Senate Standing Committee on Ways and Means

Okay. Calling to order the Committee on Ways and means and economic development and tourism. So this afternoon we'll hear from DBAN who will present their biennium budget requests. Good afternoon.

Afternoon, Chair. Hello. Chair Dela Cruz. Vice Chair, Milwaukee. Senator DeCoite and Members of the Senate Ways and Means Committee, mahalo for this opportunity to present our goals, objectives and budget requests to this Committee.

We have asked all of our agency directors and division managers to be available with us today to respond to any questions that you may have. I've always said that I'm the most fortunate Department head in the state government, and the team in this room is the reason why. Let me introduce our team.

Sitting here with me is Deputy Director Dane Wicker, who many of you know, with his many years here in the Senate, has been, you know, a great, great advocate for DBAD and for my assistance, and I really appreciate him for that.

In our office, you, key people that I want to mention is Don Murata, Kelly and Yamamoto, Lacey Goshi and Margaret Liu. They're on the front line holding down the fort every day. We'll start with the introduction of our agencies and divisions.

And when I call your names, can you please stand so that I know you're here so I don't have to turn around? Thank you. Dennis Ling with the administrator of business development and support division. Aloha, the office of international affairs. It has no staff, but you can direct your questions to Dennis Ling.

The next office is the off the Executive officer of the land use Commission, which today sitting in for Dan or Decker is Scott Derrickson. Aloha. Georgia Skinner, the Administration of creative industries division. David Sinking, administrator of the foreign trade zone. Daniel Naho, the interim President and CEO of the Hawaii tourism authority. Stephen Wells.

Sitting in for Mark Glick, chief energy officer of the State of Hawaii energy office. Mark's not able to be here today, so Stephen will be answering questions for the energy office. Dr. Eugene Thien, administrator of the research and economic analysis division.

Aloha.

Executive Director of the Hawaii green infrastructure authority for aso. Sitting in today is Stephen Sung for the ministry administrative services office. Okay, Lucy. Lucy is here as well. She was strategic broadband coordinator. The state broadband digital equity office is Chung Tan. Lori Moore, Executive Director of the military and community relations office. That's our newest division.

Dory Palkovich, administrator of the small business regulatory review board. Sandy. Connie Mori, who is sitting in for Damon Mateo, Executive Director of the Hawaii technology development Corporation. Mary Alice Evans, Director of the office of planning and sustainability development. Lawrence Sambaridia, acting Director of nelha. Craig Nak, Executive Director of Community and Development Authority.

Dean Minakami, Executive Director of the Hawaii Housing Finance and Development Corporation. Wendy Gaty, Executive Director of the Agribusiness Development Corporation. And last but not least, I think that's the last one. Brian Andrews, Stadium Manager, hoping to miss anyone. So we, we sent you all a a whole list of our details and they get really into the weeds.

But what we're going to do today is we're going to share a slide deck so that you can see how that ties into the request that we're going to be making in the budget table. So at this point I'll turn it over to Deputy Director Wicker to present to start the slide presentation.

Thank you Director. Good afternoon Members, Chair Dela Cruz, Chair DeCoite, Vice Chair Mariwaukee, Vice Chair Makai. You've been provided our full slide deck. We provided the notes in there.

It gives a narrative, a very detailed narrative of our framework and a cadence on how we put together our framework and up to budget requests to get those deliverables in essence of time. I'm not going to go over every single slide in detail.

I will be skipping over, but we can always go back or if there are questions, I can always refer to that specific slide. Okay.

So to begin with our framework, you'll see some consistent slides that we've presented the past two years and that was a lot of the development and putting together our vision and now we're leading into implementation.

So we always refer back to what is the State of Hawaii's economy and we look for that data from our research Economic Analysis Division to understand that.

We also looked at previous studies and reports as well as mandates to give us guidance on our framework that led us to determine what sectors and industries we need to focus on and how we're going to target those to diversify our economy short term and long term, as well as reverse our brain drain through workforce development alignment, our cradle to career incubation to maturity framework that leads up to implementation and examples of implementation tied into our budget request.

So the State of our economy. So we looked at several agencies that rank the State of Hawaii and we consistently rank among the bottom 10 states overall in business and economic environment as evaluated by these multiple entities.

The metrics that they use to weight our state include business creation and growth costs, workforce development, infrastructure development, access to capital, technology and innovation, and the affordability for workforce housing. An assessment of these entities we Our strength is a moderate, a moderate workforce development program.

Our weaknesses include high business costs, limited access to finance underdeveloped infrastructure and innovation. One key note here is CNBC and up until 2023 when they waited all 50 states through 128 different metrics in 10 competitive areas. Workforce development was their primary focus and they weight the states on how well you market that to your development implementation.

Up until 2024 for the first time since 2007, their highest weighted metrics now is infrastructure. So our alignment started with a lot of state mandates. Our economic development sustainability efforts are guided by a series of legislative mandates and the Governor's priorities, all working toward a resilient and diversified economy.

These mandates and priorities address critical areas such as food security, energy resiliency and housing while aligning the long term environmental and economic goals. For example, Act 151 in 2019, Food Security and Resiliency, which aims to double Hawaii's food production and increase agricultural exports.

It also promotes the Farm to State initiative to integrate locally sourced food into public institutions, Act 175 and 176 from 2021, local food sourcing in school and local procurement benchmarks respectively.

This sets not only Department of Education's mandate to double food production, but also state departments to purchase a percentage of fresh local agriculture products and value added goods supporting local ag and processing industries.

Act 97 from 2015 and Act 15 from 2018 mandates 100% RPS standards by 2045 as well as committing Hawaii to achieve a net zero emissions by 2040. To operationalize these mandates, DBED set up two internal working groups.

First, our land use Strategy Working Group to align land use planning with goals for housing, food security and sustainable development and our Housing Strategy Internal Working group as we have hhfdc, HCDA and LUC as well as OPSD coordinating affordable housing just with DBAD alone.

These two working groups set up the following focus areas with number one, Food security and resiliency. As you see on the slide here, land use is the number one resource all three compete for and we have conflicting mandates and conflicting strategies.

So starting with the mandates to double food production, increase farm to school, we were looking at what lands will need to be set aside for both conventional and vertical farming, overlaying the RPS mandate that HSCO did with their projections. And then where does housing go?

This not only sets up short term but also long term goals and policy changes. Second was energy stability and resiliency and third, housing. This also aligns with Governor's priorities for affordable housing as the Administration aims to construct 13,000 affordable units by 2026.

The governor's goals also include climate mitigation and resiliency and we adopt that in all of our strategic framework throughout our process as well as First Lady's Feed the Children initiative. Her Child Nutrition Supporting Improve supports improved nutrition for Hawaii's children through locally sourced and nutritious food programs.

So our economy continues to evolve through the growth of targeted and emerging industries identified as critical to the state's diversification strategy. These three sectors, carefully analyzed and research Economic Analysis Division's 2024 Targeted and Emerging Emerging Industries Report represent sectors with the potential to generate high quality jobs, enhance our competitiveness and foster economic resilience.

So for tech and innovation, we're focused on these four industries, Aerospace, advanced manufacturing, healthcare and energy and the Creative Industries Division. I mean sector which also encompass our culture and heritage, media, fashion and design and music and our product development sector which includes value add products, food and non food products as well as intellectual property.

So our Incubation to Maturity framework to drive economic diversification and sustainable growth, DBIT is implementing a strategic framework focused on four key pillars. These pillars serve as a foundation for aligning our resources, addressing the gaps and building a resilient economy that supports Hawaii's long term goals. Pillar one includes workforce development, preparing our next generation.

Pillar two, infrastructure supporting commercialization and growth three is our regulatory environment creating a business friendly ecosystem and four with incentives, our capital formation which fuels our industry growth. In addition, we follow the Governor's Pillar of Climate and Resiliency and align and integrate this throughout all of our framework.

Our economic future hinges on the ability to expand exports and scale industries that create sustainable and resilient revenue streams. Exporting not only broadens Hawaii's tax base but also significantly increases tax revenues enabling our state to reinvest in critical infrastructure, social services and future focused initiatives.

So a key strategy with our framework and exports is in Value added manufacturing. This enhances local resources and products to commend command higher market value and by focusing on value added industries, it'll help pay for our sustainability and resiliency. We can reinvest the revenues long term.

For example, sectors like food, product innovation, aquaculture and advanced manufacturing represent prime opportunities to maximize our state's unique resources and cultural identity while driving export growth. Manufacturing stands out as a cornerstone for our economic diversification. It is a scalable industry that provides a foundation for growth across multiple sectors.

Advanced manufacturing includes technologies paired with support for small and medium sized enterprises and it amplifies our capacity to reach and compete in global markets.

Workforce Developments We've been spending a lot of time in workforce development to understand both what our industries are and working backwards, what the skills gap is and having discussions with P20, uh and Doe to understand what CT programs they currently have and then to align the skill sets with the industry.

So answering the big question here with workforce development and our cradle to career objective for our State Department, DBIT aims to provide clear answer to students. What is your path after graduation? And DBED acknowledges the fact that 49% of our public school graduates in state do not enroll in college in the first fall after graduation.

So our alignment, our alignment right now for our three sectors includes these CTE pathways. We've identified these and are working alongside with our Workforce Development coordinator in our Department as well as DOE to understand where these programs are offered, in which complexes and then identifying the employer. We do have two budget requests targeted to this.

We're asking for bed 105 and that's CID. We're asking for one permanent program specialist. Five. We currently have a temporary position that's federally funded, but that was specific to cid. We're asking for a permanent position to offer Department wide workforce development.

Yeah, if I can just interject a little bit right here. Chair. When we were on Hilo last year, a year and a half ago, you coordinated a site visit and at that site visit was the Keith Hayashi.

And we sat and we met and you know, since that time, Deputy Director and others in the DOE have been meeting in the communities and when I say communities, the complex areas, figure out which complex area would be the right place for manufacturing, which complex area would be the right area for film and design and fashion and music.

So according to the doe, that's never happened before. The collaboration of trying to figure out where we put curriculum and how it ties into the big picture with dvet. And we thank you for instigating that in Hilo.

And it's, it's, it's, it's the path that started and it's the path that we will continue to be on because it's working.

Our second request tied to workforce development. This is a continuation under Act 89 which was passed last year on the Healthcare Workforce Development Program. There were two parts in that act. One was the funding to contract with a private sector, public private partnership to offer both a glide path and CPN pathway.

We administered that under Business Development Support Division. We're asking for year two funding of 1,450,000 to complete year two, the discussion with the contractor. The goal is to get off of subsidy long term and for the private sector to step in and Fund this workforce training.

I didn't get a chance to look at the report, but just last week Friday data came out on the healthcare industry and tied to this specific project or this pathway that actually Legislature you folks pass. It did result in a decrease in the gap in the skills though the workforce. So there is positive out from this program.

I'll also note that we've been doing site visits at the high school level. So that includes Kapoli High School, Eva Makai Middle School, Campbell High School, Waialua High School for the robotics program, Waipahu complex area, as well as a Pearl City complex area and attending their complex area meetings.

We've also done site visits and meetings with Honolulu Community College, uh, West Oahu Academy for Creative Media and Advanced Research Lab at mic. All these are tied to one of the three sectors. We are being resourceful as much as we can.

So some pathways currently right now there is no ask which is a huge plus of the state and for example Advanced Manufacturing, there's a big push here from Department of Defense and this was a site visit that DBA did out a little over a year ago to Oak Ridge, Tennessee to their Department of Energy national lab.

Advanced manufacturing plays a huge role in our economy, not just with Department of Defense, but also US Space Force as well as smaller manufacturer companies. The opportunity here is a training program short term with set up with Department of Defense at the Honolulu Community College this spring. Summer.

I'm sorry, this summer they'll be providing equipment to the community college. They'll also be targeting a few high schools that stick in that equipment. So think of it when you tour some of our doe maker spaces and their 3D printers as well as the robotics program.

Advanced Manufacturing is those students learning how to use robotics to create a component or a piece for some of our larger employers here.

There's big interest in some of our major employers here with the shipyard as well as Department of Defense and they're looking at doing investments in the training site, the training site coming out of HCC and uh, MNOA as well as potential a facility which would employ both enlisted as well as civilian jobs on Oahu.

Long term we don't have an ET on that, but there's a lot of discussion to develop that facility here. So advanced manufacturing is one of our key industries, both short term and long term. Our second is product development. We've toured Waipahu High School's Autogro as well as Waimea High School's Agriculture, Food and Natural Resources pathway.

By mapping out these comprehensive pathways and securing the necessary resources, we'll ensure that students like those at those two campuses can transition into meaningful careers without barriers.

Leeward Community College if you had the opportunity to tour the Value Added Product Development center, it became a great example on what we can do to help address a gap in creating small to medium businesses. Lastly, we do have an ask, and I'll go over this a little later, to help finance a Creative Lab Innovation Center.

So as we focused on the Value Added Product innovation, we completed a study under House House Concurrent Resolution 184 which passed out last session.

We just completed the report and that industry for fashion and design as well as music has a similar request and similar issues where they need specialized equipment, warehousing and facilities not only to establish but scale up. So we're seeing a trend here in a couple of our cottage industry manufacturing.

Yes, and it's as important as we possibly can be because you see with workforce development that some restaurants and businesses throughout the state close one day a week. It never used to happen before and a lot of the calls back to us is we need help finding employees.

So in taking it to the next step with dbed, because of all of the attached agencies that we have, you know, we've collaborated with all of these workforce development entities that are out there, from the nonprofits to the University to the Chamber and really focusing on the how we can get everybody on the same page so that the community we know how much it costs for college and some kids will spend their parents money going to college and they really don't know what they want to do.

So these some of these programs that we think we are connecting here or we know we know we are connecting here will give the kids the opportunity to work in an industry that they can get paid for and not burden their parents because college is expensive. So we know that that's something that we're focused on.

So we work with the Workforce Development Council with Keala Peters from the Chamber, with Julie Morikawa on Climb High and many others to collaborate a message from all of the Whether it's healthcare, the trade unions, there is this path that you can go and search that these are opportunities in the state for your children, your child who may be looking.

For a job after school implementation.

So being resourceful where we can, we have gone back to review prior studies, reports and plans to develop our framework such as the Hawaii State Planning act under Chapter two to six. It's undergoing a comprehensive review to align with current and emerging issues, ensuring effective direction for the state's future development.

So last session under Act 36 it called for a two year plan. We are asking for one temporary position in this budget under BLD 144 for special plans Project Coordinator to help us complete phase two of Act 36. We've also looked at the 2023 statewide comprehensive economic Development Strategy which is also an effort with the counties.

We looked at the 2010 Rural Economic Development Report where it identified challenges in our rural communities such as economic difficulties post sugar industry and explore strategies to create jobs while retaining rural character and lifestyle, retaining our sense of place and concurrently in ongoing the Hawaii Economic Recovery and Resilience Project which through data driven strategies will support our economic diversification and enhance the state's ability to withstand external shocks such as we've seen with the Maui wildfire and Covid.

In addition to the temporary position under BLD 144, we're asking for three full time permanent positions to help us with the planning and coordinating so we can finish these plans and transition them to our sister agencies for implementation. We're leveraging our attached agencies for short term and long term economic diversification.

And here's a map out of how we see several of our state agencies through their projects and statutory powers and bring in economic regional economic development across the state, whether it's ADC to do agriculture or aquaculture as well as NELHA on the Big island with energy and aquaculture and everything in between with value add energy and aerospace.

One of the key requests you're going to hear from us is for Innovation Centers through the Food and Product Innovation Network as well as through the Creative Lab Innovation Center.

And we found that being committed to supporting businesses at every stage of their development by providing tailored resources, expertise and incentives through Innovation Centers will help them not only anchor but scale up. These centers serve as hubs for fostering innovation and economic diversification, empowering our entrepreneurs and businesses to succeed in local and global markets.

So these four phases include ideas to early stage trials, growth as you scale up from trials to the market, commercialization through market validation and testing and then the export phase expanding beyond Hawaii. And through this we've been able to align our incentives for an ecosystem that help leverage our grants and our loan programs.

How many Innovation Centers do we have throughout the state? Not just run by the state.

Not just run by the state. I would have to get back to you on the private side. I'm aware of two. Well, they're co working spaces. The capacity is innovation. I would have to get back to that. Sandy, do we have do we know true innovation centers across the state with that inventory is.

Mainly co working. They lack the, they lack the specialized equipment that we're seeing that we put in through.

The last time we checked There were like 15 innovation centers throughout the state. Different innovation centers including University of Hawaii. Shouldn't DBED know what all these innovation centers, what they're doing, what's the overlap?

That's a very good point. We do know like there's advanced research lab in Manoa, but there's. They're mainly they sit under uh, but they are DoD funded and they do primary work for DoD.

It's like a ghost town from what I understand over there. But isn't there a competition for funds, startup funds for a lot of these innovation centers? So I think DBED should really have a handle on these innovation centers. And is it?

Not at all. I have no idea. We will, yeah, thank you for the comment and the question center. We will get that inventory and align it with our priorities and see where we can adapt with them and you know, make and not, not duplicate some of the stuff that's already happening. Thank you.

Dane. Yes. Can you also figure out, because you also have incubators that are also run by the state, how many incubators that are there that when you go full innovation, right. You go from beginning to end. You have existing incubators I believe under the state as well.

And then I know that you guys are working with one of them to doing full innovation.

I'll take it back to you on that one too. Thank you. So building off of a statewide strategic plan for the innovation pipeline. We do have a request in Bed 170 for 350,000 to contract with the University of Y Community Design center to do planning for the food and product innovation network on the neighbor islands.

We have seen successes in this facility that opened up just last March. Eight companies will be attending the Fancy food show this month as well as three companies going through. A cohort partnered with the University of Hawaii have now secured sales contracts with local grocers including ABC Stores and Whole Foods.

So without the proper equipment, learning how to be efficient as well as reducing the risks and costs by the state offering these, they were able to scale up and expand their cottage industry business, their value added business. So in central Oahu we have a proof of concept going on with the Agribusiness Development Corporation.

And up on the screen here is a site plan of a 40 acre plot under Agribusiness Development Corporation. But this site is becoming a statewide plan that we can scale up or scale down and we talk about a lot about resiliency.

And what we found through the planning on this is that these facilities are not only addressing challenges that were brought forth to us by our small to medium businesses.

Where is that located?

This is in Central Wahoo, specifically Whitmore. These facilities are also helping us address resiliency. So for example, the FPIN facility, which is the Entrepreneur Product Innovation center is the commercialization facility that can help the small to medium businesses scale up by renting this space from the state to build their product.

It also can tie into the high pressure processing to expand their shelf life so they can reach exports off our shores and then through cold storage to store their products. These are challenges that the private sector have brought to us and that we're addressing.

The second would be the regional kitchen to help the DOE achieve its mandate to double to do their 30% by 2030. But in the flip of the switch and addressing economic diversification, we can use these facilities in the time of a natural disaster where the regional kitchen can prepare meals, extend the life stored in its regional kitchen.

I'm sorry in the cold storage. And then we can distribute to the different schools, return it to shelters. These are two.

Is this a pilot project?

It's not a pilot, but it's becoming.

You can expand it to the neighbor island.

Yes. My next slide will. We'll have an ask to do this on the big island. This came from. This creates two new pathways for our agriculture industry. 40% of their product does not go to market. They just dispose it. So through value add, that's a new market number one.

And through DOE to help them achieve their mandate, they can take the off grades. That's new market number two.

So we are asking in our budget for 1.3 million to look at just under 42 acres, about 40 acres parcel in Kohala to revitalize this former plantation town and replicate in the same site plan that we did in central Oahu, we can scale up the scale down on the immediate needs for the value added producers and the ag industry in North Kohala.

Is this already we already acquired?

No, no. We have a budget request to acquire that 1.3 million under bed 170.

Back to the slide.

Yes.

You guys know that that area has limited water supply.

We did a site visit just last month. Yep. Another challenge with our ag industry is the small animal producers. They don't have the adequate facilities to process. The state slaughterhouse in Koleloa is at full capacity with the beef industry. We have a hog industry that's dwindling.

But we are Meeting with them and they're in dire need of a state processing facility or a processing facility. We do have in our budget under bed 170 a request for 4 million to do land acquisition as well as planning and design for a state small animal processing facility.

Not only will this help the small animal producers all the way from the Leeward coast up through Central Wahoo north all the way to Kuala Ranch as we spoke in the Kualoa Ranch, this will also feed into DOE's regional kitchen to help them with the mandate of 30% of local procurement by 2030.

Another critical investment as you mentioned Senator Noye is irrigation. So in our budget and this is a quick study we looked at from 2007 was the last study we could find on record. So we're using this as an example.

Waihiwa irrigation system in 2007 had an economic impact of 85 million generating almost 29 million in household revenue and saving, providing 980 jobs. There's also small contribution to the neighbor islands of Kauai, Maui and the Big island through this irrigation system. We do have a budget request under bed 170 we have three requests for irrigation.

We have asked. We're asking for 6.47 million for Kekaha irrigation improvements, 3 million for land acquisition in Lihue tied to those Kekaha irrigation system and 9.2 million for infrastructure improvements on Oahu including the acquisition of a few wells owned by Dole Food Company. We have a $500,000 request.

We were looking at a parcel in Kalailoa next to the Kalailoa film studios. So going back to that resolution we completed the study on there is a need for specialized equipment that they can't find or we don't have that facility currently for fashion design, jewelry and music that was reduced.

You'll notice that our original quest was 14 million. The Governor has asked us to explore current state inventory land. So we're in discussion. We've talked briefly with HCDA and we're looking at what DLNR may have for this parcel or for this innovation center.

Dean. Yes, Dean, you know what is the state post harvest facility construction?

That's the high pressure processing. So that's the remaining balance to finance the full construction of the high pressure processing facility. HPP the 1.8. Thank you. So I mentioned earlier about our incubation to maturity framework as a three phase approach. Research and development market and scale up for new products and then expanded export.

So we're leveraging our current ecosystem. So with the facility from Leeward value Added Product Development Center. Our Business Development Support division has done workforce training and workforce seminars and they've been utilizing places such as the Convention center. With the Leeward Value Added Product Development center.

We're able to do workshops on site and virtually and partnership with Leeward to get into those new businesses as well as existing businesses who want to refine their product at an early phase.

As they transition out of the Leeward facility or a neighboring like for example the Maui Innovation center, they'll come into the Agribusiness Entrepreneur Product Innovation Centers. This is the commercialization. So you go from education to commercialization through this transition. This is where you learn and you leverage the Made in Hawaii or the Hawaii Made brand.

The goal here is to get them ready for exports. Phase two is where you fail. But this is where we're able to reduce the risk and the time because we're able to offer the facilities and the specialized equipment for those businesses if successful and there is a demand for your product.

As you move out to phase three, which is private sector. Either you're going to lease brick and mortar from the private or if the state provides it, commercial warehouse space from the state you can leverage HTDC's SBIR program which is a federal matching program, the Manufacturing Assistance program, which many are familiar with.

We did a visit with you folks to Hawaii ULU Coop. They use the MAP program to get their reefer as well as some processing equipment. And then through business development Support Divisions, CBED Small Business Loan program.

And as you go, phase three, if you decide you want to go to international markets, you can tap into the foreign trade zone benefits as well as the high step program. So through this incubation to maturity, we're able to align the current incentives and really leverage the resources we get from the Legislature.

Energy stabilization so as I mentioned earlier, Act 97 with the RPS mandate last session the Legislature provided us 6 million. That funding was reduced to 3 million. So 6 million would have got us to phase two in this map of a geothermal framework to deliver a plan and cost for 50 to 100 megawatt project.

Our focus is on the Big Island. Hawaii State Energy Office did receive Department of Energy funds. They're focused on Maui and Oahu to do some exploration there. With the reduction of funds we will be able to move forward and complete phase one.

Phase one would include in community engagement and the development of a plan to bring forth a 50 to 100 megawatt project. Not only is it key to look at a firm baseload to help US achieve the mandate.

In the previous slides you heard a lot about export, which leads into manufacturing, whether it's advanced manufacturing to provide products here or for export. If we don't stabilize our energy costs, manufacturing will not pencil out. So geothermal is very important for the manufacturing and the diversification of our economy.

Can I add early 2000 there was a bill and I think it passed and maybe you can have somebody check with the Office of Energy that there was a bill to not do an undersea cable for transmission of geothermal. You remember that with Rose Baker? Yeah, so I think. Yeah, Carol and I remember.

So there is a Bill already banning in the undersea cable. So just check because if there is, then maybe we'll have to go and revisit that measure to lift the ban. Just for your information.

Okay, thank you, Sana.

We'll do okay, Dane. Yes, that's the question. If I heard you correctly, you're saying the SCA State Energy office is going to look at geothermal on Oahu and Maui and then DBA is going to look at it on the Big Island. Why are we sectioning it off like that?

Okay, so with their funds we wanted to coordinate where we where we're not duplicating. So they're going to strategically use the funds they received on those two counties and then we can use the funds we received to look at exploration on the Big island so we can maximize exploration that way.

Okay. I just always thought the Big island was the lowest hanging fruit. I mean if they were going to dig, you don't have to dig that deep on the Big island, but much deeper digs on. OK with Maui.

Okay, thank you Senator. So one of our last slides here is our housing as I mentioned, 13,000 units by 2026. So through OPSD and the TLD Council, HHFDC and HCDA we're on track by 2026 to provide 8,755 of those 13,000 units.

But moving forward, we still need infrastructure in some key areas as well as the continuation of support for our rental housing revolving Fund. That includes funding for Tier 2, which are for those people who are make just above the affordable amount but cannot move just make under the amount to buy workforce housing.

So we'll be asking for budget requests under bed 144 OPSD to help us with the continuation of the Tod Council and their planning initiatives will be asking for rental housing revolving Fund tier one, tier two as well as dwelling unit revolving Fund under bed 160 and under bed 150 HCDA, we're asking for funding for infrastructure in the Eva Lake Kapalama area as well as funding for phase two, uh, West Oahu.

And with that I'll turn it back over to the Director.

Yeah. And just to close up the housing portion of it because some of the details are still being worked out. We just, the Maui legislators don't want you to think that we're not focusing on housing on Maui, which we are in a working group.

So as we get more of those details and more of the requests for specific funding. But a lot of it is coming from Hawaii Community foundation as well as others trying to figure out next steps for infrastructure so that developers can develop. And that is something that's in the works right now.

But that is our presentation hair and Vice Chair. Thank you for the opportunity and we're available for questions. Thank you.

Why don't we go over table six? So you already outlined the first two items. I'm not sure if anybody has questions on those two. If not you can go to the third one which is adding one permanent position and.

Yes. And funds film permitting. That one.

Yeah. And call up Georgia. But this position. So last session the budget Bill transferred a position out of CID over to HTDC for aerospace. That was a warm body position. That position was responsible for the permitting process. So we're currently operating without that position and we need that capacity.

So we're asking for that position a new position to restore that. If I'm correct, Georgia, is that correct?

Yes. Good afternoon. Yes, this was the position 44000, that film industry development specialist focused on permitting. It is the lead film permitting person for the film office. Two people are required to manage statewide film permits for the film industry. We are down to one currently. We did have an 89 day hire in that position.

We no longer do and it was transferred. So the reason to reinstate this is critical in two ways. One, to provide the correct staffing that we need to be able to support the industry here. And remember, it's not just people from offshore, it's our local industry as well which is growing significantly.

The other is that there's an online system that this person is to manage which has not been launched yet for film permitting to streamline it. And unfortunately we do only have one person right now. This was posted by De Herd. Initially we had 30 applicants for the position.

When it was transferred we then had to let the applicants know we were not no longer able to fill it.

Okay. I know there were concerns the last couple sessions about the organization of the. Of the division. And so we had. We had a Bill to create a whole separate Commission.

Yes.

Have you guys thought about how you're going to reorganize before you. Before we even consider look at this?

Yes, we have. We've had internal discussions on that, and I think it's something that we want to look at for this session. There is no active Bill currently from the Administration for it.

There are things we can do within, I think, our jurisdiction under the Director to be able to really create a much more vibrant and reactive program. Yeah, some program.

There were concerns that the permitting was limited to just one person. Yes, versus if you have at least a Commission, three people. People are looking at it and it. Hopefully you can take the politics out of. Out of it.

I think better integration with our State Departments because we are only the facilitator. So it is important for us to also look to where the staffing needs might be in DLNR and other DOT and other segments. But I think a structure for that, which we've talked about is very important to move forward with. So I would agree.

Okay, well, we're going to. Hopefully there's a vehicle then. Go ahead.

So I've heard that there have been inconsistent application of tax credits as well, that we've lost productions, big productions that we need in. In order to not only generate workforce development, but generate jobs.

So can you address that and how you've restructured so that you can address that and more coordination with dotex, knowing what the criteria are so it can be speedier done. I heard audits take a long time.

Yes, the first part of your question, I didn't hear quite all of this.

So if we're talking about reorganization in order to keep productions here and not lose them, what are you doing? What have you done?

Yes, and you also mentioned the tax credit.

Well, do the first the reorganization and we'll talk about the tax credit.

So the film tax credit is managed by a team of two people that are doing an excellent job. I think the Director and deputy are aware of the high level of performance there. We have the online system now which has expedited those programs. However, there are delays in some of the people being paid out.

I think that's what you're referring to, and that is a dotax function. They would have to respond to that. I know that they have had some staffing challenges in their audit division, and so that is something that we are addressing with them. But it's their jurisdiction in terms.

So have you coordinated in terms of what those Standards are. So that there isn't. They're getting mixed messages. One from DO Tax, one from dbed.

H. Well, I'm not aware of mixed messages other than. But I definitely will look into it. We coordinate very closely with the Department of Taxation through both the Director, Deputy Director and their rules specialist.

So I think the critical question is what are the other things, including what you mentioned, that are impeding the ability to attract and keep productions here, most importantly our film industry in General, but also television and streaming series. Those things are very important because they keep us working all through the year.

So if there are issues, I'd love to talk to you additionally about what you have heard from the community and what needs to be addressed. But for us, the turnaround time in our shop is stellar and we turn around quickly and we respond quickly. And that's headed by David Kaylee Holikai, who's here with us today.

Yeah, but we still need a plan because we talked about it the last several sessions, above the line, below the line, vendors, all of those type of things. And I don't think we've reached the type of progress that we need to make.

I would, I would agree with you, Chair. From the last year's info brief, there was a very heavy focus on the film office. So from the time I got to DBAD till today, we are discussing all of the different options, trying to coordinate and manage some of the things that didn't happen before.

When is that plan going to be done so that we can have a discussion on it? Because talking to industry people and industry leaders, they've compared Hawaii to other destinations. And the example they gave me about New Zealand, where New Zealand's tax credit requires the production to hire a local coal producer.

And so once you have a local co producer, they know the lay of the land, they know local companies, local vendors. The guy coming in from out of state doesn't know that.

So they know when they want to get a job done, they hire their colleagues and people they've worked with in the past and bringing them out of state.

What, what they found was after several years, the co producer that's local builds capacity and then you no longer need the guy from the mainland coming in because we built capacity as a requirement of all these through all these co producers. But I don't see that kind of.

Yeah, it's not happening as fast as we. We'd like. Chair. And I can tell you, like, Rescue High Surf is a great example of local people, local production. And one of the coordinators for the Production sitting in this office. So it's local.

No, but it has to be codified. Yeah, it has to be because it can't be whoever the person is doing permitting. Who. We, we don't. None of us know it has it. It has to be something that's more cultural and so that we can support that.

We, we agree 100%. Some of, some of the concerns were constitutional stuff, but we agree 100% that it should be looked at. Production.

That's good. You can agree. I'm glad you agree. We just got to get it done because we've been talking about this for quite some time. I mean, how many site visits are we going to do to Diamond Head and all these other places? And we still, we're not moving the needle fast enough.

We built that facility out at West, West Oahu. I'm not sure how if it's even used enough.

I mean, we just, we just came from a site visit from the educational facility and Dane and myself and some of our staff also, it's, it is unfortunate without positions in that facility, they do have a challenge in being able to hold classes there, but also the use of it for industry.

Well, and nobody follows up on the tax credit, Right. In the sense where they get the tax credit if they're supposed to do certain things. You know, at the, at one of the, the chair's hearings, the person who was there, I'm not going to say their name, said that they don't have time to check up on it.

Yeah, I'd like to know what that's exactly referring to because you can wait.

It's, you can watch your hearing from last year when you had a, I mean, but it's all, it was all recorded.

All right, Well, I can tell you that there is follow up from the tax office, from, excuse me, from our office and our tax credit unit. But as a Director said Rescue High Surf is an example of 90% local hires. And overall we have a track record of obviously less offshore hires than local hires.

But to your point, you want to see a plan. Yeah.

And that's not the norm. So you guys are highlighting that anecdotally. Yes, and that's great. But then how is it going to be 100%?

Right. So the 100% would be to require something within the HRS 23517 the tax credit law, to require the producer to propose that. Yes, I will work with our subject matter chair on that.

Do you have a list of a producer who, who, who have asked for tax credit and a list of who was given tax credit. So we can see what are we losing. It's part of our regular annual report.

zero, I'm sorry. Go ahead.

So. So we can know what you're actually doing. And what are you bringing in or losing?

Okay, well, I am happy to give you that information. It's something that's circulated to the Legislature through the leadership, and we have provided that for every year that the tax credit, it gives you the exact name of the production house.

Followed up of why we're losing. Not that. Not accepting it.

Yeah. Senator, we will get. We will get that. Thank you. Yeah. But we may not want some productions. I mean, if they're going to take advantage of Hawaii and Hawaii is not going to get something out of it, then we would. Why would we want it? We can't be that desperate.

Yeah, we're not. We have to follow the Hawaii administrative rules and the law. And I can tell you that there aren't people that we. We don't get the choice to turn them away unless they don't qualify, unless they don't have those metrics.

And now I think the main thing is what we're hearing from the Legislature is being able to have a hiring quota so that, for example, you could add something like add 5% to the current hire of the 22% and the 27% that are now offered from Oahu to the neighbor islands, and add that 5% lift based on 85% or more hires.

And that's one way to codify it.

So. So Georgia. Yeah, I believe it's one of the bills that we have now in our possession. Correct. And I just wanted to say that far from what it was before, a lot of the questions that we've asked, we did have challenges on a permit part, which we're still getting challenges because of constitutional issues.

But if you could do a write up on what we've done, I mean, what happened before to where you are today and send it to us, that would be super helpful.

Thank you. Well, we got to see where we're headed, though. I mean, so what other changes do we have to make so we can become way more competitive and build local capacity?

Okay, ready?

Sure. If you can add in the ICANN part and everything else that got added to the training, starting from where we just fell short of everything from like we had C Rider production and then now we expanded off by bringing. Can you like, just put it all in writing for us in layman's terms? As simple as possible.

But G Writer's production wasn't a result of dbit.

That was because it's an example of that.

That should have been a result of D bit but it was not. What is that something like sea writers production. Well you know that's where going back to what the deputy said, having this bigger plan to see how everyone.

Right.

And I think coordinate is coordinated and achieves a bigger goal for us.

Exactly. I think that's why the plan that's been presented today is important and well. We don't have plans.

If you didn't present, you presented one budget item. What we don't have a plan for you to present here.

I'm talking about the. The value add comparison to developing local talent. Because that addresses the questions that you're.

Asking Senator for value.

Couple of things. I guess you're not understanding what Senator De La Cruz is saying. We're supposed to get the perm reading on neighbor islands, automobile islands, everybody together to streamline this perm reading to get it forward. He's talking about something that you guys did not do. So the lifeguard movie.

They decided that they was going to hire local produce. Local and then local. Because I'm not sure if I was involved, demanded it didn't come from the film industry, didn't come from you guys. While we are talking here is we want you guys to take the lead. You guys are taking credit for something you guys didn't do.

They did it on their own. And don't tell me how I know. As you guys know I know.

Right. Recognize that second thing.

What did we do? You guys do way ahead of time that was gonna lose NCIS and Cbs. What did we do to try to keep them here? Nothing. Then with all the equipment and everything like that that was taken saying that we never have enough equipment and all that we did nothing to save it.

So I was just like no, what the Director what you guys was doing to save CBS here Because when we put this up, Jimmy, before you guys, before you say anything, before you guys even was going to lose them, you guys was notified we're in advance that we need to see them. Nothing was put in.

The leaders from CBS told us that nothing was really made that we wanted to see Cbs. Nothing was told to intensify them to even stay here. So we lost a lot of production under this human. I understand you guys seen, you got number staff and all of that.

But what are we going to do to not only attract people here to come here and film like what the Senator said so we get local, local talent that we can have Local producers, local viewers. We're not doing that. We're not doing that. Even though we talking about other productions.

I'm telling you, those guys did it on themselves because I was very much on when they was doing the production. I was helping them with certain things on certain meanings, but they never had ever come from an erection from here again. He was talking about permittings.

How you going to permit anybody if we do not have any industries thinking about coming here? Second, the production up in Cora, we still have foreigners up there running every single union equipment and everything. And still yet not being addressed. None of you guys went up there and addressed the fact that fantasy planting what of Island?

Never even one. And the teamster high contractor to this company to hire guys to run the equipment. Again, this is the same thing that the seller is saying. Why is it not being stopped? You guys is notified before we got you guys back in here.

Has the issues with Boston and all that you guys was taking care of. That is not taken care of. They're only what, fourth season, fifth season, and not one local round or one night. So can you guys, can you, can you. I was waiting too long, so sorry. Go ahead.

Okay. What they have to say.

Okay, so there's a lot of questions in that. I will try to address them as I remember them. So as far as what we did with ncis, did we know that they were leaving? We didn't know until the entire production knew, which at that point what they wanted was increase in the, in the tax credit.

We couldn't do that. I mean, it's. It comes from what the Legislature gives us. And I will tell you that, you know, in this Committee hearing and in Senator Decoy's Committee, you guys have been very, very helpful as far as, you know, increasing the credit.

But it's a Legislature, so we weren't able to take more money to give more incentives to a production that was leaving. So that was. That's to answer the first question, the second question about the Big island production. I've met with Kevin numerous times and I know in the beginning he talked to me about that specific production.

I too, right now, I'm not aware that it's still happening. So it was not brought to my attention. I apologize for not knowing, Senator, but I am not aware that they are still filming there and that they're not using union work.

Now when it comes to the permits and the union's notification, we sat down in numerous meetings with Georgia and David, who's now doing the tax credit, and we made sure that whenever a production comes in that the notification, if they are going to apply for the tax credit, the notification is sent to all of the units, all of the unions that this is happening.

And then it's incumbent upon whichever unit it is to contact the production with the number, with the information, contact information on there that we are here and we are aware that you are coming and we are, whatever union it is, Teamsters, Hayatsi, whichever the different unions are. So we certainly put that as part of the process.

And I'm assuming we're still doing that.

Right, a couple of different ways.

And it wasn't tax credit discussions, and that's what the discussion was. I think part of it was in your office, Senator, is that we didn't have a consistent structure of notification. And we have that now. If you're going to take the craft tax credit, then you better be informing the units.

And we made that very, very, very clear. And so that answers the second question. As far as, you know, my situation, me personally, you, this Committee made it very clear.

Clear that you had a lot of concerns in the film office. And you can ask Georgia, you can ask anyone in the film office. Spent a lot of my time working with them, as well as Deputy Director Wicker going through. Why would we do this when we could have done that?

And so I agree, Senator Chair, with what you said as far as Hawaii being in the forefront are people in the industry. And it's. It's taking a while for us to get to some of these places. But yes, we need to qualify. We need to work out what the statutory language. Yeah. The constitutional issues up to. And I. And we agree. We're not disagreeing. We 100 agree.

Senator Kim.

So I understand you're saying about the CBS, but the thing is, what was the conversation? Because the conversation. Yeah. They wanted to have more tax credits. So if you told CPS he was going to wait till the legislation come back in and ask them if we could again modify it so we could have kept him here.

We didn't do that. I mean, this. That's just a question.

Yeah. And thank you, Senator, for the question. I think that it's important to know that it was a surprise not only to the cast, but also to us. Right. We fought. I called the head of Liz Miller, who is actually head of the CBS production planning Department. How can we save it? What can we do?

What is possible? And she said, unless this tax credit changes and we weren't in session. So that was one issue. As Jimmy said, it's really up to the Legislature for us to float that. We do have some modifications that we've discussed with subject matter Chair. So we do hope that that will come through for this session.

The other is that it's really important to look at things like the good jobs challenge, which is now a, uh, Good jobs Hawaii program. The number of production assist, which I know we. We have certain opinions about. Right. But production accounting, it's a need area.

We put 12 people through various programs that are now working, but there's no business. And I want to share with the Committee what the complication of this is that the US has lost an enormous amount of production due to the contraction of the business itself.

The issues that have arisen because of the cumulative effect of the pandemic on top of the Writers Guild strikes, and the minute that our entertainment labor unions, IATSI, and our labor union for teamsters were having their difficulties negotiating their contracts, then most of the production, it was an exodus from the US to foreign countries. Now we have to get that back.

So we have to try doubly hard to position ourselves, which is why I hope we can get something working together with the Legislature this session to help codify what needs to be happening and also to fulfill some of the needs that I think were discussed, especially with Native Hawaiian content and ways to be able to help develop that in a more equitable way with both investment and also some other elements of the tax credit itself.

I will not claim credit for what the rescue high surf. That was just an example. You're 100% right. They absolutely did the best they can. Now we are fighting to keep them for season two and the same thing with Chief of War.

So those are the things that we're currently working on, but with a very, very limited capacity than to.

Kim, let me go back. And you talked about the Academy of Creative Arts Media at West Oahu that you folks said you went and visited. So my understanding that when we've gone, that's been closed. It's a ghost town there. And I'm not sure how many jobs have actually been created created since we've put in that. That facility. Are we aware?

So you're correct, Senator. They're. They're not using. Utilizing that facility to its capacity at all. And that's because they don't have, when we toured it, they don't have positions to bring in or run the rooms or the studio for productions.

How many years old is this facility?

That I do not know, Senator.

Approximately. Okay, so since we've been here and since we visited and since we've seen it, you know, like a ghost town and nobody there, they've not come in and told us that.

And I understand that that Manoa, the creative media arts there cinema arts program, they split apart because they've had difficulty dealing with, with the Academy that the facility is not being made open for them on times when they need to be there. And so it's like, what are we doing to coordinate?

We spend all this money and we think that arts and creative media and all of that is so important and yet we have this facility sitting there. What's happening to it? We gave a lot of money to the program. My understanding is Chris Lee awards, 50,000 a year to International Film Festival. Where's all the money going?

Have we done any kind of audit, Senator?

No, we haven't. But I would say just like the studio at the University at Manoa, they have a film and theater class there. It's totally separate from our purview.

So yes, I know it's separate from your purview. But as the. As the state debt and we're working on film like you went and visited. Are you folks being born proactive and how we coordinate so that we can get jobs out of that? I mean, otherwise everybody's got silos, and then what's happening?

Thank you, Senator Kim, for the question. A couple of things. Yes. The site visit reaffirmed that there are still the challenges of hiring people there, to which I like to be a problem solver. We talked to the vice chancellor during our tour and said, how can we bring in experts from the industry and utilize the facility?

So you didn't talk to the chancellor? No, the vice chancellor was with us that day.

But I have the chancellor even there?

No, but I have reached out to the chancellor, and we did ask, and we were still. We still are pursuing the idea of using the facility for the training for good jobs, because it's under. Uh. Anyway. So why not utilize the facility if there aren't any classes happening?

What did they say?

The. The chancellor was open to it.

So they're not willing to let Manoa students use it, but they're more open to letting you use it.

I have a backstory. The Manoa students from the School of Cinematic Arts, which has undergone a name change based on faculty input and that.

Yes, we know why.

Yes, so. So we did come. Debed did step in and assist those students because they needed a space to film and they could not pay the $10,000amount that they were quoted initially. I believe that came down quoted by West Oahu.

So we're charging. Westerville is charging Manoa to use the facilities that the state paid for.

And I think the value of both programs can't be understated. I mean, it overstated. Excuse me. It's really important that both of them coexist. But this is an issue that I think we need to work with DBED and Creative Industries take the lead to work with the University to fix this challenge. I don't. And I'm sorry.

That's the number that I heard from the students from, uh, School of Cinematic Arts from manoa. So we did help them. They were very willing to pay a nominal fee to use the Entrepreneur Sandbox creative space that we made just for this purpose of local filmmakers having a studio to work in.

But. But think about this. And I'm sorry, Mr. Chair. You know, we put so much value. We put so much money in tax credits we want to attract. We have Sea Writer for Sea Rider program that had been such a good job. We try to duplicate it.

We put it at West Oahu, we've got something at Manoa. And yet they're all disjointed, and nobody's really looking at it. So how important is film to us?

If they're disjointed, if the very mechanism of the foundation that's going to put the students, that's going to put them in the jobs, how disjointed is it? How are we having vice chancellors and people running around and money's being spent and there's no audit, no nothing. And no wonder we're such. We're a mess.

Yeah.

I think there's a lot of findings from good jobs that and also the HCR184 that underscore new jobs.

Yes, we have the facilities already there, but no, we got to create a whole new program to get what we, what we decided to do.

We leverage what's there and we make it work. And we'll take that on and we'll make sure that you and the Committee get.

We're going to hear from on that as well. But as the state entity overseeing economic development and making sure that the jobs get created, you know, that's. Without that, you. Where. Where's the pipeline.

Yeah.

And specifically the film industry falls with us.

So isn't your. What was the person you said trying to align all of those things?

Our workforce development coordinate.

Yeah. Are they working? Because it sounds like that's.

The person that is the person that has been leading our good jobs Hawaii Creative jobs development. He has a wealth of information and has also served the Department well in being.

But kind of going back. So once that's established it is then when like what Senator Kim is saying, then he's not going to. It's different if he calls the Chancellor versus the DBEDT Director calls the Chancellor. And so to kind of organize everybody, you got to leverage the. The influence of your. Your position.

Right. And the data that we've collected.

Senator Fukunaga, you had something just.

If I. If I may just to. To add on to. To response for Center Kim. So we did the site visit. So we're not.

Where did the site visit when?

Two Mondays ago.

Okay. And that's the only time you've done a site visit of a physical site visit? Yeah. Is that the first time you've ever done a site visit of the physical.

In your current position? In my current position, yes. Because I, I've gone there before.

But in the history of deb, have anybody looked at the facilities? My fifth or sixth Time. Oh and nothing's changed since all of that time you've gone over. Okay.

So we went there to look because based off of HCR 184 so we're not creating similar facilities and bringing the same equipment. We went to uh, West Oahu.

We can work with uh, West Oahu to feed in students from Searider Campbell High School as an opportunity because there is a rate card for the open access for the non student. But the facilities are sitting on underutilized because they don't have the right, they don't have the faculty position to focus on the film production there.

They don't have the service managers or the technical support.

We built the FAC and we gave them.

I don't. That's outside. Yeah.

So we're boxes of, of equipment still in the box that they ordered and is I don't know how many years old now that's sitting in boxes.

I, I can't answer for uh, that might be.

I know but saying they went on the site visit, you know so the.

We would we to get to that level to have them utilize the facilities. They needed five additional positions. They asked for 14.

They told us this session in their budget, they're asking for five specifically for ACM to get the proper people in there so they can start to utilize that facility and then we can work that pipeline and we're not going to duplicate with our innovation Center. On the film side.

Some of that though is. I know West Oahu is a four year.

They're a four year.

But good Jobs, doesn't that. Yeah, community college. So how is that. Is that. Because oftentimes the four-year campuses don't want to participate with or have programs from the community college at their facility.

Yeah, I don't see that pushback at all. I mean I think they have been receptive.

So they're willing to do CTE certificates and AA degrees at West Oahu.

They already do early college there. Yes.

Yeah. But early college is just us paying for you to go college while you're in high school. I'm talking about actually getting the CTE certificate or AA because like we talked about earlier, a lot of the below the line jobs, they don't necessarily need the four-year degree.

Correct. That's a big, big part of the data from good jobs and the work that we have been doing.

So this arrangement with West Oahu, I'm just hoping that you can maintain the CTE and the AA and that it's not going to have to be a bachelor's that's required.

We were closely with Leeward in our whole Leeward Community College, also with their media program there.

So let us.

Yeah, you regroup and we will share with you folks. Yeah, I think they're going to have a joint briefing.

Okay. I think in DBEDT's defense, you know, the Legislature did adopt legislation in 2022 which changed the way in which some of the production costs were calculated. In the past, some of the costs that were taxed at the wholesale rate. You know, Hawaii is one of the few states that has the general excise tax was changed to full retail 4%.

And so my understanding, I think some of the people that Vice Chair Moriwaki has talked with have also shared with us that many productions are making a concerted effort to wait to see what the Department of Taxation and the Legislature is going to do to address that concern. So hopefully, you know, we can all work together to get that, you know, resolved.

Yeah. And then secondly, with respect to the facilities at acm, I think one of the things that has sort of fallen through the cracks and they did request positions early on, you know, when the building was scheduled to be completed, but that request was apparently not forwarded from the campus level.

And so this year, it's encouraging that you have five positions that are part of the, uh, budget. So I think, you know, there's a lot of concerns being raised, and I think that's productive.

But I think if we, you know, look to see how we can make good use of facilities that are already built and we can make sure that everyone can use them, then that's what we really want to accomplish. Thank you.

Well, last year we had a Bill to try to tweak the tax credit to address some issues, but I think you said it failed. Yeah, in the house.

So the tax credit, we wanted to require more local scores so we can help local musicians so that they should be using Hawaii songs and Hawaii musicians in our movies, local fashion. I mean, all those type of things should be incorporated into the tax credit.

And I just want to say add on to that is that having gone over to West O and see such a ghost town and that over 63% of the students are doing virtual learning, the concern becomes the facilities that's out there.

And so there's been a hesitancy to give positions to give more to West Oahu when the enrollment is dropping. We don't even know how many students are in creative Media arts over there and what the need is for these position. So those are concerns.

Okay. Why don't we move to the 120,000.

This is for FTZ for forklift replacement. This is in their non General Fund request to replace agent equipment.

Any questions? Okay. No questions.

You knocked out Blessings Convention Center.

The 1.9.

I don't have that.

I thought was this additional funds that. Because I thought last year we. We funded what we thought was the full amount for the roof.

So this is for Aloha Daniel Nahoopii, interim CEO. So this is additional funding to take care of other repairs that are occurring at the same time. Since the convention center will be closed in school year calendar year 26, we can deal with a lot of the other repairs and maintenance that can happen.

Major fixes such as the escalator painting, fixing the wall that you all saw, that tour with the mold growing on the side of the kitchen walls, et cetera. We're actually going to look at requesting even more in CIP funding.

What's the status of the roof currently?

We just issued the RFP for the construction contract. So the architects have created the plans and the scope of services and it just went out how many thousand pages of rfp?

It's on track. It's on track, Senator, for renovation shutdown in 2026.

What's the target amount for that project?

64 and 60. Well, what we were budgeted to spend is 64 million. Our accountant there says he thinks it might be less, but we're not. I'm not going to hold my breath.

Well, if we did it 10 years ago and when is the. How long is the center going to be down for one about preferment in one year.

One year.

So that income there'd be no, no income known.

But we can operate. We can operate on the weekends down and in the ex hall, so Exhibition hall. So local events will still continue to occur as we do some of that. It's just the major events up in the meeting spaces and in the main ballroom.

As you know, the decision had to be made because all of the work that's going to be upstairs, the hammering and all of that could create problems for the conventions that are there. So you know, just to not have to deal with that.

That's why we went with the shutdown and expedite as soon as possible so we don't have to work around people that are having their conventions there.

Yeah. Had we done it when we projected the cost for the Hawaiian Music Dance Museum and the roof, it was going to be 64 million for all of it. And they said it was too much. And here we are today 64 million only for the roof.

Senator Elefante, as a follow up to. That for the 1.97 million, can you provide the committees with a breakdown of what your projects will be for maintenance and repair?

Yes, we can send that into the Committee. Okay. It's all budgeted out.

Thank you.

Okay, so this is a follow up. So with the 1.9 million while we're under renovation, is there any other. Require. Anything else that got to be fixed up while we under renovation on that portion of it? Because I would hate to stop it again to do another renovation that we can take care of now. And what does that cost?

Actually we estimate now working with the convention center management that is maybe up to 40. We're going to request $41 million overall projects. Accelerate them all in fiscal year, I mean calendar year 26 and get them all completed. All the painting in that way will not impact future events going forward.

Okay, thank you, Senator Wakai. For the one year when the convention center is going to be closed, what's going to happen to the people who, you know, work there for operations?

So that's part of the work that we're doing. We're trying to create enough work as well to keep them employed in certain functions that they do have skills in.

So like you have maintenance crews that. Are there, they're not going to have. Anything to do for a year, right?

Well, they're going to be part, they're going to be integrated into some of these construction projects and maintenance projects that we're moving forward into calendar year 26. In our original plans, we had them spread out over the course of our, you know, we have our six year plan of CIP maintenance programs.

But we want to pull it all up front into calendar year 26, keep them employed as well as get all of the work out of the way so that we can start with the fresh new center going forward.

Thanks. Okay, let's move on to HTA reimbursement. BNF B D113.

So the 11 million on there is a bookkeeping correction. In the beginning of the fiscal year of 25, BNF had to Fund the 11 million for the convention center because in the creating of the books in our new General funded accounting system, we had to actually borrow the money.

So we're returning the money from the special Fund to put it back into what was borrowed from BNF.

Yeah, it's kind of awkward, but yeah. Okay. 2.7.

Okay. So you'll see all of those adjustments and corrections, they're mainly for the fact that I'm sorry. 114. 114 is increase in marketing. 114 is the branding and marketing section. So we have our existing contracts in fiscal year 25, when we were.

When we were funded, the amount of 63 million we didn't have in consideration the 10% restriction. So many of our contracts were created before that 10% administrative restriction. So first we're adjusting so we can pay for those existing contracts, recursing that funding and then increasing in our Japan market, creating a China GSA. Right now.

China will not be fund. We don't have a fund in fiscal year 25 for China. We're carrying over funds that we had from the special Fund, including an air route development specialist and then funding additional funds for increased costs in the island visitor bureaus.

Questions? Okay. 3.9.

BD 116.

Okay. So the next couple of them are actually again, an accounting change or adjustment. We're requesting that our 115, 117, and bed 118 be combined with bed 116 into one program. So that way HTA will just have three programs to manage. And this is just an accounting of moving those funds in.

Can Isaac do his job? That's not moving. That's not moving. Part of the reason why we have the different program IDs was in order for HTA to get the base budget, we wanted to make sure that when you had the lump sum, you kept moving monies around. And so we have no idea how monies were being spent.

But if it's in the program ID, you can't move it around. And it's way more transparent for us.

So yeah, we agreed to that. And that's why we have the three programs. The major three programs. The administrative. Administrative budget, the marketing and branding separated and then the destination stewardship. And that aligns with our new reorganization plan that was approved by the board and then also the Department. You know what's.

What's to prevent monies from different programs being moved. Moved around.

So we will have the accounting of within that new created one. One. I mean the combined one month.

In the past you had calls from legislators or the Director who said, Oh, I want. I want you guys to spend money on a tennis tournament. And all of a sudden that wasn't in the original budget. And because you had the lump sum, you guys could move monies around.

Took it from someplace else that you thought you were going to spend it on. Because the lump sum allows you that kind of flexibility.

Yeah. So Chair, to directly answer your question about that, when you reference Mr. Choi. He's very consistent about if it didn't belong in that program, then we shouldn't be funding it from that program ID. So, you know, if there are other concerns that you, you had from the past, you can certainly bring it up. But he's.

I mean, you can ask the administrator.

But this was a condition to make sure that we put it in the base.

Yeah, so I'm just saying he's not moving around stuff as far as I'm.

No, yeah, I'm not saying that. All I'm saying is when you start to collapse them now you have less program IDs, so there's. That means, again, more flexibility, which means less transparency.

We do have checks in place. First, our budget, our detailed budget must be approved by our board every year. Also, the detailed budget ask is. Must be approved by the board and then submitted. We have submitted with the Form A's, actually the very detailed budget.

And in our policies and processes, we will continue to align with the details. So each of those smaller programs broken out within the larger program ID, or whenever we submit it to the Legislature and chair.

Also, our ASO office goes through every single budget. So, you know, they make sure that there is transparency, there is alignment, and that we're not going off track from what the intent of the Legislature was or is.

Okay, questions. Okay, why don't we go to the next one? Because it's. There's. It's related to, I guess, some of the issues you guys are dealing with. So this is bed 120.

HSCL. HSCL, yeah.

This is you, Roy. You're asking for a pay differential. Is that the payroll?

Charter Energy office? Yeah.

No, he doesn't have to explain because what I. What I calculate. So the current salary is what. What's the current salary for? For that position?

The Chief Energy Officer position, sir, it. Is. Budgeted for just under 100. So the position that was taken to use for the Chief Energy Officer position.

Okay, so when you add this amount, what would be the new salary?

It's around 180, which is based on the salary in a letter from the Governor to the Chief Energy Officer.

That includes fringe.

No, the 180,000 does not include fringe.

I don't believe so.

Yeah. No, because fringe is 64% according to the BNF memo. So that means this would be 180,000 plus 64%. That comes out to $295,200. But then in yesterday's article, there was a concern about the $300. 300,000 salary. For HTA Executive Director. So why. It's not consistent. You're now, you're supporting something that's going to be almost $300,000.

But then with HTA, you said, no, we're not going to do $300,000.

Okay. So I would address the HTA question during the budget review. And, you know, a lot of it comes from the discussions here. When HTA was founded, it was, you know, pretty much an autonomous organization with a bigger budget and a bigger amount of more employees there, which is not the current situation right now.

So the Governor felt that currently the responsibilities of that position did not raise to the level.

Oh, yeah. So even if you went with the 180,000, if you. Even if you give them the same salary as the Energy office. Okay, how many, how many people is there in Green infrastructure? How much does staff count?

I don't know. I. I'll check.

How many people you got in your. Nine. Okay. She has nine people. And the salary for the ED is 191,000. That doesn't include fringe either. So when you include the fringe, you figure $191,293 plus 64%. 191,293 plus. Or should I keep hearing plus?

That's 313 and so I don't understand the rationale that I read in the article versus the inconsistency with the other directors from the other attached agencies. She only has nine. So, Office of Energy, how many people you guys got?

21.

And how many people at HTA?

30.

Okay, so that means the HTA Director is going to make less than the Energy office and the Green Infrastructure person.

But the board said they were going to limit the HTA Director to 300,000. At the last meeting. I remember asking this question specifically.

But that 300,000 doesn't include fringe. That's a $300,000 contract.

Correct? Yeah, previously.

That's how it was previously, because we didn't want to pay fringe. We had people who had retired, and that's what we're going to save money.

Now, I would say that that 64% number that you're talking about is what UTF uses for federal positions and how much. We know that's BNF's memo. Yeah, I know, but that number comes from a calculation. Okay, what.

What percentage you want for fringe, then?

Well, it's not. Wasn't a percentage. So what I did was I multiplied the amount versus what the actual vacation days are, what the actual holidays are, the sick days, and it's nowhere near 64% for.

For a position that if you look at the history of the HTA President and Executive and CEO, we haven't had one that has been in that job for more than three years in years. So accumulating.

So I'm just saying if you go back, let's say if you, you agree to the same salary as green infrastructure and include benefits. So that's okay. You can go down to 191 and include infrastructure and include benefits.

I guess. Mr. Chair.

So you're okay with that?

Which part of it?

Because your, your, your discussion in the paper said you don't want anything above the lg. But you already have several people in your Department that make more than the lg.

So I'm the Department head. That directive came from my bosses. So I'm the one who send it to Kim.

No, I just wanted to. To get a sense of when we increase somebody's salary, we don't look at if the money's in the budget.

No, it's.

Where's the money going to come from?

By law, it's a contract. You're talking about the energy office.

The energy office.

I believe that the current salary is paid out.

Okay, but I was reading where you folks wanted us to add more money because you didn't have enough for the payroll and then you had a shortage in the position. So you're asking us to Fund all of that. So are you asking us if you're getting out on a savings?

It was up until now has been funded out of salary savings. This other, the other requests we have are to little bumps for a few long term savings and we also want to reduce.

Yeah, but if your department's going to ask us if you're going to make the decisions to give a raise that you got to sustain that without coming in and asking us.

Just in case this helps. The CEO's salary is not a raise. It's. It's based on a. The letter from the Governor, the CEO.

Right, but. Okay, but it's an increase. Okay, so if the governor's given an increase, did you guys ask them for the monies for the increase? The governor's office to all the monies for the increase because you didn't have it in your payroll. And if the ledge says no, then what?

No, we have said no. Yeah, so then the last several years we haven't approved it.

So now what? Did you guys go back to the Governor and say we don't have the funding and maybe we have to cut. Cut the Position, salary down.

We may, we may be in such a position. Yes, you may.

If we say no, you are right. You are. And you know, you would have been.

Right. And since the CEO rolled up before, so that's the cabinet level position with advice and consent from the Senate was created. There hasn't been a salary or a position officially attached to that when in that original statute the CEO position was created out of an existing generally funded position with a salary below, well below what other directors are paid.

And so what I've been told is that up until now the shortfall in order to, to pay the CEO salary has been out of salaries.

Right, but how are you gonna, are you gonna sustain that when we've said no? Have you guys decided, Are you gonna say that because you're telling us you don't have enough money to run the Department because obviously you're using the money to pay the salaries or doing something. Right. Isn't that part of your request?

We have, we have salary adjustments, other salary adjustment requests. Yes, in our request. I mean, I believe if the CEO position does not receive a raise, then I think we would discuss with the Governor that would be, you know.

Well, you would do what you're doing now. You would be taking from current expenses potentially.

I'm not sure we have enough to go around.

Yeah, because they're asking us for monies. Because they're saying they don't have enough.

Yeah, well, we still got half the year left. On top of that, the budget withheld funds. So you must still have funds.

Right? There is some budget withheld as well. I think it's 5% and then there's another 5% contingency. So we could, we, I think we've sent in a letter to tap that. We haven't heard back yet, but it's a bit tight.

Yeah, but I just want to make it clear. The HTA CEO is 300,000. No benefits. Yeah, currently. So when you compare no benefits with some of your other division heads or agencies that make those high salaries with benefits, they clearly exceed the 300,000 of the, of the HTA contract for the CEO.

So I, so if you're, if you're. Going to say nothing can go higher than the lg, then why did you guys approve some of these other ones?

Well, if you spread the article too, there are other positions from the governor's response that are differently aligned than the HTA President and CEO position. Like some of the positions at the medical school and other positions.

Yeah, I mean, I have a whole list of everybody that makes more than a Governor here. But I'm talking about your own Department, which you approve.

And again, it's a process. And if you guys see fit that my choice was wrong, then.

No, I'm not saying it's wrong. I'm just saying it's not consistent. So if that's your policy and you're going to simplify it, okay, be consistent. But that's not what we see here in the. In how other division heads are being paid.

And yes, and we can talk about.

Because then it looks political because then now you're picking and choosing versus you're being consistent across the board.

I don't believe in the two positions that we're talking about. It's political. The responsibility, as far as the salary. Component and I'm talking about the salary. I just think the responsibilities are different. Different.

So they should be different. They're different divisions. But one is only nine people. Tourism is our number one industry.

Yeah, let me clarify too. I think the acting President CEO said 30. I think there's 30 positions budgeted, but there's hasn't been 30 positions in HD.

Okay, still nine positions. I don't think they're as Low as nine. They don't manage the convention center either. And that, you know, without hta, we need to make sure that we get increased tat. If not, you can't find any of this stuff, it's going to be much harder. It's not just TAT visitors paid get.

So we need HTA to be at the point where they're bringing in and attracting visitors that are going to help generate those revenues. I still don't necessarily have a plan though, that I've seen, which we've talked about for years, that HTA is going to target the higher spending visitor.

And so we get all these budget requests, but there's no specific plan on. Okay, who are we attracting as the higher high spending visitor? Do you know who that is?

The higher spending? Yeah.

Who is that?

Business?

No. So where, where, so what? Where are target markets? What salaries? Where are we with that?

I can bring Daniel up here and he can explain what they're doing with their marketing plans.

Yeah, but you're on the board too.

Sure. He's the Executive.

Bring somebody else. I just, I just like said it before. I start asking 800 questions because I'm waiting too long. Just like ask, did we vote on a 300,000 in the budget? Was it in the budget last Whatever when we voted on it?

We, the Legislature.

Legislature. We. We. Not me. You.

We I am not sure.

So when the thing went through the budget or the thing was in the budget, why wasn't the Governor at that time vetoing the budget? If you to other positions, other things.

Because he, when he, when it was presented it to him and this budget go around is when he did it.

Okay, but what I'm saying it was already voted on as, as a whole. He and, and he, he didn't veto it. He let it go through.

It wasn't now it was voted by the board. Right. And at that point it wasn't him to interject. And he interjected when it was all.

The board would vote for.

I, I can check. I, I know I did it.

Did it pass?

It passed. It was seven to five.

And the reason why I ask is there's a lot of efforts in trying to get in this funding to get somebody like Senator Dela Cruz said, tourist is our number one industry. No matter what anybody say on this island. Without tourism. We did. And then here we are, nickel and diminum. This person will benefit.

So not going to have benefits kind of, kind of that way. And he's saying political in a sense not saying that you try to be political with the funding but you try to think about it this way. One person get benefits that is more than the lieutenant Governor.

One person no more benefits makes more than the lieutenant Governor. You see when you say stuff like that in the media, I don't know who wr the script. You got to be consistent what he's saying because you see that that's in your guys statue. It's within you guys. Right.

But then really, really if you look at it, it's above a majority of the guys or who he was just saying makes more than the lieutenant Governor. That's all we're saying is just be consistent in what's being said. But there's a lot of effort that went into allocating or try to allocate the 300,000. Right.

So you guys thinking that you guys want to attract somebody for the position on a very important position, tourism and then we're not gonna take that seriously and every other position around it and different responsibility like Senator Dela Cruz said, then we, we're not going to push. Do you have a question? That is the question. Okay.

Why, why, why nickeling diamond now. Okay. All this time. Okay, that's the question.

We got the question.

Yeah. So okay, what is it you had all these time to change why now? I am not gonna.

I, I commented what the governor's directive was. I'm not gonna comment further than that.

You ain't commenting the paper.

Well, I was asked. I don't lie. I could ask you a question. Thank you.

Thank you. Any other questions? Okay.

Okay. What is this? 54,000.

General Fund. General Fund adjustment for? I believe it's six employees.

Why?

They've been. They are responsible for oversight of grants that we've recently received and due to the increased workload and success in.

Yeah, but achieving those grants, how are these positions funded now?

General funds.

So you're asking that these positions pay this money? Pay salary increases for those. Correct. And how many?

Six. Six.

So how did you guys determine that?

The. The. So there was. We looked at. Some. We looked at market, obviously, state pays bullet market. We also looked at collective bargaining agreement adjustments and discussed with the employee and came up with a number that we felt was agreeable.

Okay, this just goes back. I hate to keep beating a dead horse, but this process is very different from the process you used again for the HTA CEO. So there's not a consistent process of how DBEDT is looking at setting salaries across the board.

Are these exam positions or civil service exams?

Exams, yes.

Okay, next.

Thanks, Stephen.

What is this 211,000?

138.

Just from your position, that Act 40.

Yeah? No, you better explain why you want the money.

Yeah, that is for a--so last year or this past year, Act 40 was passed which included one position to establish the Solar Hui Fund. That position has been filled and that is to move this position into my base budget.

Okay. You know when we looked at your annual report, year 2004, it was slightly different or quite different depending on how you looked at it from the 2023 report. So in your 2024 report, you didn't have as much detailed information as you had in 2023, including information on profile of customers, finance for residential loan program, and the 2023 report showed that loans were disproportionately distributed to customers with a credit score above 700.

So those, so those metrics are reported to the PC and it's all public. I took it out of the 2024 legislative report because it caused a lot of confusion. So we have not pulled credit report--credit scores since 2018. Those are legacy before our green energy--

Yeah, but the whole point of green energy is supposed to help low-income.

It is low-income.

You have, you help more people with salaries over $100,000 annual salary and mainly customers that lived on Oahu.

Right. Annual household income is over 100,000, but those typically will support ten, eleven, six people in the household. So what we use is we use the HUD's Area Median Income which applies the number of household members with the total annual household.

And we talked about this last year where we didn't see enough effort with your agency in going to low-income areas. I mean we talked about Molokai, we talked about other areas where they're not benefiting from your program at all.

So Molokai, we are working with the Oahu Collaborative Energy Molokai.

So how many people took--were able to get money?

So we are, for that particular one, we will be providing 8.5 million in the capital stack that will provide 1,500 residential repair subscriptions. 1,500 out of IP--

So then, like PV infrastructure is supposed to be for--they can do solar on their roof, they can do other things permanently.

Right, Right. We do have, on Molokai, we have solar hot water heaters, we have a few solar PV. It's just a bit difficult to get contractors to Molokai because the cost is high and for the contractors to go over to do one job, it's difficult for them. So they had a solar hot water contractor that we did a few there. Solar PV, the contractor is flying in from Maui and so we thought the better route for Molokai was to help with the community solar.

So when you looked at things like--I'm just going to summarize all of this because if not, we're going to take too long--but there's Act 121 from 2018, Act 107 from 2021, there's the Solar Hui Program, C-PACER. Like a lot of these that we passed, I don't feel meet the metrics that we intended when we passed these laws.

So when, with the different programs there are different metrics, right?

So they should all be for low-income and except where it specifically says, you know, a state agency or a non-profit, those are very specific. But with the amount of money we put in and the results that we're getting, I don't see that there's a good return.

So the financing that we do is for low and moderate income households, nonprofits, and small businesses.

So who evaluates you?

Well, I have a board. We report to the board. We report quarterly to the PUC. It gets approved by the board--

And then the board looks at the statutes and say, 'yes, you meet the metrics of the statute or no you didn't?'

In our reporting we provide, because it goes to the PC also, we also provide all of the metrics.

Yeah. Yeah, you provide the metrics that you've achieved, but that doesn't mean it meets the metrics that we intended by statute. So there--we're talking different levels here. And so that's where--when you're going back to, even if you want to talk about salary, we're not meeting the metrics that we're required to or should be reaching according to the statute. Yet this is the highest paid division hit.

Chair, if you're asking 'meeting the metrics,' meaning financing low and moderate-income and nonprofits and underserved, that's what we finance with the GEM$ and the General Funds.

Yeah, but when you read your annual report, I'm just saying it doesn't look like it meets a lot.

And that's why I took it out because, again, the annual, the metrics are based on the HUD's Area Median Income metrics, which is a combination of total household income and number of people in the households. And that's--so many of our households have over 100,000 because they have so many people in that household, but according to HUD, it's still low and moderate-income.

Yeah, but it doesn't necessarily look good and now all of a sudden this metric is no longer reported.

Because of this exact reason, because it confuses people, because people look at 100,000 and they go, 'oh, that's rich.' And you can ask these households, I mean, they might have over 100,000 in annual household income, but it supports so many household members that they're not considered affluent, they're considered low or moderate-income.