The Good, The Bad And The Forecasts
Hawaii Business spoke with the executive directors of each of the economic development boards for the following counties. Paula Helfrich (Big Island), Jeanne Skog (Maui), Michael Fitzgerald (Oahu) and Bruce MacDonald (Kauai) shared their interpretations of their counties’ strengths and weaknesses, and also provided brief economic outlooks
Kauai has a healthy time-share market and continues to receive capital investment for time-share properties. Visitor expenditures and length of stay have increased. The science and technology sector is thriving, with an increased budget for the federal Department of Defense’s Pacific Missile Range Facility (PMRF) and the Office of Naval Research; construction of 60,000 square feet of technology infrastructure off PMRF between 1999 and 2003; establishment of 20 defense dual-use companies on Kauai in a similar time period, including three manufacturing facilities; initiation of the Kauai Technology Intern Program for Kauai’s “Best & Brightest” high school students, resulting in a reversal of the Hawaii brain drain.
There is a lack of K-12 infrastructure (technology and capital improvements) necessary for entry into the New Economy, a lack of water, wastewater and solid-waste infrastructure, which are necessary for continued diversification of Kauai’s economy, and continued deterioration of state and county roads, as well as future capital projects for expansion.
Kauai is expecting the following for 2003: visitor expenditures +5%; visitor length of stay +4%; visitor arrivals +3%; $125 million PMRF budget; Office of Naval Research budget $60 million; building infrastructure +15,000 square feet; new science and technology companies +10; and the establishment of two big-box retailers, Home Depot and Checker Auto Parts. Retail will remain level for smaller retailers, and there will be a continued increase in owner-operated farms producing specialty crops.
In 2002, Maui was voted “Best Island in the World” for the ninth straight year by Conde Naste Traveler. Roughly $100 million per year flows through Maui Research & Technology Park. The island has sound county finances, with the highest bond rating in its history. There are continued robust public, private and nonprofit sector collaborations, and the advent of the University of Hawaii Maui four-year degree program. Maui’s year-round growing season is attractive to agritechnology and biotechnology firms.
There is a shortage of space for expansion in the Maui Research & Technology Park, a lack of affordable housing, and an overloaded transportation infrastructure. There is a persistence of illegal drug use in the community, prevalence among youth is of special concern. There are also unresolved issues about water resources and allocation.
There is a strong potential for continued tech-industry growth, especially in the dual-use arena. Educational opportunities are expanding at Maui Community College, including a new national center of excellence in supercomputing instruction. Continued low unemployment is expected, and strong real estate and construction activity. There is broad-based interest in expanding the agricultural sector, and there are multiple ongoing efforts to clarify community priorities.
Several new groundbreaking projects are in the works, including the Smithsonian Submillimeter Telescope Headquarters, Mauna Kea Astronomy Education Center, the Natural Energy Laboratory of Hawaii Authority’s “Gateway” project in Kona, reconstruction of Saddle Road and the Pacific Basin Ag Research Center. There has been a doubling of cruise industry visits in Hilo and Kona on the Norwegian Cruise Line. University of Hawaii Hilo construction will provide new facilities and make way for new educational programs. The West Hawaii Education Center is under construction. Agricultural products and services amount to $386 million in revenue at the farm level, $1.2 billion after processing and value-added treatments. There is a land and housing sales boom.
Ice and other illegal drug use, especially in remote rural communities, create multigenerational social problems. Inadequate services, facilities and programs also have an exponential impact on local families. P-20 education implementation is just getting started. There is a need to upgrade infrastructure to support the water and transportation industries, harbor and pier maintenance and expansion of the cruise industry instead of commercial sugar facilities. Neighbor Island perspectives are very different: “Oahu-centric” project controls hamper communication, permitting processes and project implementation on the Big Island.
Collaborative, community-based support systems and facilities will be put in place to resolve a social crisis of addiction and dysfunction. The Big Island will realize its vision as the “Knowledge Island,” with a center for natural science studies, agricultural resources, biotech, healing and health. More incentives are anticipated for cultural centers for Hawaiian hula, music, writing, and study. University expansion will encourage study and implementation of high-tech training. The goal is to establish Hawaii – and especially Hawaii Island – as the Puuhonua, or safe haven in troubled times.
There have been military budget increases from the Homeland Security Bill. Groundbreaking has been completed for the $150 million Bio Sciences Medical School Initiative, and tourism is back to pre-Sept. 11 levels. University of Hawaii Manoa continues renewal and refurbishing under President Evan Dobelle’s leadership. Act 221 incentives entice new investment in tech companies and startups. Silicon Valley companies and venture capitalists continue to trickle into Honolulu. Multimillion-dollar investments could start a renaissance in Waikiki. Agriculture diversification and more aggressive local and international marketing of specialty crops are under way.
Public education is still perceived as inadequate. The cost of housing is still high but is starting to equalize with leading U.S. Mainland metro areas. There is an inadequate system by which job seekers and employers can quickly find each other. There is still the perception of the high cost of state and local government. There are high taxes and a cumbersome, costly and time-wasting permitting process for new developments. The future of air service is still unclear. Oahu has the third-highest property crime rating in the U.S. Retail dominance by the big-box retailers will likely put more small local business in jeopardy.
The Medical School/Bioscience initiatives at Kakaako will attract new investors. Unemployment will continue to be low. New tourism promotions and investments will keep tourism strong and stable. Interest rates will remain low, which will sustain the healthy real estate markets. The new government administration will bring confidence, hope and actions that will mobilize people and resources to take new initiatives in government reforms, the economy, social programs, environmental stewardship, education and the arts, and begin a new era of respect and support for the Native Hawaiian host culture.