By Hunter Bishop
Those who suggest we run for the bunker in tough economic times fail to see the opportunities that we have to make our island a better place to live. Lost in the anxiety many are feeling over the County budget is a practical application of sound economic principles.
We need to recognize and take advantage of the opportunities that tough times provide by funding capital improvement projects that will benefit our island now and in the future.
This administration proposes a $56 million bond authorization to take advantage of these opportunities. With these funds the County will build important roads, parks, housing and waste disposal projects that our communities desperately need. The bond authorization will position us to take advantage of near-record low interest rates and any additional federal stimulus programs that offer interest rebates. Construction companies desperate for the work are submitting low bids, so we save more money while employing workers to keep our families strong and dollars flowing throughout our local economy.
Even while our economy is struggling, our island is still growing with a resulting increase in demands for service. We cannot afford to sit on our hands and say “no can” to our critical needs when we have the capacity to address them.
This is our administration’s first bond authorization request because we preserved our borrowing capacity to use at the right time, which is now, and the debt will be paid down over 20 years with the bulk of it paid as our economy improves. Such long-term borrowing is the normal way governments manage the cost of capital improvements.
Our current debt service rate of 10.3 percent will remain below the 15 percent threshold for responsible borrowing even with the addition of the bond sale we are proposing.
In July, three national bond rating firms — Standard & Poor’s, Moody’s and Fitch — evaluated our County’s financial outlook and determined that Hawai`i County is a good investment risk because of our sound approach to budgeting and willingness to take the necessary steps to keep our financial outlook strong.
Projects we propose to build include:
- La`aloa Avenue extension to improve public health, safety and the flow of traffic in Kona.
- An additional 16 units of Kaloko transitional housing to provide a safe haven for the most vulnerable Kona residents to help them stabilize their lives.
- Kapiolani Street extension to spur growth and development at the University of Hawai`i at Hilo by opening up nearly 42 acres of undeveloped land for businesses to invest in housing and new commercial activity around the campus.
- New County park facilities in the rapidly growing Hawaiian Paradise Park subdivision in Puna to provide organized and supervised activities for children, seniors and families that will strengthen the community and make it safer for residents.
- A regional rubbish transfer station and recycling center at Waiohinu to serve the growing needs of the sprawling Ka`u District for solid waste disposal facilities and give businesses relief from the long, costly drive to a landfill in Hilo or Kona.
- New photovoltaic systems in County buildings to save long-term costs and contribute to energy conservation and sustainability.
- Planning the Puna Makai Alternative Route (PMAR), a critical need in the County’s fastest growing district for access in and out during emergencies, to improve traffic safety and congestion on existing roads and provide opportunities to leverage County dollars with federal funding.
- Repairs and upgrades to recreational facilities in North Kohala, including Kamehameha and Keokea Beach parks where facilities that are used extensively by the community have been closed since the 2006 Kiholo Bay earthquake.
These are some of the proposed projects we are proposing to be funded with the sale of bonds that will put people to work, save taxpayer dollars, strengthen our communities and help us paddle our canoe out of the economic doldrums.
The Hawai`i County Council again will consider our proposed bond authorization Bill 311 on Nov. 30, and the administration urges Council members to confirm their earlier decision to authorize the sale of bonds for these projects for the benefit of our residents and the future of our island.
(Hunter Bishop is an executive assistant to Mayor Billy Kenoi.)
November 27th, 2010 at 2:47 pm
“sound economics” as used here: this is like the wife telling the husband how much she saved him by maxing out the credit card while shopping only for items on sale.
So the bond rating companies still value the Big Island tax payers as a “good investment”, that is to say, we continue to be willing suckers to government greed.
As for “employing workers to keep our families strong and dollars flowing throughout our local economy”:
that’s great if you arr a favored contractor. Not so good for the rest of us who would rather spend our money in ways we are certain will benefit our families directly, not trickling through the government’s fingers to their favored buddies in hopes a few crumbs end up for us down the road.
Just say no.
November 27th, 2010 at 2:54 pm
With all due respect to Hunter Bishop and Billy Kenoi there is a sense of, to use Hunter’s phrase, “take advantage of the opportunities” that is more than a bit worrisome.
A few points to consider….
1. We have some major debt moving forward with haste and an outspoken lack of interest in public input. ‘Haste makes waste’ quickly comes to mind and wasting money is something the CoH has a proven track record off.
2. Some of the “intended” uses of the bond, worthwhile as they may be, are projects not even quite in the conceptual stage yet and are in fact jumping the line in the approved list of Capital Improvement Projects (CIP). There are legitimate questions to be asked about the rush to fund, without specificity, $56 million to be repaid with interest by we the taxpayers.
3. The voters have made a loud statement in removing Kenoi’s rubber stamp council majority. The Power of the Purse lies with our legislative body. Kenoi’s bond request, pushed forward as it has been without public hearing, deprives the voters (us through our newly elected council) of evaluating the bond request in a timely and reasonable manner.
4. While all the intended uses for this bond have the veneer of usefulness some are of more practical purpose than others. The outgoing council majority has made every effort to prevent thorough discourse on council and with the public.
Perhaps Mr. Bishop could respond here, since there is no such opportunity to question him on the Mayor’s press release site, as to just what the hell the hurry is?
Are we to conclude that the Mayor’s office believes that the incoming council majority is not concerned with the infrastructure needs of this island?
So Hunter, please explain here the Mayor’s rationale for excluding public hearings and forcing Bill 311 forward before the impacts of the 2011 budget are understood.
Why do we need this debt today for projects, some of which are years away? Why are no public hearings allowed? What happened to “Together We Can”?
You do understand that if Bill 311 is pushed through unceremoniously that there will be blow back. What makes it worth the acrimony?
November 27th, 2010 at 3:18 pm
Aloha Hunter,
Thank you for the insight into the upcoming proposed Bond issue.
Since the County is spending all of this money and various projects, why can’t they complete a road paving project that was promised 4 years ago, namely the re-surfacing of County roads within the community of Kalapana Seaview?? We spent millions building and dedicating the roads within Seaview to the County….only to watch them fall in to utter disrepair….there are roads where you can barely see the pavement thru all the weeds and grass.
Not very good fiscal policy to ignore roads that were given to the County with the understanding that they would be improved. Please help. If there are any funds remaining from the Bond issue….I suggest some much needed road repair within a large subdivision that acted on good faith when we gave the roads to the County.
November 27th, 2010 at 4:15 pm
Hunter,
Clearly, as presented above in reasonable fashion by Rob, Mark, and Marie, the matter here requires a good bit more consideration.
CoH has a serious credibility problems, regarding contract management, community relations regarding infrastructure, etc.
Maybe the current administration does or does not deserve that rap. Deserve it or not, that is the reality the current administration must deal with.
For example, the community is being told CoH needs the “flexibility” to not do what it is claiming to want the debt for.
How about some assurances to the community that we know what this proposed debt is for? Confidence building.
In the case of the HPP park, find out from the community what is wanted. Partnering rather than Soviet-style central planning.
btw: as a trained economist, I remain curious as to specifically what “sound economic principles” you refer to. …?
November 27th, 2010 at 4:38 pm
Marie says:
“‘sound economics’ as used here: this is like the wife telling the husband how much she saved him by maxing out the credit card while shopping only for items on sale.”
The only way that is similar is if the wife is buying a new playhouse for the kids, pavement for the driveway, repairs to the house or other household improvements. Otherwise it is a bogus comparison.
And by the way, “favored contractors” is defined as those who make the lowest bid.
And from her penultimate paragraph it appears she has no need for fire, or police, or any other county services. Call it a hunch, but I’m guessing otherwise.
November 27th, 2010 at 5:00 pm
Mark–
Road maintenance is an operating expense. Road building is a capital expense. You can’t use capital money for operating expenses.
November 27th, 2010 at 5:19 pm
In the business world I have always been able to tell the difference between a plan and a scheme as follows:
A plan can be put on paper. A scheme cannot.
By defeating the motion to attach the identified projects to the bond the current council majority endorsed a scheme.
November 27th, 2010 at 5:43 pm
Hunter Bishop,
you are a friend and I respect you, but I have many reservations about this bond proposal. The only people that I see going to work are the UNION people to suck up the high wages of community improvements. What about the rest of us that are not unionized and need a job? We fall by he wayside because we are not part of the UNION that elected our politicians.
Now you and the political machine want US to back you because it is good for our future. Bull crap pal, we will support our UNION brothers for a year or two and pay for it with twenty years of paying off the bonds. And ounce our UNIONS are out of work the political machine will demand more support because they voted for you. This is Bull S and anyone with a sense of reality will recognize it.
Stop spending beyond our means, let’ firm up and live like a family. If you don’t have money you can’t buy a new TV, we can’t afford it until we save up and put the monies in the bank. Because the interest rate on a plasma TV is low right now doesn’t mean we have to bury ourselves, Hell the TV will be in the land fill before we pay it off.
The Lack
November 27th, 2010 at 5:49 pm
Just two questions,
1. Your Logic will be the same after the new Council takes place, so why be in such a rush, does the logic not work on the newly elected Council Members that the Voters seemed to place more confidence in????
2. You seemed to list all the projects you wanted to fund, why won’t you put it in the Bill????
November 27th, 2010 at 6:21 pm
I’d like to keep my money you keep your county services. Most are sadly lacking and on 1/4 speed. Hire a managing director and contract jobs out to the the REAL low bidders. This is only the beginning of tough times. No federal, state or county produce any product only services. Most services are for their own revenue stream. Fire how many structures have been saved? EMT’s ok, Police most for state revenue collection., waste put a %tax on every pound of goods in a wrapper, hire private co. to figure out how to make this resource pay back. There’s machines on the market that will turn it back into fuel ect ect. Times are changing and business as usual is not going to cut it very much longer. Fee’s and tax increases are making people mad. No county QE2
November 27th, 2010 at 8:47 pm
Procurement reform.
Now.
November 27th, 2010 at 9:06 pm
It appears to me that by not committing to specific projects in the bill the administration will have the flexibility to make the most of federal and state funds as they become available by putting the county’s money where they can get the biggest bang for the buck. I see nothing on the list Hunter mentioned for which there isn’t a need.
November 28th, 2010 at 6:32 am
Years back I was with the CEO of the company I work for who took me along with a few other accounting people to a division of the company in Cleveland, Ohio. The division had been loosing money for quite sometime.
The division manager was explaining on and on and on why he felt it was OK to loose money in light of several dozen reasons.
I will never forget the CEO’s words to him after his seemingly endless justifications of financial losses. The CEO said:
“Look, only and I mean ONLY my wife can justify to me spending more money than I make. No one and I repeat NO ONE ELSE can do that and survive.”
He fired the division manager and replaced him with another qualified individual.
A year later – the Cleveland division was the top performer for the entire company.
Too bad we just can’t fire Billy for his justifications for loosing money. One would think that with the election of 3 NEW competent qualified individuals – that the insanity would end.
Apparently NOT SO!
November 28th, 2010 at 8:21 am
Opportunities are great, but exploiting them are counterproductive. If more energy is put into creating new opportunities for the future, then this frame of mind works. But if the CoH keeps up this habit of scraping anything left behind from the rapture of non-local enterprises, then begging for residuals, our keiki will never see the day when we actually have a budget, not an appropriation of debt!
November 28th, 2010 at 2:26 pm
Pretty much any one who has a good credit score is trying to borrow money today because borrowing costs are so cheap. Ask your banker, there is a refi boom going on.
I agree that this is the time to borrow and build if you can, because the cost to do the work and to borrow capital will only go up if you wait. And it helps that this stuff will create jobs. It beats sitting on your hands and waiting for something to happen to improve the economy
The more basic question is whether this work needs to be done. Does Kona really need a mauka-to-makai connector road like Laaloa? They say they do, and the project has been in the works for many years, lots of planning went into it. Does HPP need a park? Aparently HPP folks don’t think they they do, so that money ought to go somewhere else where there is a community consensus about what they need and want.
It seems a shame to let this opportunity pass, but I guess HPP can band together later and do an improvement district or something if a consensus emerges in favor of a park. Doesn’t seem likely, though
November 28th, 2010 at 2:34 pm
As for the process, why would a mayor who has the votes to push soemthing through council wait until he doesn’t have the votes, and then try? Duh.
Only an idiot would wait. I’m not wild about Kenoi, but he’s not an idiot.
November 28th, 2010 at 5:25 pm
PaulJ:
There’s more going on than a bond issue.
November 28th, 2010 at 5:26 pm
“why would a mayor who has the votes to push something through council wait until he doesn’t have the votes”?
In the event that politics is more important than good government.
As for an HPP “community consensus about what they need and want” — the County has never asked the community what it wants. No matter what community it is, this is no way to do good government.
November 28th, 2010 at 7:22 pm
Some would beg to differ. If an official spent 21 grand on a tv show for themselves I would be cutting their credit card off.
It may be a good time to borrow money but that doesn’t necessarily make it a good idea to do so. Tiny Hawaii can’t spend its way out of a bad global economy no matter how much money we borrow.
Pete’s right, real procurement reform is needed, for a start. This bad economy may last longer than we think.
November 28th, 2010 at 10:41 pm
Actually and feel free to edit Tiffany, but Kenoi has truly become an idiot.
His remaining 2 years will be hell for him. After that, he will no longer be in public office.
He blew his chances supporting the wrong Governor, more or less his death sentence, and let’s not forget he supported Guy – and if this bill passes – it will be the final nail in a coffin already shut and sealed.
Kenoi will be a pain in the ass for a few more weeks – then he becomes irrelevant to anything that will matter.
November 29th, 2010 at 5:38 am
James, haven’t those 20-acre park sites been on the books since HPP was created? In other words, the park sites were there before the people who live in the subdivision today. Years ago I saw maps of the subdivision that had areas designated for schools and parks, and it was my understanding that those land uses were designated as part of the original design of HPP.
If you buy a lot next to a site designated for a park, and then get upset when the park opens, who’s fault is that? I was trying to be polite when I said there seems to be a “consensus” issue. What HPP apparently has is a NIMBY problem, which will stop any project cold these days. That’s why the county should just move on to another community that wants the benefit (park), and leave HPP to fight with itself.
Re politics, part of “good government” means making decisions. Kenoi is making a decision. You may not agree with it — and in the case of the HPP park, I think Kenoi is wrong — but I prefer a decision to a do-nothing governor, do-nothing mayor or do-nothing council. In my book, Lingle was a failure because she had no power. Anything she did, the Legislature would attack it, and it tied her hands for eight long years.
My guess is the new political game in the works is that the new council majority will do the same thing to Kenoi. They will fight every initiative Kenoi does, just like the Republicans fight everything Obama does. The County will be stuck, with no way forward, simply because a couple of members of the Council want to run for mayor against Kenoi in two years.
It’s a terrible thing to do because it shows a complete disregards for the well-being of the larger community. I hate this game when I see it in national, state or local politics.
November 29th, 2010 at 7:29 am
Hello? Hello? What will be the debt ratio for our uocoming budget years. This key compenent is clearly missing by pros and cons in all this gibberish,
And keep in mind what bonds can be legally used for!
(– HJC is Hugh Clark.)
November 29th, 2010 at 9:25 am
Gibberish HJC?
Please explain.
This lame duck council wishes to impose a whole bunch of financial unknowns on the citizens and taxpayers of this County without due discussion, public input and as you say, financial analysis.
Is that gibberish?
November 29th, 2010 at 10:08 am
“My guess is the new political game in the works is that the new council majority will do the same thing to Kenoi. They will fight every initiative Kenoi does, just like the Republicans fight everything Obama does. The County will be stuck, with no way forward, simply because a couple of members of the Council want to run for mayor against Kenoi in two years.” (PaulJ)
I guess I have more faith in the new council than you do. If the mayor has an initiative that will be good for the county, it will pass – a bad initiative will flounder. I believe the new council will hold the best interests of residents as their number one priority and will not play the politics of the past. I have the utmost trust in the new council to do the right thing.
November 29th, 2010 at 10:57 am
If you want more debt stay home Tuesday. If you want accountable governmant show up and let the Council know that our money has value. Please review the Counties track record spending our money. 27 Million for a building which still leaks. Incidentally the most expensive re-build in County history. The Imiloa was built and filled with all those neat Gizmos for 26 Million. Look at consulting fees. How about 3.4 million dollars in auto accidents. Were the employees fired? NO!Personal misconduct is paid for by? Thats righ, you guessed it US! At least wait until the new Council Persons arrive. Three Council persons were not re-elected because their past behavior and decisions. This is too much money to piss away Many of Hunters arguments have merit. The question then is would a smaller governmnet still accomplish these objectives and not incur so much debt.
November 29th, 2010 at 1:17 pm
with the acceptance of fiat money terms like debt and surplus become meaning-less, rather, less relevant
what we are not told up front is that money is imaginary
the greater the number of zeros to the right of the one [100 or 10000000000000000000000....] the more imaginary the money
in other words if God Almighty wrote you a check for a trillion trillion trillion dollars who could cash the check
be it gold or paper it is simply an idea which conveys a arbitrary supposed value
gold at least has some utilitarian value but one can not eat, clothe, or shelter oneself with either substance paper or gold
paper is so low in actual value that we use it in the bathroom
not only is money ONLY an idea BUT to both governments [like the county and this bond issue] and banks it’s even more imaginary than normal as banks and governments MAKE MONEY UP OUT OF THIN AIR
banks do it by a scheme known as fractional reserve lending where a bank has one dollar and can lend ten with nine dollars made up out of thin air[so much for the mortgage crisis]
governments do it by racking up debt
all divisions of government can do so the county with a bond issue the same for the states and feds each just PRINTS up money out of nothing
remember the $1,000,000,000,000 out of thin air bail out money- no one moved a billion ounces of gold anywhere it just came from thin air or more precisly words on paper
now what they do not tell and allow FEAR to rear its ugly head is the idea that our grandkids are going to pay it all back
this is a bold faced lie
in the 1920′s as a result of the Treaty of Versailles Germany experienced hyper-inflation such that eventually folks got pay raises three times a day and it took a wheelbarrow full of cash to buy a loaf of bread
how was this problem solved [and solved it was as Germany was a military superpower 15 years later]??
the German Government issued a NEW paper currency with a short term[get it while the getting is good tick tock] exchange rate of one TRILLION old Marks for a new Mark; PROBLEM SOLVED government debt erased with the stroke of a pen [if one fails to learn from the mistakes of the past one is doomed to repeat them if one is fooled by the old slight of hand look out for the new kind]
humanity has entered a phase of geometric progressions money can only follow
given the above a smarter thing for the County to do would be to:
super overfund capitol improvement projects for the next 25 to 50 years
issue tax free bonds on this capitol
use some to fund the county budget
and the vast surplus to fund money, mortgage, global growth and equity accounts
make tax free profits and repay the debt from the differential between the tax free municipal bonds county issued and the revenues from the investment pool of surplus fund
example instead of only 50 million make it 500,000,000,000 with a variable yield at 3 to 6 percent tax free linked to the return of the invested surplus from 6 to 9 percent, so there is a built in 3 percent return on the invested surplus; if the county were limited to only one billion a year expenses that would leave 3 percent on 500 billion or 14 billion to repay 500 billion in 33 years with one Billion yearly revenue to the County above the cost of the bonds this would eliminate all county fees and property tax and really provide infrastructure and services
November 29th, 2010 at 1:39 pm
a interesting web page
http://www.usdebtclock.org/
if one doubts what I said above about imaginary money check out the row called “money creation” and look at the number for currency and credit derivatives 577 TRILLION — hint that much money does not exist
November 29th, 2010 at 5:55 pm
Actually, for the first time in a long time, we have a Council with the POTENTIAL to lead this County for the next two years. And not the absolute “gibberish” we have had for the last 4 plus years. Real true leadership. The POTENTIAL exists – of which I have a strong belief that the true POTENTIAL will surface here very quickly.
The last two years this Council has thumbed its nose at virtually everything it had before it. This bill, will once again, be a thumb nose to the public that overwhelmingly does not want it – if it passes.
Kenoi has the opportunity to “redeem” himself in the next two years. However, my belief if very strong that he will not. He will become the “lame duck” – for the next two years.
Yagong wants to be the next Mayor. This Council has the POTENTIAL to lead – with or without Kenoi – but at the end of it all – in 2 years – Yagong will be the next Mayor.
Perhaps – Smart as Chair(wo)man????
And Edwards Hunt as ????
PS – If this bill passes – could the “new” council – as its first order of business – revoke it? Legally?? (And not Lincoln’s opinion please – but a real lawyers opinion??
November 29th, 2010 at 6:26 pm
Paul J,
Don’t get your point. Sure, there are 20-acre lots long designated for “recreation and education” and for others for “commercial and light industrial.”
For me that is fine. Do it and do it right.
The issue I raise is the basic need for community input into what is proposed — this has not happened.
November 30th, 2010 at 6:54 pm
Today was certainly one among a very few extraordinary Council meetings I have observed.
It was a special meeting called to reconsider Bill 311.
This was the Council who had contradicted public sentiment on land sale, Reorganization, re-Reorganizaiton, budget, and tax hike.
For their Hana Hou, it was big debt without a detailed plan.
Testimony in opposition came from the usual suspects, and also very articulate opposition was voiced from people who had never been to a Council meeting.
Some Council Rules and some Charter provisions regarding Council proceedings were tested in very serious fashion.
Among the democratic participants was a diversity of people with two things in common: citizenship in this community and a compulsion to instruct their County government to stop the folly at hand.
There were supporters of Bill 311, notably UHH, ILWU, and Isemoto Construction, in addition to folks from Kalapana whose relatively small park project has gotten caught up in this Sumu-size political shoving match.
After J Yoshimoto made the 5th ‘aye’ vote for taking reconsideration of Bill 311 to public hearing, someone commented that the power of balance in the Council had shifted. Maybe it did indeed wobble in a different direction considerably.