on in a special fund, which can again be relied upon, it allows the botanical gardens to then start to embark on long-range planning to better manage the assets there. And that's the physical assets as well as the plant collection.

Yeah, thank you. I have been able to support your ideas based on a lot of the data that you're collecting. So thank you for that. Secondarily, you know, Chair Waters has repetitively brought up the need for us to generate revenue in other forms. And I know that when we budget, it's so hard for us to put the needs of the parks over, say, sewers or lights or streams or other maintenance that really those are life or death things that we really need. So I'm glad to hear that the fund will have something, but that it won't be, you know, flush in the 70 or hundreds of millions of dollars, but enough for us to keep contracts going. So in that way, I'm very grateful for your foresight in this because it is the number one issue that I face in my community, people complaining about the park. So there's a way for us to empower you. And this is the way that I'm happy to support. Thank you, Chair. Thank you, Council Member Tupola.

If there's any further questions. I had a quick question, Director. You mentioned, I think Council Member Topola, I really appreciate this coming to the Council because we want to make sure that we provide you with the resources you need. So this seems, you know, good and forward thinking. But when we, if you then are able to use these revenue sources to keep up the maintenance of these parks that we'll be generating them. Do you have the staff or personnel to carry out, other than the contractors that you're going to be using, but just in general, does the department have the personnel to carry out the maintenance of these parks?

You know, we have different levels of staffing in different areas, and you do see a difference in the maintenance that we're able to do. So we have two parks where we have night crews on maintenance, and that is Ala Moana Regional Park, because that's our most heavily used park, and then the Waikiki area. So you do see in those locations, having park staff on site that are able to clean the bathrooms, take out the rubbish, they're gonna be better kept in the afternoons and evening. And then in the other parks, the crews are coming in after your entire afternoon and evening are unstaffed. And so they're starting at a real deficit on maintenance. So it's always being behind the game in maintaining We are trying to explore with some additional staff an afternoon, early evening crew, and we should be testing out some different ideas and then sharing the information with the council if there's an ability to have better maintenance with some ideas like that. But again, we know that there's limited resources for the city. And so it's a matter of how do we strategically use those limited resources in the smartest way possible to get the biggest return. So I don't have a direct answer for you other than This is going to help. It's going to help by bringing some additional resources into this core responsibility. It's not going to get us to perfection, but it's going to get us to a lot of improvement. And then as you see that improvement, it's also going to help with the morale of the people who are currently in the jobs, because morale is a really big issue where people get discouraged. It's hard where you keep coming back to the park the next morning and it's a mess. You know, and it's like you kind of feel like it's never going to get better. So if we can get ahead of the game on some of the things, and people are seeing that with the support that you've been providing and the additional funds we brought in through the COVID money and with the TAT money, it's really helping with the morale. People are seeing a difference, and we want to be able to sustain that. So incrementally, yes.

Okay. Well, we'll look forward to it. I would... I would encourage you to continue, I would ask you actually to continue to show us the results. Some of us, me included, I pause sometimes with general special funds because then it takes it away from, it creates a special place for it and in many cases, less oversight. But in this case, because it's the funds that will be generated from these specific parks, it goes back to that. I am in more support of that. But I would like to see that it is having results that will be beneficial versus we create the fund and yet the parks are still not being maintained properly or not to the, I guess, the satisfaction of the community. And I know that you're trying hard, but that will be something that we would like to see. I would hopefully like to see some changes in our results as you work on being creative with your staffing. Thank you. Members, any further questions for the director? Okay. Thank you, Director Thielen. Seeing no further questions. Members, we are in discussion. Seeing no further discussion, the Chair recommends that Bill 33, 2026, CD1 be amended to the posted CD2, sorry. The Chair recommends, excuse me, members. The Chair recommends that Bill 33-2026 CD1 be amended to the postage CD2 identified as OCS 2026-0481-8-11-2026 at 3.13 p.m. and be further amended to incorporate the following changes. One, in Section 2 of the bill, amend Section 6-blank.3 to include a proviso that states that all proceeds derived from or dedicated to the Hanauma Bay Nature Preserve must be deposited into the Hanauma Bay Nature Preserve Fund. Two, delete section six of the bill, which concerns fees for camping and renumber the subsequent sections. And three, in section eight of the bill, delete the portion of the revisers clause that refers to the Ramseyeri, oh my goodness. Ramseering in the former section six of the bill. Thank you. Any discussion? Any objections? Any reservations? The bill has been amended to a CD2. The chair then recommends that bill 33-2026 CD2 be reported out for passage on third reading. Any discussion? Any objections? Any reservations? Hearing none, so ordered. Moving on to agenda item number six. As I announced earlier, this item has been canceled. Moving on to agenda item number seven, for action, Bill 50-2026. This bill amends provisions related to the Land Conservation Fund. I will now defer The introducer is not here. Okay, before we call up the administration, we'll proceed first with in-person oral testimony in the council chamber. Clerks, do we have any in-person testifiers for this item? Chair, there are none. Thank you. Proceeding now with remote testimony. Clerks, do we have any remote testifiers for this item?

Chair, there are none.

Thank you. I have on my agenda from the Department of Housing and Land Management, Director Kevin Auger, but I don't see him here. Is there anybody here? We have from our Director of Budget and Fiscal Services, Director Andy Kawano. Good morning, Director Kawano.

Good morning, Budget Chair Okimoto, Chair Waters, Vice Budget Chair Nishimoto, honorable council members, Andy Kawano, Director of Budget and Fiscal Services. With regard to Bill 50, administration supports the repeal of the Land Conservation Fund. There's just a very small balance in the fund, approximately $200. We can transfer it into the Clean Water Natural Lands Fund and manage those funds through that one fund. So strong support from the administration.

Thank you, Director Kawano. Members, any questions for the director? Seeing no questions, members, we are in discussion. Seeing no further discussion, the Chair recommends that Bill 50-2026 be reported out for passage on third reading. Any further discussion, any objections or reservations? Hearing none, so ordered. Moving on to our final item on the agenda, agenda item number eight, informational briefing, community facilities district financing program presentation. Members joining us in the council chamber, we have Adam Bauer, president of Fieldman, Rollap and Associates Inc. to give a brief presentation. For your information, the presentation is available online as Miscellaneous Communication 360-2026. Good morning and thank you for joining us today, Adam.

When you want to listen.

Great. Good morning and thank you. And once again, my name is Adam Bauer from Filmin. Our firm specializes in land secured transactions. One of those are community facilities districts. And I'm also supported by Mindy Case, who did a substantial amount of the work to pull all this together. So I want to say thank you for her for having us ready for this morning. So what we've done is we've done a 101 with a good number of people here. I think there was a request to come bring back more, and so that's what we're doing here. For those who did see that presentation, we have added a few things because with the rise bonds coming as an option in November for your voters to consider, When we did this last time, there's a lot of questions about that and how that fits and the differences with the community facilities district. So we added a few slides to just help explain the financing options that the city has today and what that may or may not add if it's approved by voters. But here's how we organize the presentation. really tried to focus on overview of CFDs. When you do CFDs, there are two major steps to it. One is a district has to be formed, and that's 100% independent from selling bonds. Now, in Hawaii, you have very high property values, and so the conversations tend to merge more than they otherwise would. So, for example, if we were forming this out in what's called the Inland Empire of California, we would likely form the CFD and then maybe three to five years later talk about selling bonds. Much different circumstances here with your property values, but we'll get into some of the details there. And then finally we get into some of the funding and management along the way. So on our first slide here, we really tried to break down what are your options available today to consider for financing. And this is one of the slides that we've added since we last did a presentation with a good number of staff here. You recently completed a GEO bond. Congratulations. You had several series to it. You had a lot of efficiencies for bringing all those together. But that is backed by the full faith in credit. You can see there your general taxes are what go to repay that. And one thing that's very important here is it is part of the county's debt limit. And so you're going to see some of these other financial things are not. You are limited in the number of geo or the amount of geo bonds you can issue. But once again, you recently completed one of these. Congratulations. The other thing that the city and county can do is issue revenue bonds. This is different than a general obligation bond because you're typically pledging a very specific revenue versus all your full faith and credit. Then that last bullet point there is this one is not up against the city and county's debt limit. Then you also have special improvement bonds or special assessment bonds, and community facilities districts would fall within that category. What I'm going to spend 98 percent of my time talking about today is this bottom left box. Then on the far right there, you have tax and revenue trends, essentially. And what these are, these really are to help cash flow throughout the year. You have certain periods of time where money flows in, but you have ongoing expenses on a monthly basis, and this helps to manage that cash flow along the way. And then finally, in certain circumstances, there are private activity bonds, probably a lot more rare than any of the other options that you look at. So these are the, once again, the legal options that the city and county has available to it today. But because of Senate Bill 3218, It looks like it's could now act 31 This will allow voters to consider essentially like a tipped or tax increment district Known as rise bonds if that's approved by the and then the four counties would have options to do this so this is very different from special assessment or CFD bonds because that's not actually having any higher taxes. It's kind of how those taxes are allocated where when you do an assessment bond you're actually having on that specific portion of the community a new tax for supporting that project. Sorry about that. On our next slide, once again, this is a new one that we have added as we walk through this. It's just to give a general sense of what the rise is. I think I've already hit on all these final points, but I think one worth noting is should this legislation pass, rise bonds would not be counted against the county's debt limit. It's not counted for that repayment of the GEO, but it's also not counted against the county's debt limit should those be approved. more on that and this is the last slide until we get to the really the matter at hand with CFDs and this is more on the rise district basically a value capture mechanism where you would lock assess value at a certain point anything over that would be used for very specific purposes some allocated to counties a good portion allocated towards debt service but At another time, if there's a need, we can get more into details of that. Just really wanted to draw that distinction since that's on the ballot in November. So now we get into the CFDs and kind of what they are and how they work. So a CFD has a very specific boundary. There is actually a CFD map that's drawn, and that map says these properties will be within the community facilities district. Within that, for that set of properties, there is a document that dictates how our special tax will be levied. And so that's typically a 15 to a 20-page document. It says a unit of this size. It says developed property, undeveloped property would be taxed in this way. But should someone be interested, it's a complicated document, but should someone be interested, they could get the copy of that document and see how those special taxes would be levied within that CFR. There needs to be a landowner, there's a landowner protest in Hawaii. You can see owners of 55% of land have that opportunity and we highlight that there. So once the formation is done, this is essentially your boundaries are set and really nothing would happen immediately until the property started to develop. And so if there were building permits issued, there's maps recorded, all those types of things would be tracked and managed through a third party special tax administrator. And they would work with the city and county to help administer that along the way. So when bonds are sold, it's a lot different than your geo bonds, where I talked about full faith and credit of those geo bonds. That is not what CFD bonds are, should you keep them the way they were traditionally made. A CFD bond would typically be secured solely by the special taxes of the property within that CFD. And that is what secures those bonds, not either another pledge or the general fund. The CFD lien is on parity with the other property tax lien and it's superior to the mortgage and deeds of trust on the property. So this is what makes it so that investors feel very comfortable in buying these types of bonds because they know they have a very good lien position. Now, one of the things that is also very important when we look at bonds like this is to have policies in place to focus on how much would you be willing to allow for all the taxes on the property to be. So one of the things that we've worked with staff on is identifying a 2% maximum. And just take a moment to think about how, from an investor perspective, how good that is. So one is an investor says, if I'm going to buy bonds with this and the taxes, all the taxes on the property are only 2% of the value of that home, there's a very good chance that homeowner or mortgage company are going to step in and pay those taxes, even if the economy gets really bad. And the other thing I think is really attractive there is when you think about the burden that's being placed on the homeowners is by identifying a maximum, you're making sure that your homeowners within that CFD aren't overburdened by the overall taxes within the property. So then the next section is there's a lot of reporting and activities that get taken place. And this is where a CFD administrator, like I said, a third party administrator would come in and they would manage, they would basically pull the building permit data, pull map recordations, they would monitor delinquencies, they would repair reports for city and county staff to kind of review what's taking place within that CFD. So they are on a day-to-day basis managing these types of things and that is that CFD administrative process of the activities. What can be covered with it? Fund special improvements benefiting the district in a general manner. One thing I think is really important is that CFDs are typically set up so that they cover the cost of all the administrative activities. So once the bonds are sold, you'll need to hear from me, or the city staff would need to hear from me every now and then. They would have attorneys that are weighing in on things, they'd have a CFD administrator. So when we set these up, what we've done with the other counties within Hawaii is we've made it so that there's a gross revenue, and then you subtract out what we call priority administration. Then you take net revenue and you use that net revenue to basically secure bonds. And that way you make sure that you have a priority position to cover all costs associated with that. And I think that's really important is we don't want that or I don't think you'd want a situation where CFDs are taking or encroaching on the general fund or in any other way impacting the operations of the city or county. So what set all this up? Chapter 27, and this had changed over time. Originally it was a different chapter, but at one point it was amended and it was set up as Chapter 27. And so then you can see there that's what allowed for this, even though the city and county of Honolulu have not done this. You've had Kauai and Hawaii, who both have done CFDs for projects, both have sold bonds and have been successful with moving forward with them. And then what's been happening over the last several months is we've been establishing rules for evaluation. And one of the things I had mentioned to you that's important to both investors and your community is having an effective tax rate that's reasonable for both parties. And that is one of the things that would be addressed in those types of items. As we do this, I think it's really important you're investing this time today to listen to me talk about CFDs and you have other priorities, we know that. And so I think it's important for you to understand how all parties can benefit from CFDs. And the first set of parties is most importantly is the city and county is identifying a regional benefit. and or public benefit and making sure that by allowing a developer to use something like this, there is some good that comes to the city and county as a whole. And there's any number of ways to do this. One of the hot topics now is affordable housing. So a lot of the applications that come in today address affordable housing. We're working with another county and one of the things is critical access roads. That's really important. With another county in Hawaii, one of the things that was important to them was making access not just for that CFD, but for the community to get to an access to a certain part of the beach and make sure that that was available to the community as a whole. So there's any number of things that can be established along the way to identify a public benefit for the city and county as you look at these. So we have a few other things here, assist with development. That's another potential positive. If there's developments coming in, something like this could be very helpful to make sure that development is able to be viable. The last thing on there I think is important that if you get to a point where you have a lot of CFDs, One of the things that can be done is set it up so that there is annual revenue that's available to help with some infrastructure. If you just have one, it's really, the administrative burden of doing it and all that really would not add up too much. But we have some agencies that have 20 or 30 CFDs, and they look at that pay-as-you-go revenue as a way to refurbish and come back and fund some critical facilities. And let me explain how that works. I've already explained to you the gross revenue. You subtract out the admin. Then you have the net revenue. But investors still say, even after doing all that, we want a 10% cushion. There can be delinquencies. There can be any number of things. A property owner doesn't get their tax bill. So that 10% after bonds are paid can flow back as pay-as-you-go infrastructure for the city and county if they desire to set it up that way. So that's a long-term potential benefit should you have a lot of these. So how does a developer benefit from doing things like this? One of the things that they find is there's better marketability. They can do one of two things or a combination thereof. They could start off with a lower home price because they know that they have more infrastructure in the ground that gets reimbursed. or another option is they could have more infrastructure and more amenities that they're adding to that project because they have something like a CFD that helps pay for it. There's two different ways that we've seen developers go with that. It lowers their cost to finance. If you think about a lot of these developers, their cost of borrowing is pretty high. A lot of them are set up as LLCs and they don't have a benefit that the city and county has. your geo bonds that you just sold, when an investor buys those, if that investor is within the US, they don't pay federal taxes on that. If that investor is within Hawaii, they don't pay state income taxes on that either. So that investor that bought those bonds, does not have to pay federal and state income taxes within Hawaii. If they would have bought Home Depot bonds, they would be paying, if they're probably in the highest tax bracket for the feds, 37.5, and then the state income tax for Hawaii as well. So there's a really big benefit that the developer is able to take advantage of by getting that tax exempt benefits for these projects versus having to finance on their own and pay taxable interest rates. Another thing that's really attractive for developers is the CFD is tied to the land. And so that potentially opens up other financing mechanisms to them because this is an obligation of the CFD and an obligation of the developer why they own it, but only during that period. So those are some of the benefits that developers get by having CFDs on their property and why they're coming to you. Homeowners, how do they benefit from this? They oftentimes enjoy the newer infrastructure. And another thing that's interesting is why I really hedged the way I described the first part of the developer point is the... It used to be thought that there could be a direct correlation between CFDs in a property and the home price. And this probably is the case for lower-priced homes. If someone's putting down 20% and the bank's putting down 80%, the bank is looking at ratios and being very careful about lending to that homeowner. But for homeowners that are buying their second or third home and rolling in equity, they are less sensitive to that and they are more focused oftentimes on amenities. And what a lot of the trade publications for builders are focusing on now is when you have these types of things on the property, it's not necessarily discounts at a home, it is a focus on providing more amenities to that community and those communities are outperforming other communities. Benefits to developer, but also the homeowners are choosing to invest in those type of communities versus others. I think that could be tied to a potential positive for homeowners. Just like for the developer, these property taxes are tied, the homeowner is not paying them for their life, just for why they own that property. And other than those who refinanced or bought in 2000 through 2022 with a below 3% mortgage rates, it's frequent that someone maintains homeownership from seven to eight years. So homeowners likely factor that in that there's a limited period of time that they're paying this obligation. So some of those are crossovers with the developer benefits, but that's how both parties potentially benefit there. So our next section we focused on is kind of establishing a committee per Chapter 7 rules. And we kind of go through there kind of just a number. These names of these departments are much more familiar to you than they are me. So rather than have me kind of stumble through and try to say them all to you, they're listed there. You can go through and see what groups would be involved in a potential committee with the pending rules that I think have been drafted. And then here we have timing of the committee's review. You get a first review of it. And I think oftentimes what would happen there is once again, the city and county would look to someone like our firm to help evaluate, is this package complete? Does it meet the criteria needed that you set up with potential rules? And that would be the type of thing that you'd be looking at that phase. But then once that phase is done, it would come back potentially and work itself through that committee there. And you can see within there is a number of things. I've mentioned most of those things to you when I talked about some of the preliminary activities and the structure of CFDs. I think a few things that are I think important there is the number of times that it comes back for review. Is just because you form a CFD, that doesn't mean you've committed to a bond sale. So like your geos, you're probably very used to when the item comes to you, it's a resolution of issuance. You're really close to selling bonds. You'll do a formation and then an independent process will come when bonds are being ready to sold. But all those are opportunities where the city and county and staff will have the opportunity to evaluate and review different aspects of these. Typically with a lot of the projects that I think would be coming to you, you'll probably have multiple series of bonds. So that would just add the number of times that you'd have opportunities to weigh in on these activities. So I'm going to abbreviate this a little bit because there's five pages after this that are tied to it. But I'm going to focus on a little bit higher level. And if anyone wants me to dive into the details of the steps, we can do that. But step one is a developer would file a petition. And then after that, there could be the first step of a resolution of intention. And then a CFD report is prepared, and that report would talk about a number of kind of what the taxes would look like, what's being funded, timing, and all that sort of thing. Once again, this is prepared by a third party, that special tax consultant. And then that would eventually set us up for a public hearing, and this may be waived, but then you eventually get to step five where you have the ordinance. This is the formation process. Once again, separate from the bond sale process. And there's a slide on each one of these steps to give you more details. And I'm gonna fast forward through that unless I'm asked to stop. You sure you don't want me to stop for each step? kidding so then you get to the bond financing phase of this and that's the steps I think you're probably very used to with some of the other things that you've kind of worked through but your CFD has been established we get into some of the same points there it's a sole obligation of landowners to repay not a city and county obligation and then you can see there the annual special taxes are what it used to repay that over time And then your CFD management, we tried to kind of break this out here. I talked about the two, formation and funding bond sale, but eventually there's this management process with that. And these are some of the high level steps. A CFD administrator will, they have like a, their contract's about 10 pages. And it just kind of goes through, this is some of the high level type stuff that you'd be focused on. Levy and management, development research, If a realtor or someone's looking to sell a home within that project, they would help provide some of the disclosures, the max tax and the max term of the tax have to be disclosed to them. They would help with that as well. So there's some of the steps there. And then some of the, we wanted to highlight some of the parties that are involved in this, because it's quite a team. Our office actually prepares a three or four page, what we call interested party list, and here's all the parties that are listed there. Bond council, very similar to your geo bonds. They issue that tax exempt opinion. Municipal advisor, that's a role firm like our state serves to you, and that's your fiduciary in the transaction. Special Tax Assultant, they work with all the levy components and make sure that it gets on the tax roll and is administered along the way. An appraiser is very important because a developer's appraiser is likely more optimistic than yours would be. So we want to make sure both for investors and for our own purposes that we have an independent party that's associated with that. Underwriter, just like your geos, they buy the bonds and resell them to investors. Underwriters Council, they represent the underwriter in the transaction. And then you have your trustee. The trustee is much more involved than the R and Gs. Their fee, which is covered by the special tax levy, is much higher and there's much more detail of what they do. One thing I think is important that I've listed all these different consultants is one of the things in the rules that's drafted is that the developer, should they want to have you consider a CFD, they would have to post a deposit. And that deposit would go to pay all those professionals. We think it's very important to do it that way rather than just have them pay for funds. So think of it as if I'm negotiating against the developer and the developer is not real happy with me, you don't want them holding up the invoicing. Now, we have a fiduciary. It would not impact our approach in any way, but the perception of that could be bad. And there's several other consultants along the way, appraiser, special counsel, and that type of thing. So the rules that we have drafted have that included in them as well. So those are some of the key parties involved throughout the transaction. And then as we get to the CFD bond sale, very similar to what you probably saw in your resolution of issuance, the bond indenture is just much more detailed than a geobond bond indenture. There is a continuous disclosure agreement, but unlike your geos where you have all your county data and city data you're providing in there, that's typically information related to the CFD. Your CFD administrator is likely going to prepare that. And I think, yes, those are some of the key points there. So I ran through it a little quicker than I did a month or so ago, but I'm available for any questions.

Thank you so much, Adam. I'd like to welcome to the Chamber, Council Member Weyer. Thank you for being here with us. Members, before I turn it over to questions, I just had a couple I wanted to start off with, and I'll turn it over to the members, and then if we need to do this. We'll do that, if that's okay. And then I'll go over to testimony. Thank you for walking us through the presentation. And I want to thank you also, I was there in one of your previous meetings, but just really quickly, you mentioned the many parts that go into the formation of the CFD, the establishment formation, bond financing, and then the management. In those parts, what aspects of it would be required for city staff? What would be the responsibilities for the city personnel to have to fulfill?

The city staff, along with the council, the policy makers, and helping identify what that public benefit is, helping make sure they have the proper team in place. They would typically be involved throughout the process, but they have a good support team to help them through it that are specialized.

So would we require more personnel to fulfill this? Do we have the personnel or would we have to create positions to work on this portion to have CFDs?

I think it depends on the volume that you get. If you have two or three a year, I think it's prioritizing within the other activities. If it got to a point where there's dozens being asked of the city and county, that may be a different circumstance. But I'm not an expert on the city and county's staff and roles. I'm just trying to be kind of practical what I've seen with other agencies. but I think it just depends on volume, how it would be managed with additional staff or not.

Okay. That's good to know.

You would need other consultants. You need a firm like ours. You would need a special tasks consultant and an appraiser. Those would be parties that would need to be added to what you have today.

Okay. And you did mention in your presentation presentation about the possibilities or the benefits if there's lots of CFDs and we can have annual revenue set up to have infrastructure projects funded. And you did mention right now that there could be multiple. So multiple CFDs could be happening at the same time or simultaneously. How does that usually work?

Yeah, each CFD, as I described it, has its own boundary map. So if you had a process set up and property owners knew that this was something that they could consider, you could get any number of applications along the way. And so I think that was one of the things when we looked at the establishing rules was to not, to provide some some mechanisms so that not every project would be considered for CFD. So making sure that they're of reasonable size, making sure there's enough public benefit to help the city and county get some benefit of it as well. Those are some of the preliminary thoughts on that. But once you have a program established, there could be any number of applications that come in.

Thank you. I'll turn it over to members for questions. And I know that we have some testifiers here, so I want to give them time. Maybe we can go through questions. And if there's further discussion, we can do that after testimony. But members' questions. Council Member Tupoula.

Thank you so much, Mr. Bauer, for your presentation and for the thoroughness of covering all the aspects of it. I appreciate your thoughts on the ability to have multiple. And as well, I think you stated if there's only one, it might not be worth it. But at least if there's a handful, then the whole process makes it worth it since there's a lot of different moving parts to it. So I guess my preliminary question is, in the law, it states that the director of public works, which we don't have that anymore, is supposed to direct the independent consultant, which in this case is you, to do the work or establish it. Then you also mentioned that for developers that are interested, they have to give a revocable, piece of paper saying that they're going to pay for the costs associated with their proposition of the CFD. So in that very initial step for the petition as well as the resolution of intent, I would say all of that cost is on the developer and not on the city. Is that correct?

Yeah, so a few points of clarification I want to make. There's two buckets of money potentially for the city and county. There's a public benefit that we want to negotiate with you to make sure the CFD was worth doing. So that you're going to get. The piece that I was talking about needing a lot of these to make work is the pay-as-you-go component over time. So essentially investors require a 10% cushion between the revenue and the principal and interest payments. And so if you just have one CFD, it's 10% of the overall revenue. It's probably not worth everyone's time to focus on. But if you did have a lot of these, that pay as you go could add up to a sizable number. So I think that was one piece. I think the next piece that I think you're asking about is kind of who pays for all this. And so one of the things I think is important is that the city and county enter into a reimbursement agreement that we call a deposit reimbursement agreement that a developer would post most likely something not less than $50,000. And when that deposit got to a low enough number, we would demand that it gets refilled. And if it doesn't get refilled, all activities stop. And so that's an important document to have in place when an application is submitted. And then for some of the activities, so some of the activities that are specialized, those are ones that you can get third party consultants. to help you with along the way. But in general, city and county staff still are involved in the process, but you have these parties that are assisting and advising along the way.

Yeah, because I think right after the resolution of intent, the CFD report is the next step. And so, yes, they might be advising, but in general, as you stated with the possible retainer, the person proposing the CFD, the developer, they would front the cost for that just to make it worth it on the city side, making sure that there's a partnership there. Is that correct?

And not to encroach on your other residents. I don't think the city and county wants to pick winners and losers on developers and just for safety. So if the developer wants to come in, they are posting a deposit. I think it is two things. It pays the cost, and two, it shows you what developers are real.

Yes.

Right? So you don't want just someone saying, I'm interested in this and taking up a bunch of your time.

Yeah, and I think that goes along with the question that you had about cost and what staff we would have to be, I guess... funding in order for this to happen. So after the CFD report, then there's the ordinance for the bond, and then there's the issuance of the bond, and then the ability to collect the special tax. I think those are the last three steps, correct? And I think those are just all different steps that we take in the legislative body to make sure that it happens, correct?

Yeah, that's right. And then I would say those reports would often be reviewed and probably discussed with the staff and the consultants. But those reports are dictated in some of the formation documents of what needs to be included in those types of reports. And that special tax administrator is the one that is gathering and sending you the data. And so they would also prepare the reports associated with this. So on the administrative side, the things that are kind of outside the types of things that the city and county do today have third party consoles. But at that point, it's paid from the special tax levy. It's no longer paid directly from the developer deposit.

Yeah, so I wanted to make that clear as well. So on the back end, after the CFD report is completed, the only other cost you could fold into the bond issuance, you could do an administrative fee for the actual disbursement of the bond, right? Because you'd be collecting the tax, you'd be paying it to the district, and then the district would have to be paying off the bond that it purchased, correct?

That's right.

Yeah. Yeah. So I think in that sense, that little process I described that also doesn't require city staff, correct?

I'm sorry, I want to clarify a few things. So to answer your question, Council Member Tupola, we are currently staffed, so BFS is currently staffed to do two bond issuances a year. And we have a number of meetings with the investment bankers, with bond council, and with other advisors to issue the bonds. So we work overtime in terms of getting those bonds out. So getting back to the scenario you all talked about, if there are several CFDs being formed at the same time, and at the same time we're issuing bonds, we may have to look at staffing. So I just want to make that clear because right now we're all working overtime.

No, we appreciate it. And I think that's why budget chair was asking what staff would be needed. But I would say that in the law and when I read it, it says that the district, so the district that is formed, that is the entity that goes and sells the bond and actually has to pay the bond back, not us.

No, the district is the district the city still issues the bond on behalf of the district So you're going to be authorizing me and BFS to issue the bond So it's going to be just like any other bond issuance we do So so the bond will be issued under the city's name. Yeah, I

I'm almost positive that it's actually issued by the district because when we collect the taxes, the district itself has a trustee and it's set up to protect us from any of that. So we can get into that later.

Yeah, we can get into the legalese later, but the district will receive all of the bond proceeds and it'll go into the fund allocation. funding allocation process, but when the assessments are collected from the property owners, those assessments go into the trust that Adam was talking about.

Yes, so the trust is then given to the district, the district pays back the bond.

But the issuance process, it's a city process. You're going to authorize me and the BFS admin staff to sell bonds.

Okay, so the way I read the law doesn't state that, but we can get back to legalese at a separate time. Last question. There is a section that you have that states that there is going to be a committee or rules that are generated, but my question is because the law, chapter 27, doesn't designate that we're supposed to promulgate rules, but we can. So whenever there is an, and a responsibility given to a department, they can make admin rules of how they administer it. But specifically, it doesn't state that BFS is over this or that they have to make admin rules or have a committee to approve or disapprove because the council would put forward the resolution of intent to create the CFD. Is that correct?

I'm not familiar with your government code enough to really answer to that question. Understood.

No, thank you so much. I don't want to put you into a spot that it's too much legalese. Thank you, Chair.

Thank you, Council Member Topola. I'd like to welcome to the Chamber, joining us, Council Member Kea Aina, Chair Waters.

Thank you so much. This prospect sounds really exciting. It definitely is a benefit to the developer as well as to the public, but I really had some nuts and bolts questions. Just following up, with what Council Member Tupola asked about pending rules. Are you testified that pending rules are currently being drafted? Is that correct?

There's a draft document. I'm not sure kind of where that stands.

Thank you, Adam. Chair Waters, we have rules and final draft. We have to go through a final review by the committee, if you will, of department directors that are going to be involved.

Fantastic, because oftentimes roles take years. So if we're in final draft, that's really good news. And then how long do these CFDs last? Is it the same amount of years as the mortgage, like 30 years or 15 years, or is it a shorter period of time?

So community facilities district would typically sell a series of bonds for 30 years. Depending how it's structured, it can go longer than that. But you would typically set up your special tax to be slightly longer than that. So let's say 35 years. The reason why you do that is so if there's ever a problem along the way, you have like a five-year period of time that has no bonds issued against it. So you have some revenue to work with to try to fix anything that might go wrong with it. That's very rare. But you try to set up your revenue stream to be a little bit longer than your bonds so that you have something to work with if there's ever a problem.

I see. And in the RISE example that you gave, The property tax revenue is frozen. That's right. Would that be same with the CFD process?

No, sir. That was a distinction I was attempting to make here.

Okay. So the city can still generate revenue based on the increase in property values?

A big difference between those two is the TIF or RISE locks what's available for the city or county, and then anything over that would be used for the specific purposes.

I see.

Whereas here, you're adding an additional tax to the property. That's the difference between the two.

Well, we don't want to call it a tax because then people aren't going to like it, right? Let's name it something else. You got any ideas? A levy of fees? Special assessment. Special assessment is better. Yeah. No, seriously. People are very, very sensitive to that word. But the people would know going into it because I think you said 25% of the landowners have to agree to the levy.

So typically you'd have unanimous support for the initiating party. And then the homeowners before they buy or merchant builders or whoever is buying the property down the road, there's mandatory disclosures that they are made aware of this. Okay. But now... sometimes homeowners don't remember that, right? So when you're signing your 2,000 pages and the notary says sign this one, you're hopeful that that homeowner remembers that. But yes, technically they've all been made aware that these special taxes are on the property.

Okay. And then as far as how the City Council gets involved, the first step is the petition. Who drafts the petition? Is that drafted by the City or the consultant or the developer?

It can be done a number of ways. I think it would typically be done by the developer side to petition for CFD.

And the petition is, I guess, transmitted to the City Council? Probably through DPP.

right excuse me so the the petition is that something that the city council has to approve from the get-go or it's just a notice requirement um i believe it's a notice requirement i would want to get yours um you know bond councils have slightly different ways of interpreting all this so should you get to a point where we have the rules in place and you can receive one we would want bond council to weigh in on the exact how they think the process should flow yeah i'd imagine to be by resolution not by bill right that we

we approve it preliminarily, right? And then the next step would be, yeah, right here, it says city council adopts a resolution of intention, the ROI, and then who drafts the ROI?

That, we would hope, it's done by your council. Okay. So you're at the same, Furniture and Service Bond Council would typically draft those documents.

Okay, well typically it would be probably DPP or Budget and Fiscal Services for our approval that we could amend as we see fit. Or no? I mean, because in the ROI you specify what rate and apportionment of the tax and what it's gonna be used for, right? Whether it's a road, sewer, or other infrastructure, it's gonna be in the ROI, correct?

Yeah, you know, and Chair Waters, bear with us because this is our first go-around, so we're going to be kind of feeling our way through all of this.

Okay, no, I understand. I'm just trying to figure it out.

But definitely, I can see BFS's involvement. We're probably going to have consultants involved in helping to get the... get the document produced, but it's gonna, there's effort involved to do it. There's time and effort involved to do it that we're gonna have to commit to.

Right, okay, so there's an initial petition, then there's the ROI, and then there's a CFD report. This is done after the ROI, right?

That's correct.

And then it says the duration of a hearing. So does that come back before the City Council? We have to have another hearing to determine if there's any protests?

Yes, but the public hearing may be waived.

Okay. Public hearings sometimes are done here at the City Council and sometimes it's done in the community. Which do you anticipate it would be?

I've never not seen it done at the City Council chambers.

Okay, so it could be in the community where the project is?

I've not seen it done that way.

Oh.

I've always seen it done in the chambers.

In the chamber here? Yeah. And what kind of protest do you anticipate? I'm sorry, I'm not part of the community. Protests, protests. Who possibly would protest against this?

Let's say we don't have one unanimous support. I had one in a carpentry area where they needed sewer lines. They used the CFD to come in and help with that. Some of the homeowners weren't interested in having a new assessment on their property. I guess would rather deal with it in some other mechanism, those homeowners complained and did a protest. So in areas where you have a unanimous support for it from a developer with land that's not developed, I would not see that as very likely.

Yeah, that's what I thought. If it's undeveloped land, right, the developer is the landowner. There's probably not going to be any protests because they're the ones initiating the CFD. But this would be in the cases where there's already an existing neighborhood, perhaps?

I think in most cases, yes.

Okay.

I'm thinking back specifically to Hawaii. When we did one of our earlier CFD formations, I do believe there was some either public comment or some sort of protest of just about doing a CFD. So you might have that sort of thing when you're doing these, but not necessarily those are impacted by it directly on their property.

Okay, good to know upfront what we're possibly looking at. I don't actually anticipate protests, but you never know. And then lastly, the ordinance or formation. We actually have to pass an ordinance okaying this, and presumably that's through the City Council, right?

It goes through the City Council, yeah.

Yeah. Okay. No, it's really promising, and we've been talking a lot about this for years, so it's good to know we got two in the hopper and possibly more. So, hey, thank you very much for your presentation today. Thank you, Chair.

Thank you, Chair Watters. Council Member Weyer.

um thank you chair um and maybe this is more of a direct to kwano question um because i think we all know we're in a housing crisis that predates this bfs's work i think we all know that city staff are underpaid and stretched and and so i guess my question to you today is like how what can we do in the immediate knowing the gravity of this reality our community is facing to make it easier for you to speed up the process. And I don't know if that's transferring funds, that's looking at more consultants. I mean, I can't speak for the other folks, but for me, I think it's really a matter of you tell us what you need to make this process work out so we can materialize some housing opportunities.

So I think it's, and thank you for your question, Council Member Weyer. I think it's important for... for BFS to note that, you know, we typically establish rules so that when we go through the process of accepting applications for CFDs, new CFDs, we do it on a fair and equal basis. And we have clear standards processes that we follow. So we have the draft of the rules. We need to go through final review by Corporation Council and the departments that are gonna be involved. And then we'll have to post the rules and then take comment after 30 days of posting, and then we get moving, right? We are... It's hard for us to say how many more staff we're going to need at this point because we have to do one, eventually do one and assess, you know, the amount of time it takes. But I can tell you right now, every year we have two bond issuances, right, multiple series. We do GO bond issuances and we do the revenue bond issuances for the sewer fund. And we're pretty busy. So there's BFS staff, there's Treasury staff, and then we have various department staff helping us gather information because for both issuances, we have to put together documentation that's posted for the rating agencies and potential bond holders. So there's definitely work to do. We just got to go through the process.

No, I appreciate that. So right now the rules are with the committee, the review committee. So all the different departments.

It's with BFS and CORE. We're gonna have to get the rules out to the final draft out to our committee members for final review.

Okay, is that BFS's corporation council or all the different departments also?

We believe that it'll be the departments listed in the presentation that Adam referred to.

Okay, so I mean like right now are all their corporation councils collectively looking at it or is it just BFS's? Corporation Council has looked at it. Okay, so the only review once it gets out from you would be the department's looking at something?

That's internal, and then when we have final, we'll post the rules, because we have to do that. Administrative rules have to be posted for approximately 30 days. So we're not waiting on the committee then? Yeah, and then we take comments from the public, and typically they're very little to none. But, you know, we don't know what's going to happen. So we take comments and then we make adjustments to the rules, revisions if needed or if appropriate, and then, you know, we get going from that point on.

Okay. And then the timeline on the rules then is up in the air or is there a specific general timeline? amount of time.

We don't, okay, so currently what we're trying to do is work through the state, with the state, with regard to all of the city's investments made in Iwile, Kapalama, because the state currently has a planning project that's ongoing for CFDs because they inform the city that they want to work with us on various financing tools, one of which would be the CFD. So that's where we are right now. So the intention is to work through the state and work with them on the rule process too. So we may have to ask the state body that's involved in this project to take a look at our rules as well.

Yeah. Specifically because the rules may affect state interests.

Well, and other interests in the Iwile Kapalama corridor.

Okay. So there's not a possibility to do it in and steps and then like apply it to projects as they?

Well, I'm thinking we can look at short cutting it because the other approach would be to just post it, right? Post it, notify the state agency that's working on planning Iwilei and Kapalama. and then let them know that it's posted and they can comment at that time as well. So that's the other approach that can be taken as well.

Okay. Do you think they'd be okay with that? Are we going to...

We're going to have to ask them, but I think our rules will be viewed as being very reasonable.

Yeah, because I'm not trying to upset them, but I'm just kind of curious. I think all of our mind is on how do we multitask, and not that you're not up to it, but how do we provide that support? Because I know you already have a contract out. We have contracts for appraisals and tax consultants, right? Or do we?

We just have our municipal advisor. We have, we're gonna have to.

So the master agreement appraisers maybe aren't qualified to do this type of work?

We're gonna have to select a procurement methodology to get started on those contracts, yeah. Okay, thank you, Chair.

Thank you, Council Member Weyer. Members, just to finish up this first round, we're going to have Council Member Cordero and Council Member Tova ask the first round of questions. I do want to respect our testifiers who have been here. So after this round, we'll go to testifiers, and then we'll come back if there's any follow-up questions or discussion, if the members are okay with that. Council Member Cordero.

Okay, Chair, how many questions then? No, feel free to ask questions and then if there's follow-up again after this.

Okay, thank you. I will continue again.

Thank you, budget chair. Okay, so maybe Adam, I believe, so who holds liability for the bonds then, just in general?

So the CFD is responsible, the special tax within that CFD is responsible for repaying those bonds. And if the special taxes are in default, they would eventually be a foreclosure activity, which would have to run through the council.

Run through the council, but not...

There's this, even though the CFD is the one that secures the bonds, as kind of has been described, the city and county are the one issuing the bonds on behalf of the CFD, and should foreclosure provisions be needed, those would come back as a council item to consider. Now, the documents are going to say you have to do it, but they do have to get approved by you before you initiate such an activity.

With that then, is the city or the council then liable for that foreclosure or any other types of bonds?

The city and county, under standard circumstances, would not have any legal obligation to repay the bonds.

Understood. Thank you. That's very clear, and I really appreciate that. Next, in other municipalities, where would the CFD, as you mentioned on page eight of your slide, where would the CFD administrative costs go to? I was kind of confused. Does it go to the firm or consultant, to the city, or I don't know?

So the party that would take the majority of the priority administration would be the special task consultant. The party that would take the next largest tranche would be the trustee. And then whatever amount of levy charge there is to get on the tax bills, that sort of thing. And then when unique circumstances happen where you need advice from someone like me, you need advice from a legal counsel, those are the parties that are kind of ad hoc-ish, that kind of show up. Those are how it's done. And then in some circumstances, the government agency also has a charge against that priority administration to make sure that Staff time is being compensated for the CFD. There's some very careful accounting that needs to be done when doing that. You need to be able to allocate time and things like that. But when I see the waterfall of who gets paid from the admin, that is your list there.

Okay, and so from the city standpoint though, that means we're going to be billing the CFD then?

In some cases, I kind of view this so kind of like that 10% surplus. If you just have one, just the tracking and trying to get it back from the CFD is probably not going to be worth it. But if you had like 10 or 20 down the road, then that might be a circumstance where it's worth looking at.

It'll be good to get to that point, but I don't know if that's very near in the future, but okay. My last question, sorry, I have more, but just one last question. On your page 12 here, it says, items to be considered by the committee, the viability of the development project. Is there a difference between a committee determining the viability of a development project versus the ability to form the CFD and designated area?

I think the viability is kind of the financial wherewithal of the developer. Does it seem reasonable of what they're building in that area and that type of thing? And you draw on whatever expertise you need. Some of it you might draw on from a firm like us. If you have an appraiser, we say, hey, are they ever going to build... 14,000 square foot homes in this area. We can ask that question of them. Those are the types of things. If that feasibility is looked at, then there's this whole process of negotiating the deal. If a deal is negotiated, eventually it gets to that point of having a resolute intention. It could be, as it works its way through that committee, that you can't come to terms with that particular property owner. In that situation, it might not progress

Understood. Okay. Thank you. Thank you chair. Thank you. Thank you. Councilmember Cordero. Councilmember Toba.

Thank you chair. Aloha Adam. My question is, is there a way to outsource the entire CEFD review process to a third party professionals like yourself that focus on these districts so that it won't burden the city staff?

So there are I don't think I've ever been asked that question, but it made me think of a circumstance here. In California, there are some statewide aggregators that have people just, the councils approve something, and they can just kind of directly go to those programs. One of the things that we've seen from the Securities and Exchange Commission is say that you're getting tax benefits for these investors that buy these things, and there's not oversight on those. And so I think the idea of doing 100% offloading this to a third party, that can't be done and has been open to criticism from some of the regulators. So I don't see that as a viable approach.

Okay, thank you. And who determined which department heads are part of the reviewing moves? I think this is a question for staff.

Sorry. Thank you for the question, Council Member Toba. Currently, it's our team, our internal team. So you can say the administration decided who should be involved to do an initial assessment of the project. Because what we want to do is we want to ensure that before we go through the process of formation and then eventually issuing bonds, we want to make sure that we're all comfortable that Hey, this is gonna work and At the end of the day the most important thing The developer will be able to sell the different units the Constructed to homeowners right and and hopefully more so to local homeowners and we want to make sure that it's going to be affordable and when everything's said and done. So they have their mortgage, they're gonna have their property taxes, that doesn't go away. They're gonna have to pay the special tax assessment related to the CFD, any HOA fees, and things like that. So we wanna feel comfortable, big picture, that it's gonna be affordable, and hopefully help people to be able to afford homes down the road. Yeah.

Thank you, thank you, Chair.

Thank you, Council Member Toba. Thank you so much, Director, and thank you, Adam. If you could just remain here, because we do have testifiers, and I promised the members to have another round of questions in discussion if they still had any.

Happy to.

Okay, thank you again for those of you who are joining us in the chamber and for your patience. We will now proceed with in-person oral testimony in the council chamber. I do have a list of in-person testifiers. I will go through the list and if anybody else is here that's not on my list and you would like to testify, please feel free to come up and identify yourself. First, I have Matt Delaney.

Thank you, Chair Okamoto. Thanks for this opportunity and members of the council. My name is Matt Delaney. I'm with La Lima. I function as the CFO. I first want to thank, this started way back with the Governor Green, Mayor Blangiardi over a year ago, Director Kawano and his team and every single one of you that we've met with on multiple occasions. We've worked together to understand CFDs and learn them together and educate everybody and how they can help deliver desperately needed housing and infrastructure on Oahu. We're extremely grateful for all the work that's put in so far. Our position today is pretty simple. The city should establish the staffing resources, procedures and framework necessary to evaluate and advance multiple qualified CFDs concurrently. The question should be what resources are needed to accelerate housing and how do we put those resources in place, not just work on one at a time. Thank you for your time.

Thank you, Mr. Delaney. Members, any questions for the testifier? Okay, seeing none, next I have from Laulima, also Brennan Brown.

Hello, Council. My name is Brennan Brown. Thank you for the opportunity to address you. I'll try and do this as quickly as I can. I spent my career doing special district finance all over the country, and there's about $10 billion of bonds sold every year in our country. to finance public infrastructure across our nation. We have the great blessing of living in an incredible country with the most incredible capital markets in the world. This capital flows to build infrastructure that residents of your community can use. Financing infrastructure is very difficult. Accessing this market through a CFD is a way to bring capital here and build infrastructure. And it's the most efficient way to do it anywhere in the world because we live in this great country. And so I invite everyone here to move this process forward so that Oahu can join the ranks of communities around our country who are accessing this $10 billion every year. Thank you.

Thank you. I did have a quick question for one of the La Lima representatives. It came to me, and I think I'm going to ask you instead of Adam. In the event where Adam did mention that sometimes people don't want to buy into it because of the additional assessment charge. So as the developer, if units aren't sold, if we go through the process and you develop the properties and you have the projects, and then if units are not selling, what happens then? Who's responsible? Because I think in other projects with other... subsidized project, we've come back and we've been asked by other developers to help because the units aren't selling or renting. What happens in a case like this with a CFD project?

Yeah, as Director Kawano and Adam so accurately described, part of the application process is to make sure that the properties are not overburdened with this special tax. And so there will be an analysis done that will make sure that it's an appropriate level. In terms of fast forwarding that all the way to is a property selling, I think that's market forces at the end of the day that determine that. And so I don't think the La Lima Group or any other developer should have the expectation that any type of government entity should help them move units. That's up to them to build a product at a price that's right and efficient that people can buy. And so my answer to that would be they would just need to lower the price.

Okay, thank you. Members, any further questions for the testifier? Thank you very much. Next on my list I have from Operating Engineers Local 3, Mr. Pani Miatova III.

Aloha, Chair, members of the committee. Panem Yatonga III, Deputy Political Director for Operating Engineers, Local 3, in support of and asking for you folks to continue moving forward with the framework for the CFDs. I had to do a lot of testifying this past state session for TIFs, and I used the word toolbox. So I'm going to change it up for the CFDs, and I'm going to look at it from a perspective of a football play. Right now, the city only has certain plays that they can use. But if you use those plays over and over again, soon enough your opposition is going to figure it out and stop it. This is CFDs. There's another way to add another play. You're going to add in different personnel. You're going to add different rules, different logistics. People are going to move in different directions. But this is what we need. to advance infrastructure so that we don't, the public doesn't have to bear that cost of infrastructure of that. It's key for us to make sure that the city has all the tools, all the plays that it needs so that it can move around, do the things that it needs to do to help the public, to help the community, to increase jobs. For us in construction, it's making sure we have projects. That's very big for us. So we look at this as a financing tool that will help.

Thank you. Thank you, members, any questions for the testifier? Okay, Sina, next I have also from Operating Engineers, Mr. Ana Tui Sasopo.

Thank you, CNN County. But I'm just here. I usually don't come and testify. I let Pawnee do all the talking. But yeah, if it's important for me to be here to support these developers, I'll be here to come and testify. But this work, it supports all our members. My name is . My name is Anatia Subban from Operating Engineers. We have 3,300 members here in Hawaii. This is going to provide a lot of work for our members, especially from Kapolei all the way to Ko'olina. But I'm just here to make sure that you guys do support this CFD. And that's it. So, you guys got any questions?

Thank you, members. Any questions for the testifier? Thank you. Thank you very much. And thank you for sending your name for the record. Next I have Mr. Michael Pacheco from IBEW 1186. Good morning.

Aloha, Chair Okamoto and council members. My name is Mike Pacheco, and I'm here just speaking on behalf of IBW 1186, Leighton Torta, our current business manager, and our 2,700 members who we represent in a variety of fields. Thank you for the opportunity to testify, and of course, we're in strong support of this, as Pani put it, I thought that was a great analogy, just another play in the playbook. So thank you for the opportunity to testify. Aloha.

Thank you, members. Any questions for the testifier? I see none. I have none others on my list of registered, but if there's someone here who would like to testify, please feel free to come forward. If you could just state your name for the record and proceed with your testimony.

Do I press this? Oh, it's on. Aloha, Chair Okimoto, council members. My name is Geno Sequena. I'm the executive director of the Hawaii Building and Construction Trades Council, which represents 18 construction trade unions throughout the state of Hawaii. I'm writing in strong support of establishing and implementing these community facilities districts as an additional financing tool that may be used to help finance public infrastructure and expedite necessary housing. We also support Laulima, the master plan community as an appropriate candidate to become Oahu's first community facilities district and help to establish a successful pathway for other housing and infrastructure projects to follow. Laulima has planned to deliver approximately 2,500 new homes together with significant public infrastructure. So we encourage the City and County of Honolulu to continue moving forward with the implementation of the CFD program and support Laulima's efforts to become the first CFD district. Thank you. Aloha.

Thank you, Mr. Sequoia. Members, any questions for the testifier? Seeing none, Imani.

Aloha, Chair. Oh, sorry about that. Aloha, Chair, members of the Council. Emmanuel Ziba Kalam here on behalf of the Laborers Union Local 368. I'll keep it short. We're just hoping that you continue this conversation by moving this forward and helping our residents as well as our members continue working in the state of Hawaii. Thank you.

Thank you, members. Any questions for the testifier? Seeing none, thank you so much.

Good morning, Chair, members. This is Kiko Bukowski on behalf of the Plumbers and Fitters Local 675. We submitted written testimony, I hope you folks received it, and just wanted to add that we understand that the City Council formed a PIG, Permitted Interaction Group, in 2025 look at TIFs, Tax Increment Financing, and in their recommendations and findings, they did recommend moving forward, looking into CFDs as a method of financing infrastructure. And so we wanna strongly support the city council in moving forward with this proposal. And we also want to encourage, highly encourage the city council to consider multiple CFDs if they prove useful and viable. Thank you.

Thank you. Members, any questions for the testifier? Seeing none, is there anyone here in person in the chamber who would like to testify? None will not proceed with remote testimony. Clerks, do we have any remote testifiers for this item? Chair, there are none. Thank you. Okay. Thank you for your patience. Again, members, we'll now transition back to discussion. So at this time, if there's any follow-up questions for our administration and Mr. Bauer. Council Member Cordero.

Thank you, Chair. This question is for Director Kawano. Sorry I missed this earlier because I remember you mentioning Iwilei Kupalama, but I actually didn't really get the fact or get that point of just working on one individually. So are you stating that the city administration is only requesting to work on one or formulating one CFD per year? Is that what you said?

No, that's not what I'm trying to say. There could be multiple CFDs in that area.

Oh, in that area.

Because it's a huge area, right?

I meant in general, like it could be, just for example, I'm going to use my district, like Aloha Stadium or Kapolei.

I would say this. My preference, but I don't make the call, right? It's the mayor's call. My preference would be to do one first, get one done and do it right, and get everything lined up, understand what we're doing before we do several. I know the discussion of doing several at a time was brought up, but... We're learning. We're going to be learning on the fly. And like I said, in terms of capacity to oversee all of the advisors and consultants that we're going to need, it's going to take time. It takes effort on our part because we need to understand what the consultants are doing. And we have to understand the inputs they're putting into their processes and their reporting that comes out. Because at the end of the day, when we sell bonds, I'm going to be signing documents, you know, opinion letters and other things like that. I have to sign it. So I have to say that, you know, whatever we put out there on behalf of the city is appropriate and accurate. So that's my preference. But, you know, I don't make the call.

Right, I understand. I think my first question to Adam was, like, who's liable then? I mean, I know you would be signing documents, but at the end of the day, it would be who's setting up the CFD, though, yeah? I mean, sorry, excuse my naivety. I don't even know how to say that word. But I was trying to formulate questions at the same time when you were talking. So, I mean, at the same time, what is our liability then at the city level?

It's time, effort, and reputation, because at the end of the day, as Adam clearly covered during his presentation, the liability for the repayment of the special assessment bonds related to the CFD will be will have to be paid by the property owners. So the property owners will have, they have their real property tax, they're gonna have to pay. They're gonna have these special tax assessments related to their CFD. They're gonna have to pay it. And if they don't, our responsibility as a city, like collecting real property, we're gonna have to make sure the billings go out, We're going to have to make sure that we collect on the billings. And then if property owners go delinquent after the developer sells to property owners, we're going to have to address any delinquencies. And then unfortunately, if we have to foreclose, and we don't have that many annually, we're going to have to go through the process, the foreclosure proceedings. We don't want to go there, but that could be out there as well. So there's definitely time and effort we're going to expend. And if we have several active issuing bonds at the same time, we're going to have to evaluate that. I can tell you right now we're at full capacity as is. So as we go through the process, we're going to have to understand what more we need so that in future budgets we can ask for it, you know, request for it. So we're prepared going forward.

Yeah, I fully understand that. I don't want to overburden you folks, but I think at the same time, when we look at Iwile, Kapalama, TOD, and I forgot what it's called, that area, in comparison to possibly Akapole, CFD, I feel like Iwile, Kapalama would definitely take more time because you mentioned there's state entities and properties and numerous owners involved versus maybe just one CFD applicant. I don't know how to describe it, but yeah, like at Laulima. So I don't know, it just seems like it may be easier to do Laulima quicker, Versus like Ibele Kupalama where it's going to be a lot more discussion, which I support both because obviously in my district area, or shared district, I should say. But I think it would be good to look at managing both. I don't know. That was just my opinion.

If I could maybe tag on to what you're asking. Thank you, Council Member Cordero. And thank you, Director. I know that it sounds like this is kind of a guinea pig situation where we're following the example of Kauai, but I think we're looking forward to having the further discussion, but you just mentioned that it would make sense right now to have one, because we're still going through, I guess, the growing process of learning how to do this. Would it then make more sense, and you did mention that the liability would fall on the landowner, so in this case, as we're going through choosing one project, would it then make sense and less liability for the city to have a project that's not on city land, that way we could go through the process and see how it's done, see how much personnel would be required to manage all the steps, but we're not the landowner, so we're not carrying the liability in the end.

So can you, I don't understand your question.

Well, you mentioned that, Adam mentioned that there's a benefit to having more than one CFD, which I thought was good for the long picture. But you said right now with our current personnel and what you're, I guess it's a little daunting for what you currently have to then only have one, to focus on one. So I'm asking if that is the goal and because that's what we have the staffing for right now, would it then make more sense? Because I thought you just said the project is, it would make more sense to not have the liability fall on the city as a landowner.

I did not state that.

No, I'm asking that.

I can comment on what you're saying. I think the effort and time would be the same whether or not, so we have city land in Ivalere. We enter into a development agreement with a developer, because we can, right? We have similar 201H type authorities if we're building housing. So we go ahead and we do that. The developer develops. They need some financing for infrastructure, let's say, for their project. If the CFD can pencil, they apply for it, if it makes sense and it pencils. I think the processes are about the same in terms of our liability. I don't think we're any more liable than if it's done on a third party land. We're still going to have to bill and collect the assessment. once the developer sells the units to homeowners, because eventually the developer will do that, right? They'll either sell or rent. And generally speaking, if they're renting, CFD won't apply because it's probably affordable rentals. But once they sell, especially the market units, because the projects will be a combination of affordable and market units, CFDs probably can apply, but we will be responsible, DFS will be responsible to build and collect those assessments and oversee the financing. Even though we have consultants and all of that, and we're gonna need them because we're gonna be learning as we ramp up.

But you stated that the city wouldn't be more liable if it's our property versus?

I don't think so.

Okay, if units don't sell.

I'm not an attorney, so what I will do is run your question through CORE, but I think our liability And our time and effort that'll be involved would be quite comparable whether we justify using CFD financing on land initially purchased by the city versus something owned by a third party developer.

And in that case where the third-party developer came in and they hired their own consultants, we would have to do the same if we're the landowner?

Oh, yeah.

And so you're saying it would not have more of a burden on us?

I'm saying that we have two projects side by side, one on city land purchased and one being developed on land owned by a third-party developer. the level of effort, assuming that the projects are similar in size and complexity, will be about the same. For your department, correct? For your department. For the city as a whole. The city as a whole. Yeah, and in terms of the liability, to bondholders, it'll be the liability of the district in both cases. So I think the city's finances, time and effort involved to administer this type of project in both cases would be quite comparable. That's what I'm thinking going in.

Okay, thank you. Council Member Tupola.

No additional questions. Thank you, Director, just for discussion. I appreciate your question, your line of questioning, because I do think that the complexity of us being the landowner is why the onerous of all of the different documentation would be different than a private landowner who then would have to hire, complete all of that without any of our wherewith, because that report would then be run through the city as far as the CFD report. Secondarily, I think because we're still in kind of the beginning mode of this, it would behoove us for the very first resolution of intent that comes through our body that we do in executive session. Because I think for court counsel to weigh in on the legality of what we're required to do versus what the landowner is required to do would be something that we could ask the lawyers specifically and then get more clarity. because I have read the ordinance many times and I think as long as we get clarity from Corp Council, then we're good to move because the resolution of intent, whoever does one first in whatever district doesn't require any approval. So we would have a resolution, we go through it and then the CFD report would go forward and that's when the admin would interact with it. I think during any resolution of intent, anyone that moves forward, that's when we would have to have an executive session, determine what the legality is. Then as the report moves forward, and it actually says public works director, which has been divided over the years into DFM and DDC, we would have to determine who is going to be the person that overlooks the report that is submitted. And then that's what forms the ordinance. So long story short, I think it would be cool of us on that first step to have the lawyers here. We clarify it. We move forward because, again, that could bring us a lot more clarity than what we're getting here. But thank you for the hearing and thank you for all of the questions.

Thank you, Council Member Tupola. Follow-up questions or discussion and or discussion? Council Member Weyer.

Thank you, Chair. I just wanted to check with Director Cuomo again on the... these particular bonds, or CFD bonds, the type of bonds, does that still trigger prevailing wage?

I do not know.

Okay.

Yeah, for me that's a core question. I'm not sure. And it'll depend on all of the other funding stacks that a project has, right? Not just, because the CFD will fund a part of it, not the whole thing. So it's gonna depend on everything in, in terms of what we have to comply with. You know, in terms of regulatory issues.

Yeah, is that something that'd be better for us to do an RLS for or would it be easy just to have CORE shoot over like an update or an opinion on that?

If you're interested in getting a direct response, we probably should do an RLS to core. Okay. Yeah.

We can do that. Since I know we're talking about staffing needs.

Because it's complicated, right? Because every project will have several funding stacks.

Yeah.

And different parties involved. And if you have federal money, especially. I mean, I only ask because we're talking about

the need for housing and then also the opportunity for good paying jobs. I think we know the severity. I know you fully know the severity of the crisis we're in, because then it also directly impacts revenue too. And honestly, I think we all know that a good job is the biggest safety net. I mean, that's what allows people to afford housing and healthcare and transportation and food and keeping them from falling below the line. And so, more reason just to kind of talk through how do we speed up the process. And I'm open to both, right? Like if it's how do we speed up the process for EVLA 2, Was there a discussion on whether TIFs would be more applicable to EVLA or CFD seem like the prime best option? I mean, I don't expect an answer. If you have one, you know, I welcome the feedback.

I just know enough to be dangerous at this point because we haven't done TIFs either. And we can't right now. We need that constitutional amendment. We're encouraging everyone to vote for it, right? The city is?

Yeah.

I am not out there to encourage anyone either way.

No, I do hope, in seriousness, I do hope that the city administration takes a position.

These are all financing tools that can be used in different situations. They all have their pluses and minuses.

Yeah. Okay. I'll end with that. Appreciate you being here. Appreciate the discussion. And I definitely want to continue the dialogue in terms of how we can expedite the process. So thank you, Chair.

Thank you, Council Member Weyer. Any follow-up questions, further questions or discussion? Okay. Seeing no further questions or discussion, thank you everyone for joining us today and for participating in today's meeting. There being no further business, this meeting is adjourned.