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Friday, March 17, 2000

City & County of Honolulu

$16 million in
uncollected revenue
prompt questions on
how city balances
its budget

It's foolish to use one-time
revenue sources to balance
the budget, critics say

By Gordon Y.K. Pang


At least $16 million in anticipated one-time revenues have yet to be collected for this year's city operating budget.

The report by the research arm of the City Council comes as Mayor Jeremy Harris is being assailed for proposing to "raid" $23 million from the HPOWER special fund to help balance next year's $1 billion operating budget.

Council members and others think it is wrong to depend on one-time sources as revenues to help balance the budget.

The Office of Council Services report shows that four one-time sources of revenue have yet to be collected nine months into the budget season that begins July 1.

Those sources are:

Bullet $8 million in a developer's premium due by Coastal Rim Properties, which is putting up the Block J project bounded by the Pali Highway and Beretania, Queen Emma and Kukui streets.

Bullet $4.49 million for the sale of leased fee interest to the lessees of the Kukui Plaza condominium towers.

Bullet $2.5 million in profit from the sale of the Pearl City Junction property to Home Depot Inc.

Bullet $1.5 million from the sale of leased fee interests to the lessees of the Harbor Court project.

City Finance Director Roy Amemiya said the Block J deal has yet to be closed. Developer Coastal Rim Properties is still trying to secure a guarantee from Fannie Mae for bonding of the project.

"They're still waiting for the commitment from Fannie Mae," Amemiya said. "Once they get the commitment, we will issue the bonds and the city gets the money when the bonds are sold."

The $8 million premium should be in city coffers around June 1, he said. "I think it's on track."

Amemiya expects the $4.49 million from the sale of fee interests at Kukui Plaza to be in city hands "in two weeks."

"Escrow will close ... and in all probability we will get the money on March 31," he said.

Home Depot officials are waiting for permission by the U.S. Air Force to remove an abandoned fuel line at the Pearl City Junction site and until that occurs, the sale cannot happen, Amemiya said.

The city was hoping to collect $17.5 million, $2.5 million of which is profit, for sale of the property "sometime this fiscal year and we're still shooting for that to happen," Amemiya said.

Also yet to be collected by the city is an anticipated $1.5 million from the sale of leased fee interests to lessees of the Harbor Court complex because of a disagreement over price, Amemiya said.

He said the matter is being discussed by the City Council and Trinity Investment Trust, which holds the mortgage on the Harbor Court property.

Despite not having the money in the bank from those sources, Amemiya said, "I feel pretty confident that our revenue projections for this fiscal year will be on target."

He added: "In any year, you're going to have some sale of property or purchase of some land -- it's a dynamic thing."

While it is not a one-time revenue, the first-time payment for central administrative service expenses to be paid by the Board of Water Supply to the operating fund -- $7.9 million -- also has yet to be made.

Amemiya said he expects to get a one-time payment before the end of the year.

The fact that some $24 million in revenues has yet to be realized "needs to be kept in perspective" given that the total operating budget is $1 billion, he said.

It should also be noted that the city's carryover balance into the next fiscal year is $40 million.

Nonetheless, some Council members criticize the Harris administration for again relying on one-time funding for the 2001 operating budget that begins July 1.

The Harris administration wants to use $23 million from the $90 million HPOWER special fund for operation, maintenance and repair of the refuse collection and disposal program. The HPOWER plant burns garbage to make electricity.

City & County of Honolulu

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