16 Budget and Finance Committee - Regular Meeting

Thank you. Thank you. you

Good morning, everyone. It is now 9.03 a.m., and welcome to the Budget, Finance, Economic Development Committee. My name is Yukila Sugimura. I'm the chair of this committee, and I'd like to welcome everybody. As you know, this meeting is being conducted online, and of course, with the Sunshine Law. And as a reminder, when your name is called, if you're not, well, none of us are in the conference room, please... identify by name who, if anyone, is in the room, vehicle, or workspace with you today, and minors do not need to be identified. For the public, we are all working out of our office and out of the eighth floor chambers, no longer able to go to the eighth floor chambers because elections has taken over the eighth floor for ballot copy. So at this time, I'd like to welcome my vice chair, Latongan, this morning.

Good morning.

Council Member Cook.

Good morning, Chair. I'm in my office alone and staff is in the front.

Good morning. Member Cook. Can you hear me?

Oh, yeah. I apologize. I spoke. Could you hear me now?

I'm sorry, Member Lee is excused for now. Member Paulton. Oh, I got to go back to Johnson.

Aloha kākou, streaming live and direct from my kitchen table in the PD. I have with me two minor canines, two minor humans, and one adult human, George Vieira, in the house. Thank you.

Good morning to your family and all. Member Johnson, good morning.

Good morning, Chair, Councilmembers, community members. There's no testifiers here at the Lanai'i District Office. I'm alone on my side of the office and I'm ready to work. Thank you.

Good morning. Member Rollins-Fernandez.

Aloha kakahi kakako. Maimolo kainui ahina. I'm at my private residence alone right now, but my minor age children will be back.

and will be at home with me uh there's uh currently no testifiers at the market district office hey good morning members good morning hello and good morning kako here at my home office i'm here by myself and there are no testifiers in hana

Good morning. Member Umacoges will be joining us. So assisting us with today's meeting are the BFIT committee staff as well as- Can you call my chair? Okay.

Sorry, can I interrupt? I forgot to say where I'm calling in from. So I'm in my office on the seventh floor and I'm alone in my workspace.

And I'm also here now.

You're done with your call. Yes. Chair Umacoges.

Good morning, everyone. I am here in my workspace alone, ready to go.

Thank you. Welcome. So from the administration, we have managing director is pending. I'm not sure if he has changed his mind. Deputy Director Wade. So Deputy Director Wade is here. Deputy Director Wade, thank you very much. Deputy Director of Finance, Budget Director, Deputy Director of Housing, and Deputy Corp Counsel role. To assist us today, we have also invited TBD, the FAST. Yes?

Sorry, representatives from FAST.

Okay. We have representatives from FAST. Oh, I see what you meant. Okay, Fast Enterprise, who are assisting finance with the TAT system implementation. Members, if there are no objections, I'd like to designate the Fast Enterprise LLC to be a resource person under Rule 18A of the Rules of the Council, based on their experience with the TAT software system an implementation item comes up there, the second item on the agenda. I need your approval.

No objection.

Thanks. Please see the last page of the agenda for information on meeting connectivity. Thank you members for attending today's BFED committee meeting. And we have two items on the agenda, which is BFED 42, Bill 81, 2025, Amending Chapter 3.04, Hawaii County Code on Information on County Operations, and BFED 20, Forint 20, Transit Accommodation, Tax Billing Collection, and Systems Update. That's the seventh one. So at this time do we have anybody signed up for public testimony.

DIRECTOR HERSEY- Thank you chair. I currently see no one signed up for public testimony. However if anyone would like to testify can you please raise your hand on teams or approach the testifier station in the lobby at the county building. Chair I do have one person so far if I could call them to present. The phone number last four digits is 4925 or 4945. If you could please begin your testimony. Chair, would you like three minutes for these?

It will be three minutes, but let me just read my instructions. So testifiers wanting to provide testimony should sign up with staff, join the online meeting via Teams link, or call in to the phone number on our agenda today. Written testimonies are encouraged and can be submitted with e-comment link. at mycounty.us backslash agendas as well. Under the Sunshine Law, the chair will receive the testimony for agenda items at the beginning of the meeting and at the end, and also if the item is called up. For individuals wishing to testify via Teams, please raise your hand by clicking on the raise your hand button, or if calling in, please follow the prompts via phone. Using star five to raise and however, to lower your hand, star six to mute and unmute. Staff will add your name to the Autistify list in the order that you have signed up. If those are teams, staff will lower your hand Once your name is called, staff will then call the name you logged in under or the last four digits of your phone when it is your time to testify. At this time, staff will also enable your microphone and video. Please ensure your name appears on the Microsoft Teams as the name you prefer to be referred to or as anonymous if you wish to testify anonymously. If you're in person, please notify staff that you would like to testify anonymously. And otherwise, please state your name for the record at the beginning of the testimony. Oral testimony is limited to three minutes per item. And if you are testifying beyond that time, you will be given another 30 seconds to complete. Once you are done testifying, or if you do not wish to testify, you can view the meeting on Akapu Channel 53, Facebook Live, or mawikani.us backslash agendas. We will do our best to take each person up in an ordinary fashion. Will you please call the first testifier, please?

Thank you, Chair. The first testifier today is calling in. The last four digits of their number is 4945. Testifier, please begin your testimony. Thank you.

Aloha. This is Jesse Law calling from the U-Haul in Kahului in the parking lot. Hello, can you hear me? We can hear you. First of all, I'd like to comment on the procedure. I heard I'm actually able to join the meeting, which I'm grateful for. I have no visuals, so it's kind of like taken away four of my senses and now I get one, but I can hear you. And I was wondering about the procedure. I heard that Council Member Cook is at the South Kihei Residency Office. Is it all right for people here? And the other day I heard it was closed. So is the South Maui Residency Office open for testifiers? That's one of my, I know you don't have to answer the question, but I'm just throwing that out there for consideration. And yeah, and so I've kind of heard what the agenda was about. I'm glad that this is on the agenda today. It's just about PAT, which folks are a little bit familiar with. I think it's the Transient Accommodation Tax. And it makes me have some hope for the future because it's, In my opinion, Maui County and the state is handling their own money instead of depending on the federal government for money. And the way things are going, we're going to have to depend on ourselves a whole lot more so. Kingdom of Hawaii, I hope the Royal House of Hawaii is still listening. And that's about it for my testimony. Thank you for listening.

I'll go ahead. Thank you very much. Anyone have questions for the testifier? Seeing none. Next testifier, please.

Thank you, Chair. There's currently no one else signed up to testify. Would you like to do a last call opening the testimony?

Yes, please.

Thank you. If anyone would like to testify before the meeting, please raise your hand on Teams or approach the testifier station in the lobby. If you would like to testify, I'll begin the last call now. Three, two, one. Chair, I see no one else wishing to testify.

Okay, thank you. There's been a closed public testimony. We'll receive written testimony, members, and welcome Member Wu-Hachins.

Hi.

Hello, Chair. I'm in the PAIA office, and I have my staff members with me as well.

Okay, good morning. All right, so we've closed public testimony, and I will begin with our first item, which is BFED 42, Bill 81, 2025, amending chapter 3.04, Maui County Toad on information on county operation. And this is for development-related appropriations involving county-owned property. The bill would require disclosure of acquisition fund restrictions state executive order requirements, settlement conditions, and how any inconsistent use would be addressed. The bill is followed. They're required to use affordable housing fund money to develop county property acquired with open space fund. The county was not initially informed of the property's use and restrictions. So assisting us with today's development discussion today, we have Deputy Managing Director, Erin Wade, who's gonna take lead on this? Is it finance department?

Good morning, Chair. We are all here. Leslie Milner is here as well to assist.

Okay, anybody have opening comments regarding this?

um thank you chair yeah i'm happy to make some opening comments um we have no objection to providing the additional information um you know as you are aware when the body discussed resolution 24-179 back in november of 2024 councilmember paulton did ask about the source of funding for this property And at the time, managing director Nishita said that we would reimburse the open space fund if we move forward with affordable housing. But we have no objection to also providing that information in writing. My request would be that we get a little clarification from If it's a CIP, I think my intention would be to include it in Appendix C if that works for the body. And if it were, let's say, an affordable housing condition, we would include it as part of the conditional language under the Affordable Housing Fund. But I just, for the record, would like that to be part of the discussion if the body's open to it so we can make sure it's clear going forward if this legislation passes. Thank you, Chair. Okay.

Deputy Managing Director, you have nothing more to add to your light. You're still on the meeting.

Nothing further to add. Yep, all good. Thank you.

Okay. Grant, I'm sorry. Guy Hironaka, Land Acquisition Officer, Budget Director, spoke. And does Deputy Director Mata'aba have any comments?

Aloha Chair and Aloha BFED Committee. I wanted to give a brief update on where the department is right now with regards to that funding. So we are still in the pre-development phase where we're working closely with Ikaiko Ohana to draw up designs, plans, and to plan for infrastructure on the site. So that's kind of where we are at right now as a department from the Department of Housing standpoint. Thank you.

Thank you very much. No other comments. How about from Deputy Director Ziminski? Any comments?

Thank you, Chair. We actually have Guy Hironaka available, and I'm going to punt to him to have him make some comments. Guy?

Mr. Hironaka? Good morning. Good morning, Chair. My comment is mostly about executive orders. because of the process. If it's not for the use that it was given, we would have to review the executive order and then go back to either the Board of Land and Natural Resources and go through their process to have the property, they would have to reissue a executive order for the purpose that we would want it.

Okay, thank you very much. So thank you very much for your opening comments. So at this time, I'd like to open public testimony for BFET 42. Any testifiers?

Thank you. There's currently no one signed up to testify ahead of time. However, if anyone would like to testify, can you please raise your hand on Teams by either using the raise your hand function or using star six to raise your hand if you're calling in, or you can approach the testifier station at the location of today's meeting. Chair I see no one would like to give me a last call.

Last call please.

Thank you. If anyone would like to testify please raise your hand now or approach the testifier station. Last call for testimony is 3 2 1. Chair I see no one would like to testify.

Thank you. We're going to close public testimony for BFED 42. We receive written testimony members with your permission.

No objections.

Thank you. So we'll begin round three, round one of three minutes each person to ask questions of the resource. So I'd like to open discussion. We'll start off with Chair Lee.

Chair, if you don't mind, I'd like to go last since I joined late.

All right. My assistant chair, Member Batonga, do you have any comments or questions?

Thank you, Chair. Okay, so some of mine is background because I wasn't here in 2025 when Bill 33 was taken out. But can I get an understanding what the current practice is from Corporation Council? So when you reviewed Bill 33 or bills like that, And there is an inconsistency in the proposed use and the authorized use of the land. Do you sign it off to form a legality and then disclose what would need to be done in order to make the proposed use and authorized use compatible? Or what is the current practice?

I see council popped up. Mr. Wilcox.

Yeah, so I didn't review this specific one, but normally that is correct. We would look at the funding source that had been established. If we thought that there were inconsistencies, we would most likely contact someone in administration who was putting it forward to talk about whether or not to find a different funder to try and fix the inconsistency.

So when it would be transmitted to the council, it would either be fixed beforehand or you would sign off as to form an legality and then transmit a proposed fix so that it would be consistent? Is that what I'm understanding?

I think we would usually try and make sure that it was consistent prior to it being transmitted.

Okay. Okay. And then is it your opinion that we need to figure out where in the budget the administration would need to disclose? Because I'm comfortable leaving it unspoken and then it just being communicated in the transmittal. But if there's a desire for more specificity, I guess I'd like to know whether or not that's absolutely necessary or if that's something that we need to take up now.

I mean, that's kind of a policy question. You know, I'm fine with it either way, as long as it is sort of somewhat established, you know, somewhere where it's coming from.

Okay. Thank you, Jared. That's all I have for right now.

Thank you. So next in line is Member Paul. Oh, I see.

Okay.

Yeah, that's fine. And then after that is Member Johnson.

Thank you. You know, member Batangan was asking for background in history. And so, like, I can give you the background in history. My predecessor, member Cochrane, had, when Pulelehua got its initial approvals from this body, when none of us were on there, or maybe somebody was, I don't know, but not me. She had put in that because Pulelehua lands was supposed to be a park and now that we were going to develop it for housing or it was getting entitled for housing, she put in a condition that during the next community plan update that the county would be able to buy 50 acres of ag land at ag land prices from Maui Land and Pine because they're now going to be developing land that was in the previous community plan considered to be a park. So when I was on the council, I ensured that that condition was met after the West Maui Community Plan got its update in like 2022. So we purchased that 50 acres of land from Maui Land and Pine. Then when the fire happened, especially, and the administration wasn't going to help Kulelehua get built because of the desperate need for housing, I approached the administration about the potential of developing on county land there. And like budget director Milner said, like we were all very clear in the meeting. I don't know, everybody that was paying attention, I asked, this is open space land, and so how are we going to use it for housing? And then I think it was Mimi was the court counsel that said, well, you're just going to have to make the open space one whole and do other things. So I'm not sure what this is about because they never hid it from us. You know, we asked, they answered. I knew all along it was open space because we were the ones to purchase it for open space. And my thinking was, you know, there's areas in Front Street where the county owned property, like Lahaina Crossroads, where we're not building back in that location. So that's kind of, you know, the trade-off. There's other lands that are going to become open space just due to moving lands around. Also the Cahoma Villages, I think. got some open space land with the situation with Michelle Lincoln and like that. So I mean, I'm not sure, nothing was hidden. I don't, you know, if we want a bill to say disclose it, but it wasn't hidden, it was disclosed and everybody should know what was going on that's been paying attention and been part of the meeting. So I guess my question is like, what is what is this about? Like, are we saying that we didn't know what's going on? Because I knew what was going on.

Thank you. So this is for clarity when we get bills up to us. And then we don't have to have this discussion again. Next member Johnson.

Okay, I just was saying we can always ask and they don't lie or hide things from us. So just saying that as well.

Yeah, thanks. Are you done? Sorry.

Sure. Well, the other question I had was on Granicus. It talked about the land management issue. administrator position and in items two and three from 2025. And I'm not clear what that has to do with this bill.

Okay. So that's a question for is that question for council?

Um, I guess it's a question for whoever posted it on Granite Kiss. Like, why? Why are we? Um, why is the land management administrator information, what does it have to do with this bill? Like what, why was it posted in relationship to the bill? Like, I'm not clear on, on the, what it has to do with the posted bill. Does anyone know?

So Kirsten, can you reply to that?

I can't remember. I apologize. I think that at the time the letter was written, my understanding was that we just wanted to make sure if questions were asked that the finance might have the resources. There had been a position that had been created and still hadn't been filled at the time. And so when it was sent, it was just trying to make sure that resources were available. to help if questions were asked from departments that were going to be submitting transmittals or if the budget director needed them. I don't think it was directly tied to the bill.

That is my recollection from it. Okay. And that information is from 2025, so is there any updated information? Like, is the updated information that the position has been created and it's filled and Mr. Hironaka is the person? Because... The information posted was from 2025, and this is 2026. So is that old, outdated information?

So we'll ask finance that question. That's where he falls.

Thank you, Chair. I don't have a response for that. I don't know if Guy Haranaka can respond to that. Otherwise, we'd have to get back to you.

You don't know if the land management administrator position has been filled?

I'm sorry. I'm sorry. Yes. That would be Guy Haranaka's position.

Oh.

All right. Thank you.

He is the land manager. Director Martin popped up. Oh, she popped up.

Thank you, Chair. Yes, the reorganization is completed. The position has been filled, and the current job title is Land Acquisition Officer, and that is under the Director's Office. Thank you.

Thank you, Land Acquisition Officer. I'll try to keep that in mind, even though 2019, we've been calling it land, whatever. Okay, got it, Land Acquisition Officer.

Thank you. Next, we have Member Ramos-Fernandez, followed by Kofu Hodges-Stenenzi.

Did you skip Member Johnson?

Oh, sorry, Member Johnson. Please go. Thank you. Then Member Ramos-Fernandez.

Okay, thank you. Thank you, Chair. Thank you, Member Rollins-Fernandez. I'm trying to get to the impetus of why this is. Are we just trying to make the open space funds full? Can't we just throw affordable housing funds in there? Well, maybe you guys can explain to me because I'm curious. So reading the bill, it just sounds like, you know, making the open space funds full again. Is that really the intent of what you guys want to do? Let me clarify this.

I can answer that. So the reason the intent of the bill is to be sure that the funds we are using is in compliance with what is allowed for a charter, right, for the code. So that's what we're just trying to do in a lot of things.

I want to ask Corporation Council this. If it's already purchased and we need money to make open space back up to where it is, is that what you guys are trying to do? And if that's the case, can't you just use the Affordable Housing Fund? Because this is going to push out affordable housing units at the end of the day. Am I incorrect or correct on that? I see Deputy Director Motafa speaking on that. So, Mr. Rowan, if we could get from the department.

Is it Mr. Rowe or Mr. Deputy Director Mata'apa? Who would like to speak?

I'll defer to Deputy Mata'apa.

Thank you. Thank you, Chair, and thank you, Councilmember Johnson, for that question. So back in the FY27 budget discussions, the department worked closely with finance to determine what that amount would be to reimburse the open space funds. So there is an appropriation currently in the FY2027 budget in the amount of $1.434 million that is set aside for the open space. You don't need a bill to do this, right?

You already did this. Oh, I see a bunch of heads popping up.

It's confusing me, I'm sorry.

Yes, I just wanted to state that there is funding for the reimbursement in the FY27 budget.

Thanks. Director Milner.

Thank you, Chair. Thank you, Council Members. I just wanted to add, I think at least my understanding of the bill is separate from this property. That property was just sort of the driving force for the bill. And this bill would just codify that in future, if we sent down an amendment to the Affordable Housing Fund or to the open, sorry, to the Affordable Housing Fund for funding on a project that was purchased with funds any county funds, we would state what the funding source was. So it would have come down and said Kaʻūʻonopili funds were purchased with Open Space Fund and Open Space Fund will be reimbursed if this property is determined to be acceptable for affordable housing. And then that amendment would have gone forward. The other option is if we already know it's going to happen, we will move those funds in advance. And then when it comes down, it will say Kailua-Napili funds were purchased with affordable housing fund. That's my understanding of the hope here.

So I heard the time and I'll wait for second round. But chair, if you allow me to read two sentences into the record, the use of the affordable housing funds, because we worked on this when I was chair for housing, was the council may make appropriations from the affordable housing fund for the provision and protection and expansion of affordable housing funds. and simple living environments, including rehabilitation of existing structures, land purchase, or other acquisitions of land or property entitlements, planning, design, and construction for residents whose income between very low income is defined in this section, the gap income as defined in this section. So it sounds like the use of the fund could cover this. I'm not sure why we're explaining that now. If you take it from this pot, we have to give to that pot, and we got to tell everybody we're doing that. The reason for this bill is just informing that you're moving money around?

Especially the open space fund in particular because it very has specific uses. And we want to make sure that most specific uses got right. I just want to clarify the beginning of transparency, which is kind of your song, right?

Okay. It sounds like they did it already. Okay. I'm waiting for more discussion. I heard the time. Thank you, Chair.

Thank you. Member Ron Fernandez, then Cook, and then Wu Hodgins.

Mahalo, since you introduced this bill, remember Sugimura, is there another example or just that one example that was the impetus for this?

Yeah, that's what triggered it. The one example? Yeah.

okay because basically what member paulton and member johnson are saying is that transparency could be achieved through a written transmittal asking questions and then the uh administration just responds to those questions and we post it on garnicus um and that same transparency would be achieved um and that this bill is unnecessary because all of this is so I I don't know this just seems to me like uh it's an election year and member Sigmar is trying to get a gotcha on Mayor Bisson's administration and that's so that's my read on it please do not bring up the race please do not this is not the right time well that's my read on it I can say what I want to say you can that's not appreciated I wasn't done I wasn't done. I am proceeding with the item. Budget Director Milner, mahalo. Do you see any advantages of passing this bill? Do you see any difference in us just requesting this information via written transmittal?

Thank you, Chair. And thank you, Council Member Rollins-Fernandez. I think that's going to be a policy discussion for you all, whether you would prefer it to actually be a part of the budget ordinance or if you are okay with it being a separate document. So whatever the body decides is their preference on that communication, we are happy to accommodate.

Okay. Mahalo, Budget Director. I'm Powell.

Member Cook, followed by Member Hull-Hodges.

Thank you, Chair. I don't a lot of my questions have been answered. I don't have any questions right now. Thank you.

Thank you, Member. Member Houghtons.

Thank you, Chair. I too have no questions.

Thank you. Member Sinensi.

Mahalo, Chair, just following up on some of the questions that's already been answered. So for clarification, the funding has already been appropriated for this purchase yet. Finance, Budget Director?

Thank you, Chair. Thank you, Council Member Sinensi. Yes, the purchase that was the impetus for this bill in the fiscal year 27 budget funding has been allocated from the Affordable Housing Fund to the Open Space Fund to repay the Open Space Fund. Thank you, Chair.

Oh, okay. Thank you for that clarification. Thank you, Chair.

Thank you, Member Sinensi.

Chair B.

Okay, I have a couple of questions for the Budget Director, Leslie. Can you tell me why the Open Space Fund was used rather than the Affordable Housing Fund at that time?

Thank you, Chair. Thank you, Chair Lee. Yes, when the property was initially purchased, the intent was to use the entirety as open space, but due to the significant need for affordable housing, particularly in West Maui, it was determined that this may be an appropriate site. We didn't do the reimbursement until this fiscal year because we wanted to ensure that the property was appropriate for affordable housing before moving forward with that reimbursement.

Well, by waiting to reimburse the open space fund you like depriving that fund of the money it's supposed to have for the use it was created for right i mean why the the gap in time why didn't you why didn't you reimburse it right away thank you chair thank you chair lee um yes we

had to determine that the property could be used for affordable housing before the fund was reimbursed because if it wasn't appropriate for affordable housing, it would have remained open space and it would have been an appropriate use of the open space fund.

Okay, but the money was already taken or was it not taken from the fund already?

The funds were expended out of the open space fund when the property was initially purchased, yes. And at that time, the intent was for the whole property to be open space. And then in the last couple of years, the determination was made to convert it to affordable, a portion of the property to affordable housing.

Yeah, okay. Well, I can see the reason for trying to get clarity and to have the correct code in place so that this type of confusion doesn't occur again. Because remember, we come and go, council members come and go and so does the administration. So the sooner you deal with an issue, the better. But if there's a requirement, then there wouldn't be any lapse in time for implementation or correction or any of these things. So I can see why this was brought up. Okay, thank you.

Thank you very much. Does anybody else have any questions for round two? Member Botongan, then Member Fulton.

Well, thank you, Chair. And a couple of my members, I think I caused some confusion when I was asking about Bill 33, 2025. I wasn't trying to relitigate the matter. I was just trying to get background information as to what prompted this. So I apologize if the focus of our conversations veered off of Bill 81 and onto past action from the Council. I'll start by just saying that I find the disclosure requirements in this bill helpful. As Chair Lee said, members come and go, and I wasn't here on the body in 2025 when this happened. I can see future council members and members of the public finding it helpful to know if there are restrictions on the use of lands due to the funds that were used to acquire them. I do have one question for budget director. You said that transfers of funds could be made in advance of the transmittal to council, is that correct? Because my understanding is that you wouldn't need to unless you were revenue a situation. But if the action wasn't approved by council, you wouldn't need to make, it wouldn't make sense to do a transfer in advance of the council taking action, right?

Thank you, Chair. Thank you, Councillor Batangan. I think there are a couple of different situations. Obviously, if there were any transfer, the council would have to approve it. I think Let's say we were in a situation where we purchased land with open space funds and all of a sudden we've determined that a portion is good for affordable housing, but we want to put it out to bid to get bids in to see who's going to be the contractor for that affordable housing. We would initially submit an amendment to the council to move the funds if we definitely know we're going to use them for affordable housing. We would put it out to bid, and then we would come to council to allocate the funding from the affordable housing fund for the contractor who would be doing it. So that would be how it would work if we reallocated the funding in advance. The other way it could work is it would happen simultaneously. So we would submit a bill with both allocations in it.

Okay. and my reading of this is that the bill 81 applies to all special purpose revenue funds used to acquire real property are there any others besides open space and housing that we need to be aware of thank you chair thank you council member um i mean we use

All of our funds, I think, you know, we use the solid waste fund to acquire landfill property, things like that. So let's say we had a CIP coming in that was going to use landfill property, but it wasn't a landfill. We would need to very clearly state that and maybe reimburse the solid waste fund or switch the debt service for a few years that it will be used for something else, things like that.

Yeah, I did. even more so i would appreciate this like as a new guy i i don't always have background on some of the things that come before our body i think it would be helpful um for these kind of disorders to be made up front because we may not know to ask. And there are some quirks with some of the special purpose revenue funds. And I think you'd just be more transparent for this body and for the public if those things are stated up front rather than members needing to know to put in writing before the department or before the administration. So thank you.

Thank you, member Batongan. I think I also saw member Paulson, did you have a question?

Thank you Chair. I guess you know what I have to say is that all of this really did occur at the time that it happened. If you want to codify what happened that's fine but to Member Batongan's point the only reason this is coming up again is because it already happened like it's not something that we're dealing with currently because the administration was transparent in every step of the process. If we're seeing future administrations may not be transparent with the process, then yes, by all means, let's pass this. I don't think it's a reflection on this administration because this is pretty much exactly how the process went. I was the one to approach the administration about the need for housing, about our acquisition of this property as open space, and I'm grateful that they took it seriously. Then they came in at every step of the process before they even started working with Ikaiko Ohana. Does the council support us working with Ikaika Ohana to investigate if this would be appropriate for housing? And then we voted yes on that. And then they said, would you be willing to support pre-development funds to go through the details of it? And then we said yes. So I mean, This bill is just kind of codifying everything that happened back in 2024, 2025. And if the concern is that future administrations are not going to be as transparent as this administration, then I guess, yes, we should pass it. But I also think that these are standard questions that anybody with fiscal oversight should be asking at the time that it goes down. Putting it in the transmittal, I guess, would be helpful, but not always every time everyone reads the transmittal. If we want to go forward with it, because we're not sure that future administrations are going to be transparent, sure, let's do it. But I just want to be clear and saying that this is exactly the process that happened in 2024 2025. And before because, you know, we went through the purchase of the property. So I guess that's my discussion for when the motion happened. I already did it in discussion before the motion.

Okay, anybody else? I never cook.

Thank you, Chair. My question for the budget director, Ms. Milder. The property that we put money in for Kihei, the 13 acres, when I was reviewing and proposing that, the discussion was whether to use open space or highways or housing. And I'm just for clarity, at the time I was told, I thought that if you use, you can't use open space funds unless it's for open space. And if you're intending to do something else with it, then you shouldn't use open space funds. So, which is logical. So I was thinking what we're discussing now is sort of like, is there a mechanism to make that change? Like that people are familiar with? or because purchasing a potential piece of property for affordable housing when there isn't a current plan, but you want to secure the property and you don't want to make it a park. So open space seemed to be somewhat of a catch-all that then the county would have that in inventory to potentially work with somebody to do an affordable housing project. So could you comment on that, please?

Thank you Chair. Thank you Councilmember Cook. Yes I remember our discussion. Yes I think The point I was making at the time is if you already know when you're purchasing the property that your intent is not to use that property or the entirety of the property for open space, the preference would be, okay, we're gonna use 75% open space because that's gonna remain park and 25% affordable housing because we know we can develop that as affordable housing. So in this instance, our intent really was for it to be open space at the time it was purchased and then circumstances changed. So we do have that flexibility as we've seen if five, 10 years down the road, something changes. But if at the time of purchase, we know the entirety of the property isn't going to be used for open space, it's really not an appropriate use of the fund.

Okay, no, thank you for that explanation. So it is appropriate if a council member is, for their district, asking the body to consider funding, purchasing a piece of property to identify the portions of the property that may be used for different aspects of it. And that would be the funding mechanism for it, even though the zoning and there may be a lot of things that are not in alignment with that, but it's just sort of going on record. This is the this is the projected intent. And then if it's purchased, it could be modified in the future.

Thank you, Chair. Thank you, Council Member Cook. Yes, I think that would be appropriate. And then in your circumstance, let's say we purchased a parcel that we intend to use for affordable housing, but for some reason the zoning isn't approved, then we could pay back the affordable housing fund if it won't move forward with the intended use.

Okay. Thank you for the clarity in that. And you did a really good job communicating that. And it's a matter of this is helping me understand that there is versatility there. possible. So thank you, Chair.

Thank you. Thank you. Anybody else have questions?

Thank you, Chair. Sorry, one last one for Council. So under 3.04.020 section B2, It talks about restrictions applicable to the fund authorized uses, or alternatively, how inconsistency will be rectified. And the rectification mechanism that we've been discussing has to do with reimbursement from a different fund. Is that a allowable way to circumvent restrictions through funds? I was a member of the public, and I saw that a property was acquired through Open Space Fund. I would assume that that gave it some level of protection. But if the legislative body can then just swap the fund being utilized to acquire it to eliminate those restrictions, I think it might be a little disappointed. So I just want to make sure that the rectifications that we're discussing are all legal. Mr. Neal.

So I think the important thing to remember, right, is kind of whether or not the property can be used for the specific purpose in the revenue fund. In this case, it was available for open space treatment, and the determination as to its availability for affordable housing was done later. So at the time the initial resolution came through, it was a legal use of the fund. If there's a change in planning as to how the fund is going to be used, basically the switching of the fund or the funding mechanism to a different fund goes through the council. So the council ultimately has the approval of it. But at the time of the purchase, right, the use was consistent.

Okay.

All right.

Thank you, Sarah.

Thank you. Anybody else have any questions? Okay, seeing none. So at this time, then, I'm gonna recommend passage of first reading of this item. Excuse me. And... So moved. Thank you, Bill 81, 2025. Thank you. Chair Lee made the motion and seconded by Member Cook. Any further discussion? Seeing none, is this roll call? Member Ron Fernandez.

Mahalo. Yeah. It's fine. I think I can be supportive of this and just mahalo to the Bissett administration for doing what this already says, already doing what this is setting out for future administrations to follow. I think we went over hypotheticals of like how this could be affected with the acquisition of certain special funds. I guess it's a good exercise for council members catching up on how special funds can be used and how it can be changed. And I just, I think Mayor Bisson and his hardworking administration for collaborating with the council throughout this one example and in another example that Member Cook provided. And it'll be good for future administrations to be held to the same standard that the Bisson administration already followed. Mahalo.

Thank you. Member Johnson.

Thank you, Chair. It's funny. I wanted to share the same sentiments. I want to thank this administration for being transparent on this, even whether they didn't have to by code. I want to thank Ikaiko Ohana for stepping up. I mean, they've been building a lot of homes on the west side, which is so important. And the fact that we had a builder and administration that worked quickly after the fires to find a place. It wasn't the best place. Remember, it was for open space. But in times of crisis, you've got to act like it. And I felt that they found a way. And they even kept us up to date on it and were transparent about it. So thank you, administration. Thank you, Kaikōhana. And if this is a way to keep it more transparent, then for future evidence, then sure, why not? But I think there's a lot of more work to do in other topics, and I'm ready to move forward. Thank you, Chair.

Thank you. Member Mujadid.

Thank you, Chair. Just as an FYI, Director Mitchell asked me to schedule an update for these projects in HOU. So we'll be doing that next month, and we can continue the conversation on the status of this project. So thank you.

Very good. Thank you very much. Member Fulton, did you have your hand up? Please.

Thank you. Um, as others have said, I can be supportive of this. I think we do really need to focus on the big troubling issue at hand, which is, um, you know, these light tech project, low income tax housing credit projects, um, especially if they're on 201 H lands are on the HHFDC schedule and not on the county's HUD schedule, which is actually about $223 more than the county's HUD schedule and they've been notified in August, a lot of them, their rents are going up by $200. Utility increases coming up in October, which I've heard could be, usually it's $4 to $6, but in this case, because of all the things, it might be $50 to $100. So now our low-income tenants that are on 201H, project properties that are going through hhf dc affordable rent guidelines are looking at a 200 to 300 a month increase that like you know these are low income folks folks earning 60 and below of what the area median income is and we're talking about Elderly, we're talking about people on fixed incomes. We're talking about single parents. Just because HUD says you can qualify by making more money doesn't mean their bosses are going to say, hey, HUD says you can make more money to make your ends meet. We've got people in Lahaina that went from a 60% AMI when they qualified to a 40% AMI and are now paying 60% of their income to pay rent. These are the serious issues that we need to work on. I've been trying to coordinate with Maui United Way to do a gap program, but that's only going to last so long as their money holds out. And instead, we're trying to pass bills about transparency that already happened. Like we need to address the issues that are causing people strife right now. All the low income properties on 201H projects are looking at like a two to 300 increase per month. And that's on top of what this council approved for water rate increases, sewer rate increases, 9%. And this is not getting us closer to addressing the problem. So I don't know. I've been trying to work for West Maui. I don't know what else can be done, but I'm putting it out there. There's nine of us to put our heads together and try and figure something out. The Alice money hasn't been released. It's going on year two. And so we're in dire straits. And this is kind of like a side thing that we're already doing. So I mean, let's try and do some real stuff here, folks. Thank you.

So thank you for bringing out, which is really not on this agenda, but is happening in the community, especially with the many people.

It's related to the topic at hand, which is, you know, the project.

Thank you. Thank you. Thank you. Any other discussion? I'm going to call for the motion, call for the vote. Is this roll call? Or are you fine? All in favor, raise your hand, say aye. So we have nine I's and two counties. Thank you very much. So you want to take a break? I'm going to continue on. It's about 10 o'clock.

All right.

You want a break? Okay. I'm going to take a 10-minute break. Come back at 10. Thank you. Send everybody back to the committee. It is now, it is 10 and 11, welcome back. And so we're gonna be taking up the second item, which is really an update of the TAT collection and process. So there's no legislative action, which will be taken. This is a 17. So assisting us today, which is Deputy Director Zielinski, Paul Nathart, revenue manager and representatives from Fast Enterprise LLC. Deputy Director Zinitsky, thank you for joining us. Thank you for letting us use your conference room, by the way.

You're very welcome. Chair, would you like some opening remarks? Yes, please. Okay. Thank you, Chair. The good news is TAT software implementation project is actually progressing and is on schedule. And actually, it currently is a week ahead of time. However, I've been told that a few people are taking vacations in the future. So we figured that one week, you know, being ahead is we'll kind of, you know, be right where we need to be right on time. Billings and collections are in progress for both current taxpayers, but also for prior years. As you know, there was a lot of prior implementation work that had to be done. We have about 15,000 taxpayers for TAT. Right now, we have a new revenue manager, Paul Neidhart, who is available, and I'll be He's available for questions as well. But he's also developed policies and procedures that hadn't actually existed before for TAT. He's worked with court counsel on this. So we really feel very comfortable with how it's operating right now with TAT. There's a lot of data scrubbing that's still being done. So, you know, as I say, 15,000 taxpayers. Currently, I'm just trying to hit the high points of what your questions were in the letter. There are six employees that are in TAT, but we have one vacancy right now. So there are five active employees right now. We do have one position that we're waiting on DPS to – I think they have to – It's a new position, so they have to do the research or whatever, but it's a tax auditor for. It's a very critical position, so we're hoping that we can get that filled sooner than later because that'll, you know, it's a high level and we'll be able to achieve even more than we have already. With regard to the quarterly reports, and that's under Maui County Code 3.47.190. This is all the required information that's been included in there as far as reports that relate to the districts, to the residency areas, that sort of thing. receivable information, that sort of thing. We anticipate that once we go live, which will be in October of this year, that this will become available. Now, keep in mind, you know, we do have to have the taxpayers register under the new system. And a lot of the new information or a lot of the information as they register will be new because The old system did not request some information, like the TMK, for example. That will give us a lot of information. And interestingly enough, the state doesn't even ask for the TMK. If they had, our lives would be a lot easier. So as they register, we will have that will be able to implement these additional requirements. We'll have it, but we want to have enough people registered under the new system. And as I say, we'll be doing different correspondence and that sort of thing. But I suspect it'll take a little bit of time. That's pretty much it. We do have Paul Neidhart, who is our revenue manager, available on the call right now. And we also have Cara Beck and Jacob Beck, who are the two folks that are overseeing the FAST Enterprises implementation project. And they are in Hawaii, and they have been on site in Maui as well when needed for testing and that sort of thing. Thank you.

Thank you, Deputy Director. Mr. Neidhart, would you like to give some opening comments? And by the way, welcome.

Oh, Chair, this is Tamara. Before we go on to Mr. Neidhart, I just wanted to clarify what I heard Deputy Zielinski said. It's a clarifying question. Did you say 15,000 units? 15,000 taxpayers. 15,000 taxpayers. Okay, thank you. You're welcome.

Thank you. Mr. Nygaard.

Good morning, Chair, Council members. Nothing further to add to Deputy Director Zelensky's comments, but can definitely provide some greater depth based upon where your questions are.

Okay. Anybody else has a comment? None. All right. So at this time, I'd like to take public testimony. Staff, are there any testifiers signed up?

Yes, Chair, we do have a testifier signed up.

Please proceed. Identify yourself by name.

Our first testifier is Mr. James Langford. Mr. Langford, if you could please, I'm sorry, let me promote you and begin your testimony in just one second. Thank you, Mr. Lankford, please begin your testimony.

Aloha. Very grateful for the work you folks are doing. I had a different testimony prepared, so I'm gonna reserve my time. Thank you, God bless you.

Oh, that was your whole testimony. All right, still no questions for the testifier. Any other testifiers?

Thank you Chair. There's currently no one else to sign up to testify. Would you like to do the last call?

Yes please.

Thank you. If anyone would like to testify on this item please raise your hand on Teams using the raise your hand function or by dialing star six on your phone or please approach the testifier station here at the meeting place. This is the last call for testimony. Three two one. Chair seeing none no one else like to testify.

Okay, thank you. I'm gonna close public testimony, receive written testimony on this item, members with your permission.

Objections.

Thank you. Thank you very much, Member Cook and everybody. So at this time, I'd like to go through questions from the members. I'm gonna start off with Chair Lee, and then go to Member Batonga.

Okay, well, Mary, Congratulations on catching up. I know we've been behind, unfortunately, for several years now. Do you see any trends occurring with the collections? Is it more or is it less? Is it coming from the west? Is it coming from the south? What are the trends?

First, I'm going to actually have Paul address this in a moment, but I do want to mention that, yeah, we're very pleased and we've made a lot of progress because of Paul and his staff. They're working very, very hard, tirelessly, I have to say. So, you know, a lot of kudos to him and his staff. But having said that, I'm going to have Paul respond. He has been working actively on looking at scrubbing the information, looking at where, you know, where we have the receivables and where we have payables. There are accounts where we owe money. In fact, you know, he actually, we had a few large checks we had to make out to some of the hotels. To who? For what? I'm going to let Paul, I don't know if he can mention the name, maybe just mention the area, Paul. Okay, yeah. Yeah, yeah. Go ahead, Paul.

Chair, Council Member Lee, yes, we are not allowed by law to share specifics on taxpayers, but it was a large taxpayer in West Maui that we issued a recent check for.

Oh, I thought you meant like office supplies. We made a mistake on a taxpayer.

We overcollected. No, this is actually a taxpayer paying in full, but then later, based upon our interpretation of the statute, we actually owed them a refund because it didn't actually qualify as a short-term rental. It was under a long-term contract.

Oh, okay. Yes. All right. But I just wondered, what are the other, besides expenses, what about the income? What are the trends on revenues?

I'd say we're still trending at the $70 million a year in annual revenue. Obviously, that's based upon, you know, because we're a lagging indicator, we're ultimately as successful as the taxpayers' businesses are. But once we have the data, you know, enough data for properties, we'll be able to get more granular in terms of what districts that revenue is coming from.

I see. Thank you. And Shirley, if I can just add to Paul's, is that, you know, the new system will enable us to do better compliance. Right now, the tools we have are just, we just don't have the tools to know if there are people that should be paying that are not paying. And Paul has, you know, has plans to be working with planning department and other departments in the administration where we can determine if there are properties or people that are not paying. But right now, we've got nothing, you know, without the information.

do have okay so how far are we uh like one year behind year and a half behind what well we're current but let me have paul address that okay we're current okay all right that's all i have thank you okay mr newhart before i move on did you want to add a moment

My only comment is that we're still continuing to reach out to taxpayers and inform them of outstanding taxes and penalties and interest and such. And then it's a matter of the collections piece where we're ensuring that we're reaching out to the taxpayers, ensuring their information is current, ensuring that there's no They pay their own account. There's no errors either on our part or on the taxpayer's part, but ultimately providing as clear a picture as possible on their account balances, which will become instantly available to them at scale once the new software goes live.

Okay. Thank you. Thank you very much. Thank you, Chair Lee. So next we have a member of Otongan, followed by Paulton, Johnson, Rollins-Fernandez.

Thank you, Chair. Deputy Director Zielinski, so I've read through the responses that your department provided to this body. Can you give us a little bit more detail about the policies and procedures that have been created to administer the collection of TAT taxes?

Okay, I'm going to have Paul, since Paul was hands-on on this one, Paul, if you could just at high level just address.

Yes, I don't know. I can provide a complete roster in writing, but think of these policies as writing out standard operating procedures on how we review refunds, how we evaluate penalties and interest owed, how we. how we actually implement some of the grandfather we've been dealing with, with taxpayers who potentially could exclude income that was received from reservations that were made before the program started. Just a lot of, a lot that hadn't been put, had documented and put into writing that can then be, you know, enforced, it can be transparent. And ultimately, you know, I'm being clear with my staff and taxpayers on how we do things as an office.

Okay. Back to Deputy Director. What is the statutory authority that lets the county collect GAT taxes?

That would be the Maui County Code. Is it 3.47190, I believe? That's yeah, 3.47. Okay. And the interesting thing, Councilmember, just to mention to you is that what we did find in Paul looking to delve into this and work with court counsel is we found, thankfully, I probably shouldn't say this, but it was very general as far as how it was written. So we were able to achieve a lot of the policies that we needed to achieve, staying within the guidelines, if you will.

I guess the generality is why I'm asking. So, Corporation Council, can you come online, please? I'm concerned that some of the activities described extend beyond what's permissible under policies and procedures and extend to what should have been done through the rulemaking process. Can you opine? that or can you confirm that everything described by the department complies with HRS Chapter 91?

You know, I would really have to kind of look back if you wanted a full answer.

And we can put that question in writing because this is starting to feel like the presentation we got from the Office of Economic Development when they were implementing new rules for grants, where I think that there's some confusion as to what needs to be done through the rulemaking process and what needs to be done through policies and procedures. But can we just transmit a question to the department confirming that everything that they've that they're implementing to collect the TAT taxes can be done through policies and procedures, and that we are being compliant with HRS chapter 91. Thank you.

OCF will send that written correspondence. Thank you. Excuse me. So next we have member Halton.

Thank you, Chair. My first question is to clarify that we collect TAT from four classes, which would be hotel, timeshare, STR, and commercialized residential, correct? Yes. Okay, great. And then I was wondering if under the chair's signature, we can get the timeshare and hotel data, like how we're provided in this RPT booklet? It says TVR, STRH, class count by value and council district. If we could get that for timeshare and hotel because it wasn't included in our real property tax certification booklet for fiscal year 2026. And then my other question is when Deputy Zelinsky mentioned 15,000 taxpayers. Are we counting like one hotel with so many units as one of the 15,000 taxpayers? So the unit number is much larger. Do we know the entirety of the unit number?

I don't personally. I don't know. Paul, would you know offhand? Probably not. Because we just get, that's just one account. okay so but if we have the breakdown would it have it or not really because it would still treat one hotel as however many units okay yeah they just but uh council member you were saying that so you were pointing to the report for real property tax but i didn't understand your question were you looking for the the tat relating to those i wasn't sure

no i'm looking for the class count by value and council district because we have like owner occupied non-owner occupied str commercialized residential i'd love to see the class count by value and council district for hotel and timeshare as well if possible um and then uh Could you clarify, was it we have three years or was it five years to reconcile? Is it? Oh, is it three?

It's three, yeah?

That's what I thought.

Okay.

Okay. And so you're saying that we're current on up to three years ago and every year that passes, we have three years. And so we don't have anticipate any issues with meeting that three-year deadline on collecting.

no right now currently paul and his staff is have you know actively been you know working on getting all that information now whether things yeah whether things slip through the cracks hard to say there's going to be some we know that yeah and then um as paul was saying that um

they're gonna have to fill out this new form with new information. And in that way, it's kind of like self-reporting. I know that if they operate illegally, there's a $20,000 fine. What is the consequence for not filling out these forms in a timely manner or just not complying? the ones that are already on the list of whom we're um collecting from it would be easy to cross-check but if there's ones that aren't on the list and they don't fill out the paperwork is there a penalty and is that something that you need us to codify like that there is a penalty

I'm not sure. I'd have to look. I'm not sure. Paul, would you know offhand if noncompliance, you know, we're kind of not at that point yet where we've been able to identify noncompliant taxpayers, but would you know offhand, Paul?

Yes, Chair, Council members. So we do have, we do rely on the state because they have an enforcement arm where they actually can investigate and potentially find if folks aren't reporting against their TAT liabilities. Ultimately, under the current statutes, we do have negligence and fraud penalties that if we do receive filings after the fact, All those can be applied based upon why they filed so late. But currently we don't have the capacity nor the arena to actually go out and potentially find folks who who are not reporting against the TAT taxes. But as we start to gain that more clarity into where the income is being derived from, the properties, that offers some opportunities to cross-reference with real property, with planning, and potentially find those taxpayers who may be under-reporting, may not be reporting, but that's a year or two down the line after we're able to take care of all the taxpayers who do want to do the right thing and are trying to do things to the best of their abilities.

Thank you. I did hear the bell, and I'll come around for a second opportunity. Thank you.

Thank you. Member Johnson, followed by Member Rollins-Fernandez.

Thank you, Chair. Much of my questions have been asked and answered already. I just want to Show my support again, once again, for this TAT to be used to mitigate some of the climate change disasters that we've been facing. We have a hurricane barreling down our throats right now. We just saw some wildfires over the weekend. This money could be used to offset some of the climate change. But we went a different route, and that's $70 million now. I just think come next budget season, we have to allocate where it's going to go. And I thought it would have been a great use of the fund to kind of work on things like that. And I don't have any questions at this time. Thank you, Chair.

Thank you, Member Johnson, followed by Member Ron Fernandez.

Mahalo, Chair, and mahalo to the administration for their continued work on this. So just a little bit of background in response to Member Batongan's question regarding statutory authority. So in the 2021 session, the legislature passed a bill that became HRS 237D-2.5. and that established the county transient accommodation tax and the administration of it which required the counties to then establish a process within our code in 2021 december of 2021 we passed bill 101 2021 to amend title 3 to establish a new 3.47 transient accommodation tax rules on collection processing appeals penalties etc the counties were not required under hrs 23 237 d-2.5 to establish rules under chapter 91 rulemaking process because we're a rulemaking body. Our rules are established under code. And so that's what 3.47 is. And that's where you would find the information on how we collect on transient accommodation tax. You'll find all the definitions. You'll find all the processes, appeals. it's it's all in 3.47 if if you have questions on on what the process is and that gave um the public an opportunity to provide us feedback when establishing the process through testimony and it continues to just be in the code and if we need to make amendments then we can take testimony but That's where it is. We're not required under Chapter 91 to establish rules. Our rules are in the county code. Mahalo, Chair.

Thank you very much. Next, we have Member Pook Bulupajan Semenci.

Chair, could you repeat that?

Oh, you're next.

Okay. I just want a confirmation. Thank you. So, Director, do we currently have visibility when we look at the properties, how much it's being paid to the state and how much is the county share so that we have an understanding of the total net tax revenue from

a property well we do uh chair uh we do receive um the information from the state so we would be able to see that but it's not something we you know we collect or accumulate but we it is available i mean well i i just i'm curious um for us to know how much the percentages on the state on the county is is it

Is it the total amount of TAT paid, and then the 3%, I believe, is the county's portion? Is that correct?

We're getting – well, the state is – people – there's two separate – basically, there's two separate filings. The taxpayer sends a return to the state, and then they send one to the Maui County, so there's two. And the taxpayer – that sense to the state is paying 11%, which is tremendous compared to what we get. We're getting the, you know, the 3%. So we don't see them. They don't, they're never, you never see it on a total. Okay. It's just one separate report for the state and the other one is separate for the, for Maui County. As I say, TAT receives what's filed from the state, but I don't see that we would ever, we'd have that available if somebody said, hey, what's this taxpayer paying the state?

That would be available. Sorry, I'm going to interrupt you. Okay. So the reason I'm asking the question is because when we take a certain number of transit vacation rentals out of the market, it's the state itself I mean, the county has an impact and that's what we've been addressing and mapping to date. But there's also a substantial amount of state revenue that isn't being paid. And I'm just trying to have visibility and impact. I'm not really going one way or another. I'm just saying that this process that we've initiated to terminate some short-term rentals for housing. So we're not necessarily mapping that we're just addressing the three percent exactly and we have no reason to know what the state is getting but you know we can easily determine it yeah yeah um my next question is by us catching up was it a purchase uh utilizing new software or is it principally additional staffing

It was just a lot of hard work. He doesn't have any more people. We're talking about people putting in a lot of extra time and overtime, in fact, as well. But, you know, it's a great group. They're working very hard. They see progress. And that's really what it comes down to. No additional people. Yeah.

Thank you very much. And, you know, appreciation to the staff. I heard the bell, Chair.

Thank you. Member Uhadjiz, Senate seat.

Thank you. Thank you guys for your presentation and being with us today. Earlier, you said that the new software is going live. When is it going live?

It's going live in October. I think October 6th. Is that correct, Paul? Oh, the 5th. Okay. I got it wrong by one day. Okay.

Cool. Thank you. And then I'm curious, how many I guess how much money did we have to reimburse? And does that affect our estimated total that we assumed

You mean as far as when we're adjusting, making adjustments? Is that what you're saying?

Yeah, well, and earlier, I mean, to the unnamed taxpayer for this T&T, we cut a large check. About how much money did we have to reimburse and does that affect our anticipated $70 million of annual T&T, TAT revenue?

Council member, I don't see that it'll have any impact. I mean, the one that we were talking about on the west side was about a million change, but it really, it shouldn't have any impact. But Paul, any comments that you wanted to add to that? So no impact, okay. I don't see any. Anything, Paul, that you would think?

Well, just to give you ratios in terms of accounts receivables, the amounts of money that are still outstanding based on our current books, it's about two to one in terms of the amounts that are accounts receivable versus accounts payable versus refunds going out. So, yes, in terms of a month to month cash flow, there may be some fluctuation, especially for this was one of our top 20 taxpayers that pays a majority of taxes due. But in terms of the overall amount received over the years, and especially as we start to collect more on past years, I don't see it affecting that overall $70 million estimate.

Okay, could you provide us an estimate on how much money we needed to reimburse this, not, I know you just said million something, but all the other taxpayers, how much did we have to reimburse?

In terms of the total amount of refunds we've issued, say, this year, in the last fiscal year?

Yeah.

It was, I mean, this one refund was, I mean, I would throw out a number, 90%, 95%. It was a significant amount of money. Most of the refunds we issue are, you know, double payments, a few hundred dollars. This was a significant amount of money.

So just a little bit over a million if that one was 90% or so.

It might have been 98%. I'd have to look to see the total amount. Sure.

I was just curious of a rough estimate. Okay. And then in the future, when you do have to reimburse certain taxpayers, how would you folks at the council know, like, hey, FYI, we had to repay back this person a million-something dollars?

I don't. Chair, I don't think that we would necessarily, first of all, any taxpayer information has to be confidential. So we couldn't tell you that, you know, Maria Zielinski paid back, blah, blah, blah, or whatever.

Yeah, yeah, yeah.

Yeah. But I think from an, we might, I mean, we'll have the, once we have the system in place, it should be very easy to say we issued, we received this much revenue, but we also issued these many refunds. Okay. That should be very simple. Yeah. Yeah.

That's fine. I mean, obviously, we spend a month together in budget, so there'll be ample time to talk about this. But I feel like this is just our first time relearning. We have to reimburse quite a significant amount. So out of just moving forward, I think it would be important for us to just get an FYI. Got it. Thank you.

Yeah, thanks. Thank you, Reverend Uhad. Next member, Sunanzi.

Hello, Chair. Hello, Deputy Zielinski for that report. I just set up. Are there two different dates that we're collecting a TAT?

I'm not sure. Councilmember?

When do we normally collect those? Or is it ongoing? Or is it that we deposit or when we call it?

Some days go monthly, some days go quarterly.

Yeah, it's sort of like G.E.T. It depends on the amount that you have. If you're a small operator, it might be semi-annual. Others are monthly. The larger ones are monthly. And it's usually the due date is the 20th of the month. So we tend to see more monies coming in at that time of the month.

okay thank you for that and then i'm kind of of the same mindset as uh chair lee kind of wanted to see some of the trends you know just anticipate that and see some forecasts i know riley does some great ai generated spreadsheets that would kind of give you an idea um so that was just kind of my if we can look at it from a you know a more uh

distant lens then that'll help us as uh policy makers but i appreciate the report thank you thank you thank you council member thank you um members so i have a question fast enterprise llc um i think mr newhart was saying that this is the same um software used by the state of hawaii separate oh good and um they don't collect for us. And I think it was also said that we add in TMK numbers and theirs does not.

The state doesn't collect TMK numbers. They just have an address. So many times there's some issues or identification issues, and that's why we want to have the TMK, and also to be in compliance with the request to have, you know, by residency or whatever, we need the TMK. Otherwise... you know, certain addresses, you know, it might be Wailuku, it might be, you know, some of them are right on the border and it's hard to tell which is which, but the TMK would nail it. So that's the reason. So that'll take a little bit of time because it's, you know, we can transfer over all the taxpayer information, but the TMK, they may have some, I'm not sure if they do or they don't, but they're going to need to get that from the new registration, from the new system.

Oh, so it's, we are using it and the state is not, right? Is that correct? And it sounds like it's information we would think they would. Do you think this would maybe involve the question as to the state of Hawaii as to why they're not and possibly are they looking at implementing this wise decision also like finance is doing right now?

I don't know, I know Paul, Oh, Chair, yeah, Paul, I know, talks to a lot of the counties and also the state. I'm not sure. I mean, they haven't been particularly cooperative, but Paul, I don't know if you have anything you can add to that.

I mean, we're actually about to, next month, we'll be having an all-counties meeting with the Department of Taxation. That is one of the topics of discussion, specifically kind of what we're doing with Fast Enterprises. Ultimately, we are beholden to the state for providing these filings and us being able to, you know, determine what taxes are owed because of that. But then there's also kind of ongoing discussions about what collaboration opportunities there are. You know, if they conduct an audit at the state level, do they inform us? Do they share information? If they find that, you know, worst case example, you know, some fraud is being committed. Ultimately, as it is currently, the only data that's transmitted to us are those filings, and there's not that collaboration piece. It's kind of on each individual county to enforce and collect taxes as they see fit.

And Chair, I should mention there's a 60-day delay in what the state provides to all of the counties, not just us.

Okay. Very good. So before Paul, and when we were in finance trying to collect the TAT, are there any fees that were not collected that now is too late that we cannot collect? I think as we were setting this up for 2021...

Chair, you know, I'll have Paul respond, but let me just say that I suspect there's some that have fallen by the wayside only because, you know, it's just a matter of number of people and the amount of work that was accumulated prior to Paul arriving. And, you know, and even before that, I mean, it was just, it was an overwhelming task. So I would have to say that I'm sure there are some, but Paul, I don't know if you want to address that.

There will... I mean, without trying to obfuscate like there are some taxpayers who were not like who we need to do an investigation into our records to determine whether they were assessed prior to the expiration of the statute of limitations. And part of one of the policies that that I sent to the director for her approval and signature was kind of what is our due diligence in terms of determining whether a taxpayer is assessed or not and whether we then need to basically just write off that tax. So because if it were to go to a tax appeal course, worst case scenario, you know, do we have documentation to show that we were meeting the statute of limitations of the statute? But as far as like the exact amounts and how long this will take, it will definitely be a process. And there are definitely some taxpayers from 2021 that, you know, would be tens of thousands, hundreds of thousands of dollars. And that's why, you know, I need to do all the work on my end to ensure that, you know, we're looking through email archives. We're looking through mailings that were sent out to determine like, okay, do we have a, do we have standing to be able to say, no, we did assess you prior to the statute of limitations. But that is a, that will be an ongoing project.

Good job. So that's it. Second round. Chair, you're first.

Yeah, thank you. So, Paul, I just want, since you're new, I just want to let you know, when you're in grade school, what happened in the 90s is that the state decided to take a certain percentage of our TAT and And since then, they've taken more. So when you meet with them, you have to be careful. Don't tell them we were very successful. You have to make them feel bad that they should not be taking any more money from us. And then Mr. Sinensi, you made my grandson's day. So he will give you any and all reports you'll ever need. Thank you. Thank you, Chair.

Very good. Member Plotongan, Paulton, Johnson, any more questions?

Thank you. I'll start off by saying that I had read Chapter 3.47 because it's cited in the department's response. I would still like that written response from Corporation Council on the matter. Deputy Director Zielinski, can you clarify, we collect TMKs but not addresses? Is that what you had said?

No, no. All along, it's been addresses and not TMKs. The state does not collect TMKs. The new system...

So in your response, you say that we do not... In your response to item three, question three, second paragraph, you say that we do not capture taxpayers' physical addresses. So what do we collect?

Deputy Director, if I may interject. Yes, please. We only have mailing addresses, and we do not collect property addresses. But starting with the software, not only will taxpayers, taxpayers can live in, you know, California, but ultimately we need to collect the property information that is then driving the income, right? So that's why I'm not able to provide that, you know, the district-level reporting, because ultimately we don't know which properties are driving the income. It's just on the taxpayer to report, to self-report how much they make off of their transit accommodations.

Okay, thank you. I didn't pick up on that distinction and was very confused when you were talking about what we collect and what we still need in order to generate. Okay, I don't have anything else, Chair.

Thank you. Member Fulton, Johnson, Rollins-Hernandez.

Thank you, Mr. Neidhart. Just following up on my last round of questions, you said the state has an enforcement arm. Would it make sense to just duplicate that for the county in terms of legislation? We can say it goes into effect when your software is up and running, but I think Personally, I would rather be prepared ahead of time and make it be an act or what is that called work when you guys are ready but have the legislation in place and would it make sense to duplicate the state's enforcement actions but at the county level for the county TAT?

Paul, can I respond to that first, and then you might, Councilmember? One of the things we're looking at is we need to do a reorganization of the TAT section. Right now, TAT is under administration, which makes no sense. It really needs to be a separate division, if you will. And having said that, we've been talking to Paul, is that we do want to have a compliance section or whatever. Our first kind of feeble attempt is doing a tax auditor for, which we're trying to get DPS to approve. And that person would start to start the compliance section. You know, section up, if you will. But we do need to recognize that this can be a lot. We need to have compliance and we need to have it more geared like state does. Now, of course, not as large a state, but something like that. So it's not something we haven't thought of. But, you know, we don't have the people. That's kind of the biggest thing. We can't do the function unless we have the people. He still only has five people, including himself. And we've got one vacancy, which, you know, we're struggling to fill. So in any case, totally agree. But that's kind of the reason. But Paul, I don't know if you want to add anything.

uh yes i think i think you can kind of split into two buckets um the first bucket is kind of auditing the documentation that taxpayers are providing to ensure that their self-reported tax is correct and there haven't been any errors made that's really more of a in office going through some some legalese and and tax documentation and i think what what you're getting to is more as far as enforcement that's where we're actually going and starting to enforce or potentially investigate um say non-reporting taxpayers. I mean, I've gotten a handful of tips, you know, emails from taxpayers saying, you know, so-and-so at these, you know, at these addresses are reporting. And ultimately, we pass those along to the state. There's actually a hotline that folks can use. But as far as me having personnel or even myself going out and actually, I don't even know what it would look like in terms of, you know, powers that we would need to be able to document, you know, our people staying there for a short time.

Is there any opportunity to do a joint task force? Because I imagine if you folks are looking at similar types of wrongness, that it would be beneficial for the state to have a local arm to work with to enforce. So maybe if we're not there yet with... the county creating its own legislation? Is there discussions that could be had with the enforcement arm of the state as to how future collaboration, once you get the staff, it may not be called a tax auditor for as we've seen with the land, assets, acquisition, whatever, I forgot what it is already, but whatever that position gets created be so that we can correctly describe the position and how it could potentially work with a state enforcement, like, you know, build out the job that we want to see so that it's not 100% on the state, not 100% on the county, and they're working in silos investigating maybe a similar circumstance. Like, we're better together.

Okay.

Any thoughts on that? I guess that's agreement.

Okay.

No comment.

All right. Yeah, I think, Councilmember, I think it's just a matter of getting their agreement. They have not been very amenable to anything we've suggested as a joint venture, I have to say. Unfortunate.

And then I guess, you know, if we were to try and pursue something like this, would it be the administration that heads it up? And would we potentially have better opportunity with a different state administration? And being that this is an election year, could that be a question we ask ourselves? for getting elected? What are your policies in collaborating with counties on this issue? What better time for Civil Beat to ask that question or whomever because just throwing them a bone. We're trying to figure out how to make this system fair, equitable, up and up. And we really need to work together to do this. So would it be you folks as the administration heading up this type of discussion? Should it be us as the legislative like talking about it at each conference coming up September 11th? Anyone who hasn't registered on Maui? Or would it be like reporters or, you know, I know Paul knows some good reporter journalistic types, but just, you know, throwing it out there, like how would we proceed to make this be a better collaborative effort? Like, is it, will we have better people to work with it under a different governor or is that a potential? I didn't fill out that part of my ballot yet.

Council member, I think all of the above would be useful. I mean, you know, Paul will do his thing when he meets with, you know, the county and the state. But I don't know, to be quite honest, I don't know how effective. I know his predecessor tried that and we weren't necessarily that, you know, effective. But I think that what you mentioned with ASAP or whatever, that might be a very, very useful vehicle.

Noted. Sorry, didn't mean to interrupt.

no chair council members i think that um ultimately um once we start dealing with non-compliant taxpayers we start to get more to like the investigative positions where we're I mean, are we scraping Airbnb, VRBO to determine, you know, if folks are at a certain property, are renting it out, you know, how are we able to then prove that revenue was generated through those properties and therefore they should be filing taxes? Again, there's a lot of, it all just comes down to resources and what we're able to I don't want to say like prove are we able to like hold up in court, but, you know, ultimately just off the top of my head, I think it just comes down to, I think the state is more established, more heavily resourced. And if they can share those, the products of that work with us, you know, does that come down the line with them, like folks actually filing late? And then, you know, they determined that those late filings were due to, hey, they got got, and now they're filing taxes from three or four years ago. Again, that's all we see are the filings coming in, and we collect the taxes and the penalties that are resulting from that.

Thank you. I guess then to just add to that, what I was saying before, we should also work closely with IRF. I hope that finance and the TAT also works closely with our own planning department because of their software in enforcement of legal short-term rentals. Thank you.

Okay. Thank you very much. Next, Member Johnson, then Member Ramos-Fernandez.

Thank you, Chair. All my questions have been answered, and I appreciate the Department staying with us and informing us. Thank you, Chair.

Thank you. Member Ramos-Fernandez, followed by Member Twohy.

Hello, Chair. No additional questions. I think I'll just add that in 2021, when we were making that decision of whether to start as soon as possible. So pass the law in December of 2021 so that we could start collecting County TAT or follow Oahu, which was gonna wait until they had everything, their staff all like established and everything. I and the majority of council members At that time, we had the discussion with the administration and the majority of council members at the time said, we go, let's start as soon as possible. And I don't regret that. We are years later, trying to still massage our way through. And I don't doubt the other counties are also going through this because this is new. And with every new process, It takes time to really get it just right. I'm excited about the software that, I'm sorry, I can't say your last name, that Paul is working on. I'm excited at the future potential of this software, not just for TAT, but for other opportunities. My apologies to the admin, but I appreciate the collaboration and continuing to work together on getting this right so that it's easy on everyone and that we're all caught up to speed. But if given the opportunity to do it again, I would have done it the same way. Mahalo.

Thank you. Member Cook, you're next.

Thank you, Chair. So, Director, is there any way that the county audits the state for the TAT collections and distribution? And it sounds like not, and bear with me, because the county and the state is putting this burden on the taxpayers, right? And it's pretty stringent insofar as compliance. And the fact that it is how it is, and I agree with Member Rollins-Fernandez that, you know, and I acknowledge you folks, it was started building the plane while you're flying, kind of so, and not a regret. But I think we have a, the county government has an obligation to the people who are paying the taxes and to the uh general citizenry to convey that it's being that we it's audible so the state isn't cooperating apparently that's kind of a brief question uh no

I think I wouldn't say they're not cooperating but they could cooperate more I think there are things that they could do and many times when I've had conversations you know they've mentioned that they have you know a shortage of shortage of staff and of course we know Paul knows about that and we know the county in general knows about that so I do understand that but I know when there's been some face-to-face meetings they haven't necessarily been as you know The willingness doesn't appear to be there. Maybe it's changed. I haven't had any conversations recently. And as Paul said, he'll be having a conversation very shortly. So I'm hopeful. But, yeah, I think we can do a lot better if we're, you know, we're one unit instead of, you know, just a lot of separate ones. Absolutely.

Okay, great. And it sounds like, I mean, hopefully their computer system and the IT and software will They'll invest in it and get up to speed because all this is a lot of data and reporting. And if it was on the carpenter side, just outside my lane. But it seems like if you have the right software to manage all of this, that it would not be as people intensive. Anyway, I just thank you. Thank you for what you're doing. And for this, I'm really glad we're having this meeting. It's an eye opener to me. the disconnect between the state and the county. I've heard it before, but this sort of just solidifies it. And I want to just underline the fact that if we're getting 3% and they're getting 11%, then they're getting, they're getting three and a half times the income that we're getting. So whatever income we yield on, decide to yield on is three and a half times that overall for the state income. And, uh, I don't know. I just like to use all of that stuff to build homes. So thank you very much. That's all I have to offer and ask, Chair. Thank you.

Okay. Thank you, Member Cook, followed by Member Ujajas and Senancy.

Thank you, Chair. I don't think I have any further questions. Thank you for getting us all called up. If I was on the council back then, I probably would have supported it doing it ASAP as well, because if not, we just lose out on money. So we can go backwards, but... I appreciate this. I guess I do have one quick question. What is the statute of limitations on how far we can go back and collect?

Do you know a hand, Paul?

I do. So it's three years from when you file your annual reconciliation. So think of tax day, April 20th, three years from that date. So for 2020.

Cool. Thank you. That's all I have. Thank you again. Thank you.

Member Sinensi?

No questions, Chair. Thank you for the update.

Thank you. I wonder if it would help if the council through member Walton and your communication for the finance department would try to encourage the state of, I can't, I think having the task map keys where every single one of the customers seems almost automatic but that number one and number two is to participate in terms of enforcement because whatever they find out is gonna affect us. So you would think that, you know, if we should work together with all the counties and I wonder Member Palten, if we could look at some legislation for the next tax, I'm sorry, the next legislative session, if the finance department thinks it makes sense coming from ASA.

Are you talking about state legislation? Yeah. I think. Well, I mean, to me, I would start with a conversation with the other counties first, but if if finance has ideas as to legislation, I mean, any one of us can put it forward. Um, the deadline for the H sack package is coming up pretty quick because, you know, the process we have to approve it to apply to the H sack, then H sack narrows it down and sends all of it back to the county. And then we like either approve it, disapprove it, whatever. So, um, I think for this particular legislative session, we're a little behind the curve, but that wouldn't stop any one of us from working with a representative or a senator to do something in their own package because I think historically that has been kind of more successful With the H-SAC package, it's each of us executive committee members trying to jump off of our council meetings or whatever to provide testimony when they schedule the legislative hearings, which, you know, can be like 24 hours notice or whatever. They're not scheduled. They subject us to the Sunshine Law, but they do not follow the same level of stuff, which makes it difficult on our end. But I can definitely, at our next H-TAC executive committee meeting, bring up the topic or ask our executive director to put it on the agenda and see, especially if other counties are having better results in dealing with the state than us maybe we can see like what they're doing that we're not doing or if we're all having similar uh issues then i think it would be something that all counties could get on board with like just saying hey we just want to work with you you know what what's your big trips um so i i'll try to ask nahe to put it on our next agenda

You can ask there and then I'll explore on my own. I'll work with finance if Deputy Directors Alinsky or Mr. Newhart would allow to explore this further and thank you. All right, members, any more questions? This is, oh, is that Rick Watonga? Paul, can you tell us how to pronounce your last name?

It's Nighthart.

Nighthart. Just wanted to say thank you. I appreciate all the work that you're doing, you and the department, but I know how to say Zelinski.

All right, anybody else have any last comments? Yeah, thank you very much. This is a great follow-up and to really introduce where we are because I think we were struggling through this earlier. All right, members, this is a 7B, so no action will be taken. This meeting is now adjourned.

Bye-bye.