House Standing Committee on Tourism

Thank you. We are convening this morning's info briefing for the House Committee on Tourism alongside with the Senate Committee on Economic Development and Tourism. Alongside me now is my Vice Chair, Shirley Ann Templo, as well as Representative Joe Gedeon. And we--the purpose of this information--and we also have the Senate. You want to introduce yours?

Thank you. On the Senate side, you have myself as chair, Senator Wakai as vice chair, Senator Fukunaga, Senator Kim, and Senator Fevella.

Thank you. And, you know, the purpose of this info briefing today is to review the Hawaii Tourism Authority's interim action plans, current projects, and recent developments. This briefing will also cover contract updates, destination management action plans, and the audit finding issue by the State Auditor. Afterwards, we will have time for questions from the members. So, Senator, do you want to add anything?

No, let's get started.

So, so I have to be here till at least 5:00 today. Do you think we can cover all this?

Possibly. Joining us is Ms. Caroline Anderson, the Interim CEO for the Hawaii Tourism Authority, and I understand that she has a presentation for us, so go ahead.

Okay, thank you. Aloha, Chairs DeCoite, Chair Tam, Vice Chair Wakai, Vice Chair Templo, and members of the committee. First, before I begin, I'd like to recognize and thank our hardworking, dedicated staff, our HTA Board Chair Todd Apo, members of our HTA Board, and DBEDT Director Tokioka and his staff for their support in this effort.

I appreciate Senator DeCoite and Senator Tam's time and initiative to give us this opportunity to update you on our efforts and answer any questions that you may have. On April 14, the HTA Board appointed me Interim CEO. I did not lobby for this position nor did I ever expect to fill it.

I accepted the appointment because I wanted to help address the challenges that we as an agency face. Since my appointment, I have worked as hard as possible, using my abilities to address those challenges. I recognize and accept that I am in this position temporarily. I will leave this position as soon as a new CEO is appointed.

Realizing the temporary nature of my appointment, my approach to addressing the challenges HTA is facing is to one: identify the problem, a problem, gather information, and communicate about the problem with HTA stakeholders. With staff, identify and implement a solution and then move on to the next problem.

By focusing on solutions step-by-step, my hope is that we will build trust with each other and overcome the divisions that are preventing us from being a more effective agency. This trust-building process takes time and must overcome the current dynamic. HTA now expends all of its funds from state accounts. We are a typical state agency, government agency.

The state government has internal controls and procedures as well as laws and penalties that govern their expenditure of state funds. Everything a state agency does is governed by law and any mistake a state employee makes can be characterized as breaking the law.

However, there is a difference between a mistake due to a misunderstanding of a process or timing issue, and waste, fraud, and abuse. The state system has procedures for identifying and addressing process errors. Moreover, given the complexity of state approval chains and processes, it is often difficult to determine precisely who is responsible for a mistake.

Nonetheless, all state employees should report suspected waste, fraud, and abuse to the Department of the Attorney General. While HTA is a typical state agency, HTA is often asked to do things and undertake programs that are not typical of a state agency.

Therefore, I can foresee that HTA will generate process errors in the state system or to eliminate these errors, HTA will have to change the types of programs and activities it undertakes.

One of the reasons HTA was given autonomy in the past was to provide the agency the additional flexibility to respond to the tourism industry's needs in a timely manner. Today we will discuss the DMAP process. I want to be clear that I accept responsibility for the DMAPs.

I take to heart the criticisms raised about the DMAP process, particularly how we can improve the effectiveness of a DMAP plan. The DMAP process is intended to be a community-driven process.

The process should not be defined as a process where experts go into the community and identify the community--I'm sorry--identify for the community what is best for them. If it were, the DMAPs would only contain actions that experts believe are the right solutions for a particular community.

I have found that the DMAP process uncovers problems that have been persisted--that have persisted for years and are very difficult to address. These problems must be identified and incorporated into the state planning process.

The questions I think about are if we don't do DMAPs, what should we do? If we create a high-stakes process where HTA must show immediate effectiveness of effort, how will this dynamic influence HTA staff to include only issues that are easy to address in the DMAPs?

In our common effort to improve the DMAP process, I want the community members who participated to know that their time and effort are valued. When the auditor's reports on the DMAP process came out, I directed our staff to review it with the idea of what we could learn from it and how we could improve.

I have a document that shows this review and have shared it with our board in our board meeting and I will share it with you today. It is also posted on our website. I hope that after my presentation and our discussions today, we can make further progress in gaining your confidence that HTA is addressing outstanding issues and taking action to move forward effectively. I expect a new CEO to be appointed soon.

Until that time happens, I will work to provide solutions to the HTA challenges and do my best to fulfill my responsibilities while I'm here. Thank you. So with that, I'll get into the presentation. I'm hoping it will be soon. So we're--so we are--I'm sorry, I can't answer exactly when is soon.

So how can you say soon if you don't know when soon is?

So I'm hoping it will--no, probably not in a month. I'm not, I'm--I don't know when. I'm, I'm just saying that I hope it will be soon.

I think, Chair Apo, could you please come up and, you know, I know that you're the chair that you might have--can you help answer that question?

I couldn't hear the question.

She said that she hopes we're going to have a CEO soon.

Oh, your question is in regards to finding the permanent CEO?

What is soon?

Okay, I, I just couldn't hear the original question from the back. Aloha. Todd Apo, currently the chair of the HTA board. Appreciate the opportunity, committee chairs and committee members, to be here.

So I--my hope is that we can have that selected in within the next four months and we have extended the contract so the existing search firm that helped start the process that had to be stopped earlier is still engaged with us. We are finally finishing those negotiations to have them continue to do that work.

We are revising the position description based on the laws that governor signed about a week and a half ago which dealt with the compensation. We also need to finish the paperwork with the governor's office and DBEDT for the approvals to hire that position to finally post that.

Once it's posted, we expect to have--and this is a discussion I have had with the hiring company--to get that out quickly, have a shortened period for bringing in applicants, picking a set of finalists, and getting through that. So therefore my hope is within four months we will have that completed and a selection.

So the company will be sending you the names within the next two months is what you're saying?

I would guess within two to two and a half months they would have a set of--we've asked for three to six finalists.

Okay. And if it doesn't happen within four months?

I'm glad to continue to update the committee on what has held up that timeline from happening and what type of extension is expected, but right now, without knowing what would cause that to go beyond four months, I can't say, sort of what--

Do you have a list of qualifications for the CEO?

Generally, it'll be the same job description requirements that were in the previous job description that went out--I believe it was late or early last year. So we're not looking to make any major changes to the job description itself. It's more around the compensation package and making sure that we're clear in regards to, based on the new law, that the position reports to the governor's office and not to the board.

And in the meantime, do we have someone there that has the qualifications to do this job?

At HTA? As Caroline sits in the interim position, CEO position, we continue to look at the leadership team. From a board perspective, one of the duties that we still hold as a board is the job of selecting a CEO and so I take that as looking at how do we properly form the leadership team that exists and do we need to find other resources in the interim until the new CEO is selected, but--

Well my concern is during this interim, it's a very important time.

Yes.

Right? And that we have somebody at the helm, regardless if it's an interim that they're qualified to do, to do the job.

I believe Caroline is qualified to do the job. Her history with HTA has been very important to continuing to get things going. Also say, and I'll say it with her, not perfect, not the complete package of everything we need, and so making sure that she is supported and that we scaffold around her with the great staff that exists, including those that are here today, both on the finance and the branding side, and for my part, as board chair, I feel like I'm taking more of a role than a normal advisory board chair would do in order to help that effort as well, and as we continue to look at that, if we need to bring in additional resources, we will.

Okay. I'm sorry because I'm going to hit this right on the head and I know people might not like this, but, I mean, I'm not sure even the staff your seeing, the qualified staff that you've had, you've come to this point, this lowest point at HTA, as far as I know, with the staff.

So I don't know that there's confidence, that going forward, and, you know, we've already made a lot of mistakes with more mistakes being done. We've got the roof of the Convention Center, which is supposed to have been done a while ago. I mean, there are so many issues and how do we get confidence that we're going to be moving in the right--that we're moving in the right direction? It's troublesome.

I understand that and I share your concern. I'm sure most if not everyone on this committee does. I know board members at HTA share that concern. And we have what we have right now, and we have to do the best we can with the staff that we have.

I believe that the staff that we have do a great job in what they do. There are gaps because there are vacancies because people have left because of what has happened in the past has gotten to agree with you, one of our lowest points as to where we are, and we need to start building out of that.

And so I can't tell you that we have more than what we have on the staff, but I do have confidence in them and I think if we can, one--and Caroline talked about this--is correct what errors were in the past, two, make sure we're not making any more errors going forward, that we can spend, get that time and start showing that we are building ourselves out of the point that we are at and getting to--

And I've said, I said this, I believe, to you and the committee at my confirmation hearing, I'm willing to put in the time through this year so that by the time we get to January and back when all of you are in session, that we are at a stronger point to be able to talk about what has happened over these six months and where we see it going forward, and that's going to be a discussion that we all are going to need to have with you, the Legislature, the public, the Governor's Office, in order to decide how we move forward with HTA.

Well, you know, I've heard this message many times, and when the last CEO left, I heard the same message, and we have the same board, pretty much the same board, and we've heard that message, so, you know, I'm saying it's really difficult for me to sit here and hear that.

I understand, and I've had people--

When I took over, I was the chair of HTA--of tourism back in 2000 when we fixed everything, when we gave--where we gave procurement exemptions and all the exemptions because they earned it, not because it's going to make things quicker, and that's true, but because they proved and they earned it.

And over the years, it's disintegrated because HTA has not earned all of this and you've lost everything, you've lost everything, including dedicated funding which no other agency ever got and I've said that years ago when Aaron Sala was there at the top of HTA. When are you guys are going to lose this? And it's come to pass, and yet we see recycling of the people that were responsible for all of this happening, get recycled, and it's still there. So it's very troubling for me.

Many of these people, legislators, have not been here as long as I have and don't know all of this that we went through, painstakingly went through, and to see it as this demise and to hear here and then even at your confirmation, you made statements that I don't believe that you've even held up to it. So it's very troubling. I'm sorry. And it needs to be said. It just needs to be said.

Director Tokioka, can I have you step up here real quick?

Good morning, chairs and members. Thank you. I'm sorry? Okay. So since Senate Bill 1571 passed, the structure of HTA and the Board is entirely different. Of the other ten agencies that DBEDT has, they're all advisory boards and none of the boards approved the budget. That's--it goes through HTA--I mean, it goes through DBEDT and DBEDT approves the budget.

So what you did with SB 1571, we'll go through the same process as at HTA, but right now, because the bill was approved a week and a half ago and we still have contracts that need to be done by July 1st, I know that we're having meetings with CNHA on the destination management side and HVCB on that marketing side to go over the budget and make sure that the things that need to be addressed right away will be addressed through the deliberations.

And I've also had discussions with both chairs of the Tourism Committee to make sure that some of the concerns that the Legislature had will be addressed in the next budget coming up, but I do know that time is of the essence with some of the contracts, but it is going to be a totally different process, and I think it will be better in the end because right now, people don't know because it's on a fiscal year, they don't know whether they're going to get the funding in July or not.

So the plan is to change it to a calendar year so that when the budget is approved in June, that the people in July, August, September, October, and the entire year know what, what they can look forward to as far as grants that are given by the different organizations through Kilohana and HVCB, so that, that will be the process.

And, you know, we're going to have to sit down. I mean, what you, what you did was a very, very, very different structure so we're going to have to have input from you going forward as to how the Legislature feels that the process should work. So that's, that's my job.

That's my task to figure all of that out. The governor and his office have asked me to work with Caroline and Todd and the administration at HTA to oversee whatever is happening now, and I think, you know, if you ask Caroline, we've been doing that. We've been meeting once a week to find out.

So we know--I know what they're doing, because the last thing we need is to be on the front page of the Star-Advertiser every week. But it's true. We need to, like Senator Kim said, we need to develop the trust and I've said that from the time I started at DBEDT to today, and obviously that hasn't happened, and we need to be better at that.

Yeah. Let's move straight into the presentation now, so go ahead.

Chair, I get one question for the DBEDT chair.

Oh. Go ahead.

So when the structuring wouldn't change and when we went on the Finance in the House and the Senate, decided to give dedicated funds to HTA going forward, did anybody discuss with the new Finance chair and the Ways and Means chair on how this is going to go forward?

Because even though you guys, you guys, we had changed it, which, which is great that we made it to an advisory board, did we get any opinion besides what she said in the news today, that they cannot make the decision on the budget because they're an advisory board? Did we get any opinion from--or any clarification from the AG's Office?

On this?

Yes.

Yes.

Absolutely, yes.

Okay.

What was the clarification?

As I said, the other ten boards--

Is the AG's Office here? Yeah. Can you, can you come up?

First, we should clarify it. They don't get dedicated funding anymore.

Yes, I was just gonna--there's no dedicated funding.

But the funding that we approve, the House and the Senate, it's not dedicated, but funding.

Thank you, chairs and members. I think what you're asking is the department's authority as far as the budget goes, and HTA as a board--I mean, before this bill even happened, they would vote on a budget that would then go to the director of DBEDT and then he would typically make choices across the whole department and sometimes submit HTA's budget as it was given or he could also adjust it because he's the department head.

HTA was never exempt from the administrative supervision of boards and commissions provision which allows the agency director, department director, to approve budgets and change budgets if necessary. So I think in that sense it will be the same whereas the director has the authority and ability to adjust a budget that's given to him by HTA, whether it's through the CEO or our board.

Yeah, I understand and where I'm trying to get clarification is that why the board still cannot make their recommendation, the opinion on the board, even though DBEDT is still going to make the final decision. But what I'm hearing is that they cannot vote on their budget.

They can advise.

Yeah, they can advise, they can give their opinion. They can still advise, they can still advise the administration, but you know, part of this was the concerns from the bodies, House and Senate, that they had concerns and, and they wanted specific changes to be made on the process, so that came clearly in SB 1571.

Let me just clarify. So just to be clear, the reason why this info briefing is happening is literally because there has been things going on and decisions being made, as you eloquently opened with your speech about violations, things that's been happening within the board and commitments individuals have made without authority.

And that is what is trying to be flushed out here in making sure that the people's and the taxpayers' money is being spent the way it should be spent and not misused or mismanaged.

Clearly, what we have seen, as we've seen in Civil Beat and on the front page of the Star-Advertiser, is that we're having problems here. We're having problems of the way our funds have been used, not being executed the way it should have been executed.

So I would like for us to move forward and go on with the presentation so that we can get into the nuts and bolts of what we want to discuss, whether it be DMAP, whether it be some other contracts. As you folks know, we have the Convention Center that is on the front page also.

It has been an economic driver of ours as we rent that place out so that we can bring in income and I'm really wanting us to see what this presentation will be like as well as the follow up of our auditor based on DMAP and the functionality of where we go moving forward and having the people in the community at the table to prioritize the needs, whether it be overpopulations and hotspots of our communities.

So if we could start with that, I'd like us to move forward with the presentation, and if you could kind of summarize it so that we don't drag it on, because as you can see, there is a lot of questions and I'm sure we'll focus on some of that. Thank you, chair.

Okay. So I guess we could go to the next slide. And Kendrick, our--Kendrick Leong, our planner is moving the slides for me. So our mission, just wanted to make, to bring it out, is to strategically manage Hawaii tourism in a sustainable manner consistent with our economic goals, cultural values, preservation of natural resources, community desires, and visitor industry needs, and this is what drives what we do. We want to make sure that we are fulfilling our mission.

Next slide, please. So this is the structure of our organization now that Senate Bill 1571 passed. So we, currently, we have, reporting to the governor, we also report to the director; we also report to our board of directors.

And at the top is our, the Office of the President and CEO and underneath that there's five areas: the Finance and Procurement team, Destination Stewardship team, the Branding--the Brand Marketing team, and the Planning and Evaluation team. Next slide, please. And the next couple of slides, I just wanted to show the faces of our staff and again acknowledge them for their dedicated hard work.

So we have the Office of the CEO, and I just wanted to introduce our latest member to our team, Jill Radke. She is our Public Affairs Officer and she's in the room. I just wanted to acknowledge her. She's a great addition to our team.

The next area is our Brand Marketing team, and we recently hired Christina who is our new Senior Brand Manager and she will be overseeing the U.S. contract as well as MCI contract and global support services. The next area is our Destination Stewardship team.

You can see here, it's a big team, and thank you to the Legislature for allowing us to have five positions, new positions last year, which are the destination managers. Patti Ornellas and Meagan DeGaia were our destination managers when they were with the island chapters, Island Visitors Bureau, and so now they're in-house.

And all of the team here, all of the Destination Stewardship team, they're very passionate with what they do. I just wanted to acknowledge them also for their hard work, especially being out in the communities as well. The next slide is our Planning and Evaluation team.

Added to our team is Kendrick Leong as our planner. He started in March and he has been a huge asset to us, and I want to thank him for all he does for our agency. And--yes?

The slide before this, Destination Management, Destination Stewardship team, what do they do?

Yes. So you can think of this team as--they do the product development side as well as destination management. So in here we will have workforce development, sports, executing the destination management action plans.

What does CNHA do?

So part of this team, they work with CNHA on their contract. So CNHA has five projects.

I thought they had the contract. That's why I'm surprised to see so many people under Destination Stewardship. What exactly do they do if we got a contract? How many millions of dollars we pay CNHA?

Yeah, so--

How much do we pay them?

Sorry, I don't have that number off the top of my head. I can get it to you. Yeah, sorry, I don't have it off the top of my head right now.

You were going to ask some of these questions, right?

I'm sorry, I just don't have it, but I can tell you, for the CNHA/Kilohana Contract, their contract is basically five, five overarching projects. One is to develop the Tour Guide Certification Curriculum.

Okay, I don't need to know that. I just need to know if we're spending millions of dollars on CNHA to do this work, then what are these guys doing? Just overseeing them?

So the team is broken out into specialists that oversee certain aspects of their project. So they still have to provide direction to the contractor and work in partnership with them. So if you'd like me to explain--

Or just specifics on the direction, because, you know, I read last week this article from Stuart, your attendant, and from what it looks like, based on what I read, it looks like HTA just gives them the contract and just provides no direction.

Yeah, that's not true. Yeah, that's not true at all.

Okay, can you explain the direction?

Yeah, I'm happy to. Yeah. So for the CNHA/Kilohana Contract, there's five areas. So the first area--I'll just go over from the top of my head--is the development of the Tour Guide Certification Curriculum, and so for that one, I know that the staff was working to direct them on how to develop this, and the staff meaning the, the former Chief Stewardship Officer.

The next, the next project is the Foundational Technical Assistance Program/Community Tourism Collaboratives, and when this project first started, one of the first things they did was to conduct an assessment of the businesses and nonprofits.

And for that I was involved and I worked with them in reviewing their surveys, their final reports, making it to form and all of that, so that's how staff is involved there. From that report, they then developed, you know, what would these programs look like. So they used that as a guide, so it's data-driven.

And so, again, working with the former Chief Stewardship Officer, they developed the Foundational Technical Assistance Program as well as the Community Tourism Collaborative. Now, I believe Patti Ornellas is now working with them, overseeing those two programs. The third area is, you know, they, they help to develop the report about what should go into a destination app, and again, working with the former Chief Stewardship Officer, you know, they develop--

Who's that individual, the former Chief Stewardship Officer?

Kalani Kaanaana.

Is she still there?

No.

So you guys still working with him though? Was it contracted out?

No, he's no longer here.

But you just said you guys still working with him.

No, I'm sharing the different projects that CNHA worked on and the staff that was involved with that project to show that staff works with the contractor to develop these programs, not just, here you go, you do it. We are providing direction to the contractor.

So, just, I'd just like because--so now Patti is that individual? So Patti is that individual as well as the DMAP manager for Kauai?

Yes.

So how does that work? Because isn't the DMAP manager separate from the stewardship person? Does she--

So this is--

Do you payroll her on two positions now or--

No. So this is a Destination Stewardship team, right?

I understand that. What I'm asking you is she the DMAP manager also for Kauai?

She's the Destination Manager for Kauai, yes.

And she's the Chief Stewardship Officer?

No, she's the--she's a program staff to, to lead this area for the agencies, so working with Kilohana.

Is she collecting a paycheck to be that individual as well, is my question?

She's a staff member of HTA and--

You're not answering my question. Is she collecting a paycheck for the staff position as well as the DMAP manager position?

I'm sorry, I don't understand the question. She's--

It's a simple question. She's a staff member.

Yeah, she's a HTA staff member.

She's also a DMAP manager for Kauai. Is there a collection on two paychecks?

So her salary is based on what? Her salary is based on what position?

So, her salary is--I'm sorry--so she's--

What is the--is her salary different from the rest of those other managers, is my question?

No.

So they all get paid the same amount right across the board? They're all DMAP managers, aren't they? Yeah, all five of them are DMAP managers for each island, the bottom five. But you just told me that Patti is a staffer. I think it's a simple question.

So she's a, she's a member of Hawaii Tourism Authority staff.

We know that. I'm asking is she collecting two paychecks for different positions?

No, she just collects one.

How much does she collect?

I don't know off the top of my head.

Why don't you know that?

Because I have a lot of numbers in my head. I don't want to give the wrong number.

Weren't you the originator of DMAP?

Yes, but you're asking me about how much she makes and I don't know it off the top of my head. I'd rather give you the correct information.

What is it based--is it based on she's making a manager's salary or she's making a staff salary as this, I think, is what she's asking.

So they're all--

She has a double--she's wearing two hats. So which hat is she paid? What salary?

So she's getting paid as the Destination Manager, and in, in our team, we work on various--on the team, they work on various projects. So right now, for the Destination Management action plans, right, we are going through the next process of developing them, and so with that, for the CTCs, I mean, that's how--when the Chief Stewardship Officer left, then, you know, tasks were divided per projects, and that project was--

So who does she receive direction from?

So right now, there's no Chief Stewardship Officer, so--

I get that. Yeah, I said earlier.

So right now, the team--I'm working with the team.

So this is my problem. You're working with the team, you're the Interim CEO Officer as well as the planner, you're dealing with one of our biggest organizations right now, our economic driver, tourism--how do you manage that? Like, I guess my bigger question is, have you ever managed anybody?

So, yes, I've managed people before.

How many?

So at the most, three, but, you know, I've worked with the DMAP managers, Patti and Meagan specifically, but I've worked with others, the others on the other islands, and so, you know, I'm very much of a team-builder, team-player, and so I feel like I know what they do. They come with me if they have any issues or, you know, want my advice.

That's my problem, Caroline, is that the audit reflects that it's bad and now you're managing HTA. Okay? So I'm just gonna leave it at that.

Yeah. And I'm happy to answer your questions regarding the audit--

But I don't know how we plan on even running HTA, and especially if we're looking at the new CEO, maybe if in four months we get that person, which I don't know why we even stopped the process. There shouldn't be a process for us to stop the CEO recruitment because when we had the conversation, it was the number one priority was to get the CEO, the number one priority based on a bill or legislation that should have never stopped.

We should have still kept recruiting. And that's what is really disappointing about this. I mean we can fluff this any which way we want to cut the rug but this in itself is just like set me so frustrated and that I have no confidence right now, and--

Can I ask another question? So this Stewardship team, does that oversee the HVCB contract as well?

No, this--the Branding team does that.

How many brand managers are on the marketing team?

Yeah, three.

And how many contracts do they oversee?

We can go back to the--

How much contracts do they oversee though?

So the--sorry, that's--

So the stewardship have 11 people on a $27 million contract.

That's not the only contract that they oversee. There's many other contracts.

Okay, but they oversee, and by the way it's 27 million that you folks pay? I would think you would know that, the CNHA, being that is one of your--they only got two contractors pretty much, right? I mean two major contractors, HVCB and CNHA. Right?

We, we have a number--we have 47 contracts.

Yeah, but you have all those little ones. But the major contracts is HVCB and HNCA--CNHA. So the, the HVCB contract is how much, Aaron?

So we have five distinct contracts.

So what is the total? 38 million?

Chair, the CNHA contract is 18.6.

18.6. How come we see--over two years 27 million?

And the destination managers make 76,000 a year.

I think that's what I'm really confused by is that we have--I'm assuming that there's more contracts under marketing but yet we have less brand managers and--yeah--and we have more people on the destination stewardship team but less contracts than that. Can you make that make sense please?

So, I'm sorry, let me get out another document, but as far as how many--so for the brand and marketing side number, total number of contracts as of June 20th is nine. When we add up the total number of contracts for the destination stewardship team, that is approximately 15, total of 15.

So you have 15 run by 11 stewardship team and you've got three branding running, overseeing nine contracts for branding? What percentage of the budget, the $63 million, are actually dedicated to bringing in tourists?

So that would be, if you look at the marketing budget.

So what percentage of visitors?

62. 62%? 62%.

62%. But isn't it true that of the 63 million, approximately 70% of them come for sand, surf? For fun, sand, and surf? And I think this is HVCB did an oversight and it's just been stated. 70% of our tourists that come here will come because they come, not because they got your message, but they come because they come for the sun, the surf, the sand. They've been here before, they come, and that pretty much the other 30% is what you're targeting all your programs at.

So if you're asking why are you--why, why are we doing marketing?

No, I want to know, of the 63 million, how many direct dollars go directly, directly to generating more tourists to our islands? Because if we didn't give you a dime today, a dime for marketing, people can still come, right? Because all of our partners, all the airlines, all the hotels, they all do marketing.

And if they don't, I mean, they rely on HTA for a lot of the marketing and they did cut their budgets way back when they were getting dedicated funding in their marketing areas because the state was doing it as a state. So they got a market, but many of the tourists come because they don't get your message.

The surveys have shown, data have shown that 70% of them come. So basically, you're targeting 30% of the tourists because we have about ten million, right, that come on average--ten million, I don't know on average, but--so 63 million is being spent for 30% of what we're getting, and of that, how much does the destination marketing, destination management, how much of that 30% do they generate tourists?

Okay, so I don't have an answer to your question. I'll have to...

But do you folks look at that when you're doing your budget? I mean, how many visitors are you actually targeting your programs, and what is generating, the dollar per that we're getting? And that's my concern with HTA right now. Because it sounds good, destination management. Let's do this. Let's give tour guide training. I mean, whatever it is... But what is it, is it generating actual tourists coming here?

It does. And I know, for example...

Where's the data? Where's the data?

So, you know, I'll just use HVCB as an example. When they finish doing their marketing, like the LA saturation program, they could tell how many bookings...

At this point, I'm talking about destination management. Does HVCB do destination?

No, sorry. I thought you were asking about how many, the marketing dollars.

Yeah. Of the $63 million. Because 70% of the tourists come. They don't necessarily have to. They come because they want to come to some program that's being a little weak. They don't come for... They come. Right? I mean, we have people that just come because they love Hawaii. They love weather, they love, they love surfing.

They love whatever. But there's that other amount that we're bringing in, 30% of them that you're targeting. And of that 63 million, we're spending 27 million over two years for destination management. So my question is how much of that destination management dollars that we're spending is bringing what percentage of the tourists?

Let me talk about destination management and marketing. So sorry, Aaron. So we're talking about post, under destination management we do post arrival marketing. So when the visitor is in Hawaii, in the islands, then we're targeting them there to provide that type of messaging. So you know, like messaging about, you know, being sensitive.

Okay, so we're not generating tourists. So destination management is only educating our tourists.

So if I'm understanding you correctly, right now you're saying destination marketing and destination management. So destination marketing to me right now is the brand team working with our global marketing team to get visitors here. For destination management, I'm thinking, when you speak of that, I'm thinking of the post arrival education program or post arrival marketing here.

So we're targeting the visitors while they're here and sharing with them the many things to see and do here to make sure the dollars stay here with our local businesses and educating them when they're on island about, you know, hiking safety, not walking on the...

And is that what CNHA do?

That's what CNHA does. The post arrival...

So they don't do any marketing. So they don't bring in any tourists.

They do not bring in any... So the marketing is left with the bureau and our international...

So the bureau does all the marketing to bring in tourists.

As well as our international global marketing team.

Okay. And I guess that's what we need to look at. How many dollars, how many dollars do we spend on the contracts? Did you add that up, Aaron? 24 million. Okay, so 24 million in marketing plus what?

So 24 plus the 6.5 million.

Okay, so we're spending approximately 30 million in marketing...

So I guess. Yep. Sorry. So I guess we could say that we spend zero.

But I'm sorry, I don't understand...

Tourism coming to Hawaii. I mean, I mean zero in tourists that we're really targeting with the funds. No, no, I know they do post. But in this case, you know what amazes me? You guys get money all over the place for DMAP. Like I've known CNHA to be boots on the ground. I've known them to be in every community and district and the outreach is there.

But yet a logo has been this. We should not be engaged. I mean, it comes in where people are not of this mindset. We should be humble, mindful, and respectful. The reason for the sentiment is that local people are not of the mindset and that the message worldwide, whether it be here, Japan, is no come.

What message is that? Do we have a campaign going on with that kind of messaging?

Well, it was when we was in Maui. That was the message. You guys were there. We were trying to figure out what was the message the whole time.

So, Aaron, what program are you guys running right now. You're running a campaign of that mindful messaging?

No. So I think what's important to note is that HVCB's contract on the leisure market with HTA is a branding contract, whereas the other GMTs are lower on the funnel, more driven to conversion.

And so If I use 2019 as a metric, as a foundational metric. In 2019, the US market for which HVCB is responsible was 60% of overall visitation to Hawaii. In 2025, the US market is responsible for 75% of overall visitation to Hawaii. We are at 115% of where we were in 2019.

Now, I think what's important to note is that HVCB is responsible for the US market, distinct from Oceania, et cetera. In the leisure contract, we're responsible for overall branding. When Senator Kim says when you make the intervention that people come for sun, sand, and surf, you are absolutely right that if the state spent no money on branding, people in Siberia will know Hawaii.

I would encourage the committee to consider, however, that what happens if hotels are directly responsible for their own marketing and airlines directly responsible for their own marketing. The kind of people that come to Hawaii, we lose control of.

And what the state's responsibility is from our perspective is to assure that the kind of people that come to Hawaii are the kind of people the state wants to come to Hawaii. And that's where branding is key. And so then a hotel's responsibility ultimately operationally is to sell a room or an airline sell a seat.

The state's responsibility, from our perspective, is to assure that the kind of people that come are the kind of people that we want, be it that a mindful traveler, sustainable minded, et cetera. Right. And so with HTA, we have designated what we now call a Hawaii target traveler.

They make a certain amount of money, they watch these kinds of shows on Netflix, et cetera. And so for HVCB in the leisure market, our intent then is to make sure that the proper message is getting to the proper person at the proper time, et cetera. And they then make their own decision to come.

We don't drive at the bottom of the funnel. So let me sort of put a period there. This is distinct from the emergency campaign we're doing for Maui. Because the emergency campaign that we are doing for Maui is a direct conversion campaign.

And so what HTA has decided, and this is in conjunction with DBEDT Director and the Governor's Office, is that Maui needs an infusion of resources that brings people directly to Maui. And so that was what effected this emergency Maui campaign with 6.5 million.

The majority of that funding is going to wholesalers which are in the business of driving conversion at the point of sale. And so this contract is distinct from the overall leisure branding contract.

Okay, let me follow up on this. So you're saying that HVCB, which has the US contract. That's the leisure branding and majority of that come for sand and surf. Right. And you're saying that you want to control the kind of people that come here.

We think the state should control.

Yes, the state. Through your contract, the state should control. So you're telling everybody else, if you're not going to be mindful, we don't want you to come. If you're not going to be good stewards of our land, we don't want you to come. Right, that's what you're saying?

No, not directly, no. So what we're trying to, what we're trying to influence the kind of people that ultimately come.

Yeah, but I'm getting the message and I hear that and I'm saying, wow, am I mindful. They don't want me to come? I mean, the Japanese is a good example. So the Japanese are mindful, they are very respectful. So we're telling them, okay, you know, you're not being enough mindful enough. We don't want you to come if you're not going to do that. So it's like...

But we're not responsible for Japan.

No, but the message, whether you're responsible or not, the message you get to anybody who come to Hawaii will hear that message at some point. Right? They might not hear it in Japan, but they're going to come here and they're going to hear it.

Because that's what, that's what we're paying for, for you to get that message out. But it's like, okay, so everybody else, we don't want them to come to US, don't come. If you, if you're not of this high, higher, higher spending, if you're not mindful, then don't come.

No. So the messaging was never generated by HVCB on behalf of HTA to say don't come. A lot of that narrative was actually put out by ultimately third parties. So you have a strong minded community organization, community individual who puts something out on Instagram who is frustrated on a particular day at a particular time.

That parcel, that piece of information then gets taken and blown up in particular. And that's what the study has shown us is that a lot of how these, the negative stories have been amplified are ultimately third parties to the sharing of, the sharing of, the sharing of Instagram reels, et cetera, using social media as a platform. So that doesn't...

But it's based on your original message. So if your original message is saying we only want mindful people, we only want people who are respectful, you need to be respectful. So then others are going to say, okay, well, they don't want us to come because, you know, we have a lot.

And, and whether we like it or not, we have a lot of visitors that come. I know when we were doing convention center, like we wanted the business traveler, because they come in, they don't tax the environment as much, they spend more and they leave. So we were targeting businesses.

But then this message is not just targeting businesses, it's targeting people's way of life. To say you're not respectful and who should, who's to determine what respect means and what mindful means?

Ultimately, the state.

No, you don't determine that. People do. People determine that, not us. If I to tell you you're not being mindful, who am I to tell you you're not being mindful? Who determines if you're mindful or not?

It's not as direct, Senator, with all due respect.

Yes, it's subliminal on a lot of messages. And we're getting that message. So I don't know that we've looked at. And then isn't this campaign, we're supposed to start in April and then we didn't start until June, which is supposed to be maybe our shorter period or our slower period.

But then you guys are now doing it during the summer period. I mean, there's a lot of issues here. One, I don't even know if the message is correct. Two, it wasn't even a right timing. And then you guys, and then you're staying in your opening that we're doing things better. It's now. It's not better.

I think my bigger question then becomes, you know, as we looked at the marketing part of it, would it be worldwide? Would it be CNHA and the contracts that they have? My question is, where are we with the delinquencies? I mean, we've had our challenges, clearly on these two guys being paid out. Where's the accountability?

In your opening statement, you talk about following the law. And we followed the law with HTA. And I think my bigger question for you at HVCB is you guys doing half the stuff and CNHA is doing the other half. Why we need HTA for?

If we're going to have the message of what we're going to share to our tourism industry, then maybe the Legislature should just say, okay, no, let's just contract it out and do away with the middle individual aligning all this stuff. Here's what we want you to do and here's what we want you to do and just have the oversight at that level with a...

By the way, did we ever fill... Did we ever fill our financial officer position? Where's that? I mean, who's looking at the money is my question. Who's watching the money while we're having news come to us from the front page. And then we gotta go dig for this stuff. I mean, that's my challenge here.

Can I just share the history prior to HTA being created back in the late 90s because the Legislature was not happy. HVCB was running entire world. They had the entire contract. $83 million I think it was. Okay, they were running everything.

And I wasn't in the Legislature then, but I understand legislators felt that the state should be doing it. And so then we created HTA. But when we created HTA, we didn't give them the bodies, we didn't give them all the expertise. So what did they do? They turned around and contract with HVCB.

Nothing changed. We just had a middleman. Okay. Then I entered in 2000, took over tourism by itself, because back then it was never by itself. It's always with DBEDT. And we made that change and we took, they took HTA, I mean HVCB's contract. Instead of going worldwide, they broke it out into many marketing areas. And they fought it, by the way, HVCB, and year round HVCB fought it tooth and nail. It was very political.

But the board did it at the time and we split it all up and so that HTA would be more relevant. But now it's back to the same thing. We're back to contracts. And why have HTA? Because you haven't managed it well. Because DBEDT can do it again if they're going to just contract it with HVCB. And we didn't have HCNA back NCA back then, CNHA. So that's kind of the history is. Is going back.

There was a $300,000 governance study that was conducted last year that basically said that we should revert back to what it was.

Yeah. And again, it depends. If you have bad leadership in DBEDT, then things happen. If you have good leadership and bad leadership in HTA, you know what I mean? It just reverses itself sometimes. So it's never ideal.

We talk about the delinquencies and the invoice. Have we determined how much of an interest we have to pay for that?

So... We have through their current contract, their fixed price contract, we've handled that. And so now there are no interests that we need to pay for any delinquent invoices.

So you guys didn't pay anything because you guys figured out that you...

They were paid within the current fixed price contract. So it's taken care of.

How much was that?

I don't have that figure. I'll get...

So I know I asked for this. I've asked for this many times based on that contract alone because of a late payment. And you said you were going to get back to me, so you haven't.

So can we get Todd back up here? Because if we can't get answers from the CEO. Because you folks knew we're going to ask these questions.

Aaron staring there. Aaron, don't you move. So you know what? Maybe the question should be to you, Aaron. Aaron, since you've been delinquent on your contract and there was interest that HTA had to pay, how much was that interest, and has that been taken care of?

Since Caroline has stepped in as interim CEO, we have come current. We are still awaiting, I think, an opinion, and I'll defer this to HTA, an opinion from the AG's office on ultimately the payment of interest. And we had been basing our approach to this on two sort of fundamental tenets.

On one hand, we charge interest according to the way that our invoice reads on a net. On the other hand, the state's comptroller had put out a memo that said if the state is delinquent on payments, the state is responsible for interest at a particular rate, which changes annually.

And so my understanding is we're still awaiting opinion from the AG's office on response to the payment of interest on the set of contracts, which ultimately affects everything writ large. But since...

How much is that? That you folks, HVCB thinks based on your 30 days? 780,000.

Can we have the Director come up and answer that as well? Did we ever get a number that... Or AG, do you know the question?

Okay, I don't know that we needed to because I think it's in statute. The interest. It's in statute. If we owe somebody money, I think they have the right to collect interest on what we owe after so many days. I don't know what that time period is. But let me just say that HVCB came to me before Aaron was appointed.

And I had a meeting with Tom Mullen, Chair of the Budget and Finance Committee, Arakawa, Isaac Choy, and myself. And we talked about that amount. And it was $11 million at the time that we owed. $11 million. And then Tom said, well, you know, we can... We have the right to collect interest. And I almost... I was very upset. And I told Isaac Choy, you need to resolve this now.

How do we even find out that they weren't paying the bills?

They came to me.

Who came to you?

Tom Mullen. Tom Mullen came to me and said, Jimmy, we got a problem. I wasn't aware of it, but as soon as I was aware of it, I had the meeting and everybody...

Are you aware of that? So nobody knew this thing ever came up at the time.

Who was responsible?

The previous interim CEO and President knew. He knew. In fact, I'm sorry, he was in the meeting too. And that's not the only situation. CNHA was another one. There were almost $4 million and it was past 400 days. And they called me at the same time and I brought them in. Tyler was in the meeting with me and Isaac and Daniel and Kalani. And I told them we got to resolve this. I said, can we, can we...

Why wasn't it paid?

Well, I'll get into that. But why? I said, this is not fair for an organization like CNHA to be out. I think at that time was like $3 million. Isaac. Okay, I'm not going to use his name. The former financial officer worked with Tyler on two weekends and they resolved all of the issues of deliverables, of the contracts.

And everything was in email sent to CNHA, I mean to HTA two weeks in advance of each contract. So they sat down and they went through every single one. And I think it took them two weeks or three weeks to resolve the solution. And then they got paid I think a month and a half later.

Who was overseeing, who is overseeing the payments of these contracts?

The former destination stewardship manager Kalani Kaanaana on the CNHA, on the Kilohana contract.

What about for the HVCB?

Eva, I don't know her last name. No longer there.

Okay, so they were overseeing and they weren't being paid.

The organizations weren't being paid. Correct. On a timely basis.

But why?

I cannot answer that question. I was, I was mind boggled myself because when we found out that...

Because they were aware, at some point, they were aware. They didn't pay. My understanding is that they didn't give the proof approvals or something.

Who didn't give the approval?

Kalani and...

Oh, yes, yes. Yeah, they didn't sign off. So yes, yes.

Why?

I don't, I don't know.

In the meantime, the two organizations are left holding the bag.

Yes. And when I found out about the $780,000 interest, I'm like, this is going to end up on the front page of the Star-Advertiser and, you know, we cannot go back and fix it. I think we did as best as we can to pay them.

Where is that money going to come from?

It's paid already.

Where did it come out of?

It was in the budget. It was in HTA's. Oh, I don't... I think, I think... I have, I don't even know if that legal part is going to be paid or not.

Should they be owed that money? If it gets determined, where is that money going to go?

Okay, that's a specific question. They did not. They did not in a meeting tell me, or even today, as of today. They just wanted to get paid. I'm not going to speak for them. I'm not going to speak for them, but I think they just wanted to get paid and they never talked about interest to their credit.

So as I mentioned earlier, it's coming from their fixed price contract. And I don't, I'm sorry, I don't have the amount and I'm... Because there was cost savings like with travel or... But it's within their contract.

So in the discussions that we had regarding that, the answer is we're not going to come to the Legislature asking for more money. Somebody's contract is going to be less $780,000.

I don't think that's right.

I don't think that's right either, but...

It should come from somebody who screwed up.

So, you know, Senator Kim, you know we have the amount that, I mean, Aaron said the 24 million that. So there is that pot. But we're going to, if we have, if we pay the interest, it's going to come from somewhere in that pot. HTA doesn't have an opportunity fund.

Director. Hang on. $780,000. That could be helping the homeless or feeding people right now. That's a lot of money. $780,000. I don't plan on wiping that underneath the table. That's not right.

I can promise all of you at this table that we will not let that happen again.

And then we got to take this off of somebody else's table. Whose contract are we going to have to cancel on the 780,000?

Well, it just means that it was not needed then. I mean, we're spending money we don't need. If we all of a sudden can find 780,000, cut some contract that we actually don't need. So where is this? If we didn't owe the interest, was there a slush fund?

Like I said, we don't have an opportunity... I didn't want to say slush fund because that doesn't exist. We're just going to have to make. We got to pay them, Senator. We've got to pay them. If they, if they charge us interest.

But I'm just saying that where is it going to come from? Maybe there needs to be salary cuts or something to make up the money. Just ridiculous that we have this kind of cost.

Okay, so moving forward, as I said, you know, you folks put a lot of the responsibility on DBEDT, which is me...

Well, we had to because it doesn't seem like HTA can do the job, which is why they should be cleaning this up and not you. That's why HTA existed prior to this as a self governing board. I mean, a governing board versus an advisory board. Clearly it tells me they're not competent enough where they are to make those decisions.

I think because I came from here Legislature, every time something comes up and there's a concern, the first two people I reach out to is you, Senator DeCoite, and Representative Tam. Senator Wakai has been on the Tourism Chair before and so have you.

So I also communicate with you guys on some of the stuff that's, you know, coming so that you have a heads up. And that's the only way that we can develop a trust. If I was trying, if we tried to hide any of this and you guys found out and one of you guys are very good at finding things out, we would look terrible. And so I'm not into that. We're not going to be hiding.

Explain then the Rams contract, if you're talking about stuff being done correctly. I mean, can you guys, can you talk about the Rams contract? When was it entered into? And why didn't we have a contract signed? Contract that was voted upon by the board and when did that happen?

Okay, so I can let Caroline talk about the signing of the contract. There are still details...

Let's finish the interest part.

Thank you, Chair. So the HVCB in the past has... There have, for whatever reasons, procurement processes, payment processes, there have been lags in payment before. What happened before I came on board was that HVCB was intent on communicating now what the lag ultimately meant in this fiscal period.

And so what I don't want is for HVCB to be seen as this charger of interest. That $11 million ultimately affected our need to go into a line of credit for which we were charged interest. And so as we're as a nonprofit private organization responsible for our own overhead, our own expenses. The goal really is to assert a need for a discussion on how, what the process is and how these processes are handled.

Who approves what at what time so that we can get paid on time. So I do want to thank, again, current CEO and DBEDT Director for effecting a rather rapid coming current over the last, I want to say, 90 days. Covering this rather large delinquency in payment to HVCB. And so I just wanted to note that and thank the committee for this energy.

Yeah, I'm sorry, I should have mentioned. Mr. Mullen told me that. He said, Jimmy, we got to float credit cards to pay our vendors. And he told me that in the meeting. And so what Aaron said is exactly right. I mean, they got to pay. So I don't know what that interest amount is going to be.

But he said they had to float credit cards to pay the bills. And that should never happen. And the sad thing is, all of this money was in HTA's account. It wasn't like we had to come over here and ask for more money. We had the money.

Okay, so my question now is, because you're aware of all these unpaid invoices, was there any kind of repercussions for those that were responsible for this?

So the people that are in charge are no longer there and they just.

Resigned on their own? Or is it because they resigned because of this?

I don't know why they resigned specifically, but they are no longer at HTA.

Because what I'm hearing is that like this happened and there was no repercussions for them. And what's to stop this from happening?

I had brought up to the previous CEO that documentation should be. I mean $3 million and $11 million is a lot of money. But at the point where I found out about HVCB, that person had already left the organization. Whether she had the training to do what she was supposed to do, I'm not sure.

But as I said, moving forward, we will never let that happen again. And that's why I have to continually communicate with CNHA and HVCB to make sure. And I have been. Is everything okay? They know. Aaron knows. Tyler knows. Because I don't. We don't need. This is not how we should be run.

And I'm not there day to day doing it, but I call them at least once or twice a month.

You know, I'd just like to make one comment. Director, I don't think this is your job. I think this HTA's job to be doing that.

You know, that's what I think is more upsetting is that you're having to jump into the middle of this when clearly that's HTA and the board and everybody else they should be doing this. Isn't that.

I think what the best part of the Bill is that I didn't believe that you should have any part of being on the board, but now you smack dab trying to clean up the mess that HTA was incapable of doing.

Well, Senator, thank you for that comments. But it's under HTA. I mean HTA is under DBEDT, so I can't.

I get it. But that is the key thing, why would we need a CEO.

Exactly.

So I can fork out this next batch of money to pay for one CEO that if they screw up, I resort back to the DBEDT Director to clean the mess up. Is that the message we're sending the community?

I'm not.

So I think that's our challenge here as we gear up for 2026 and how we legislate going forward because we got to build back the public trust and clearly just sorry we didn't even get to the presentation. But I mean clearly we have a problem, Houston, we have a problem and how do we fix it?

Yeah. And the people responsible have left and repercussions and yet you guys fired or let go of the person who did the whistleblowing on all of this. How is that fair?

I mean, I heard you say it earlier debt. If it wasn't for your chief financial officer to get them paid, then pay in two weeks, which, I mean, I don't believe I should micromanage anybody and their staff.

What I believe, which is why we have an entity, separate, alone, that we vet out people through the process of what you're capable of doing by your job descriptions and your qualifications. In the meantime, I feel like now we literally having to jump in here and say, okay, apparently this person wasn't qualified.

But it seemed like we had a qualified person that majorly had a target on his back because he flushed out the deficiencies of what we now would pay, which hopefully we figure out something, which we shouldn't be figuring this out.

You guys come to us to legislate to help create a budget for our number one economic driver, which is tourism. This is far beyond the scope of what I believe we should be doing in having an info briefing today. I should be home with my grandson right now, but this is too important.

I believe after the discussions we've had and reading Stars about Kaiser, even on Molokai, I get it online. But, you know, I'm super, like, disappointed. I don't even know where to start, aside from trying to continue to build some kind of transparency. But it's a lot of money. It's a lot of money.

I know we talk about partnerships, leveraging, and I think we have great partners that we work with right now in HBCP and CNHA. But to build this and then try to make sure we build back transparency and help this industry move forward. We depend on it.

Director, can I ask what is the chief financial, Former Chief Financial officer's role in all this too, if any, or I mean, right now, the late payments. What was his role? Yeah. Did he have any role in that?

Oh, yeah. At the time, absolutely.

Is he responsible for.

Was he responsible? No, no, no, no, no, no. And, you know, Caroline can confirm this. So like we said, like I said earlier, each contract, whether it was with CNHA or HBCD, each program contract had to get approved and sent in the deliverable, sent in by the program manager of those accounts.

And he never, The VP of Finance, never got those contracts to his desk to approve it. And that's why I said I had to get involved to take one of the program managers off the Kilohana contract and put the former VP of finance on that contract to confirm the deliverables and make the payments.

That's what happened in two weekends, two Saturdays, right after we had the meeting. So it was pretty quick, right, Tyler? Yes. So, yeah, that was his involvement. It was resolving that issue and then starting to resolve the HBCB issue. And I know that more work has been done since that time on HVC because he's no longer.

So he wasn't given the invoices by.

The CEO, by the program managers.

Yes, but he was the one that pointed the fingers at the different people who were responsible, which is why he's not there anymore.

You know, I just couldn't clear something you guys kept referring. Nobody put a target on anybody's back, okay? These charges were serious enough that the. AG and Human resources took action in him leaving without pay. So. So nobody put a target on his back because he was doing his job.

It was the things that he was doing while everybody else knew he was doing them. And so the Director didn't know because it was told to him.

So when the AG sat on this and was brought to my attention, like I said in the news after our vote for HTA, I just brought it up now, if they didn't find anything or they didn't think that had any merit, he wouldn't have left without pay. So it was not no target on his back.

It was because of how his conduct was 2023 and fall of 2024 on how he was treating people at HTA. And again, like the Director said, he put a little record in his note because he did say it, even though now he's admitting that he didn't say it.

But a racial slur was made about our people being dumb Hawaiians, and that is a serious charge. And then the chauvinistic and racism that was going on again after he was reprimanded by the DBEDT chair, he was still continuing to handle conducting himself in that manner.

Then it was something that went to the AG's office and nothing was being done. And he came after the vote to my attention and then I brought it back to the Governor who took it seriously and AG.

So I'm not saying that, well, maybe he never do his work or whatever, but don't clarify as a target on his back, because that is not true. No, it's not.

I think part of it is true. I think it is. And I think that there's been many racial slurs been made by many people in the Legislature as well. So I mean, I'm not sure if the racial slur reaches that level. But again, that's an issue. But everything points to a lot of it.

That people were whistleblown and don't like the idea.

But the whistleblowing. Gotta have facts. There was no facts.

There were facts, wasn't facts. Bills didn't get paid. Bills didn't get paid. Contracts, people were getting free stuff. Contracts were not signed appropriately. Which is why we're here.

Yeah, I would just. Chair, if I may. I just want to respond to one thing the Senator from Ewa Beach brought up. I was aware of one thing because I was standing there and it's been documented. I addressed it. Isaac has been my friend for over 20 years.

I put it in writing and I told him, don't ever do it again and go apologize to the people that were there. That was over two years ago.

And did he do that?

And has it occurred again?

Yes.

Well, he said, the Senator from EFFB said, I know about others, I don't know about others. I was not made aware of others. And if I was, I would have addressed it if I would have gone and checked to see what happened, but I was not. So.

Okay, thank you. And, you know, just sort of clear this up. You know, accusations are made every day, even in this building. File a complaint. File a complaint, turn them into hr, do whatever you got to do. But the fact of the matter, we have a problem with hdf.

We have a problem here, and we got to fix them. So if we can chair, would you like to go ahead and continue the presentation?

Let's continue the presentation. If we have any questions, we'll chime in. Ms. Anderson, sorry about that.

I just wanted to just restate for all of you that the interest that was just discussed about HVCB, it has been cleared up.

Myself, our acting VP of Finance and our acting Chief Brand Officer met with Tom Mullen and we were all in a conversation together and we all confirmed with him that the interest is taken care of. It's within their fixed price contract, and he will not charge any interest to the state as long as we pay on time.

And you know, we have a new senior brand manager. You know, we are aware that we do not want this to continue ever or ever happen, have this happen again. So I just want you to all know that. That we. We move forward.

So thank you for that. If you can. Can you put that. Have him put it in writing and send it to us, please?

Sure. Well, I still don't understand what it means when you say it's in his fixed fixed price contract. Because then the contract we overpaying them by $780,000.

I believe there was. Within the fixed price contract, there were savings. And so I think that's what he used. But I'd be happy to get that information to you.

Okay. What kind of savings?

I don't. I have to get that to you. And the money would come back to the state at the end of the. It's a fixed price contract. So no, it doesn't come back to the state.

That's a problem I'm having. How can it be a fixed, fixed contract and have savings? Because it's fixed contract. That money is due to them anyway. So I'm not sure. Or they're just saying they're waiving the. They're waiving the interest.

You'll understand what I'm saying. Yes. So let me. Let me get that information to you. I don't want to. I want to make sure I have all the correct.

But you said everything was resolved, so how can it resolve if you can't answer the questions?

So in our discussions with Tom Mullen, he said it was. He will not be charging any interest. So don't say that. It's part of the fixed contract and. With interest that was owed is. It's with it. We're paying it within that contract.

Okay, so we are paying interest. So that means we have overpaid them by $780,000.

I don't know the exact amount. I don't think we are not overpaying. So.

Caroline, just. So you cannot say that. Get it in writing and tell us exactly where it's coming from. Okay, stop. When you use statements, go to presentation, please. Please just get them in writing and give it to us. Please.

Okay. You.

Well, if you don't want to have a presentation, we can just ask questions. If anything. I'd just like to cover the 90 day action plan. So, Senator Decord, you know, when we met a couple of months ago, you asked me what are we doing Right? And then I said, we have a plan.

And then this was a plan that I shared out with you.

So the date of this plan that went into effect.

So the 90 day is up in July. So April.

So April. This plan went into effect in April. Okay, go ahead. Yeah.

Or May, June, July. It's. It was developed in April. And so the whole purpose of this plan is to address the issues that HTA faces. It's not meant to be a transformational plan of our Agency, but just meant to address what is happening at the hta.

So there's basically eight goals that we want to accomplish with this plan. The first one is to be collaborative and cohesive as us, as a team, as a team, as a staff. The second one is to reduce the overdue invoices. The third one is to identify any outstanding contractor issues.

Have those two been done?

Yes.

So we have no overdue invoices at all?

Yes, yes.

And folks have identified contract issues.

The purpose was to identify if there was any outstanding contractor issues. And I talked to the staff, there are none. The third, Sorry. The fourth one is to review, update, follow policies and procedures. That's all about reviewing our policies and procedures.

We know that things have to be revised and that there are new procedures to be made on that because I. Want to come back to that. The fifth goal is to improve board efficiencies. The sixth one is to have an effective tourism policy development and empower our staff. The seventh one is to fill positions.

And the eighth one is to establish an administrative framework for the rooftop project. So Kendrick, if you can just go to the 19th slide, I'll skip over all of this was one more. Thanks. And then the next slide. So I just wanted to share with you our progress to date for each of the goals.

So the first one was in regards to achieving a collaborative and cohesive team that communicates and coordinates efforts and works. We work together effectively. So this action is in progress. And things that we've done is one, we now have staff meetings that are weekly before it was inconsistent.

The second one is before Jill came on board, we did not have a public affairs officer or a PR contract. And so we formed an internal PR hui to see what we could do to get out messaging about the work that HTA did does. The third thing we did was to, you know, work with staff.

My message to staff was to stay focused amongst everything that's happening around us and to getting our work done. Because we're closing out. We're nearing the close out of our fiscal year.

There's lots of contracts to get executed, procurements to be done, and I just wanted them to keep on task and also to assess our program's activities as we develop the 26 budget as well as our Strategic Tourism Management plan, which is basically our operational plan as identified in our Hawaii Revised Statutes.

We're also looking at, looking to see what kind of team building and employee recognition activities can be done. And we're also, our managers have either conducted or in the process of conducting Employee goal setting and reviews for the upcoming year.

Again, this is all to make sure that, you know, we have a cohesive team working together at HTA. The second goal was to reduce the overdue invoices by 100% by May 15th. And we have accomplished that. It's either being processed or paid. The third area is to identify outstanding contractor issues and again, working with staff.

All issues have been identified and addressed. The fourth goal, ensuring all policies and procedures are reviewed, updated and followed by HDA staff by the end of July. So our staff is reviewing the policies and procedures. We have started to make revisions and also have identified new procedures to develop. The fifth area is improving board work and efficiencies.

And so that's what we have been working with our chair on as well as the board. Our board reports and board packets have been streamlined. You can also see at our Board Meetings agendas. You know, we're also trying to make sure that it's more focused and organized and the work still continues.

The sixth area is ensuring effective tourism policy development, setting clear directive while empowering our staff to implement our annual tourism Management Plan. All of our program staff, we worked on completing a yearly activity plan. And this was something new that we introduced this year and that feeds into our strategic Tourism Management Plan.

And it was with that we developed our fiscal year 26 budget. The seventh area was to fill our vacant positions by July 1. So we filled our public affairs officer on June 9, our brand manager position. That's under the Stewardship division. It's the position.

I'm sorry, we're going through the applications right now and we're looking at targeting interviews next week. And for the Chief Stewardship Officer position, we're reviewing the position description and filling out all the internal paperwork so that we can post it. And the last area was regarding the.

Was in regards to establishing an administrative framework to oversee and manage the Hawaii Convention center rooftop repair project. And so like to thank our comptroller Keith Regan for, you know, working with me as well as Gordon Wood, the administrator for the Public Works division at dykes, to assist us in this project.

So the team consists of DAGS, HTA HCC and the project management contractor, RLB and the design and architect contractor. And the RFP is currently out and the deadline is July 11th. And so that is in a nutshell, the 90 action plan, 90 day action plan and the progress that we've made so far.

Caroline, my understanding is on your folks HTA Budget Committee agenda. Since November of 20233 concerns were raised about the non payments and the late payments. And I have the minutes here. It was just given to me. So that's been on the agenda and it didn't get taken care of.

But also understanding that those that caused this action to not take place has since left. Except all but one who is still working and has procurement violations. So who would that be? So maybe not who, but is there someone that's still there that was responsible for some of the procurement violations?

So if you're speaking of the late payments, there's no one on staff that are here now.

So there's nobody on staff that is responsible for some of the procurement violations.

Track violations. Yep. So if we're speaking of the procurement violations, then yes, I have a procurement violation and I can explain what that is about. So if I can just.

We can bring that up later then. Don't go into it right now. But. So you're the. You're the one that.

So yes. So if I can go into it. So our staff keeps a log of. We.

I think we want to move on. We'll get to that after all.

Right.

Because it is. Just wanted to clarify that.

So I think now we can move over to the audits. Present auditors presentation and then. Break for lunch. And then after this we'll take a break for lunch.

Now you know why I asked about dinner, right?

I'm not buying.

Just kidding.

Okay. In the meantime, then how long? More we can and ask more questions less. Are you ready to go? Okay. Okay. Maybe we can ask then. So do we have an update on the roof?

Yes.

What's the update?

So if you want to. Okay. So basically on the roof. So as I just explained, we formed a team. DAGS is going to help us lead the effort.

But is the timing going to be the same?

Yes. We're still on track for construction to begin on January 1st.

And so it's going to take the exact same time that it was going to before.

We don't have to correct right now as we know it. We're still on schedule. Just the RFP for the proposal for the bids have been pushed back. The date is now July 11th, but we need.

When was it supposed to be?

So it was supposed to be June 20th and now it's July 11th.

Okay, so we're going to be on schedule and you don't look so enough to push anything else back. Correct.

I think I can provide some clarity to some of the questions that you're asking. Good. Would you like that? I mean, it's not part of my presentation, but I hear some of the answers and I hear some of the questions and I'm not sure that. So for instance, you asked about the major contracts.

So we have a sidebar text box which is on page 11 of our report. So we looked at the contracts themselves. So we looked at, for instance, CNHA's contract and it's for support services for destination management for the period of 7/2023 to 5/1/2026. The contract amount $27,141,032. That's what the contract says.

We looked at the other contract for HVCB. HVCB's contract, and this is the title of the contract, which maybe helps some of the confusion in the discussion. Tourism, destination brand management and marketing services for the United States market. That period is 6/30/2023 to 12/31/2025. Contract amount $38,350,000.

So I heard figures that were thrown out, different titles of the contracts themselves that seem to be different. But those are the contracts that we looked at and we saw the documents themselves. Maybe there's some explanation as to the documents that we reviewed not being the most recent contracts. I think that they are the most recent contracts.

They came from HTA, but that was one of the, I guess, areas that I think there was some confusion about. I also want to clarify. I think there's a. There's a disconnect between the Destination Management Action Plans that I see on the agenda that we talked about in our audit and Destination Management.

So I know that CNHA has a destination management. I read the title Support Services for Destination Manager.

Stewardship.

Stewardship. I'm sorry, what am I saying?

Management.

Well, the title of the contract I think is Stewardship. Okay, my fault. Our fault. In any event, there's a difference between that and the Destination Management Action Plan. So I saw an article the other day in Civil Beat that talked about some money that CNHA had spent for destination stewardship. That is not DMAPs.

That is separate expenditure from DMAP. So when you saw the. When you were asking Senator about the new staff that HTA has on destination management, that may be for DMAPs, that's not for destination stewardship. Those are very different aspects.

I think HVCB also had Destination Stewardship as part of their contract that's moved to cnha, but that was always part of their contract. And when they did dmap, some of those people that are now HTA staff, they were HVCB and Island Visitor Bureau staff, which I think is hvcb.

So I think there may have been some confusion in some of the questions and answers. So I thought maybe I could provide some of my perspective, some of the information that may help clarify some of that. Some of those questions I also saw. Well, we can get into that later. But mindful messaging. I heard that discussion.

Regenerative tourism, responsible tourists. I think that there's a. We looked at this issue because it's part of what we looked at in destination management. And we talk about how the strategic plan really hasn't changed from the 2020 to 2025 strategic plan from the prior strategic plan in 2024.

In fact, I have some slides about that, so I don't want to repeat myself, but one of the destination management or one of the big plans was to get the responsible tourists, the tourist that spends more here. And I think that's part of our plan.

HCA's plan is to limit the impact on the environment, limit the impact on the residents by getting less tourists, which means getting higher spending tourists. That's been part of the plan for probably decades, probably before the 2016 plan. So I'm not sure if that was your question, but I wanted to kind of clarify.

That's kind of the responsible tourists, the regenerative tourism, I guess, direction. And that's been part of the plan.

But I think it's a messaging because the way you Put it out there. I mean like if we go after the business visitor that's, you know, they're labeled business and not basically spending or mindful or whatever.

But you know what, that's a question better put to HTA and obviously the brand managers themselves. I don't know how they do it, but I think every jurisdiction is looking for the same guy. The guy that spends a lot and spends here.

You know folks, look at the difference between management and stewardship because that's a confusing thing that I'm seeing there. We're talking about management, dmap, stewards, stewardship. It's very confusing.

We looked at destination management and more specifically what HTA has done in accomplishing destination management. And the big difference, I don't have to do slides. The big difference is the DMAPs. So then we looked at initially the strategic plan with respect to destination management. Is there any difference? Are they accomplishing the strategic plan or the vision?

And the answer is really there's no difference between 2016 and the 2020 strategic plan. Destination management seems to have been part of the earlier plans and it still continues. The big difference being between those two strategic plans and HTA's approach. The big difference being DMAPs.

So then we looked at DMAPs, Destination Management Action plans different than destination stewardship. This was, you know, theoretically done in house, but it was contracted out.

What is the difference between the DMAPs, the management and the stewardship?

I don't know. I think that question is better answered by hca. But I think that there may be some whether overlap or confusion because their terms are similar obviously. But I'm confused. There's like I mentioned, I saw that article in Civil Beat from a few days ago. Stuart wrote that article as Stuart wrote that article as well.

I thought, whoa, is that a DMAP expenditure? That was a CNHA expenditure. So I had my staff go back and look. Is that one of the DMAP expenditures? Because we report about the DMAPs and their expenditures. It was not. That's part of the destination stewardship contract. So that's a very separate pot of money.

And there's other grants that HTA has provided historically but also has revised or fine tuned to be more specific towards whether it's cultural events or. I'm sure that the CEO can talk a little more about those folks identify in the audit.

And I did read it generally that different contracts and how much they each. Were and what each contract did for destination stewardship.

Destination management, yeah. No, we didn't report It. But we did get a list of all of the contracts that HTA has.

So while you're giving your presentation, HTA, can you provide us with a list of the contracts, what they do, and the amounts, please?

Okay. I'm sorry, I took a little different tab. Can you jump on? Yeah.

If you ever had the opportunity to look at the reservations. What is the difference? When we talk about addressing hotspots for tourists, which is really what this is about, because residents were just upset about all these tourists coming in. The difference between the reservation system that makes money versus us, funding, destination management and stewardship.

What is the difference?

What is the difference on its outcomes and its goals of what they are trying to accomplish? Because what I see in a reservation system is that it. It then addresses the hot spots of which you clearly identify in your auditing.

I think the reservation system is one way that certain hotspots that they've been, quote, addressed, whether it's, you know, Diamond Head or Hanuma Bay, some of that may have predated HTA's efforts, like Honema Bay. Maybe they had some fingerprints on that.

But that seems to me to be a city and County of Honolulu reservation system and a project that the city has done. But I'm not sure I'm understanding your question. There certainly is.

In Wainopanapa, we have a reservation system. It generates about $3 million. It goes back to funding, fixing, whether it be toilets, roads, and also employees the residents in that area. It allows for people that want to come and visit, go online prior to coming to visit, and at a certain capacity.

It then says, you know, we're full for today, so you might want to try another day and then spread out to go to other areas. Something like what Hyena has done.

But in this case, we've been funding DMAP I have yet to see because DMAP is spread out all over the place and that in stewardship of monies for this, monies in grants, but yet not really coming full circle and telling me where's the hotspots and how we're addressing the hot spots and trying to alleviate inundation of over tourism population in areas that residents have been very upset about.

I'm going to zip through slides to get to your question. Thank you. Can I just zip through and talk about them? Okay. This is. We had. We done five audits of HTA. Okay. So this is our sixth audit of Hawaii Tourism Authority. Okay. By law, every five years. The last one we looked at was in 2018.

HTA was a different Entity. I know, Senator, you've talked about how HTA has, in essence been transformed by legislative action. No longer exempt from procurement, no longer has dedicated funding through the Tourism Special Fund. So there's. And now we know that it's being moved as an agency of DBED and not as an autonomous agency.

So lots has changed. So we didn't want to look at, for instance, contracts in procurement. It was an issue. We saw the CNHA and HCV stuff that was reported in the news, but things had changed. So what did we look at? We wanted to see what is HTA really about. Really, this is the news.

For us, it was about all of the resident frustration about having too many tourists, about the. The hotspot, Senator, you know, and I think that got exacerbated during COVID when we had the lockdown and there weren't tourists in our beaches and in Kailua town or wherever else they may be.

So I think residents felt even stronger about the fact that we had too many tourists. So this is what we started with. We said, okay, let's look at what HCA is doing to address this. And so we created objectives. Objectives being, let's look at the strategic plan. Has there been any achievement of the strategic plan?

Objectives relating to destination management? And the second one, I mentioned earlier, that to us the big difference was DMAPs or destination management Action Plans. That was the second objective. Let's see how effective they were. So what did we do? So what did we find? Sorry, we found that destination management. Sorry, the focus is not new or effective.

I mentioned earlier, it's the same as the 2016 strategic plan. Really? No movement of that needle in terms of achieving some kind of better situation for residents. Better destination management, maybe, if you want to call it destination stewardship, there's no difference. There's no achievement of that goal in the strategic plan.

And then we also found, with respect to the DMAPs, poorly planned, poorly executed, rushed contracted out, and very little assessment of actual implementation of action items. That's what we found.

I gotta say that I read in the paper yesterday, the Star Advertiser, it had an article about today's briefing, and near the bottom, it talked about the audit, and it talked about the fact that there were HCA staffers and board Members that disagreed with the audit findings. That is news to me. Okay, because we have.

We provide the entity, HTA, we provide them with a draft of the audit. We don't provide it to you. We. We provide it to them. We have an exit conference.

We sit around and we talk about the audit concerns they have about the report itself, and then they actually provide us or have the opportunity to provide us with written comments about the draft. This is their written comments. They basically have no objection to the draft report. During our discussion, there was no disagreement with the audit findings.

So when I read that in the paper, it was a surprise to me. I'm not sure what those objections about the findings are, but I wanted to make that point. I'm not sure what they are. I'm not aware of the concerns about our report.

Les, did you provide a presentation to the board?

I'm glad you asked that. And the answer is no. Okay. We've offered in our letter to the board that provided the copy of the actual report that we issued, we offered to meet with the board to brief the board, just like what we're doing here about the audit, about the findings, about the recommendations themselves.

We have not been invited. We. I know the board has had two, I think two meetings where they did have, I think staff provided information about our audit report. But we are not on that agenda. We were invited, but because we're not on that agenda, it's not for the purposes of us presenting the audit. We did.

We declined. It's not our. It's not our discussion. It's between the board and staff or Administration.