Ozawa’s Voting Record: Pro-rail in a Pinch

Councilmember Ozawa is chair of the Honolulu City Council Committee on Budget and for about four months has been holding two resolutions that would authorize bonds to pay for rail. The Federal Transit Administration (FTA) has forced the issue by giving a 60-day deadline in a letter they released September 21.

By not putting these resolutions on the committee’s agenda, Ozawa has already cost taxpayers $300,000 – $600,000 in extra bond issuance costs, according to Nelson Koyanagi, Director of Budget and Fiscal Services. But let’s take a closer look at some of the other rail measures.

Bill 22 (2018), CD2, HART’s Capital Budget for Fiscal Year 2019

Earlier this year Ozawa used a sneaky tactic to try to authorize the use of city funds to pay for rail. In a floor draft of Bill 22, CD2, HART’s capital budget, Ozawa included a one-sentence proviso:

(g) Notwithstanding the provisions of Ordinance 07-001, City revenues may be used to pay for the debt service for the $44 million appropriated from the general improvement bond fund. (Emphasis added.)

During discussion on June 6, he stated he came up with “this solution,” because no one had any other suggestions. There had been no discussion of this option during prior meetings. Other councilmembers were therefore concerned that there hadn’t been adequate notice to the public, and the amendment did not pass.

By the way, Ozawa’s support of this proviso isn’t “adamant opposition to using property taxes to pay for rail construction” as he stated in a recent email.

Bill 42 (2017), CD1, Authorizing the Use of City Funds for Rail

In order to address the deadline given by the FTA, the Council recently held special meetings to discuss Bill 42. The bill would allow the use of city taxpayer funds, e.g., real property taxes, to be used to pay for rail. Ozawa voted “no,” but this was a safe vote for him, because Councilmember Ann Kobayashi was the only other no vote. The bill continues to move forward and will be up for final reading on October 30.

When the pressure is on, however, Ozawa pulls through for pro-rail groups, as evidenced by his votes on two measures in 2017.

Bill 34, (2017), CD1, Authorization to Issue Bonds Equal to HART’s Capital Budget

Bill 34 (2017) is the initial authorization to issue bonds to cover capital costs of rail. Ozawa voted “no” on second reading, then switched to “yes” at the final hearing, June 7, 2017. From the Honolulu StarAdvertiser:

City Councilman Trevor Ozawa represented the swing vote, switching from a “no” to a “yes” after he read a statement from the dais at Honolulu Hale.”

All bond issuances must be approved for specific dollar amounts after the general authorization is approved. In this case, Ozawa again shows his pro-rail position when voting on Resolution 17-173.

Resolution 17-173, Authorizing the Sale of $350,000,000 in Bonds to Finance Capital Costs for Rail

On July 12, 2017, Ozawa voted “yes” on Resolution 17-173, which was the authorization for HART’s first bond issuance. Councilmembers Fukunaga, Kobayashi and Martin voted “no.” Six votes are needed to approve bond issuance. Had Ozawa voted “no,” the resolution would not have passed.

Ozawa also does not act with fiscal prudence regarding HART’s budgets.

Bill 21 (2018), CD2, HART’s Operating Budget for Fiscal Year 2019

In testimony before the Honolulu City Council, I asked councilmembers to cut HART’s budget, especially public relations (PR). Ozawa initially cut two PR staff, but then he added them back for final reading. In addition, he gave them $44 million more to spend. Roy Amemiya, city managing director, expressed concerns about this, because it means the city will have less oversight of the $44 million.

Bills 17 and 18 (2015), HART’s Operating and Capital Budgets for Fiscal Year 2016

During the March 31, 2015, meeting of the Hawaii Kai Neighborhood Board, Ozawa stated he made cuts to the HART budget. The record shows, however, that he made no cuts.

According to the FTA, there’s still a $134 million shortfall in HART’s projected revenues. In addition, with a budget of only $848 million for the City Center Guideway and Stations from Middle Street to Ala Moana, it’s very likely that additional funding will be requested. Ozawa may vote “no” on rail measures prior to the election, but when the pressure is on and voters aren’t able to exert much influence, I’m sure we’ll see his pro-rail nature shine through.

Note:  This is a re-post from my site.

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HART Meeting Tomorrow: More Broken Promises and Lack of Transparency

The Honolulu Authority for Rapid Transit (HART) board of directors will meet at 8 a.m. tomorrow, and there are several things we should all be concerned about:

• a resolution requesting that the Honolulu City Council approve a bond float for the much-talked-about $44 million for HART marketing and personnel costs;

• the potential that the board “may” go into Executive Session regarding several issues that should be discussed in public; and

• the lack of a discussion item regarding the state auditor’s concern about HART management recording employees during interviews.

When I read the agenda, I was shocked to see a resolution requesting that the Honolulu City Council approve the issuance of bonds to cover the $44 million. This $44 million was initially put into the city’s capital improvement (CIP) budget by the mayor and then moved to HART’s CIP budget by the council.

During two months of budget discussions, we were told several times that HART had the money to pay these costs. We were reassured that no bonds would be needed for next fiscal year. Even as recently as the June 6 full council meeting, the $44 million was referred to as just “a placeholder,” similar to having a line of credit available.

Who knew that this was not correct? When did they know it? When will we be given accurate and complete information?

It’s also important to note that this resolution calls for the $44 million to be repaid with city funds, which breaks another promise that was made to us with respect to the rail project, i.e., that no city money (read “real property taxes”) would be used for rail construction.

If that isn’t enough for people to be concerned about rail finances, the HART board may go into “Executive Session” on five items including approval of the budgets that the council just passed, the bond approval requests (there’s another one for $450 million), a change order and the discussion on public-private partnerships. (This last one is a biggie, because it will cover the City Center Guideway and Stations – the last major piece of the rail project to be contracted.) All of these issues should be discussed in the open. Executive sessions are closed to the public, however.

What are they trying to hide? Have costs gone up yet again?

And finally, it’s notable that there is no discussion slated regarding management’s policy of recording employees during state audit interviews. During the last HART board meeting, Les Kondo, the state auditor, expressed serious concerns about this practice and asked that it be stopped. A former state attorney general has said it is illegal to record employees in this manner, and at least two board members had questions about the issue. No discussion took place, because corporation counsel stated it wasn’t allowed due to sunshine law restrictions. (Thank you to Tom Yamachika for the reminder that the board could have voted to sunshine the item onto the agenda.) Most employees will likely not feel free to openly discuss their concerns in this type of environment, yet there appears to be no follow up by the board.

I agree with HART board member John Henry Felix -– it’s time for a “forensic audit.” We cannot afford to continue the way we have.

The HART board meeting will be broadcast live on Olelo 53.

A Sneaky Way to Approve City Funds for Rail

 

Buried in a proposed amendment to the bill for HART’s capital improvement budget (Bill 22, CD2, FD1) is the statement:

 

“Notwithstanding the provisions of Ordinance 07-001, City revenues may be used to pay for the debt service for the $44 million appropriated from the general improvement bond fund.”

 

We were told no city funds would be used to pay for rail.  Last year, however, the state legislature passed Act 1, which prohibits the general excise tax surcharge from being used to pay HART’s administrative or marketing costs, including personnel costs.  By default, that means that the bulk of these costs will need to be paid by city funds. Councilmembers then started discussions on Bill 42, which added “city” to the list of funding sources for rail.  It was opposed by most testifiers, and no final decision was made on it.

 

The mayor put $44 million of HART administrative and marketing costs into the city capital improvement (CIP) budget for next fiscal year.  Several councilmembers decried this as bad policy but then merely moved those costs to HART’s CIP budget.  

 

When asked about the $44 million, HART representatives stated they had enough cash to pay it, but according to their cash flow projections, bonds would be floated and apparently used to pay a significant portion of it.  There was no additional discussion of how the $44 million would be funded.

 

We deserve an open discussion of how and when city funds will be used to pay for rail and what councilmembers’ plans are to cover the $44 million.

 

As a side note, it is also important to consider that no significant cuts to HART’s administrative or marketing costs have been made.

 

There is one final hearing on this bill Wednesday. I will be there to oppose this bill and the manner in which the amendment is being done. I encourage others to testify as well.  The agenda and instructions on providing testimony are available here.

 

Open Letter to Residents and Taxpayers of Oahu

Aloha!

You may be aware I am running for Honolulu City Council District 4. I’ve been active in the community for about 15 years and have testified at city council for about as long.  I decided to run, because I believe we must improve the way government is run and our tax dollars are spent.

Several key issues facing Honolulu residents and taxpayers are interrelated – homelessness, affordable housing, infrastructure and rail. As we’ve seen over the past month or so, rail has started impacting city services and these key issues.  Recent budget amendments include:

  • Slashing the Department of Land Management to only two people. The department manages the city’s affordable rentals program as well as all city-owned land. At the current level of funding, the department cannot meet its mandated responsibilities under the city charter;
  • Cutting millions from the Department of Environmental Services, including wastewater treatment and disposal costs for maintenance programs;
  • Cutting the Department of Information Technology’s equipment budget in half. The director testified that the equipment is needed in order to avoid shut down of the city’s entire communications system.

We have been told these cuts were necessary in order to be able to meet FTA requirements to include $44 million (two years) of operating costs for the Honolulu Authority for Rapid Transit (HART) in the city budget. Out of HART’s ~$22 million operating budget, a mere $446,000 was cut, and those funds are likely to be restored during the next budget committee meeting.

In addition, if the full $44 million is included in the operating budget, it would needlessly tie up the $22 million that is for next fiscal year.

The city has options other than cutting these important areas. For example, amounts for FICA, a payroll tax, are routinely over-budgeted.  In addition, our entire real property tax system should be reviewed and updated to be fairer and more efficient and to make sure all taxpayers are paying what they should.  As a CPA and certified fraud examiner, I have the skill and experience to analyze the numbers and make smart decisions about them.

These are some of the concerns I have, but I’d like to hear what’s on your mind.  Please share your thoughts below (where it says “Leave a Reply”) or visit www.NatalieIwasa.com.  Note comments are moderated.

Charter Amendment #4 on Rail – What’s Not in the Booklet

Voters should have received the 2016 Charter Amendments booklet this week.  There are 20 amendments for voters to read through and decipher.  Question 4 deals with the rail project and deserves much more discussion.

This ballot question is largely the result of a proposal submitted relatively late in the process.  During Honolulu Charter Commission meetings it was mentioned the charter amendment that created HART didn’t adequately consider how rail operations and maintenance (O&M) would work (or not) with TheBus and HandiVan, which are under the Honolulu Department of Transportation Services (DTS).

In addition, certain members of the HART board felt oversight of staff was too limited.  The proposal does make it clear the board sets the policies for the development of the rail system.

It would have been better to have a separate question regarding board powers, but the commission decided to combine these issues into this one question.

The question contains three parts:  1) replace the current Transportation Commission with a Rate Commission;  2) put rail O&M under DTS; and 3) clarify and increase the HART board responsibilities and authority.

Duties of a new Rate Commission would include creation of new sources of revenues.  The commission would also be authorized to collect and report transit data.  Discussions of this proposal did not address the issue of how riders’ personal information would be handled.

While it makes sense to have the rail fare system and route scheduling under the same agency as TheBus, we need to be careful how a transition between HART and DTS would be done.  In this case, everyone (employees, contractors and even vacant positions) who has primary responsibilities related to O&M would transfer to DTS on July 1, 2017.

Those transferred “shall suffer no loss of vacation allowance, sick leave, service credits, retirement benefits or other rights and privileges because of the transfer.”  So basically DTS will inherit HART’s liabilities without the capability of making any near-term changes.

Who are these people, specifically?  How much will this change cost?

With O&M out of the way, what shortcuts will be taken on the rest of the development of rail to meet budget and completion deadlines?  How much will this end up costing us more in the long run?

And how much consideration would DTS give to the quality of work prior to acceptance of the “completed” rail with pressures to simply get it going?

These questions should be answered before this amendment is passed.  Since the Honolulu City Council may introduce charter amendments for the next election, I urge everyone to vote “no” on this.

Honolulu Charter Commission Works on Wording for Proposed Amendments

As election season heats up, a group of people continue their work putting together potential amendments to the Revised Charter of Honolulu. On November 8, registered voters will have an opportunity to vote on proposals such as creation of new city departments, increased term limits and revisions to the rail project, among other issues.

At its July 13 meeting, the Honolulu Charter Commission, narrowed down the list of proposed amendments to 27.  All 27 will likely be on the ballot in some manner. Some may be combined. Due to tight deadlines, no significant amendments will be made to these proposals.

The Committee on Submission and Information is currently working on the wording that will be used for each question as well as educational materials for the public. The public will have an opportunity to provide input on these descriptions (in draft form) 10 a.m. Monday, when the committee comes back from a weekend recess and again 3:30 p.m. Friday, when the full commission meets.

Final wording for the 27 proposals is available on the commission’s website. Some of these require significant changes to city management, so it’s important that voters become familiar with them.

For example, proposal 76A transfers operations and maintenance of the rail project from HART to the Honolulu Department of Transportation Services (DTS), replaces the transportation commission with a new fare commission, and “clarifies” the role of the HART board.

It makes sense to have TheBus, HandiVan and rail under one umbrella, but this proposal also allows DTS to create new sources of revenue (Sec. 6-1703(g)), collect data (Sec. 6-1703(g)(5)) and accept gifts. We should look at these authorizations carefully.

A much-needed change under C-1 would allow the police commission to terminate or suspend the chief of police. The need for this change has become apparent within the past year. Regardless of current affairs, however, this is good policy.

Proposal C-7 revises the grants-in-aid fund by requiring it to be the sole source of funds for city grants (excluding federal, state and affordable housing grants). This will cut down on line-itemed grants, such as the half million dollars that was recently appropriated to Kosong Foundation, an organization that is not in compliance with state law, according to the state attorney general’s website. This amendment would put all nonprofits on equal footing and force them to go through the city’s compliance checklist and vetting process.

Others I think should pass are:

  • #23 – to conform the county public records law to state law;
  • #29 – to allow the prosecuting attorney’s office some autonomy with respect to its budget. (The Honolulu Ethics Commission should also be allowed this autonomy); and
  • #78 – allows the mayor to create special funds with the council’s approval.

Several that I think should not pass are:

  • #35 – deletes the requirement that no more than a majority of the reapportionment commission members shall be from the same political party;
  • #44 – would change term limits from two to three, i.e., allow for 12 consecutive years, for the mayor and councilmembers. It would also create term limits for the prosecuting attorney; and
  • #C-3 – would create a new fund for the zoo and mandate that .5% of the city’s real property taxes be used only for the zoo. (I support the zoo, but special funds like this are bad fiscal policy.)

Keeping up with the commission and the many changes that several proposals have gone through has been challenging. It should be noted I have not read every single proposal, and just because one hasn’t been mentioned does not mean it’s not important.

I encourage voters, residents and taxpayers to carefully review each proposal and continue to provide input to the charter commission. The wording on the ballot is at least as important as the wording of the underlying proposal.

 

Rail, TheBus and HandiVan Operations – Under HART or the Mayor?

One question that is almost guaranteed to be on the ballot this fall is whether the operations for rail, TheBus and HandiVan should be under one agency. It makes sense to have all operations and maintenance (O&M) functions combined from an economic as well as public transit standpoint.

As currently written, however, the charter authorizes HART to make decisions regarding rail ticket prices and schedules, while TheBus and HandiVan decisions are made by the city administration, with Honolulu City Council approval for certain decisions. It’s vital that schedules and fares be coordinated.

In order to determine the best structure, perhaps it would be easiest to start with what it shouldn’t be. We know having rail under the city’s Department of Transportation Services didn’t work. That’s why we now have HART. But HART isn’t working well either.

How about a separate entity with a different structure?

During the Honolulu Charter Commission’s last meeting, there was a good discussion about our current semi-autonomous agencies — HART and the Board of Water Supply. The main difference between the two is that HART is unable to generate enough revenue to be self sustaining. In fact, estimates of taxpayer subsidies are anywhere from 62% to 70% according to the Full Funding Grant Agreement.

Commissioners seemed to agree that fact alone means that a “semi-autonomous” agency is not the best option. Given that taxpayers will subsidize such a large part of the O&M, a political process is necessary, and that includes public input, transparency and accountability.

We’re left then some kind of board or commission under the mayor or HART. A number of proposals were introduced that suggest a merger of operations, and Commissioner Soon did quite a lot of research on other governance models. The models are as varied as the cities, but given our experience here, I think the best option is an elected board that is subject to sunshine laws, under the mayor with policy decisions made by the council. This would allow for greater accountability and transparency that is so sorely lacking under our current set up.

Other considerations include the Ansaldo contract and how it would be transferred, integrity of bus and van operations, so their funding is not “cannibalized” by rail, and coordination of any other contracts.

The commission has formed a group to discuss this issue further and will make recommendations for a vote at a future meeting. Their next meetings are set for March 17. Agendas and proposals are available on the commission’s website at http://honoluluchartercommission.org/.

As always, your comments are welcome here and by the commission at cclcharter@honolulu.gov.