Power Brokers: Agents of Change

They've got the position, they've got the power. Can they save our Island world as we know it?

October, 2005

In the fourth edition of Hawaii Business’ Power Issue, we decided to do something a little different. We know that “Power Brokers: Agents of Change” sounds like a summer blockbuster action movie, and thanks to illustrator Dextor Doi and art director Wes Funai, it looks like it, too. However, as we were mulling over the happenings of 2005, it struck us that there were a slew of significant developments in the state that could (in the right hands) alter the economic, political and physical landscape. So we decided to focus on six movers and shakers who this year put themselves or were put into positions to be great catalysts for change. With apologies to Dick Tracy and the rest of the comics world, we present our 2005 Power List.


Harry Kim
Title: Mayor, Big Island
Nickname: Give ’em Hell Harry
Power Surge: Last July, the Honolulu Star-Bulletin reported that once-Republican Big Island Mayor Harry Kim was considering a run for governor, as a Democrat. The Kim candidacy has been on the minds of some party insiders, especially after he ran for and won a second term as a nonpartisan in 2002, with 63 percent of the vote. However, it still came as a surprise that the easy-going, denim-and-plaid-wearing Kim would ever leave Hilo for life in the big city.
Power Play: Kim’s possible candidacy says more about the sorry state of Hawaii’s Democratic Party than it does about the straight-talking, one-time head of Big Island Civil Defense. This is the second election in a row in which party officials have looked for a candidate from outside the meandering herd. Banker and über power broker Walter Dods was nearly recruited to take on Lingle the last time. Who will the Democrats choose to run in 2010? Michelle Wie?
Personal Voltage: Kim’s good ol’ local boy persona combined with cut-the-crap delivery is a one-of-a-kind, potent mixture in Hawaii politics. He would arrive at the State Capitol with very little political baggage or debts to the Machine. Will the no-nonsense Kim whip an entrenched state Legislature into action, or will the city slickers teach a few hard lessons to the hayseed from Keaau? In either case, the big winners would be the public, which would likely see a political atmosphere where the status quo has very little status.


W. David P. Carey III
Title: President and Chief Executive Officer, Outrigger Enterprises Inc.
Nickname: The Beach (Walk) Boy
Power Surge: Outrigger enterprises, which introduced the Islands to the masses, began an enormous Waikiki upgrade this spring. Outrigger’s $460-million extreme makeover of the 7.9-acre parcel bordered by Lewers Street and Saratoga Road will transform Waikiki’s low-rent Hooterville into an upscale hotel and retail hub. The local hotel chain’s effort, the largest development project in the history of Waikiki, razes nearly a dozen Truman- and Eisenhower-era lodgings. Outrigger’s budget Ohana brand will lose half of its inventory in the redevelopment, more than 1,800 rooms in eight hotels. But Ohana’s loss is Outrigger’s and the rest of Waikiki’s gain. The Beach Walk area contained approximately one-tenth of Waikiki’s room inventory. An elegant, new hotel neighborhood will significantly strengthen Outrigger’s brand as well as brighten Waikiki’s tarnished image as a first-class resort area.
Power Play: Waikiki is the most difficult area to build in the state. Not only do developers have to negotiate through a maze of landowners and their leases, but also a complex permitting process that can increase costs from between 30 percent to 50 percent. Carey and Co. weathered Sept. 11, a war and a bout of SARS and used their political connections and financial muscle to finally push through their 10-years-in-the-planning project. The Beach Walk took on a greater importance after the Queen’s Health System scaled back the redevelopment of the International Market Place.
Personal Voltage: Whether the Beach Walk becomes Waikiki’s bellwether project remains to be seen. The bottom line is that Carey is the first to jump into the redevelopment pool in a big way. His chutzpa sends a couple of important messages to two different audiences: For Mainland investors, it shows that big things can happen in risk- and change-adverse Hawaii. For Islanders, it’s a shining example that bold ideas and big bucks can be locally grown.


Dee Jay Mailer
Title: CEO, Kamehameha Schools
Nickname: Golda Mailer
Power Surge: To many Native Hawaiians, it was the most dramatic and egregious miscarriage of justice since the overthrow of the Hawaiian monarchy in 1893. Last August, the U.S. Ninth Circuit Court of Appeals struck down Kamehameha Schools’ Hawaiians-only admission policy. By a 2-to-1 vote, the high court ruled in favor of an unidentified non-Hawaiian student who was turned down for admission in 2003, overturning a U.S. District court ruling that recognized the “special trust relationship existing between the federal government and Hawaiians.” The ruling has galvanized the Kamehameha ohana, the Native Hawaiian community and non-native Islanders alike. Not since the effort to stop the bombing of Kahoolawe in the 1970s has a single issue become a rallying point for Native Hawaiian rights, hopes and dreams. It’s a movement in search of a leader.
Power Play: Shortly after taking over in 2002, Mailer, a 1970 Kamehameha Schools graduate and healthcare administrator, was lionized by the media as a nurturing, healing presence, a perfect antidote to the scandal and political infighting that plagued the institution. But that was then and this is now. The school is under siege again and the ohana and the community at large are in dire need of someone who can focus the outrage, emotion and activism on a call to action (Akaka Bill anyone?).
Personal Voltage: Arguably, the job of CEO of Kamehameha Schools, the largest private organization and landowner in the state, is the most powerful and difficult one in the Islands. Kamehameha’s CEO has multiple constituencies and mind-boggling responsibilities. Not only must the $6 billion conglomerate and educational institution do well, it must also do good. So far under Mailer’s leadership, Kamehameha has continued to be a laggard in the Islands’ fast-evolving business world. (See “The Status Quos” at bottom) She has also allied herself closely with the other powers that be. Mailer’s acceptance of a place on First Hawaiian Bank’s board of directors had many in the school’s community scratching their heads. The school needs inspiration, not institutionalization. Can Mailer channel her inner Golda Meir and lead Kamehameha and the rest of Hawaii into the promised land?


Steve Case & David Cole
 47, 52
Titles: Shareholder; Chairman, president and chief executive officer, Maui Land & Pine Co. Ltd.
Nickname: The Sunshine Boys
Power Surge: The state’s latest economic upturn, especially evident in the red-hot tourist industry and volcanic housing boom, has fattened up the bottom lines of a wide spectrum of local businesses, but it’s left many Island residents with slim pickings. Local wages can’t keep pace with home prices that were first kick-started by massive amounts of Mainland cash. The problem is especially acute in the Islands’ resort areas, where the local work forces can’t afford to live anywhere near the exclusive enclaves where they are employed. Next stop, Jamaica! Late last year, Island-grown high-tech tycoon Steve Case thought globally and acted locally when he outlined his plans to build sustainable businesses. Specifically, Case wants to integrate Maui Land & Pine’s vast, diverse resources, including everything from high-end hotels to high-yield agricultural lands. ML&P has set aside 300 West Maui acres to build affordable housing for some of the company’s nearly 1,500 employees. The move will bring new meaning to the term “community wealth.” Heading this effort is another local boy, CEO David Cole, who is a former AOL executive and has a background in organic farming.
Power Play: If Case and Cole can make Maui Land & Pine’s grand experiment work, it could be a model for not only Hawaii’s high-end resorts but for the state in general: high-end tourist areas built around sustainable villages, where leisure, business, culture and lifestyle come together.
Personal Voltage: Case’s ill-fated merger of AOL and Time Warner made “convergence” a bad word. But the trailblazing businessman, worth approximately $825 million, according to Forbes magazine, is undaunted. He’s mentioned on several occasions that Hawaii is the perfect laboratory for his experiment in social entrepreneurship, because big investments can produce big results in such a small state. Case in point is Steve’s $1 million investment in the Hawaii Superferry, the high-speed transport that will zip visitors and local residents to and from Oahu, Maui, Kauai and the Big Island. As their Kapalua experiment comes to fruition, look for further investments in other such symbiotic businesses.


Mufi Hanneman
Title: Mayor, City and County of Honolulu
Nickname: Mr. Fixit
Power Surge: It was inevitable and ironic that soon after Mayor Mufi Hannemann took office at the beginning of the year, Honolulu experienced an epidemic of sewage line breaks and spills–nearly a dozen in a little more than a month. It turns out that the previous Harris administration had been raiding the sewer fund and playing a budgetary shell game to build vanity projects and throw parties on the beach. During 10 years under Harris, Islanders were knee deep in crap and never realized it. In his first year in office, Hizoner Hannemann has quietly become the pothole politician, tending to the city’s long-overlooked core services. Some have accused him of building his new career on top of Harris’ debt-ridden carcass. However, with a $3 billion debt service bill and a crumbling infrastructure, Hannemann’s Honolulu repair job is more about pragmatism than politics.
Power Play: It is also ironic that while he was dutifully fixing potholes, Hannemann was laying the foundation for the biggest public works project in the history of the city: a brand-new mass transit system, featuring fixed rail of some sort as its centerpiece. Long characterized as either the panacea to Honolulu’s traffic woes, or a Pandora’s box of fiscal doom, rail has been on the agenda since the Blaisdell administration. But mass transit never had a more persuasive advocate than Hannemann. The mayor rallied the troops to get excited about trains again. He flipped the Chamber of Commerce to his side, convinced powerful Rep. Neil Abercrombie to give Honolulu one more chance with the feds and steered enabling legislation through the State Capitol. He saved the bill from an 11th-hour veto by Gov. Linda Lingle and then worked the City Council to pass the resulting Bill 40, which would raise the general excise tax from 4 percent to 4.5 percent on Oahu to pay for the city’s portion of the mass transit system.
Personal Voltage: Hannemann’s quixotic tour through federal, state and county governments over his decades-long political career seems to be finally paying off. A special assistant to every U.S. president since Carter, head of the state Department of Business, Economic Development and Tourism as well as a Honolulu City Council member from 1994 to 2000, Hannemann knows how government and politics work, from inside and out. His campaign for mass transit is a good example. The mayor knew when to lead the charge and when to sit back and let others carry the torch. The result is that the legislation got through with political costs spread throughout state and city governments. But make no mistake, this baby belongs to Mufi.


They’re big, they’re bold, they have the ability to stagnate

Russell Okata and the HGEA
Powerful unionized public workers are a fact of Island life that became more apparent last November when the Hawaii Government Employees Association (HGEA) and its executive director flexed their considerable political muscle. The 2004 election was billed as a litmus test of organized labor in general and the HGEA, the state’s largest union, in particular. In 2002, their gubernatorial candidate Mazie Hirono was defeated by Linda Lingle. Was that election a call for sweeping change in state government or simply a contest of personalities?
Last election season, Okata and the HGEA put troops on the ground and flyers in the mail, helping defeat five Republican incumbents in the House. It was a reversal of Republican gains made in 2000, cutting off Governor Lingle’s coattails somewhere around the knees.
The election results ensured a veto-proof Democratic Legislature, which got busy last May, overturning 12 Lingle vetoes–tying a state record. The efficacy of the 2005 Legislature is a matter of debate. But the efficacy of HGEA is not.

General Growth Properties
The shopping center giant owns Ala Moana Center and Victoria Ward in Honolulu, Hilo’s Prince Kuhio Mall and Lahaina’s Whalers’ Village. They also manage Kahalui’s Queen Kaahumanu Center and Kaneohe’s Windward Mall. GGP controls five of the state’s top seven shopping centers, a position that any business would covet.
This is not to say that GGP has any nefarious plans up its designer sleeves. They don’t. GGP has pumped millions of dollars into the renovation of Ala Moana Center, which looks great (if you’re from Seattle). However, word on the real estate street is that Hawaii is perceived as GGP turf. If it’s retail and the General is interested, big-money investors go shopping elsewhere, which is never a good thing. Attention shoppers: Chilling Effect in aisle two.

Kamehameha Schools Bishop Estate
The $6 billion trust is so big and has so much land that it is almost impossible to do business of a certain scale without running into it. Nothing wrong with that, except the organization reacts to political and business developments at the speed of government. Earlier this year, it was the Queen Liliuokalani Trust that led the charge to repeal Chapter 38, the 14-year-old lease-to-fee conversion law, not the resource-rich KSBE. The estate is also pulling up the rear in the development of Kakaako. The area wouldn’t be known as the land of perpetual potential, if the trust had been able to pull the trigger on any one of its many redevelopment plans in decades past. In neo-Kakaako’s latest incarnation, KSBE is shaping out to be a secondary player. Rumor has it that its holdings will be used largely as parking facilities. -DKC

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