WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
​To view the archives of the Tax Foundation of Hawaii's commentary click here. ​​​​​​​
​ 
Weekly Commentary

For the Week of November 18, 2018

Walden versus OHA’s LLCs
By Tom Yamachika, President
 
About half a year ago, we wrote about some limited liability companies formed by our Office of Hawaiian Affairs (OHA).  These companies received cash and property, including 1,600+ acres of land in Waimea Valley, from OHA.  The question we raised at the time is whether the LLCs can credibly claim that they don’t have to follow laws that apply to the rest of government, such as the open records laws. 

Since then, a gentleman named Andrew Walden, who runs Hawaii Free Press, decided he would strike a blow for public transparency and asked the LLC to fork over some records, like their check registers.  The LLCs, predictably, told him to take a long walk off a short pier.  So, he sued.

The LLCs said that they are all independent companies, and that they all had obtained 501(c)(3) tax-exempt status from the IRS.  Yes, the LLCs are managed by the top people at OHA’s executive team, but they do so as volunteers, they said.  They pointed to a Hawaii Supreme Court case involving ‘Olelo, the public broadcasting corporation that was formed by the Department of Commerce and Consumer Affairs, and argue very strongly that if ‘Olelo is not considered a government unit for purposes of the open records laws, then the LLCs should be considered independent of government as well.

When you look at the governing documents for the LLCs, however, independence from OHA is not what you see.  The managers of each LLC are not individuals whom the LLCs can change as they see fit; they are the holders of specified management positions within OHA. The position, not the individual, is key.  Thus, the managers of the LLC will always be OHA management, and will always be state employees.  If there are any changes to be made in the governing documents, then the sole member of the LLC, which is either OHA or another LLC whose sole member is OHA, needs to sign off on the change.  And then, let’s not forget the ultimate power:  for each LLC, only the sole member possesses the authority to terminate the LLC’s existence.  If an entity is terminated, its net assets (namely, what’s left after the entity’s debts are paid) are not distributed to random charities, but go up the chain to the member that had given the termination order.

Indeed, the aroma of government control is so thick that even the IRS ruled that one of the LLCs, specifically Hi’ilei Aloha LLC, was an arm or instrumentality of a government.  IRS said, in effect, “Most tax-exempt organizations making a certain amount of gross receipts need to file annual tax returns, like the IRS Form 990, but government organizations like you don’t have to file returns.”  If the IRS ruled that one of the LLCs is a government instrumentality, we argued in our friend of the court filing, all three of the LLCs should be regarded as such because they are similarly controlled.

A couple of days after the Foundation filed, the Civil Beat Law Center for the Public Interest, which has done an extensive amount of work relating to Hawaii’s open records laws, jumped into the fray as well.  The Center pointed out that there are huge differences between ‘Olelo and the LLCs.  ‘Olelo, for example, is run by a 15-member independent board of directors while the LLCs are run by 3 managers all of whom are OHA managers and who are necessarily state employees.

Now the matter is with the First Circuit Court in Honolulu.  We will be reporting on case developments in this space.

The NIMS Training is Free and Any/All community members in West Maui who want to be a part of the Organizational flow chart for West Maui Emergency Management Plan in any point of position on that plan is asked to PLEASE go on line and Take this Free Training Opportunity!

Our November 29th West Maui Emergency Planning Meeting at the West Maui Lahaina College on Kenui Road, is coming up soon.  Please check out this NIMS Training Requirement (download PDF below) and let us know at WMTA (wmta@maui.net) or Dennis Terpin (ua446@aol.com) if you have any questions. Mahalo nui loa.

Who needs a FEMA SID?
A FEMA SID is required to register for and participate in any training provided by FEMA. Anyone that is to attend training provided by FEMA will be required to obtain a FEMA SID prior to registering for the training.
How to get a FEMA Number
https://cdp.dhs.gov/femasid/register 
​

Course Objectives:
At the end of this course, the students will be able to describe how the National Response Framework is applied to manage all-hazards response.
At the end of this course, participants will be able to describe:

• the purpose, scope, organization, and underlying doctrine of the National Response Framework (NRF).
• the Response roles and responsibilities of all elements of the whole community.
• core capabilities for Response and the actions required to deliver those capabilities.
• coordinating structures and operational planning used to support emergency response.

 
https://training.fema.gov/is/courseoverview.aspx?code=IS-800.c 

​Registration for FEMA Classes

FEMA Student Identification Number

What is a FEMA SID?
FEMA Student Identification (SID) number is a unique number generated and assigned to anyone who needs or is required to take training provided by a FEMA organization. Your FEMA SID uniquely identifies you throughout the FEMA organization and all of its agencies. The goal is for your FEMA SID to serve as your personal identification number instead of your Social Security Number (SSN) in support of FEMA’s effort to decrease/cease the use of SSN for identifying and tracking individuals.

Why do I need a FEMA SID?
A FEMA SID is required to register for and participate in any training provided by FEMA. All FEMA training providers’ registration systems and enrollment procedures require a valid FEMA SID. The FEMA SID will serve as your unique identifier and be used to maintain the record of FEMA training you attended. 

For further details please click below to download PDF  of WMTA - NIMS Training Requirements. ​

WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
​To view the archives of the Tax Foundation of Hawaii's commentary click here. ​​​​​​​
​
Weekly Commentary

For the Week of November 11, 2018
 
Oh?  Can’t We Keep HART’s Funding Sources “Pure”?
By Tom Yamachika, President
 
Recently, there has been fierce debate over Bill 42 before the Honolulu City Council.  Here’s the background:  In 2007, the City passed Ordinance 07-001, which says that the Honolulu rail project would be funded only with proceeds of the general excise tax surcharge and federal money.  “We’ll never touch the real property tax to build rail,” the politicians said at the time.  Bill 42 basically repeals 07-001 to open up other funding sources, like real property tax.

For a long time, I was wondering what the authors of 07-001 were smoking.

For a little while since 2007, the rail project seemed to be on track.  Mr. Mayor was out telling all of us that the project will be built on time and on budget.

But then, a little later when the project was being planned and costed out, Mr. Mayor started becoming a frequent visitor to the Legislature.  With hat in hand.  “We need just a small kine extension of the surcharge,” he said.  “A permanent extension would be nice.”

This, of course, started to drive the Legislature nuts.  Several legislators wondered out loud why they needed to stick their necks out to extend or increase taxes to bail out the City from its projected cost overruns when the City could just hide behind 07-001 and say to voters, “But WE protected your property taxes.”

As time went on, more and further bailouts were needed.  Not only was the GET surcharge extended multiple times, but 2017 legislation added an additional percentage point to the transient accommodations tax to build rail.  Some of the bill drafts contained language that would require the City to repeal 07-001 if they wanted a state bailout, but that language didn’t pass.  At the same time, the State reduced its skim off the surcharge proceeds from 10% to 1%, freeing up millions more for rail.

Then, the debate turned to whether real property tax, thus protected, was too low.  HSTA and others started arguing that low property taxes exposed the soft underbelly of our real estate market to nasty, rotten, foreign speculators.  The solution?  Enact a surcharge on property taxes to increase funds for education.  That conversation, which started in the 2017 session, rose to prominence in the 2018 session, and then dominated the public’s attention while a proposed constitutional amendment to do that was on the ballot.  Mercifully, that amendment was dealt a death blow by the Hawaii Supreme Court.

Amid all that, the Federal Highway Administration, which was supposed to be contributing $1.5 billion to the effort, grew increasingly dissatisfied with the City’s skin in the game and threatened to crater the project unless more money was immediately made available to it.  07-001 was in the way.  It needed to go.  In effect, the Feds were saying that they were not going to dance the same way that the State did; the City needed to show its commitment.  Hence, Bill 42 was necessary.

Was Bill 42 a manifestation of promises made and betrayed?  I think of it more as a realization that 07-001 represented a promise that was unrealistic from the beginning.  If the City wanted to build this project, it needed to be committed; if it weren’t, reality would catch up with it eventually.  And by committed I don’t mean the commitment that the chicken makes to give you your bacon and eggs breakfast; I am talking about the commitment that the pig makes.  More and further bailouts, by the State, the Feds, or the electorate, won’t happen without consequences.  Our City officials need the resolve to make this project work within its means if they hope to avoid those consequences.