Hilo moved one step closer to having the state’s first Neighbor Island community economic district on Thursday after a bill creating the district cleared its final committee in the state Senate.
House Bill 1479, introduced by Rep. Mark Nakashima, D-Hamakua, North Hilo, South Hilo, would establish the district within the Hawaii Community Development Authority, a division of the state Department of Business, Economic Development and Tourism. It would allow the HCDA to receive revenue and income, including that of the state-owned leases that comprise most of the district, and use that money to fund redevelopment projects.
The area that would be covered by the bill includes the Banyan Drive area and the Kanoelehua Industrial Area. Land in both areas is primarily on state leases. In the case of the KIA, those leases are all set to expire at the same time, as they were all issued after the 1960 tsunami.
The community economic district proposal was part of a bigger legislation package introduced by Big Island representatives with the goal of improving East Hawaii’s economy and revitalizing areas such as Banyan Drive and the KIA.
Those aims had been “weighing on the minds of Hilo legislators for a long time,” said Sen. Kai Kahele, D-Hilo, who introduced a companion bill to HB 1479.
“I think that as (they) … tried to get some types of positive things happening in Hilo, they realized that, ‘Hey, we don’t control the leases,’ and ‘How are we going to fund these things?’” Kahele said.
“When you’ve determined that you really weren’t in control of your destiny, no matter what solution you come up with … this was a mechanism we looked at and said, ‘Hey, maybe this could happen.’”
This is the first year a community economic district was proposed for Hilo. The Hawaii Community Development Authority oversees three districts on Oahu.
HCDA has not testified in support or against the bill, but has provided comments. Executive director Jesse Souki estimated in testimony that the cost of establishing a Hilo district would be about $1.5 million annually, with initial startup costs of $50,000. This would cover full-time employees and a Hawaii Island satellite office.
The state Department of Land and Natural Resources, which holds the long-term leases for most of the land in the proposed district, also provided comments about the measure.
In written testimony for Thursday’s Senate committee hearing, DLNR chairwoman Suzanne Case said that because the department incurred “significant costs and expenses” in maintaining the leases, “the department believes that all the revenues generated by existing leases (less the Office of Hawaiian Affairs’ share) should be remitted to the department to allow it to continue to perform the lease management duties.”
Revenue from the leases is about $3 million annually, Kahele said.
“I think what you’re seeing now is DLNR getting a little worried … this bill has a chance, and I think it’s getting their attention,” he said. “The bill never said it would take the entire pot (of revenue); it said it would be shared.”
The exact proportion of sharing would be determined during conferencing when HB 1479 moves to that stage.
Kahele said he expects Hilo to be in a good position once that begins because Nakashima and fellow Rep. Richard Onishi, D-Hilo, Keaau, Kurtistown, Volcano, will be sitting at the table.
During the past two months, Hawaii Island legislators hosted a number of community meetings about the economic development legislation. That outreach led to increased participation in the testimony process, Kahele said.
“A lot of people came out and offered support,” he said. “I think all of that little bit helps. How I would summarize it is that Hilo has been heard — the voices of Hilo have been heard.”
Email Ivy Ashe at iashe@hawaiitribune-herald.com.
