Yukimura refers Kukui‘ula Development Co. donation to ethics board

At the insistence of Kaua‘i County Councilwoman JoAnn Yukimura, council members this week deferred to the Kaua‘i Board of Ethics a proposal by Kukui‘ula Development Company (Hawai‘i) LLC to donate $92,354 to cover the cost incurred by the county in recently passing a law that lessens building costs for developers.

During a council meeting at the historic County Building Wednesday, Yukimura said it would be inappropriate for Kukui‘ula leaders to cover costs incurred by the county in developing and approving the ordinance governing the special improvement financing.

That is because the developer, through another request separate from the law, is moving forward to establish a specific district at its 1,000-plus acre, residential, commercial and resort project at Kukui‘ula in Po‘ipu, she said.

But Kaua‘i County Council Chairman Kaipo Asing and councilman Daryl Kaneshiro, and other county officials, noted that Kukui‘ula leaders had offered as far back as June 2004 to compensate the county for hiring Mainland consultants and attorneys to help develop the law.

County officials said Yukimura also was made aware of that offer at the time.

At the Wednesday meeting, Yukimura said she would not accept the donation unless the Kaua‘i Ethics Board deemed the offer to be ethical.

Yukimura contended there might be a conflict of interest where a “a developer would pay the county for a process it wanted.” “I am also wondering whether there is a violation of the (Kaua‘i County) charter for government officials to request the money when they are before us in a process,” Yukimura said. “That also seems very questionable.” County Finance Director Mike Tresler said he didn’t see anything wrong in asking.

“I don’t know that it is a good deed to follow up to see if we could get reimbursed for some of the expenses (paid out to consultants by the county), or contributions made to the enabling legislation,” Tresler said.

He added that consultants informed county officials that acceptance of the donation would be okay.

If the offer was made, the consultants never mentioned such an option in numerous meetings with the council, said Yukimura, who grilled the consultants for hours for clarification on the benefits of the legislation for the county and residents before it was approved.

“Well, I had discussions with them,” Tresler said. “You know, if that is your opinion, that is fine.” Tresler and Kaneshiro said the cost of government is high and that the donation would go into county coffers to benefit residents.

“Why should the taxpayer pay for this if we can get a contribution to pay for it,” Tresler asked. In response, Yukimura shot back, “Because the developer is asking to use the process to his or her benefit.” In a separate agenda item before the council Wednesday, Kukui‘ula leaders proposed to set up a special district within their 1,000-plus acre project and, in another agenda item before the council, had proposed to establish a $50,000 advance account to help create the district.

Action on that separate item won’t be taken until the council can draft a resolution to consummate an agreement between the county and Kukui‘ula in creating the account.

Kukui‘ula leaders plan to replenish the account whenever funds dip below $10,000.

Related to the donation, Tresler said the county doesn’t have to accept it, and if Yukimura didn’t want the funds, he said, “that is fine by me.” Yukimura asked whether Tresler had checked with the Kaua‘i Ethics Board to see whether accepting the donation was ethical. Tresler said no.

Councilman Mel Rapozo said he was prepared to vote on the issue of the donation until arguments against acting on it were raised by Yukimura.

He said the use of the term donation or reimbursement, in describing the $92,000 Kukui‘ula leaders proposed to give to the county, was “awkward.” “It is further awkward to see that item and the district deposit (the proposed $50,000 advance account) on the same agenda,” Rapozo said. “And I think councilwoman Yukimura brings some valid points.” He said he would not vote on the issue of the donation until the Kaua‘i Board of Ethics has rendered a decision.

The issue of the donation is tied to enabling legislation that allows for the creation of the community facilities districts across the island.

Through it, a developer can apply to the county to float a bond to create funds to build improvements like roads, a school or a playground, a county official said.

Through the law, county leaders can use its status to access low interest loans for the projects.

The process saves money for the developer because its own funds won’t be used for the improvements.

Residents who buy into a residential subdivision built by a developer, for instance, will pay property taxes for their homes, and will pay an extra charge for the improvements.

The money the new homeowners pay will be used to pay off the county’s debt service for the improvements.

Lester Chang, staff writer, can be reached at 245-3681 (ext. 225) and lchang@ kauaipubco.com

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