University of Hawaii's Cancer Center Will Run Out of Funding in Two Years

The Cancer Center, a research unit of the University of Hawaii at Manoa, will run out of funding in just two years, leaving lawmakers furious at the lack of oversight by the University.  Last year, the Cancer Center ended the year with nearly a $10 million budget deficit and was required to tap into its financial reserves in order to stay afloat.  David Lassner, the university president, admitted to the state House Finance and Senate Ways and Means committees that the university isn't sure what will happen if the reserves are depleted.  Lassner stated, "It is not clear — without support from some source, that Hawaii can maintain a (National Cancer Institute-designated) cancer center."

With declining cigarette tax revenues that pay for cancer research, and the fact that the center's Kakaako facility costs $8 million a year in mortgage payments, has left the Cancer Center in huge financial problems.  Senator Jill Tokuda, the Ways and Means chairwoman, commented, "I think we're in a very serious situation, probably more serious than you realize. Yes, we have a very significant obligation to the health and wellness of the people of the state. But we have a fiduciary responsibility to the state as well. The Legislature is going to want to make sure that we see some sort of very solid and detailed business plan."

Source: Honolulu Star Advertiser, 1-16-2015, www.staradvertiser.com
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State Budget Proposed to be $12.6 Billion In Next Fiscal Year

Governor Ing has just submitted his proposal for the state budget for the next fiscal year. Under his proposal the budget will increase to $12.6 billion, which represents approximately a 4 percent increase.  The majority of the increase goes to fill contractual requirements with state workers including added health benefits and raises.  These same contractual obligations will increase the budget to $13.1 billion the following fiscal year.  Governor Ing commented, "We do anticipate that we would be putting a more specific imprint on the budget in January as we get department directors on board and they've had a chance to view the budget requests and budget proposals that were developed as part of the budget process."

Source: Honolulu Star Advertiser, 12-23-2014, www.staradvertiser.com
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Hawaii Hopeful That State Will Be Chosen for Barack Obama's Presidential Library

The Barack Obama Foundation has announced that thirteen organizations have submitted proposals to build the Barack Obama Presidential Library, and the final decision will be made, with input from the first family, towards the end of this year.  Five of the proposed sites are in Illinois, where President Obama launched his political career, though Hawaii and New York are also considered to be top choices.  Obama previously stated that he wanted his library to be an anchor for economic development while reflecting the values of his public-service career: expanding economic opportunity and promoting peace, justice and dignity around the world.  Hawaii officials estimate that a library in Honolulu would generate millions of dollars in revenue each year, would create nearly 2,000 permanent jobs and attract up to 800,000 visitors each year.  Shan Tsutsui, Hawaii's Lt. Governor stated, "Our global orientation, multicultural population, robust visitor industry and unrivaled natural beauty make Hawaii a logical destination to house and nurture the president's legacy."

Source: Honolulu Star Advertiser, 8-10-2014, www.staradvertiser.com
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Mililani Residents to Meet with Government Officials About Fire Ants

Last week, the state Department of Agriculture confirmed that at least eight homes on Auina Street in Mililani Mauka were infested with fire ants.  Members of the community are now arranging to meet with representatives from the state Department of Agriculture, the state Department of Land and Natural Resources, the state Department of Health and the Invasive Special Council to find out what can be done to prevent and treat the problem.  State Senator Donovan Dela Cruz stated, "We also want to give the community an opportunity to ask questions and share concerns. With this being residential areas, it's a serious discovery, and surely triggers a lot of fear and questions in people. The meeting is intended to bring awareness and set a community effort in motion to help the state combat little fire ants." 

Source: Honolulu Star Advertiser, 7-11-2014, www.staradvertiser.com
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The Future of Aloha Stadium

The Aloha Stadium Authority has announced that they are considering several options regarding the 39 year-old facility.  One option would be to renovate the existing stadium, but the Department of Accounting and General Services estimates that they would need to spend approximately $120 million for high priority health and safety improvements to keep the stadium operation for the next 5 to 10 years.  The second option would be to build a new smaller stadium with between 30,000 and 40,000 seats, which would include premium seating options and other modern amenities.  This would cost between $132 million to $192 million, but could save the state $2.4 million to $3.2 million a year in operating costs.  The Aloha Stadium Authority will be hosting a couple of town hall style meetings to solicit the public's suggestions and opinions.

Source: Honolulu Star Advertiser, 6-27-2014, www.staradvertiser.com
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Governor Abercrombie and Senator Ige Both Oppose OHA Condominiums in Kakaako

Governor Neil Abercrombie and state Senator David Ige, who will be challenging the governor in this upcoming election, have both stated that they oppose the Office of Hawaiian Affairs from developing high-rise condominiums near the ocean at Kakaako.  OHA is requesting the state for permission to build several residential high-rise building the Kakaako makai parcels that they had received from the state in 2012.  Abercrombie stated, "So the simple, straightforward answer is no, I don't support residential high-rises down there. I didn't support it before, I don't support it now. That doesn't mean that they can't make some proposal regarding residences down there that might achieve broader public acceptance."  Ige added, "I'm open to considering alternative solutions that enable the preservation of Kaka­ako makai as publicly accessible open space without residential high-rises."

Source: Honolulu Star Advertiser, 6-23-2014, www.staradvertiser.com
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Governor Abercrombie Speaks at Democratic Party's State Convention

Governor Neil Abercombie spoke at the Democratic Party's state convention this past weekend and assured his party that he was the right governor for the job.  Abercrombie is hoping to get reelected as governor for another term and stated that since taking office four years ago he has helped turn Hawaii's economy around.  Governor Abercrombie stated, "So I can report to you that we have restored Hawaii's fiscal health. We're contributing to the economic recovery by focusing on growth and sustainability. We're transforming government by implementing measures to move government into the 21st century efficiently and effectively to serve the public. We're investing in education and skills and the well-being of Hawaii's people. And that means we have the right values, we have the right priorities, and I can report to you, you've got the right governor."

Governor Abercrombie's primary opponent in the Democratic Party is state senator David Ige.  Ige is running on a platform of restoring trust and faith in the state government.  Ige commented, "It's amazing to me in this campaign how I get blamed for everything that doesn't happen, but (Abercrombie) takes the credit for everything that does happen. You can't have it both ways.

Source: Honolulu Star Advertiser, 5-25-2014, www.staradvertiser.com
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Waikiki Businesses and Hotels Concerned About Homeless Situation

Over the last couple of years, Waikiki has seen record numbers of tourists staying in their hotels and frequenting their businesses.  However, the neighborhood has also seen an increased number of chronically homeless campers, aggressive panhandlers and people who are using sidewalks and parks as toilets, and the hotel and tourism industry are not happy about this at all.  The Waikiki Neighborhood Board, the Wai­kiki Improvement Association, the Hawaii Hotel and Lodging Association, the Oahu Visitors Bureau and the Hawaii Hotel & Visitor Industry Security Association, have joined forces with Waikiki residents and are demanding that state and city leaders enforce existing laws as well as consider creating new ones to prevent the problem from escalating further.

Real estate analysis Stephany Sofos commented, "We're just fed up with how this homeless issue has degraded our neighborhood. It's causing parts of our economy to fracture. Visitors don't want to come; people who live here want to move; and if investors start to realize that our community is decaying, they'll take their dollars out and put them in places that are thriving. It happened in Detroit and Sacramento and it will happen here.  It's Economics 101."

Source: Honolulu Star Advertiser, 5-19-2014, www.staradvertiser.com
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Addressing the Deferred Maintenance Problem at the University of Hawaii System

The University of Hawaii is facing a significant problem with deferred maintenance issues across their 10-campus system.  According to UH officials, the problems would cost approximately $487 million to fix, with the vast majority of that amount, a total of $407 million, needed for the main Manoa campus.  The school is requesting that state lawmakers give them the authority to issue revenue bonds to fund the maintenance projects, and stated that the debt for these bonds would be repaid over the next 30 years by increasing tuition costs. Howard Toto, the UH Chief Financial Officer, stated, "We have, really, a situation where we need to think hard about how we want to proceed going forward. It's something we can't ignore, but we're somewhat inhibited by funding because we can't do a whole lot without the funds."

However, many lawmakers are not comfortable with the concept of increasing the financial burden of future students by dramatically increasing their tuition.  Issac Choy, a state representative and the chairman of the House Higher Education Committee, stated, "Let's just call a spade a spade: Revenue bonds mean tuition. The kids are the ones who were going to have to repay this."  The state was willing to give the University of Hawaii $50 million in state-backed general obligation bonds for next year for systemwide capital revenue and deferred maintenance needs.

Source: Honolulu Star Advertiser, 5-17-2014, www.staradvertiser.com
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State Increases Share of Transient Accommodation Tax Revenue for Various Counties

The state Legislature has agreed to increase the amount of revenue that each of the counties will get from the state's transient accommodation tax.  Previously, the four counties (Honolulu, Maui, Hawaii/Big Island, and Kauai) received a total of $93 million a year.  However, under the new agreement, the state will give a total of $103 million.  This comes out to an additional $4.4 million for Honolulu County, $2.3 million for Maui County, $2 million for Hawaii County, and $1.5 million for Kauai County.

While the four mayors agree that the additional funds will help a little, the $10 million increase was significantly less than what they had hoped for.  City Council officials may now need to make some tough choices as to which programs to cut for the following budget year.

Source: Honolulu Star Advertiser, 4-29-2014, www.staradvertiser.com
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Waikiki Visitors and Industry Officials Unhappy About Increased Number of Homeless in Neighborhood

Laurel Mackie, a Canadian visitor who has come to Waikiki for the past 28 years, shares the growing concern that the homeless population in Waikiki is getting out of hand. Mackie stated, "I look out of my balcony and I see people passed out. And, worse yet, I have friends that have been physically assaulted by the homeless. With safety concerns and the fact that Waikiki is becoming an overpriced Beverly Hills slum of the Pacific, it seems a no-brainer to think about choosing another destination."

Tourists and visitor industry officials have come to an agreement that the rise in chronic homelessness in Waikiki has grown tremendously in the past few years ad are calling on the state and city to take immediate action to this crisis.  State Senator Brickwood Galuteria, who represents Waikiki, agrees, and commented, "I consider homeless to be a natural disaster situation not unlike a tsunami of sorts, and the tone of the response should be equal to that."

According to the U.S. Department of Housing and Urban Development, between 2007 and 2014, the number of chronic homelessness in Hawaii grew by 32.5 percent. Tourism officials are concerned that the state's $15 billion visitor industry will suffer as more and more visitors complain about their encounters with the homeless whom the meet in Waikiki.

Tourism officials say they are worried about the impact on the state's $15 billion visitor industry as more and more visitors publicly complain about encounters with homeless people throughout Waikiki. George Szigeti, the president and CEO of the Hawaii Lodging & Tourism Association, added, "We don't like homeless challenges anywhere, but the visitor industry supports 175,000 jobs across the state and Waikiki is the economic engine that drives that train. We spend millions marketing the state to get tourists to come here. We have to protect their experience. If we don't, everybody loses because the negative economic impacts will spread."

Jesse Broder Van Dyke, spokesman for Honolulu Mayor Caldwell, stated, "Complaints about homelessness in general and in Waikiki are received daily via mail, email, phone and in person. As media attention to the issue has increased, so has public outcry. Public awareness and understanding of the issue (are) essential to justifying the expense of making progress." Van Dyke added that the Caldwell administration is proposing to spend $18.9 million for the Housing First project and $3 million for support services.  However, the Honolulu City Council will have to approve the allocation of these funds.

Source: Honolulu Star Advertiser, 4-20-2014, www.staradvertiser.com
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Update on Turtle Bay Resort

This past week the State of Hawaii and the City and County of Honolulu signed a preservation agreement with Turtle Bay Resort on the North Shore of Oahu.  Under this agreement, a total of 665.8 acres of land owned by Turtle Bay Resorts will be barred in perpetuity from any development.  Furthermore, there will be two planned oceanfront parks at Kawela Bay and Kahuku Point that will be reserved for public use.  In exchange for this concession, Turtle Bay would be paid $40 million from the state, $5 million from the city and $3.5 million from the nonprofit Trust for Public Land.  The owners of Turtle Bay would still have the legal right to develop two hotels for a combined 625 rooms and another 100 homes of 150 acres of land that front the ocean.

While many North Shore community members are happy with this compromise between the government and Turtle Bay Resorts, there are three major community groups that are still protesting the decision and state that this does not resolve their pending legal actions over development.  Defend Oahu Coalition, Keep the North Shore Country and Unite Here! Local 5 stated that they will continue to fight Turtle Bay's expansion plan of building two more hotels and 100 additional homes.

Source: Honolulu Star Advertiser, 4-19-2014, www.staradvertiser.com
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Abercrombie Receives Significant Contributions from Contractors, Developers and Landowners of Kakaako

According to research conducted by members of the Star Advertiser newspaper staff, contractors, developers and landowners who are directly affiliated with the new construction projects in Kakaako have donated a total of $680,000 to Governor Neil Abercrombie's campaigns over the last two years.  The Star Advertiser notes that all the donations do comply with Hawaii's campaign regulations, but add that critics of the Kakaako redevelopment are concerned by how quickly the Hawaii Community Development Authority is approving the new projects.  Four of the nine board members on the HCDA are also members of Abercrombie's Cabinet.  The other five members were appointed by Governor Abercrombie.

Bill Kaneko, Abercrombie's campaign manager, defended the governor and stated, "Governor Abercrombie's goal is reducing urban sprawl, creating pedestrian-friendly open space and keeping the country country. Building responsibly in urban core areas like Kakaako is the way to do that. Under the Abercrombie administration, we have seen workforce and affordable housing increase substantially. These priorities are driven by the governor's vision and values for smart and sustainable growth.  Those who support his vision support him. That has been true through 34 elections over 44 years, a record of campaign integrity by any measure."

Source: Honolulu Star Advertiser, 3-30-2014, www.staradvertiser.com
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Zero Tax Revenue Growth Predicted for State of Hawaii

The state of Hawaii's Council on Revenues has announced that they are predicting zero revenue growth for this fiscal year and a 5.5 percent growth for the 2015 fiscal year.  This is significantly lower than the Council's January prediction of a 3.3 percent forecast for the 2014 fiscal year and the 7.4 percent fiscal growth for the 2015 fiscal year.  In terms of dollar amounts, this prediction means $180 million less revenue for this year and approximately $300 million less than anticipated for next year.  Kurt Kawafuchi, the Council on Revenues' chairman, stated, "The growth rate is starting to flatten. It's becoming a lot more modest at this point." Economists note that the state tax collections have decreased by 1.1 percent through February, mostly due to a decline in visitor spending.

This report may have significant impact on Governor Neil Abercrombie's state budget proposal, as state legislatures may be forced to make cuts to the governor's requests. Abercrombie commented that his budget and six-year financial plan remains sound and stated, "Our budget and financial plan replenishes and builds state reserves, pays down unfunded liabilities and modernizes state technology. Hawaii's economy is running at a sustainable level and contributing to the state's strong fiscal condition. The administration looks forward to working together with the Legislature to continue to build reserves and fund necessary public services and key initiatives, while ensuring our long-term fiscal stability."

However, not everyone agrees with the governor and some are much more cautious in their statements.  State budget director, Kalbert Young, commented, "If the COR forecast is accurate, tax revenue collections would be flat compared to last year. However, as the council also recognized, there are a number of individual statistics in the larger universe of statewide economic data that suggests the overall state economy (and tax revenues) are at a peak level, and a decline from a peak, or, a judgment as to the ending of an economic cycle, is not yet clear."

Source: Honolulu Star Advertiser, 3-12-2014, www.staradvertiser.com
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Tentative Agreement to Increase Minimum Wage to $10 Per Hour

The state Finance Committee has approved a bill that would increase the minimum wage in Hawaii to $10 per hour by January 2018.  The tip credit, which is the amount that a business can deduct from the minimum wage for those workers who earn tips, would be expanded from its current amount of 25 cents to $1 per hour over the next three years.  However, in this approved bill, the state Finance Committee has added a "poverty threshold" term, which is designed to protect low-income workers.  Under the "poverty threshold" business will not be able to deduct the tip credit from workers who earn less than 250 percent of the poverty level, or approximately $33,500 per year.  Sylvia Luke, the chairwoman of the House Finance Committee, stated, "We want to make sure we never have a situation where people are making under the minimum wage."

Source: Honolulu Star Advertiser, 2-28-2014, www.staradvertiser.com
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Counties Want State to Lift Cap on Their Share of Hotel Room Taxes

In 2011, the State of Hawaii government passed a bill that capped each counties' share of the hotel-room tax revenue at $93 million a year to help balance the state budget.  In 2013, the state decided to make the cap permanent.  However, county officials are now trying to change the law to remove the cap and give the counties 44.8 percent of the hotel room tax that they collect annual.  This would be broken down further and would give Honolulu 41.1 percent of this share, Maui County 22.8 percent, Hawaii (Big Island) County 18.6 percent and Kauai County 14.5 percent.

Honolulu Mayor Kirk Caldwell and Maui County Mayor Alan Ara­kawa stated that the counties pick up a significant portion of the costs of tourism, such as parks, roads and public safety, and therefore they should enjoy a greater share of hotel room tax revenue.  Mayor Caldwell stated, "So we're really looking for help here. As mayor, I have not been afraid to go and propose fees and increases in taxes where necessary to provide the services that everyone demands and needs. And so we're here today to ask for some help to make sure that we keep ourselves on the front edge of tourism in the world."  Mayor Arakawa  added, "The counties need to be made whole. It's a fairness issue."

State Representative James Tokioka argued that the state lawmakers are frustrated with some of the county policy choices while the state government was making budget cuts during the recession.  Tokioka stated, "You know how frustrating it is for us sitting over here that our friends and our cousins from the counties are doing these things while we're furloughing teachers and cutting ag inspectors and all of these positions. So that's the kind of thing that is very frustrating when we sit in this seat."

Source: Honolulu Star Advertiser, 2-26-2014, www.staradvertiser.com
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OHA Believes Land in Kakaako Makai Worth Twice As Much if Residential Condos Allowed

The Office of Hawaiian Affairs believes that their land in Kakaako Makai would be worth twice as much if the state allows them to build four or five high-rise residential condominium towers on their land.  The 30 acres of land was given to OHA two years ago by the state of Hawaii as part of a settlement to satisfy deferred ceded-land revenue payments.  At that time, the land, which is on the ocean-side of Ala Moana Boulevard between Honolulu Harbor and Kewalo Basin, was valued by the state at $200 million.  The Office of Hawaiian Affairs believes that if they are not allowed to build condominium towers, the fair market value of the land would be only $91 million.  Furthermore, the current revenue from the land is approximately $1 million per year.  If they were allowed to build condominium towers, OHA should be able to generate approximately $15 million per year.  In their statement to the Hawaii State Legislature, OHA is requesting the right to build a total of four or five condominium towers along with some retail and park space.  

Eight years ago, state lawmakers decided to pass a law forbidding the building of residential condominium towers in Kakaako Makai.  However, at that time, the land was officially being managed by the Hawaii Community Development Authority, a state agency responsible for the redevelopment of Kakaako.  Now that the land is owned by the Office of Hawaiian Affairs, things have changed, as OHA's charter and mission is to benefit the native Hawaiian people and not the citizens of Hawaii in general.  OHA's most recent report and proposal stated, "OHA has a tremendous opportunity to develop the Kakaako Makai land parcels in a unique and genuine way, through harmony and the balance of cultural, social, spiritual and economic values.  OHA can realize the balance of culture and commerce with smart decisions in harvesting monetary returns on its lands and also satisfy its fiduciary responsibilities of maximizing the land value and preserving the cultural history and significance of the land."

Source: Honolulu Star Advertiser, 2-1-2014, www.staradvertiser.com
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Office of Hawaiian Affairs Seeking Approval to Build Condominiums in Kakaako Makai

The Office of Hawaiian Affairs is requesting approval from the Hawaii legislature to build high-rise condominium towers on their land in Kakaako Makai.  The OHA currently own a total of 25 acres of land between Kewalo Basin and Honolulu Harbor, on the Makai (ocean) side of Ala Moana Blvd.  This land, valued at $200 million by the state, was given to OHA by the state government two years ago as part of a settlement for ceded land revenue claims that date back to 1978.  However, OHA believes that the land will not achieve the $200 million value of land under existing zoning, unless residential zoning is allowed.

Eight years ago, when the land was owned by the state, the legislature passed a bill that prohibited residential development of Makai Kakaako.  At that time, local developer Alexander & Baldwin wanted to build three condominium towers there, but public protests quickly attacked the idea.  The difference now is that the land is owned by the Office of Hawaiian Affairs and they have a right to use the land to benefit Native Hawaiians and are not mandated by the state to serve in interests of the general public.  OHA has a total of 9 parcels of land in Kakaako Makai, out of which six of them have water frontages, making them premium lots for potential developers.

State Senator Clayton Hee, who supports the request by OHA, stated, "The highest revenue generation, as evidenced by what's going on in Kakaako, is condominiums. It would provide a tremendous revenue-generating income for Hawaiians."  Governor Neil Abercrombie's office released a statement stating, "The Governor stands alongside OHA to find approaches and solutions that will help OHA help its beneficiaries."  However, many members of the public disagree including Stuart Coleman with the Surfrider Foundation. Coleman commented, "I was part of the Save Kakaako Alliance that helped stop luxury condos and residential units from being built on this last bit of public oceanfront land in Honolulu. The Legislature did the right thing in passing a law to ban residential development in this area, and it seems senseless to go against your own rules and make exemptions now."

Source: Honolulu Star Advertiser, 1-30-2014, www.staradvertiser.com
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State of Hawaii Has $844 Million Budget Surplus

During his annual State of the State address, Governor Neil Abercrombie announced that Hawaii has an $844 million budget surplus and is now on solid financial ground.  The governor outlined a wide range of projects and programs that he would like to have funded thanks to the surplus, including improving early childhood education and childhood health care, increasing minimum wage, reducing homelessness, improving the prison system and creating long term sustainability for the Hawaiian Islands.  State Senator David Ige, who is the chairman of the Senate Ways and Means Committee, cautioned that the surplus can not be spent wildly.  Ige stated, "We're concerned about the budget and making sure that it balances. We need to live within our means."

To read the State of the State in its entirety, please goto: governor.hawaii.gov/blog/2014-state-of-the-state-address/

Source: Honolulu Star Advertiser, 1-22-2014, www.staradvertiser.com
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Conservation Easement Proposal With Turtle Bay Resort Faces Challenges

The State of Hawaii has proposed purchasing just over 600 acres of land from Turtle Bay Resort to create a conservation easement along the North Shore of Oahu.  Supported by Governor Neil Abercrombie, the proposal would allow the resort to continue using the land for recreational operations provided that they provide public access, but would prevent them from developing the land.  Turtle Bay Resorts would also retain ownership of the land under an easement. Members of the North Sore community are delighted with these suggestions by the state and Turtle Bay Resort representatives have stated that they would be willing to work with the Governor and the state legislature to come to a resolution that all parties can be happy with.

However, the biggest challenge comes down to money.  Under Hawaii law, the state government is not allowed to pay more for conservation easement than the property's appraised value.  State appraisers have come up with a preliminary appraisal range of $31.3 million to $38.3 million, and the state actually has a $40 million target price to purchase the land.  However, Turtle Bay's owners have stated that amount is far too low for them to accept.  If the Turtle Bay Resort is willing to accepted the price of $40 million, they may come up with additional compromises with the state including limiting the extent of public access and/or creating exceptions for the developer regarding required road improvements.  

One final option that the state could have would be condemnation, where the state seizes the land for public use and then pays the owner the appraised value.  However, if they were to do this, the Turtle Bay Resort would surely challenge that decision in court, which could cost the state millions of dollars in legal fees.  The state would also be responsible for managing and maintaining the property under condemnation.

Source: Honolulu Star Advertiser, 1-19-2014, www.staradvertiser.com
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