Enhance Quality of Life

Improve Employment, Education & Investment Opportunities

Upgrade Infrastructure and Review Our Master Planning Process

EMC Recommendations
:EMC Recommendations (continued)

Summary of Recommendations

2005 Final Report

November 1, 2005

Purpose:

The EMC was established to develop an action plan to sustain the state’s current economic momentum over the longer term.  The Commission was formed by Governor Linda Lingle and includes the bipartisan support of the Senate President and Speaker of the House, both of whom serve as commissioners, as well as other legislative and elected leaders; and representatives from small and large businesses, labor unions, non-profit, environmental, cultural and educational organizations, government and the military.

Process:

The process was divided into five phases:

The Commission has completed Phases I, II and III.  Below is a narrative of our work to date, including our draft recommendations.  The Commission envisions a holistic approach to sustaining the economy of Hawaii.  Central to the core of this vision are all the people of Hawai`i. The eleven categories of recommendations reflect the Commission’s strong sentiment that economic growth should go hand in hand with improvements to Hawaii’s quality of life.  The Commission acknowledges these recommendations are not all-inclusive; our goal was to adopt recommendations that could be implemented within a relatively short time frame.  We have specifically designed the process to encourage public/stakeholder recommendations and comments.  Our website, www.emc-hawaii.com is fully interactive to allow for comments and recommendations.  We welcome your input.

Draft recommendations:

I. Housing
Hawaii is 49th in the nation in home ownership.  The challenge is getting worse as the gap between what a typical working family can afford and the median price continues to widen.

Hawaii’s high home prices are a critical challenge to sustaining economic growth, as well as our quality of life.  Without an adequate supply of affordable housing, Hawaii will be unable to attract or maintain a vibrant workforce community.  The lengthy, overlapping and complicated government approval and permitting process leaves us with a limited supply of developable land, resulting in a lack of housing inventory.  The problem is further complicated by a critical lack of proper infrastructure, including roads and adequate utilities.

Hawaii is at a historical junction.  Our children deserve an opportunity for home ownership.  The role of government must better balance its housing policies between being a watchdog and advocacy.

Land Use Commission (LUC):
An effective LUC is critical to balance land conservation with the need for strategic planning for long-term development.  Currently, master land use planning is more reactive than proactive.  Over time, the counties and the LUC have developed review processes that are redundant, inefficient and often contradictory.  In addition, there are no uniform guidelines for impact fees.  The result is that developers are burdened with long delays and uncertainty, while consumers face higher and higher home prices.  Additionally, this lengthy process, lack of transparency of costs and uncertain predictability has driven the smaller developers out of the home development market.

The Commission recommends legislation to clarify and upgrade the role of the LUC and to streamline the process by eliminating costly overlapping responsibilities between the state and counties.  The legislation should empower the LUC to create a strategic, statewide land use plan at a macro level.  The balance of land-use authority should remain with the county planning offices, which would have the tactical responsibility of:  (1) detailed zoning and development plans for each island, and (2) insuring that county plans remain consistent with the LUC’s statewide strategy, while addressing the need for affordable and market housing, transportation, education and other infrastructure needs as well as quality of life and the environment.

Hawaii Housing Finance & Development Administration (HHFDA):
In 2005, the Legislature passed Act 196 which created the Hawaii Housing Finance & Development Administration (HHFDA) to address the need of housing in Hawaii.  The Commission commends and supports this legislation and under the leadership of DBEDT recommends improving this legislation to give the HHFDA flexibility in procurement and flexible authority to hire a top-quality staff.  Also, the HHFDA should be required to set specific goals and timelines to accomplish its housing mission.  This agency should support the counties to assist in housing initiatives (i.e. improvement district financing), coordinate public/private partnerships to develop housing and work with the Land Use Commission to ensure Hawaii has adequate entitled lands for housing including identifying potential surplus public lands.

Hawaii Community Development Authority (HCDA):
The Commission supports the work of the HCDA in the proposed development at Kaka’ako, Oahu.  The projected $650 million project will transform the dilapidated Kewalo Basin area into a new vibrant community that offers live/work/play “mix-use” design (Smart Growth).  It calls for increased public shore access, an expanded small boat marina, a local farmers market, and an open amphitheatre to showcase Hawaiian music and hula.  This public/private partnership could serve as a model for future planned developments.  However, future models should place greater emphasis on affordable workforce housing.

For example, the Commission recommends HCDA in cooperation with the City & County of Honolulu develop and execute a plan for the development of an affordable community at Kalaeloa, Oahu (Barbers Point).  The potential 500-acre development site should be similar to Kaka’ako – a public/private partnership for a master planned community to include mix-use live/work/play design, a convenient connector to the planned mass transit system, and have ample green open space.  All homes would be for owner-occupants and sold at prices that are “workforce affordable.”  The Kalaeloa model should be developed as a potential prototype for other planned public/private partnerships throughout the state in order to offer our citizens affordable housing.

Impact Fees:
Additionally, the Commission recommends that both the state and county governments should adopt and implement a standardized transparent process for the assessment of impact fees and exactions, based on needs assessment and nexus to the proposed project.  To provide greater transparency, such fees and exactions should be available to the public.  An appeals process should be established to provide an avenue for further review.

Rental Housing:
Another increasing challenge for Hawaii is residential rental costs.  The large increases in single-family and condominium prices over the last several years, coupled with decreasing inventories is projected to have a significant negative impact on residential rental rates.  The result will be a further reduction in disposable income, a more displaced workforce and added pressure on an already critical homeless problem throughout the state.

As outlined above, the Commission recommends HHFDA to establish specific goals and timetables to increase the inventory of rental housing.  Again, unless Hawaii has proper rental housing, we shall be unable to attract and retain a workforce.  The HHFDA should utilize partnerships with the counties to use surplus public property, aggressively seek federal grants and utilize public/private and non-profit partnerships to fill the growing critical gap in rental housing.

The Commission also commends the military for its ongoing multi-billion dollar investment in military housing development which is serving to reduce their dependence on Hawaii’s stock of rental housing.  Additionally, the Commission recommends University of Hawaii system to accelerate its utilization of public/private partnership to develop student on campus/nearby housing which, like the military investments, will also serve to take pressure off the demand for rental housing and have a positive impact on transportation congestion.

Homeless:
Hawaii’s increasing home and rental costs combined with an increasingly under-prepared workforce is driving more and more of Hawaii’s citizens into the ranks of the homeless or “hidden homeless” (multi-families sharing the same accommodations because they cannot afford their own home and families living in vehicles).  If the homeless problem is left unabated, it will eventually impact the quality of life for all of Hawaii’s citizens and visitors.

In addition to the recommendations above, the Commission recommends the support of public/non-profit partnerships to develop several transitional housing centers for our homeless.  Several successful non-profit models exist, including The Salvation Army, IHS and Maui’s Ka Hale A Ke Ola Resource Center, which operates three facilities and has experienced an 80% success rate in residents transitioning to permanent housing.  We support the decision of the Housing and Community Development Corporation of Hawaii (HCDCH) for the proposed Hawaii Coalition of Christian Churches (HCCC) housing project at Uluwehi in Wai'anae.  The proposed funding would be equally shared between federal, state and private donations (individuals, businesses and foundations).

Both the Maui program and the proposed Wai’anae project are good examples of how public/private partnerships should be constructed and serve as learning models for further expansion of homeless solutions.

II. Education
An essential component in sustaining and diversifying our state’s economy is having a well trained workforce.  Too many of our people are attempting to enter the workforce ill-prepared.  They are not ready for the increasing job vacancies in education, health care, construction, finance, technology, accounting, engineering and many other higher paying fields.  These jobs are being created as a result of our state’s economic expansion and the demographic fact that older workers are retiring at a much faster rate than young people are entering the workplace.  Hawaii is experiencing very low unemployment.  Additionally, a portion of our workers are not well prepared for advancement.  Our employment challenges are further compounded by the fact that Hawaii has a very high cost of living and a poorly performing education system which discourage skilled workers and their families to transfer into our state.  These factors all are projected to continue to worsen resulting in a major threat to our economic future.

The Commission commends the legislature for enactment of Act 51 which addressed the need for changes in our public education system.  In order for Hawaii to be more competitive and productive, we need an increasing number of workers with education beyond high school. 

Major improvements to our public education system are essential to our economic future as a state.  While progress is being made, the Commission recommends immediate changes in five critical areas: teachers, principals, facilities, curriculum and parents.

Teachers:
The public school system has a severe shortage of qualified teachers.  The present process for hiring teachers has inflexible hiring restriction, including lengthy evaluations and very specific credentials required by the Hawaii Teacher Standards Board (HTSB).  These standards have often excluded qualified and experienced teachers and take away the superintendent’s flexibility to hire quality teachers.  The Commission recommends the amendment of HRS 302A-802 to provide that the state be allowed to consider for employment persons who have (1) accredited college bachelor’s or higher degree(s) to teach in subjects in which they have a degree(s) and (2) have prior teaching experience or teacher training (i.e. Teach for America, etc.).  Further, the Commission recommends that the HTSB should provide that at least one of its 13 members should come from a non-teaching background (i.e. Parent Teacher Student Association (PTSA), Hawaii Business Roundtable, etc.).

Principals:
Based upon demographic projections, Hawaii will experience a significant turnover of its public school principals over the next 5 years.  Act 51 places a major emphasis on the leadership, training and proper evaluation of our principals for improving the academic achievement of our schools.  Hawaii’s school system will improve if we recruit, train and support principals that have the capacity and committed to academic excellence.  Again, the current principal application procedure is antiquated and restrictive.  It is weighted too much on DOE experience versus most qualified.  The Commission recommends changes to the hiring procedures to ensure the superintendent and her complex area supervisors have the ability to hire the most qualified candidates.  Hawaii must seize upon this timely opportunity to make a significant impact upon the public education system.

Facilities:
The average age of our public school buildings is 59 years.  Nearly half of the schools are significantly overbuilt for the student body population, while another 25% are overcrowded.  Due to demographic trends, many of the urban elementary schools have been hollowed out while many suburban schools are bursting at the seams.  Despite an actual decline in student population over the last 25 years, Hawaii has added a significant number of new schools, while continuing to maintain the old facilities, adding costs that burden the entire system.  This has occurred because we have lacked the political will and leadership to close and consolidate these older schools and transfer education resources to localities where our population is expanding.  The result is a $468 million backlog of repair and maintenance.

Additionally, with strategic consolidation, the state and Department of Education could free up valuable real property assets that could be leveraged to provide financial resources to reinvest back into upgrading our schools.  Hawaii’s children deserve first class schools and, with over one-third of the state budget dedicated to public education, we should expect quality school facilities.

To address this challenge, the Commission recommends that the Board of Education establish an Education Facilities Revitalization Committee with a charter similar to that of the federal Base Realignment and Closure (BRAC) that is tasked with military base realignments.  The committee should objectively examine our future public education requirements, recommend the proper DOE infrastructure to meet those needs and recommend specific facilities closures/consolidations and the use or disposal of surplus real property.  Proceeds of sales or leases of DOE surplus properties would be exclusively reinvested to upgrade and build other public school facilities.

Parents:
Holding the public school system solely responsible for the poor performance of our students is not totally fair.  Clearly, Hawaii like other states is suffering from a breakdown of the family unit.  A major contributor is the tragic effects of alcohol, tobacco, drug and substance abuse (ATDSA).  These risk factors are directly linked to poor performance in school, as well as a variety of other health concerns/costs.  Recent national studies reveal that parents today are often less knowledgeable about the risks and consequences of substance use than their own children.  Studies also show that parent education can greatly reduce these risk factors.  The Commission recommends the design and implementation of a pilot education and prevention program concerning ATDSA aimed at parents.  The program should be built from existing successful state programs administered via the public school system.

Curriculum Choice:
Military activity is a major component of Hawaii’s economic vitality, providing more than 16,000 civilian jobs and a significant share of our Gross State Product.  Military families face the same qualify of life issues as our own residents, including the desire for a good education for military dependent children.

By national standards, Hawaii has a disproportional share of military dependents within our public school system.  Twelve of our public schools are actually on military bases.  The federal government pays the Department of Education a subsidy for each student.  These children have special challenges as a result of frequent relocations and parent deployments.  Our under performing public education system is cited as a major concern for military families that are required to transfer to Hawaii.  A number of these children transfer from DoD schools using a comprehensive federal curriculum.  Students taught utilizing this standard curriculum consistently perform above national standards.  The Commission recommends that several pilot schools on military bases be allowed to adopt the federal curriculum for these predominantly military dependent schools.  We understand the military parents would welcome this change.  If necessary, the schools could function as public charter schools (the cap should be raised) or as conversion charter schools.

III. Workforce Development
Workforce training is one of the most important issues facing the state.  Hawaii must better train our current and future workforce.  Substantial amounts of both federal and state funding is already available to get the job done.  Current programs are fragmented and poorly coordinated due to independent bureaucracies at both the county and state levels.  We need political will and a comprehensive strategy to bring focus to this critical opportunity.

University of Hawaii:
The University of Hawaii system should be a major change agent in addressing Hawaii’s workforce development challenges.  Not enough post-secondary educational opportunities currently exist to meet Hawaii’s regional workforce needs.  Additionally, the workforce training mission among all our UH campuses needs to be more fully aligned with the future needs of our state, especially in critical areas (i.e., nursing, teaching and engineering). The Commission recommends that the UH system should identify specific workforce development goals aligned with existing and future workforce needs and lay out a plan to train our students to fill those positions.  The plan should include benchmarks, allowing for transparency to measure UH’s progress, and incentives (including financial incentives) for success in meeting the state’s future workforce development needs.

Our current DOE adult education system was established to improve reading, math and other basic academic skills to better prepare our youth and adults.  The program is, at best, underperforming.  Hawaii’s community colleges (UHCC) have proven to be entrepreneurial and more in tune with the workforce needs of the communities they serve.  The Commission recommends accountability for the administration of adult education programs and federal/state funds be transferred from the DOE to the UHCC. 

The Commission also recommends the UHCC be responsible to establish a set of “Rapid Response” training programs tailored to the economic needs of the communities they serve.  This process has already been implemented very successfully in a growing number of states.

New Role for DBEDT:
The trend in other states that face similar challenges is to link economic development with workforce development.  The Commission recommends the merger of the economic development programs of the Department of Business, Economic Development and Tourism (DBEDT) with the workforce development programs of the Department of Labor and Industrial Relations (DLIR), aligning these two missions.  There should be one agency that has accountability and responsibility for all federal and state training programs; these programs should be focused upon the comprehensive workforce needs of Hawaii.  The DBEDT office would provide strategic oversight and coordinate with county workforce investment boards, which would continue to do training at the county level and drive a bottom-up idea process.

Partnerships:
Lastly, workforce training is the responsibility of all stakeholders, including business, labor and education.  Business and labor involvement in workforce training is uneven and fragmented, varying widely among communities and organizations.  Business and labor have a considerable stake in an effective education and workforce development system that delivers work-ready employees and provides skills training for current workers.  The Commission recommends formation of a business/labor/education partnership council to work with the Economic Development Boards and DBEDT to strengthen and expand internships, hands-on learning programs, teacher training/orientations, target school adoptions/partnerships, best practices/outcomes analysis and website development.

IV. Tourism
Tourism is and will continue to be a major contributor to Hawaii’s overall economy.  Ongoing success within the tourism sector is a vital component to maintaining our economic momentum.  Historically, we have measured the success of tourism in terms of visitor count growth.  Tourism industry leaders agree this model is no longer sustainable.  Given our limited supply of visitor accommodations, stretched infrastructure/environmental resources and social-cultural concerns, growth at any cost is not an option.  The industry is in the process of making a fundamental shift in visitor mix from quantity to quality (or volume to margin).

The higher-end visitor spends more per capita, is typically a repeat visitor, tends to respect/appreciate Hawaii’s natural beauty and host culture, is not as susceptible to tourism down cycles, and is more interested in activities beyond sun/surf.  In order to attract and retain this visitor segment, we need a continued commitment to improve both private and public infrastructure.  The public infrastructure and hotel/retail upgrades in Waikiki are an excellent example of public/private partnerships that will pay long-term dividends to our economic vitality.

However, our Honolulu Airport is a poor example: the Wiki Wiki shuttle is dilapidated, customs facilities are overcrowded and the aloha spirit/experience is lacking.  Our Commission recommends that the Department of Transportation to immediately implement a redevelopment plan for the Honolulu Airport as well as upgrades for our Neighbor Island airports.  The plan should combine the establishment of a state-of-the-art facility with an authentic Hawaiian experience.  Also, we recommend (1) that the county permitting process continue to be streamlined and (2) zoning regulations be reviewed to eliminate those that clearly are prohibiting tourism plant infrastructure upgrades throughout our state. 

V. Agriculture
Agriculture is another of Hawaii’s legacy industries that has embarked upon a transformation in order to ensure its sustainability.  With the declines of the commodity crops of sugar and pineapple, the agriculture industry has also shifted from quantity to quality via diversified agriculture.  Overall, the diversifying agriculture business has shown steady economic growth, but severe challenges threaten its sustainability.  These require changes in land designation, outdated regulatory restrictions and infrastructure.

Although ample amounts of agricultural lands exist, current conditions have severely curtailed agriculture investments, especially for smaller farmers.  Act 183 of the Session Laws of Hawaii 2005 established a process to identify important agricultural lands (IAL) and to explore incentives to encourage investment in agriculture on these lands.  The Commission recommends that the counties and the Land Use Commission be required to complete their analysis under Act 183 within 12 months.  Secondly, the Commission recommends that the counties amend inappropriate residential subdivision requirements for these agricultural lands.  For example, sidewalks and street lights are cost prohibitive and unnecessary for large farming properties.  Lastly, Act 183 recommended incentives for agriculture use.  The Commission recommends that owners of agricultural lands be allowed to apply for a rezoning to allow residential development on the periphery of agricultural subdivisions with a buffer green-belt required to separate the residential and agricultural land.  These agricultural land subdivisions should be designated “Important Agricultural Lands (IAL)” to perpetuate their exclusive availability for agricultural use. The residential zoning (subject to LUC’s state master plans) would help alleviate the housing shortage.  In addition, we propose adoption of rules to require, in lieu of other exactions, that a portion of the revenues generated be reinvested in these IAL subdivisions for needed infrastructure -- irrigation water, roads and other utilities to make these lands suitable for farm use.

VI. Energy
Hawaii is the most oil dependent state and pays the highest energy prices in the nation, especially for electricity or automobile gasoline.  Our challenge is to reduce our dependence through better conservation and to better utilize our state’s abundant supply of renewable energy resources.  A major component of the high cost of electricity is the power necessary for peak usage for residential consumers.  The Public Utilities Commission (PUC) is currently evaluating rate adjustment for peak users.  This would give consumers more choice in electricity cost and allow consumers to obtain rate reductions.  The Commission recommends that the PUC adopt a time/usage rate base formula to give consumers choice and to encourage conservation and that Hawaii’s utilities move with dispatch to put in place the technology for such a policy to produce results. 

The Commission also recommends that state take the lead by requiring all new state buildings to meet the energy efficiency standards set forth in the Leadership in Energy and Environmental Design (LEED) and the UH Center for Smart Building and Community Design, as well as to encourage the counties to adopt building codes that require increased energy efficiency in new construction and major remodels.

The Commission supports the state’s Renewable Portfolio Standard calling for  20% of our electricity to be generated from renewable sources by 2020.  The Commission recommends legislation that would encourage the production and use of biofuels and require biodiesel fuel utilization.  The legislation should also include support for streamlining the permitting process to facilitate the development of renewable energy projects.  Energy tax credits are scheduled to expire in 2008.  The Commission recommends these credits be extended and increased for both residential and commercial renewable energy.

Recommendations Continued...Next VII. Healthcare