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Hannemann Sees Positive Signs for Oahu’s Economy


            Mayor Mufi Hannemann today said tourism actions being taken by the nation’s mayors and construction starts at home offer encouraging signs for Oahu’s economy.


Hannemann made the statement on the day of his departure to attend a U.S. Conference of Mayors meeting in Florida, where the chief executives of cities across the nation will press for economic stimulus projects and aid to the airline industry.  He said, “There are many things we have done and will do, at the county level, to stimulate business and private sector job growth to mitigate the impact of a slowing economy.  While the financial resources and statutory mandate for economic development rest with the state government, there’s no reason we at the City and County of Honolulu, in collaboration with business and labor, can’t do our part to bolster our economy.


“We’ve heard plenty of gloom-and-doom forecasts about our economy, and we’ve seen friends and neighbors lose their jobs to layoffs and cutbacks, but that’s not the whole story.  There are important reasons to have hope and optimism about job retention and job growth.  The bottom line is that Oahu is home to three-fourths of the state’s population and a commensurate share of the economy and we’re being proactive in supporting our leading industries of tourism and construction.


“We need to stop worrying about Wall Street and concentrate on Main Street Honolulu.  That’s why I’m referring to our efforts as ‘Job Focus Honolulu’.”


            Tourism.  Hannemann, who serves as chairman of the U.S. Conference of Mayors’ standing committee on tourism, arts, parks, entertainment, and sports, is working with USCM chairman and Miami Mayor Manuel Diaz and USCM transportation chairman and Denver Mayor John Hickenlooper in identifying systemic solutions to aid the airline industry in tackling high fuel costs and other obstacles to their ability to compete.


            He said, “During my time at the Department of Business, Economic Development & Tourism, we crafted a loan guarantee program for Hawaiian Airlines, which at the time was facing bankruptcy.  The loan was never used, but it staved off creditors and gave Hawaiian time to restructure.  We recognize that many carriers are now in a similar position, and it is my expectation that the mayors can develop ideas to aid the airlines during what is a very troubling period.”


For the longer term, he is co-chairing a committee with Chicago Mayor Richard Daley to bring the 2016 Olympics to the United States through the Windy City.  He said mayors across the nation expect to draw some of the Olympic athletes and fans to their cities before and after the Olympics, and Hawaii could benefit from an influx of Asian sports fans in particular.


            At the USCM meeting, Hannemann and his colleagues will press top policy advisors to Presidential candidates Barack Obama and John McCain to relax visa restrictions on Asian travelers, expand the U.S. Visa Waiver program, create a cabinet-level tourism and arts chief, and boost funding for international tourism marketing—all proposals Hannemann succeeded in including in the USCM’s 10-Point Plan for the nation.


Hannemann said, “Foreign arrivals to the U.S. have dropped significantly because of tougher visa restrictions, higher airfares, and other conditions.  Two million fewer overseas travelers visited the United States in 2007 than in 2000.  The decline in overseas travel since 9/11 has cost America 46 million visitors, $140 billion in lost visitor spending, and $23 billion in lost tax revenue.  In Hawaii, industry officials tell us that tourism in August has dropped 17 percent over the same month last year.  With so many cities depending on tourism, the nation’s mayors are eager to stimulate and support more travel.”


            Coincidentally, the U.S. and South Korean governments announced on September 25 that Korean travelers will enjoy relaxed visa requirements beginning in early 2009.  Hannemann had introduced the proposal to the USCM, promoted the idea to the U.S. Ambassador to Korea and Korean municipal and tourism officials in meetings in October 2007, and lobbied his mayoral colleagues, members of Congress, and others to win its approval.  He plans to ask the same Korean officials to help promote Hawaii as a prime travel destination and will collaborate with the local Korean American Foundation on a travel promotion program.


            Additionally, the U.S. House of Representatives approved the Travel Promotion Act on September 25, which, if approved by the Senate and President, will establish a nonprofit entity to promote the United States as an international travel destination.  The entity would be funded by private contributions and a fee on foreign travelers, at no cost to U.S. taxpayers.


            Charles Merin, president of the Travel Business Roundtable, consisting of the leading figures in the travel and tourism industries, said, “Without question, the support of the U.S. Conference of Mayors, as led by word and deed by Mayor Hannemann, played a decisive role in achieving this great victory.”


            On the local tourism front, Hannemann pointed out that the most important responsibilities of a mayor in supporting economic progress are public safety and the infrastructure.  He reiterated that that his administration’s focus on public safety has contributed to the city’s ranking as one of the safety big cities in the entire United States.  He noted that the City has committed $1 billion for sewer infrastructure repairs and waste water treatment expansion, repaved nearly 600 lanes miles of roads, and made improvements to the Honolulu Zoo, public golf courses, Hanauma Bay, Halona Blowhole, Neal Blaisdell Center, and other major attractions.


            New Construction.  The mayor said that a strong construction industry would help ease the projected declines in visitor spending, “Construction is our third leading industry and strong capital spending by private investors and all levels of government will certainly soften the impact of any economic downturn and weakness in tourism spending.”


Hannemann pointed to a number of public and private projects that will provide jobs for the industry during the next several years.


Hannemann cited the $200-million Trump Tower on Beachwalk, a project that called for his personal intervention and encouragement, as a success story in revitalizing Waikiki’s aging tourism infrastructure, stimulating outside investment, and creating jobs.  Work has already begun on the tower.


He also said he would announce next week the specifics of a major resort project expected to break ground this November.  Hannemann had a direct hand in bringing the development to Oahu.


            The City assisted with the planning and permitting for the ongoing extensive renovation of the Royal Hawaiian Hotel and Sheraton Waikiki.  Kyo-ya Hotel and Resorts LP is spending $191 million on that work, with completion targeted by year’s end.  Kyo-ya is also moving ahead with plans to renovate the Princess Kaiulani Hotel and Moana Tower.  Meanwhile, the Queen Emma Land Company recently announced plans to redevelop the International Marketplace site and surrounding properties.


            City Capital Spending.  The City’s capital improvement program for the current fiscal year is $955 million, with a significant part of the money spent locally and benefiting contractors, construction workers, architects, engineers, planners, suppliers, and other construction-related businesses.


Among the spending is $245 million for sewers and waste water, $77 million for road repaving, $4.2 million for a Middle Street intermodal center, $6.7 million for the Joint Traffic Management Center, $5.1 million for a traffic signal maintenance facility, $4 million in improvements to police and fire facilities, $8.5 million for the East Kapolei and Ewa Beach fire stations, and $24 million for parks improvements.


            Hannemann said, “All of these efforts are going to keep the economy pumping.”


Bonds.  Hannemann said the uncertainty roiling the financial markets will not affect the City in the near term:  “We won’t have to sell our bonds right away.  Thanks to sound financial management, we have flexibility that the state government does not through our Tax-Exempt Commercial Paper program.  This provides us with a guaranteed line of credit that we can use for interim financing.  The general obligation TECP is secured by two AAA-rated German banks, West LB and Helaba, for $250 million until 2015.  The City will close this November on a $150-million commercial paper program for our waste water system and is securing commitments from two AA-rated banks to provide credit enhancement and liquidity for three years.


“The City’s bond rating remains high, and our debt is considered conservative, so we’re comfortable with our financial situation for the time-being.  You’ll recall, too, that we increased our rainy day fund by 400 percent.”


Rail Transit.  The rail transit project, poised to break ground in late 2009, will generate an estimated 9,000 jobs in construction and related industries.  Investing strongly in prudent growth and in infrastructure improvements will stimulate the economy and boost employment, Mayor Hannemann said, noting that the U.S. Department of Transportation estimates every $1 billion invested in transportation infrastructure generates $2 billion in economic activity.


            The City has budgeted $265 million this year for planning, design, and preliminary construction activities for the fixed guideway.


The City has received $217.5 million through June 30, 2008, from the general excise tax surcharge, while the state’s take has been $25.4 million.  Hannemann said that some are questioning the effect of a lower tax take on the rail project.  He responded that a projected decline can be addressed in several ways:  (a) There is a $900-million contingency built into the project cost so a loss could be absorbed.  (b) The annual federal transit formula fund, now used for bus and bus-related capital costs, could be applied.  (c) The City could request an increase in New Starts funding, particularly now that Congress is poised to increase transit funding to cope with high fuel prices and ridership demand.  (d) A slow economy could result in lower construction costs.


            He said, “Our financial plan for rail is sound and reasonable, as confirmed by the Federal Transit Administration’s independent auditor, Booz Allen Hamilton.”


Housing.  The mayor signed into law three zoning measures today (Monday, September 29) that will spur new housing development and job growth in Kapolei.  The new Kapolei projects will include more than 6,500 homes and businesses built in developments known as Makaiwa Hills, Kapolei West, and Kapolei Harborside.  The developments are expected to create 7,500 permanent jobs and approximately 1,500 annual average construction jobs.


The continuing growth in Kapolei is widely recognized as a major bright spot for job creation and investment, helping stabilize Hawaii’s economy.  The City Council approved the Kapolei zoning measures on September 24, and the three projects, collectively known as Western Kapolei, include:  Makaiwa Hills, a hillside mixed use residential project with a diversity of housing choices that is expected to create 1,200 permanent jobs and 650 average annual construction jobs; Kapolei West, a golf course and transit-oriented mixed use residential community adjacent to major regional job centers that is expected to create 2,500 permanent jobs and 377 average annual construction jobs; and Kapolei Harborside, a light industrial, maritime-related and mixed use project that will be a major regional employment center and is expect to create 3,800 permanent jobs and 450 average annual construction jobs.


The Makaiwa Hills project figured in the preservation of Kunia Plantation Village and the 115 homes rented mostly by former pineapple workers.  The plan, announced in June 2008, calls for the James Campbell Company to transfer the 119-acre village to the nonprofit Hawaii Agriculture Research Center for $1.  The agreement ensures continued housing for farm workers, as well as land and buildings for agriculture-related businesses, including a processing center being proposed by HARC.  The assessed value of the acreage exceeds $11.5 million.  The City will also gain 16 acres on Kapolei Parkway for public services.


One of the many challenges in preserving the village was the high cost of upgrading the fire safety infrastructure to bring it up to standard.  To facilitate a solution, the City supported Campbell’s proposal to count these 115 homes toward the total 1,230-unit affordable housing requirement for Makaiwa Hills.  While the credits represent only a small portion of the requirement, Campbell will carry the entire cost for the fire system upgrade, totaling about $1 million.


Hannemann said, “This latest announcement demonstrates my administration’s commitment in fostering public-private partnership to build not just a Second City, but a great city in Kapolei.  During these challenging economic times, positive economic growth on the West side can not only bring about good results for the entire island but for the entire state.”





Bill Brennan, 527-6928

Monday, September 29, 2008

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