A Policy Statement About Fines
This week we are taking up as a new and noteworthy development Bill 17 being considered by the Honolulu City Council. That bill would give the city’s Department of Planning and Permitting a clear pathway to enforcing fines that the Department imposed by allowing the Department to record liens against the property that the fines concern, and then to foreclose on the liens like a mortgage company would if a mortgage was in default. Except that the Department doesn’t really want to do that stuff. Department Director Uchida was recently quoted in the Star-Advertiser. “The problem is to go the next step to put a lien on the property and actually foreclose, you got to go to the court system,” he said. “[Corporation] Counsel is understaffed, we’re understaffed, so everything gets bogged down there.” The Department has the authority under current law to slap liens on property and foreclose them. Yet, some properties have unpaid fines totaling more than $150,000, or fines that have remained unpaid for more than five years. If the Department has been acting like a toothless tiger all this time although it certainly had the teeth, why do lawmakers think that this bill is going to cause any significant change? “The purpose of Bill 17 is to make a policy statement that you need to address noncompliance with the housing code, specifically public nuisances, and that at a certain point the department must act,” said Tommy Waters, council chair and introducer of Bill 17. But it seems that the problem might not be something this bill can solve. If a CEO of a normal company told the Board of Directors that the staff were too busy to collect unpaid money that its customers owed, and that the unpaid receivables on occasion exceeded $150,000 per customer or were outstanding for five years or more, that CEO wouldn’t have that job for much longer. Even if the CEO was a really talented subject matter expert, there are just some basic competencies that just have to be there so that the business can survive. The same is true even in government. The basic competencies need to be there, although perhaps for different reasons. Here, we want our agencies to deter bad behavior by enforcing fines and penalties. If it were well known that penalties weren’t being enforced, there’s a good chance that bad actors would ignore the penalties, continue to act badly, and maybe encourage others to do the same. Lawmakers sometimes overlook these basic facts. To solve the problem here, there needs to be a change in the underlying mentality. Enacting a bill as a “policy statement” can’t be expected to accomplish much. Something else needs to be done. Perhaps the Council should consider requiring the Department to turn over its seriously unpaid fine cases to its property tax collectors. Those folks record liens and do foreclosure suits all the time and don’t complain about doing them. By the way, current law already allows the fines to be added to other debts the taxpayer might owe, including property taxes, so it would not be a serious crimp in the system to have the Department fork them over to the property tax folks. Save the policy statements for the campaign trail – if we want to go forward with this, we need thoughtful action.
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Property Forfeitures and
What Our AG is Doing About Them First, a quick question: What’s worse than having your property condemned, or taken for a payment representing “just compensation”? The answer: Having your property taken for no payment. Taxation, of course, is one way this happens. But it also can happen if personal property, such as cars and currency, is connected to certain criminal offenses. The property may be forfeited without a court hearing, without compensation, and at times, without even a criminal charge filed against the property owner. The Attorney General oversees this kind of property. In the Report No. 18-09, the State Auditor examined the Attorney General’s oversight of forfeited property and had some startling findings. First, there wasn’t any written document either telling internal staff how the program worked, or administrative rules to educate the public and other agencies (such as law enforcement agencies). That led to frustration by law enforcement agencies such as county police departments who wanted to seize properties connected with illegal activity (and profit from them, as explained below), and by folks whose properties were taken who wanted to show that they weren’t connected with crime and could be returned. The person in charge of the program at the AG’s office, furthermore, had responsibilities outside of the program, and as a result oversight of the program had been piecemeal and, well, second-rate at best. Processing petitions for administrative forfeiture took an average of 561 days (about 1 year and 7 months). Worse, the office couldn’t account for some of the cash or property it was supposed to have. Finally, the laws governing property forfeiture specified that the agency initiating the forfeiture and the prosecutor’s office associated with that agency each get a cut of 25% of the cash or sale proceeds from the forfeited property. The Auditor also found that 20% of the balance was to be used to support drug abuse education, prevention, and rehabilitation programs. The 20% allocation was news to the AG’s office at the time, as not a penny had been spent toward drug abuse mitigation programs. Recently, the Auditor’s Office issued Report No. 21-09 on whether its 2018 recommendations were being implemented. Here’s what the Auditor found. The AG did indeed issue administrative rules covering the program, but they were an easy lift because the governing law allowed the AG to adopt the rules without a public hearing. The AG did not, however, adopt any internal procedures to guide its own staff. So, there is a chance that within the AG’s office there may be some arbitrariness as the staff responds to each case on its own facts. The rules seemed to help with the office’s backlog. Average processing time for petitions for administrative forfeiture dropped from 561 days to 204 days. The good news is that they knocked one year off the processing time. The bad news is that they still need seven months. That’s a long time for a person to be without a car, for example, if it’s found that it wasn’t lawfully seized. The Auditor also found that the AG’s staff got better at accounting for the money seized, but still didn’t keep an inventory of the hard goods. And, when it came to the requirement that 20% of money be used to support drug abuse education, prevention, and rehabilitation programs, the AG’s staff couldn’t find the requirement in the law. So, they ignored the Auditor’s point. The AG’s position here is defensible. Even though the law passed by the Legislature said that the Legislature intended to create a 20% requirement, there was nothing in the law that in fact created it. If the Department spent money on drug abuse mitigation, justifiable criticism could follow. Legislators should take note and make sure that their intent stated in a bill matches the law that they intend to enact. We’re making progress, it seems; perhaps not as quickly or smoothly as folks would like, but the program is better now than when the Auditor first looked at it. Special Land and Development Fund, Revisited
Some time ago, we devoted some of this space to discuss the State Auditor’s findings regarding the Department of Land and Natural Resources’ Special Land and Development Fund (SLDF). That fund is the repository of all land rents the State receives for land that is either leased or used under a revocable permit (such as those used by airport or harbor-based businesses), and it also is funded by earmarks off two taxes: HRS section 248-8 gives it 0.3% of the highway fuel tax up to $250,000, and HRS section 237D-6.5(b)(4) gives it $3 million of the transient accommodations tax, each year. (This TAT earmark was not affected by House Bill 862, which became law by veto override.) In 2019, the State Auditor’s Report No. 19-12 had some unflattering things to say about management of the fund: In our audit, we found that the Land Division is not fulfilling its mission. It has neither a strategic plan for the long-term management of its public lands, nor an asset management plan to identify and fulfill its obligations and goals related to the administration of these lands. . . . We also found that the Land Division lacks clear and consistent policies and procedures necessary to guide day-to-day operations. Without them, the Land Division does not adequately perform two of its four core lease management functions: (1) it has significant difficulties collecting delinquent rent; and (2) it does not perform field inspections to ensure compliance with lease terms, including lessees’ obligation to upkeep and maintain leased premises. DLNR’s management responded with a scathing rebuke of the Auditor’s findings, and we thought many of those comments were hollow excuses. The Legislature is now poised to do something about it. The House formed a special investigative committee, chaired by House Majority Leader Rep. Belatti, which had its initial meeting on July 15th. Under House Resolution 164, the committee is to investigate the Auditor’s findings and report by the beginning of the 2022 legislative session. In the meantime, we have heard from people, some that are or were in DLNR. They describe some policies or practices that have us shaking our head.
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