OFFICE OF THE MAYOR CITY AND COUNTY OF HONOLULU 530 SOUTH KING STREET, ROOM 300 HONOLULU, HAWAII 96813 PHONE: (8081 768-4141 FAX: (808) 768-4242 INTERNET: www.horoIuIu.QovPETER B. CARLISLE DOUGLASS. CHIN MAYOR MANAGING DIRECTOR CHRYSTN K. A. EADS DEPUTY MANAGING DIRECTOR May 17, 2011 C) The Honorable Nestor R. Garcia, Chair and Members —a Honolulu City Council 530 South King Street, Room 202 Honolulu, Hawai’i 96813 Re: Bill 33(2011), CDI, FDI Bill 34 (2011), CDI, FD1 Dear Chair Garcia: The Mayor’s position with respect to Revised Charter of Honolulu (RCH), 1973, as amended, Article 17 has never wavered whether in campaigning for the passage — of the Charter amendment, in the State of the City address, or in presenting the Executive Budget he agrees, and the voting public was told, that the purpose of the — Charter amendment was to take the money and control of the rapid transit project out of the hands of elected politicians, the mayor and council specifically, and put it into the hands of a semi-autonomous non-elected, non-partisan, professional board of directors with a single-minded focus on one goal: build and operate the rail project on time, and within budget. Not only have the people spoken in favor of the fixed guideway project, but they have also told us that they do not want this project executed in a “business as usual” manner. While there is no question that the Honolulu Authority for Rapid Transportation (“HART” or “the Authority”) is just “semi” autonomous and still part of the City government, it is equally clear that the voters in 2010 saw this project as a long term investment, and wanted to make sure that (1) funds dedicated to the transit project remain dedicated to the transit project, and (2) the Authority be empowered to make decisions about how to spend those dedicated funds based on technical developments, and not based on the push and pull of special interest groups and the timing of election cycles.
The Honorable Nestor R. Garcia, Chair and Members May 17, 2011 Page 2 That professional board, but for the tenth member, has been selected and is comprised of highly intelligent, dedicated, and experienced people tasked with the duty come July 1 of overseeing all aspects of HART. Contrary to what was said in Budget Comm. Rpt. Nos. 152 and 153, by Charter HART is subject to the same ethical and sunshine law requirements as is the council (and the mayor with respect to ethical 1 requirements). The Mayor has full confidence they will be open and responsive to the taxpayers, the Mayor, and the Council alike as they carry out their weighty commission. In light of what is occurring during the FY 2012 budget process, the Mayor is even more convinced than ever that the Charter amendment granting HART semi- autonomy was the right direction in which to go. Having said that this communication seeks to restate and affirm the Mayor’s 2 position on the Council’s newly claimed ability to appropriate transit fund monies after July 1, and relatedly Bills 33 and 34. This administration was not a part of the lengthy process leading up to theCharter amendment, but it is evident from the documented history found in DocuSharethat Reso 09-252, unamended, contained the language that Council shall approverates, and with or without amendment shall approve the HART capital and operatingbudgets by ordinance. That language was removed in Reso 09-252, CDI beforepresentation to the voting public and is not contained in the new Charter provision, RCHArticle 17. In the end, Council and the voters gave to HART the authority to review, modifyas necessary, and adopt the annual operating and capital budgets (RCH § 17-103(3)(b)), establish all fares, fees and charges (RCH § 17-103(2)(e) and 17-106),manage and control the Transit Fund, and receive and expend federal funds for theproject (RCH § 17-1 08 and 17-114). Council chose language that can only beinterpreted in light of its history as relinquishing control over the transit funds in favor ofHART semi-autonomy, and retaining the power to approve with or without amendmentsHART appropriation requests, if any, from the city general fund.3 § 17-118 reads: “Article Xl (standards of conduct) of the charter shall be applicable to the authority.’ 17-107 reads: “The board shall hold public hearings prior to fixing and adjusting rates and adopting a proposed §budget.” § 17-105 reads: “The board shall be governed bythe provisions of Section 13-103 of this charter, exceptthatsubsections (b) and (e) shall not apply and as otherwise provided herein.” Section 13-103(h) and (i) require theboard to hold all meetings in city hall or other public places, and that all action taken by the board shall be made at ameeting open to the public.2 Dept. Corn. 149 (response to Budget Comm. No. 4 by Michael R. Hansen), filed March 15, 2011 andincorporated herein by reference. Under RCH Article 17, in addition to appointing 3 members of the HART Board of Directors, council retains manyadditional points of oversight over HART. For the use of any general funds at all, Council must approve the line itemappropriation request(s) from HART ( 17-106). Council must approve the fixed guideway system alignment, or any
The Honorable Nestor R. Garcia, Chair and Members May 17, 2011 Page 3 The proposed Charter amendment governing HART was adopted 8 0 (one — absent) by the Council in 2009, overwhelmingly approved by the voters in 2010, and becomes effective on July 1,2011 as RCH Article 17. RCH Arlicle 17 is patterned after and is reflective of RCH Article 7, which has governed the semi-autonomous Board of Water Supply (“BWS”); of no,te, Council is not able to appropriate monies from the BWS, nor does Council approve and adopt BWS budgets. Understandably, in this transition period when there is no HART board in place, 4 Council sought to review and amend the operating and capital budgets of HART and introduced bills 33 and 34. The Mayor was willing to allow the proposed unamended bills to move forward without his signature as a vehicle for Council to provide input to HART. However, the Mayor believes that by adding the provisos to Bills 33 and 34 in the CDI s and FD1 5, Council appears to directly contravene the letter and spirit of the voter- approved Charter amendment. Most importantly, the Charter amendment created a separate transit fund that was to be managed and controlled by the HART Board (RCH § 17-114 and 17-108). Bills 33 and 34 as amended seek a result directly contrary to the voter-approved Charter amendment and improperly seek to award to Council by ordinance a power that was not given to it in the Charter amendment. This may 6 subject the City and HART to litigation before HART even has a chance to get started.new alignment, extension or addition, except for alignment necessitated by impact mitigation ( 17-119). Councilcan object to acquisition of property by eminent domain ( 17-1 03(2)(b)) and its approval is necessary for the sale,exchange or transfer of real property or interest therein under control of the authority ( 17-1 03(2)(c)). Councilapproval is needed for general bond issuances ( 17-109), and for issuances of any revenue bonds ( 17-1 03(3)(a)). And Council will continue to be able to monitor the project, as it shall receive a copy of the board’s annualperformance evaluation of the executive director of HART ( 17-1 03(3)(d)), an annual report on HART’s activities17-103(3)(i)), and an annual accounting and financial status of the authority prepared by a CPA contracted and paid (for by the board ( 17-111(1 )); in addition, the authority shall come within the purview of the performance auditconducted by the managing director and such audits as may be required by the council or conducted by the cityauditor ( 17-111(2)). The Charter amendment contains language regarding the budget on July 1, 2011 and after; it is silent regarding thebudget up until June 30, 2011. footnote 2. Section 17-108. Receipt and Disbursement of Funds— The authority shall have management and control over the moneys made available to the authority in the special transit fund established to receive the county surcharge on state tax. The authority shall have the authority to receive and expend federal funds authorized for the planning, construction, and operation and maintenance of fixed guideway system projects.(Ellipses added.)Fasi6 v. City Council of the City and County of Honolulu, et al., 72 Hawai’i 513, 518, 823 P. 2d 742, 744 (1992) (Abasic tenet of municipal corporation law is that an ordinance which conflicts with an express provision in a charter isinvalid).
The Honorable Nestor R. Garcia, Chair and MembersMay 17, 2011Page 4 While fully appreciating the desire of Council to retain budgetary oversight overHART after July 1, and that this is an interim transition year, the Council will leave theMayor no choice but to veto Bills 33 and 34 as amended. Council should allow theHART Board to come into existence, and if its concerns (whatever they may be)materialize, then determine whether or not such extraordinary measures as furtherCharter amendment or judiciary intervention is necessary. I trust this clears up any issues with respect to the Mayor’s position on Bills 33and 34; however, should you have any questions or concerns, please don’t hesitate tocontact me. Very truly yours, Douglas S. Chin Managing Director City and County of Honolulu