Letters to the Editor


January, 2008

Cheers for Choo

I always enjoy reading David Choo’s articles and various musings. His “Guide to Local Style Business” in the December issue is right on the mark. I’ve not seen a better explanation of the “What School You Went” phenomenon anywhere else. I especially like his analogy to an “island style google search”.
I appreciate his efforts and insightfulness.

Esmond Chung
Director of Sales and Marketing, Adecco
Honolulu, Hawaii
Via email

About Act 221

Your December 2007 Spinzone column on Act 221 by Walter Roth, son of former Lingle Administration Chief Policy Advisor Randy Roth, requires some important factual clarifications.

The Department of Taxation reports that more than $822 million has been invested in 287 Act 221 companies, hundreds of millions of which have come from Mainland investors. These companies have already spent more than $1 billion in Hawaii and paid more than $500 million in salaries. These emerging high tech and media companies create hope and opportunity for Hawaii’s future generations. But today, they already provide jobs and income that pay for the mortgages, tuitions and groceries of thousands of Hawaii residents, in addition to generating substantial general excise and employment tax revenues.

Act 221 is not a “tax shelter.” It offers state tax credits of up to 100 percent of qualified investment amounts over five years, which is really about 57 percent after federal and state taxes on the credits for most (other than AMT) taxpayers. Without investment returns, it’s much better for investors to just pay their taxes. Disproportionate allocations of credits can make Act 221 more attractive for some investors who receive more credits, but this increases market validation by other investors who invest in the same company at the same time and are willing to give up their corresponding amount of credits.

The thousands of Hawaii investors in Act 221 companies are neither stupid nor careless. We have often found Hawaii investors to be more careful and financially responsible than Silicon Valley investors who have invested in companies that our firm and other Hawaii investors have walked away from.

Mr. Roth’s McCarthy style allegation of “large-scale abuse” is unfounded. Tax Director Kurt Kawafuchi has publicly testified that such allegations have been “misleading.” Such press spin also diverts attention from how Messrs. Roth and a few other vocal Act 221 critics have personally benefited by using Act 221 to secure millions of dollars for their own companies.

Jeffrey K. D. Au
Managing Director, PacifiCap Group LLC
Honolulu, Hawaii
Via email

Hacking Harry

David Choo’s minor-league kiss for Harry Kim would be funny if it weren’t so shallow. Didn’t anyone note the lack of accomplishment in Kim’s years in office?
Professionals or just plain seasoned observers of government recognize the Community Development Plans on the Big Island for what they are, a continued and studied way to ignore the festering problems our island has. As planning director for a plan-clueless Harry Kim, Chris Yuen fashioned a sure-fire Dead-on-Arrival planning process that is clearly intended to subvert and ignore existing state law on General Plan requirements.

Yuen has the uncanny notion that a county’s populace can plan its future when they are forbidden – as Yuen did – to consider those entities that are the state’s responsibility. He said that clearly in the opening CDP meetings, “we can’t consider matters that are the state’s job.” Right, no planning for schools, hospitals, roads and anything else that is necessary for the “nice” life that Harry seems to enjoy on the Big Island – and which is in jeopardy.

What this island needs is simple attention to basic and fundamental needs. That should start with a county water system that serves rather than ignores most of the homes and areas of the island. Some 50,000 lots in Puna and Ka`u, for example are not even on the radar for county water service. Water czar Milton Pavao – who hasn’t added any service except a tiny group in Kona and a line to the fire station in Puna’s Paradise Park – seems to absolutely detest any suggestion that water is necessary. We have seen nothing in Harry’s years in office to disagree with that coy notion.

You spot a few developments that Harry has cottened to but you didn’t search for anything the county might have done to allay our island’s growing problems. There is nothing to report there but failure on the county dump and you did mention that.

The horrid and dangerous traffic problems are the most visible symptom of Kim’s neglect but even Hawaii Business must have heard about the Big Island’s medical problems, shortage of doctors, out-of-date state facilities and on and on.

Your question about whether Harry’s “pragmatism” could work on Oahu is laughable since it clearly hasn’t worked in any way on the Big Island. He has doubled the county budget, added huge numbers of employees without giving them much visible to do but somehow your magazine and some 75 percent of your readers have missed that, as the poll shows.

Rooster out and do some serious reporting for a change.

Bill Eger
Owner, Franklin’s Iris LLC
Hilo, Hawaii
Via email

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