Hawaii Business Magazine February 2023 by aio Hawaiʻi

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Plus: Private equity firms have been buying rental properties nationwide, including in West O‘ahu. We looked into their impacts on renters. P. 36

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S PEC I A L PR O M OT I O N A L S ECT I O N ‘ AI N A PAUA H I : L AU L I M A

Thriving Together K A M E H A M E H A S C H O O L S ' C O M M I T M E N T to creating resilient communities extends to the types of retailers operating within its commercial real estate properties. Striking the right balance between the number of national and local brands makes for a thriving retail center. “We believe that local businesses and national brands coexist harmoniously,” says Haunani Fujimoto, Kamehameha Schools Director of Leasing. Comprised of 15,000 acres, Kamehameha Schools’ commercial real estate is used for everything from hospitality to residential and retail. “Our goal is to ensure our tenancies align with our vision for our communities and addresses the needs of the neighborhoods they are in,” she says. On the islands of O‘ahu and Hawai‘i, over 300 retail businesses are operating within Kamehameha Schoolsowned and managed properties. Some of them, such as the Dillingham Plaza in Kapālama, are situated in the urban core of Honolulu, while others, such as Keauhou Shopping Center, are located on the island of Hawai‘i. Every tenant offers unique brands and products, which play a significant role in shaping those neighborhoods, as it directly influences the experiences of kama‘āina and visitors. Therefore, each retail center must be thoughtfully executed for those who call these communities home. “Traditionally, national brands are key anchors to a retail center. However, we are seeing a shift in some of our centers where local brands are making a more commanding presence through their unique experiences and product offerings,” says Fujimoto. “The national retailers provide mainstream global exposure which local business can capitalize on.” The addition of local retailers helps to balance the big-name retail stores. For example, Kamehameha School’s largest shopping center, Windward Mall, includes national brands, such as Target and Ross Dress for Less, but it also has a long list of locally owned businesses that contribute to the center’s diversity and vibrancy, including Ko‘olau Pets, T&C Surf Design, and Cookie Corner. Similarly, in Honolulu, SALT at Our Kaka‘ako has a Starbucks alongside three locally owned coffee businesses: ARVO, Morning Brew Kaka‘ako, and 9Bar Honolulu. “With the right mixture, national brands provide familiarity for customers, while our local businesses offer a sense of intrigue, wonderment, and authenticity,” says Fujimoto.

“Hawai‘i’s locally grown businesses create a viable market and draw the attention of national brands.” - H AU N A N I F UJ I M OTO , K A M E H A M E H A S C H O O L S ' D I R E C TO R O F L E A S I N G

S PEC I A L PR O M OT I O N A L S ECT I O N

KAMEHAMEHA SCHOOLS

Retail, by the numbers • $1.3 billion

The total number of GE tax revenue the Hawai'i retail industry generates

• 300+

The number of retail businesses operating within Kamehameha Schools-owned real estate

• 10,000

The number of job opportunities retailers on Kamehameha Schools' lands provide

Source: The Department of Taxation Annual Report, 2020-21

Photos: clockwise from top, Paiko at SALT at Our Kaka‘ako, Windward Mall, and Butcher & Bird.

02.23

FEATURES

Air Force veteran Rickey Welch found a job at a Waikīkī hotel with the help of U.S. Vets Hawai‘i.

This Startup Is Restoring Forests Terraformation planted 7,200 trees and plants, and it’s just getting started. The goal: restoring 3 billion acres of degraded land across the globe.

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Private Equity Is Buying Up Rental Properties The controversial mainland practice is growing in West O‘ahu. Tenants say the result is often escalating rents and unexpected fees.

How to Find Valuable “Hidden Workers” Hawai‘i employers struggle to fill 46,500 job openings, but great candidates are often overlooked in the hiring process.

5 Construction Industry Leaders on What’s Ahead Our roundtable covers topics such as affordable housing, climate change adaptations and an upcoming multibilliondollar construction project.

BOSS Survey: What Local People Really Think Business leaders and residents weigh in on remote work, just-right tourism levels, and how likely they are to attend big events and pay more for Hawai‘i products.

PH OTO BY A A R O N YO S H I N O

02.23

CONTENTS

ON THE COVER, PHOTO: GETTY IMAGES, PHOTO ILLUSTRATION: KELSEY IGE; THIS PAGE, PHOTO: JEFF HAWE

Saving Native ‘Ōhi‘a Trees Pests and diseases are decimating native forests, but simple actions can help stop the decline.

Hawai‘i Foodbank’s New Model for Serving 120,000 People President and CEO Amy Miller Marvin says, “We’ve completely changed our sourcing. It allows us to be more thoughtful about nutrition.” 14 A Hospice Nurse Brings Dignity and Comfort Kymberly James is part of an end-of-life team that includes doctors, social workers and spiritual counselors. 18

Hawai‘i’s Small Businesses Miss Out on Lucrative Contracts While mainland companies are awarded billions of federal dollars each year, local ones don’t even apply. Here’s advice on how to compete. 19 Alexander & Baldwin Has Been Busy Simplifying Its Portfolio The 153-year-old kama‘āina company is focused on commercial real estate: installing solar, repurposing structures, upgrading retail centers and acquiring new properties. 20

Big Changes Are Happening at a 12-Acre Campus for Animals The Hawaii Island Humane Society has a new community center and a soon-to-be-completed hospital. 24 East Maui Icons Win Nature Conservancy Award Tweetie and John Lind have spent their lives preserving traditional subsistence practices and Hawaiian lifestyles in Kīpahulu. 74

SPECI A L A DV ERTI SI NG SECTI ON S Industry Outlook Nine companies share executive expertise and provide previews for 2023 on their specific industry. 25 Shipping, Air and Transportation Your 2023 guide to one of Hawai‘i’s most vital industries. 55

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Hawaii Business Magazine will honor the 2023 Hawai‘i’s Best Places to Work winners on Friday, March 31, at the Hilton Hawaiian Village. Wondering what it takes to be a Best Place to Work? Our April issue will feature profiles of the companies and outline their tools to create better workplaces. The Best Places to Work Awards celebration is by invitation only. Look out for the 2024 Best Places to Work registration for your chance to make the list and be invited to next year’s celebration! For more information about our events, visit hawaiibusiness.com/events or contact Magdalena Durak, Events Manager, at magdalenad@hawaiibusiness.com

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Women Entrepreneurs Conference Prince Waikiki Central Pacific Bank and Hawaii Business Magazine will present the inaugural Women Entrepreneurs Conference on May 10, 2023. The conference will be inspiring and fun, but mostly we want our attendees to leave with solid, actionable information that will allow them to gain more funding and discover other resources to support the growth and success of their businesses! More details to come.

CO R R E C T I O N S

Central Pacific Bank is the state’s number one lender for residential multifamily projects. Bank of Hawai‘i is the state’s number one lender for home buyers. December’s report on CEO of the Year Paul Yonamine incorrectly said CPB was the number one lender for home buyers. 8

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CELEBRATING THE GIFT OF EDUCATION Mahalo to everyone who participated in our annual Scholarship Luncheon! Through the generosity of our donors, we awarded 373 scholarships totaling nearly $1.1 million for the 2022-2023 academic year. Special thanks to our Title Sponsor

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N AT I V E

T R E E S

How to Help Hawai‘i’s Declining Native Tree Population BY AUSTIN BO URCIER

ATIVE TREES ARE AN of ESSENTIAL PART

Hawai‘i’s ecosystem, but they’re rapidly vanishing statewide, says Travis Idol, a professor of tropical forestry and agroforestry at UH Mānoa. He says multiple factors are to blame: Nonnative species compete with native plants for nutrients like water and sunlight. Often, they regenerate faster, grow taller and take up more space than native plants. In direct competition, the invasive species often overpower the native trees. That means fewer native plant seedlings and fewer native plants being naturally grown. The introduction of pests and diseases such as Rapid ‘Ōhi‘a Death has also devastated native trees and forests. As the name suggests, the disease causes significant damage to ‘ōhi‘a trees and kills them in a matter of days or weeks. It’s difficult to contain pests and diseases once they’re introduced. “Invasive species, you can sort of get in there and control them. With pests and diseases, once they’re out there, it’s almost impossible to keep them under control,” says Idol. Many diseases and pests active in Hawai‘i are relatively new: ‘Ōhi‘a rust was first found here in 2005; Rapid ‘Ōhi‘a Death was identified in the last few years and has been in the state since at least 2014. And new diseases and pests are found every couple of years, Idol says. A destructive invasive pest, the Erythrina gall wasp, nearly wiped out several native species, notably wiliwili trees. The release of a biocontrol agent – an even

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smaller parasitic wasp that preys on the gall wasp – reduced the population of the invasive pest and helped restore wiliwili trees. On their own, each pest and disease harms native species, but the compound effect is far more intense, Idol says. “It really is the combination of disturbances to which our native plants are not adapted, combined with nonnative species that can take advantage of those conditions, that leads to the introduction, spread and dominance of nonnative species.” BEFORE ENTERING FORESTS

Local guidelines (tinyurl. com/Hitreehelp) help reduce the spread of damaging pests and diseases in Hawai‘i. One guideline is: Avoid moving ‘ōhi‘a wood. If you don’t know where the ‘ōhi‘a wood or ‘ōhi‘a parts are from, don’t move them. A State Department of Agriculture quarantine prevents moving ‘ōhi‘a off Hawai‘i Island. Another guideline: if you are hiking or working in the woods, clean your gear, tools, shoes and clothes before and after entering forests. Brush all soil off tools and gear, then spray with 70% rubbing

alcohol. Wash clothes with hot water and soap. New pests and diseases enter the state through imports, according to Idol, and the best way to stop them is to heavily restrict the importation of live plants and animals. “Bringing in live plant material from out of the state is a risk if it hasn’t been cooked or sanitized before it gets here. There are more serious measures we could take to try to reduce the accidental importation of pests, diseases and even other potentially invasive plant species,” he says. It’s important to keep Hawai‘i isolated from nonnative species, as native species serve a special role in our islands’ ecosystem, Idol says. “Many tropical trees can grow in Hawai‘i, but native species evolved as a community ... of plants, animals and microbes that thrive together, support the health of the land, water and people, and therefore make Hawai‘i the unique and special place that it is for those of us who live here and the millions who visit every year.” The Pacific Ocean served for millennia as a barrier to invasive species, pests and diseases. Native species benefited from that seclusion while it lasted, but now they have almost no resistance to those outside forces. Idol says Australia and New Zealand’s strict import regulations on plants offer a model for Hawai‘i. Read about their regulations at tinyurl.com/AusRules and tinyurl.com/NZPlantRules. Learn more about local conservation efforts at hawaiiconservation.org. PH OTO BY J E F F H AW E

An ‘ōhi‘a forest on Hawai‘i Island. The trees have been affected by Rapid ‘Ōhi‘a Death as evidenced by black splotches on the trees leaves and bark.

T E R R A F O R M AT I O N

Startup Helps Restore Biodiversity and Native Forests on Hawai‘i Island The startup is called Terraformation, and its goal is to use local projects as models for restoring degraded land and countering carbon emissions worldwide BY CY N TH IA SWEEN EY

nearly two centuries of ranching, a large swath of landscape along ‘Akoni Pule Highway in North Kohala had been left dry and barren. Now, a local startup has begun planting trees and other plants on the land in an effort to revitalize the ecosystem and eventually help bring back additional coastal ocean life. Terraformation, a forest restoration company based on Hawai‘i Island, has planted about 7,200 trees and plants on a 45-acre site adjacent to the highway, called Pacific Flight at Kaupalaoa, including more than a dozen native species. The company has three other biodiversity projects on Hawai‘i Island and a seed bank at the Natural Energy Laboratory of Hawaii Authority in Kona, says Keali‘i Thoene, Terraformation’s community programs manager. He says Terraformation aims to help solve the planet’s carbon emission problem and restore degraded land across the globe by sowing native plants and trees, with Hawai‘i Island leading the way. CARBON EMISSIONS

The company was founded in 2017 by 12

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CEO Yishan Wong, formerly the CEO of Reddit and an engineer at both PayPal and Facebook. It has about 100 employees including engineers, arborists and biologists, half of them in Hawai‘i. Wong purchased the 45-acre property along ‘Akoni Pule Highway to retire and build a “little community” for friends and family. While starting that project, he was living in Waimea, known for its cooler climate, yet the town was experiencing unusually warm nighttime temperatures, Wong says. That got him thinking about global warming and how to capture the carbon emissions that lead to it. Planting trees seemed like the right answer. Thoene says Terraformation’s other projects on the island are ‘Ōhi‘a Lani on 174 acres in Mahiki, which is being planted with koa and ‘ōhi‘a; the 51-acre Ho‘ohui Agroforestry Project in Pāpa‘ikou, north of Hilo; and 49 acres at Future Forests in Honokōhau, Kona. At Pacific Flight at Kaupalaoa, Terraformation has planted mostly acacia trees, which should reach maturity in about 10 years. Native sandalwood will then be introduced, because sandalwood needs another plant to act as a “host,” says Thoene. Just planting trees won’t do the job, however. “Planting long rows of a single species of tree is not as effective at drawing

down carbon and storing it in the long run. Biodiverse native forests are 42 times better at doing that,” Thoene says. To reestablish native ecosystems, in the coming months Terraformation says it intends to sow 25,000 plants from 22 native species, including ferns, shrubs, berries and forest hibiscus. COMBATING CLIMATE CHANGE

Terraformation is currently supporting reforestation projects across five continents by providing seeds, specialty software and advice on how to find funding for the projects. “By and large the things that are slowing people down are water, money and lack of expertise,” Thoene says. Terraformation’s ultimate goal is to

PHOTO: COURTESY OF TERRAFORMATION

FTER THE CLEAR- CUTTING OF ‘ILIAHI (SANDALWOOD TREES) and

Restoration Site Lead Nyree Hulme carefully plants an ‘āweoweo at the Kaupalaoa site.

revitalize 3 billion acres of degraded land across the globe – roughly the size of the U.S. and Mexico combined. Thoene says it was on track in 2022 to plant or support planting a million trees worldwide. “We need to times that by 100, every year for the next decade,” he says. “We’re not sure we’re going to get 3 billion acres of land planted, but we know we have to try. We know this is the right thing to do, so we’re taking the first step.” Investors seem ready to commit. At the 2021 United Nations Climate Change Conference, COP26, $7.2 billion of private investment was committed to protect and restore forests. Terraformation received $30 million in early stage venture funding in 2021. And in October, it announced the formation of a Seed to Forest Alliance with

three forestry nonprofits to help build up the reforestation movement worldwide. REFORESTING AND THE OCEAN

To water the plants and trees at Pacific Flight, Terraformation says, it installed a solar-powered facility that uses reverse osmosis to desalinate 26,000 gallons of ocean water a day – comparable to what it takes to water a golf course. The company says similar systems could provide fresh water for other restoration projects. “We don’t want to have to do this forever, only about another decade,” Thoene says. By that time, he says, the ecosystem should be self-sustaining. A thriving sandalwood forest is one goal, but the ultimate success at Pacific Flight will see the return of a spring-wa-

ter trench that once attracted sperm whales to the Kohala Coast. “You can’t just plant trees and call it a day,” Thoene says. “If you look at what was here before, I think our task will be finished once we see the sperm whales return to the ocean shores. That’s when we will know our ecosystems are back.” To that end, Terraformation has partnered with Arizona State University and its Center for Global Discovery and Conservation Science, which has a Hawai‘i facility adjacent to UH Hilo. Center director Greg Asner says while Terraformation is restoring native vegetation on land, his team, along with the state’s Department of Land and Natural Resources, is leading coral reef restoration programs. The inter-agency program, called Hawai‘i Coral, uses aircraft to map all the reefs in the state every year or so. The biggest killer of coral reef isn’t bleaching but nearby land erosion, Asner says. “My team has been particularly interested in pairing up with Terraformation because they have expanded their business model to include nearshore coastal lands, where a large part of the reef problem lies,” Asner says “My team is the only source for mapping coral reefs across the state and assessing coral reef decline across the Hawaiian Islands, and from those many diagnostic studies, we know we cannot save corals without a very large landbased intervention. Terraformation is a part of that solution.” Maui Nui Botanical Gardens, in Kahalui, has also expressed interest in Terraformation’s seed bank. According to Executive Director Tamara Sherrill, the gardens have started a seed storage program and have been trying to find a partner for some time. The Bishop Museum on O‘ahu has also expressed interest, Thoene says. “With all of its different climate zones, any creature from the planet Earth can come here (to Hawai‘i Island) and find a comfortable place to live,” he says. “In that sense we are a representation of the globe in general. If we get it right here in Hawai‘i, we can be an example for what we can do in the world. The goal is to be a big, shining example.” H AWA I I B U S I N ES S

W H AT ’ S

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Hawai‘i Foodbank: “Nourish our ‘Ohana Today and Work to End Hunger Tomorrow” The pandemic transformed how the nonprofit operates, with a greater emphasis now on healthier food and long-term solutions to reduce hunger

A sorting day at the Foodbank warehouse in Mapunapuna.

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PHOTO: COURTESY OF HAWAII FOODBANK

BY STEV E PETRA NIK

MILLER

MARVIN,

president and CEO of Hawai‘i Foodbank, says 1 in 4 children in Hawai‘i are food insecure – meaning they don’t have the consistent access to food they need to lead active healthy lives. She talks about how the Foodbank is transforming the way it collects and distributes food to better serve those who need it. This interview has been condensed. Q: HOW MANY PEOPLE DOES HAWAI‘I FOODBANK SERVE IN AN AVERAGE MONTH?

About 110,000 people on O‘ahu and 10,000 people on Kaua‘i, including people coming multiple times to a food pantry and those who need help just once at the end of the month when their SNAP benefit runs out. And we partner with the Maui Food Bank and The Food Basket on Hawai‘i Island. We’re a member of Feeding America, a network of about 200 food banks nationwide that gives us access to donated and heavily discounted food, so we can pass those benefits to Maui and the Big Island. WHO IS THE TYPICAL PERSON YOU SERVE?

It runs the gamut – all walks of life – but since the pandemic began, we’ve seen lots of people need help for the first time. At least a third of those we support are employed – sometimes two jobs – yet can’t make ends meet. We estimate 1 in 6 people in Hawai‘i are now food insecure. That includes about 1 in 4 children – the second-highest rate of childhood food insecurity in the country after Louisiana. Kūpuna in multigenerational households are more likely to be food insecure than kūpuna living alone. We think one reason is grandparents might go without to be sure a grandchild has enough to eat. No one should ever have to make that choice. WHAT DOES FOOD INSECURITY MEAN?

It means there isn’t regular consistent access to food for everyone in the household to lead an active healthy life. It

could mean you have access to food, but not healthy food. It could be someone on SNAP has healthy food for the first three weeks but not all month. It might mean a parent goes without. Many times kids get healthy meals at school – maybe breakfast and lunch – but not another healthy meal until they come back to school. That makes weekends and school breaks especially difficult.

cleaned out retailers and people weren’t going to restaurants and kids weren’t going to school. So retailers and restaurants had little to donate. We pivoted to purchasing. We averaged about a million dollars a month in food purchases during the pandemic and that model remains. This fiscal year, we budgeted to spend $8.7 million on purchases.

HOW DOES HAWAI‘I FOODBANK COUNTER FOOD INSECURITY?

THAT’S 20 TIMES YOUR PRE-PANDEMIC SPENDING ON PURCHASED FOOD!

The Foodbank does little direct distribution. Almost all of the food is distributed through about 200 partners, ranging from small country churches to large nonprofit food pantries. We gather food for those partners. Retailers, wholesalers, manufacturers, farmers donate products and our trucks pick up food daily and bring it to the warehouse. Nonperishable items are simple: We have storage space for that. Produce is complicated because most produce sold in Hawai‘i has been on a ship for a week and then on display in the store. When it gets to the Foodbank, it often needs to be consumed quickly. But food safety is critical, so every donated item is inspected by a trained volunteer or staff member. Another 15% of our food comes from the USDA’s emergency food program, which buys food from farmers on the continent. The rest of our food we buy. Prior to the pandemic, we were purchasing little: Our annual food purchase budget was about $400,000. But the pandemic blew up that model, because need more than doubled and our regular sources of food fell because shoppers

Yes, we’ve completely changed our sourcing. It allows us to be more thoughtful about nutrition. Another silver lining from the pandemic is we partnered with the Hawai‘i Farm Bureau, which represents farmers who suddenly lost their primary customers – hotels and restaurants. We’ve continued that program. It’s a win-win-win: supporting local agriculture; investing in local food systems; and getting fresh, healthy produce that can last a couple of weeks in your fridge. Last year, 32% of the food we distributed was fresh produce. Canned goods and other nonperishables will always be an important part of what we do. But we know many food insecure people are at high risk of chronic health issues related to nutrition and expensive produce can be the first thing eliminated if you need to cut costs. WHAT ARE YOUR SPECIAL PROGRAMS FOR THE MOST VULNERABLE POPULATIONS: KEIKI AND KŪPUNA?

We’re piloting a program where about 2,200 low-income seniors across O‘ahu

“WE’VE COMPLETELY CHANGED OUR SOURCING. IT ALLOWS US TO BE MORE THOUGHTFUL ABOUT NUTRITION.” —Amy Miller Marvin, President and CEO, Hawai‘i Foodbank

H AWA I I B U S I N ES S

W H AT ’ S

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and Kaua‘i get a monthly box of USDA foods and we add an 8- to 10-pound bag of produce. For keiki, we have a school pantry program in 37 schools, where kids get access to a healthy snack during the day and for the weekends, they can take home a 5-pound bag of food. That’s something we’d like to expand. We have a summer program, when kids don’t have access to school meals, so they can still have a hot meal during the day. Last year, we were in eight sites. HOW DO YOU DESCRIBE YOUR REVISED MISSION?

WHAT DOES THE FOODBANK NEED MORE: DONATED FOOD OR DONATED MONEY?

If you purchase food to donate to us, it’s inefficient, because we can provide 2.15 meals for every dollar donated. You can’t buy 2.15 meals for $1 but we can. So we’re encouraging people to donate money to the Foodbank instead of going to the store to buy food to donate. We can stretch money so much further and we have a better sense of what foods are needed. For instance, if we get a container of carrots or of ground beef from the mainland, we pivot to buy other things. But if you have things in your cupboard that you don’t use or you have extra fruit 16

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Volunteers help load cars with produce boxes during a community food distribution event.

from a tree, we’ll take that any day. (Donate or volunteer at hawaiifoodbank.org.) WHAT ABOUT VOLUNTEERING?

There’s a ton of ways to volunteer and it can be a lot of fun. We have volunteer opportunities every day sorting food at the warehouse (2611 Kilihau St. in Mapunapuna). It’s also a great team-building activity. And we help our partners get volunteers too. (Last year, volunteers worked 23,892 hours.) WHAT DID YOU RECENTLY CHANGE IN YOUR COST-SHARING SYSTEM?

We and most food banks charged a “shared maintenance fee” to partners – like 9 or 18 cents per pound of food – to share the cost of transportation, distribution, storage and all that. Food

we buy on a grant is 100% free for the agencies, but if we’re purchasing food on unrestricted dollars, we pay half and they pay half. That’s how I think 98% of food banks worked pre-pandemic. But the agencies that tended to get the most food had the most money or the staff to visit the Foodbank daily, not necessarily the organizations serving the most vulnerable communities. A small church group might literally pass the hat to pay a $30 maintenance fee. That’s a barrier we did not want our agencies to face, so we eliminated the fee in April and reduced the shared cost of purchases to 25%. Our goal is to get that to zero while we build a more equitable food distribution model. Read a version of this interview with two more questions at hawaiibusiness.com.

PHOTO: COURTESY OF HAWAII FOODBANK

Our new mission is: We nourish our ‘ohana today and work to end hunger tomorrow. In partnership with others, we address the systemic reasons people need our services. Can we put people in contact with other resources so we can shorten the food pantry line? One pillar is to get qualified people access to federal SNAP benefits. We got a contract from the state, so we have outreach coordinators and translation services at distribution sites. It’s hard and complicated to get SNAP benefits and that’s why 15% or more of people eligible for SNAP aren’t getting access. Another issue: An emergency pandemic addition to SNAP benefits will probably expire in February. About 91,000 families across the state get an average of $199 of those additional benefits a month.

S PEC I A L PRO M OTI O N A L S ECTI O N

HMSA

HIS YE AR, HMSA WILL CELEBR ATE 85 YE ARS

P HOTOS : COU RTESY O F HM S A

of serving their members in the good times and the tough times. As they reach this milestone anniversary, they look forward to continuing to support members and the state of Hawaii for generations to come. A group of social workers established the Hawai‘i Medical Service Association in 1938. Back then, HMSA served 671 members. In the 1940s, HMSA joined the Blue Shield Association and opened offices on the Big Island, Maui, and Kauai. Membership grew to 30,000 members. Today, HMSA is the most experienced health plan in the state, covering more than half of Hawaii’s population. Since HMSA was founded more than eight decades ago, the world has changed drastically. The global population exploded, the cost of living has risen, and the world has become incredibly tense. Most recently, the COVID-19 pandemic greatly impacted businesses, communities, and health systems and, most of all, tested everyone’s resilience. In response to the pandemic, HMSA found ways to support the people they serve through one of the most challenging times in modern history. In addition to expanding members’ health plan benefits, they remained connected with employers, members, and providers virtually and in person to help ensure their health, well-being, and safety. And they implemented a secure technology platform that gives them the ability to work hand-in-hand with doctors, specialists, and other health care

2023

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providers to ensure that members get the best possible care. Even before the pandemic, HMSA had long been committed to supporting members in their whole health. Their programs and resources include health coaching, pregnancy and postpartum support, and a Diabetes Prevention Program. “Our goal is to be a health organization that empowers our members, employers, providers, and communities in ways that go beyond paying claims as a health insurer,” says HMSA President and CEO Mark Mugiishi, M.D., F.A.C.S. In their 85th year, HMSA thanks its members for their trust and extends its gratitude to providers and community partners for working with them to provide quality care. “We’ll continue to be here for you and our families, friends, and neighbors in the years ahead,” says Dr. Mugiishi.

HMSA 818 Keeaumoku St., Honolulu, HI 96814 (808) 948-6079 or 1 (800) 776-4672 hmsa.com

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When Death Brings Out Beauty BY K AT L IN C IL L IER S

MANY OF US AVOID THINKING ABOUT DEATH until it’s unavoidable.

But hospice nurse Kymberly James, who works for the nonprofit Navian Hawai‘i and cares for people in their homes, has a different perspective. She says endof-life care can be as beautiful and rewarding as bringing a newborn into the world. “As a hospice nurse, you grow and you understand that (death) is a beautiful process, because you’re allowing dignity to those patients who wish to die at home, in comfort and love, and helping provide memories, their last memories with their family.” For the past two years, amid bittersweet moments, James has witnessed forgiveness, love and the importance of family in her job. One client, a father in his 70s, recently reunited with his family to create cherished moments before passing. “(The family is) now making memories of taking care of Papa,” she says.

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“And that’s the beautiful part of it, they actually all come together a lot during these difficult times, and it’s good to see.” James recalls struggling to connect with another patient, who eventually died from dementia complications. “I didn’t really know him because he couldn’t talk. I find that I have to figure out who this person is that I am taking care of, to bring out the humanity in this person,” she says. “I found out that he was actually a search and rescue diver, and that he had saved multiple people,” she says, adding, “I had to ask his family to bring pictures of him next to the bed so I can see what they looked like, and who they actually are.” James had worked in other areas of nursing, from pediatrics to the ICU, for 20 years. Later, as James’ mother neared the end, she became aware of the great need for hospice nurses.

“I was really amazed at the compassion they had and the knowledge they had,” she says. “They had really keen assessment skills, they were able to anticipate needs of my mother, they were able to recognize what things can come up and they acted on it before they happened so there were no crises.” The work has its challenges: She says there remains a lot of stigma around death and many people aren’t aware of everything a hospice team can provide. “They think that we just hasten death and that we’re just there till they die. We actually have a multidisciplinary team of nurses, doctors, social workers, spiritual counselors, volunteers.” Hospice care is fully covered by most health insurance programs, including Medicare, Medicaid and most private insurance providers. And these resources are widely available for a range of diagnoses. When she is not visiting her clients, James enjoys going to the beach and playing with her German shepherd. “You have to learn to have a work-life balance.” THIS INTERVIEW HAS BEEN EDITED FOR CL ARITY AND CONCISENESS.

ILLUSTRATION: GETTY IMAGES

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Many Hawai‘i Small Businesses Can Add Major Revenue Streams

PHOTO: GETTY IMAGES, PHOTO ILLUSTRATION: KELSEY IGE

T H E F E D E R A L G OV E R N M E N T I S T H E S I N G L E largest

consumer of goods and products on the planet. In the 2021 fiscal year, it awarded $665 billion in contracts. Of that, $154.2 billion was set aside for small businesses, but only a tiny fraction was awarded to Hawai‘i small businesses. Even though many local small businesses are capable of fulfilling government contracts and many corporate contracts as well, mainland companies often win them because most local companies are ineligible to bid. These local companies lack the small business certifications required to apply.

For example, out of more than 44,000 female-owned businesses in Hawai‘i, only 36 are certified as Women Business Enterprises and therefore eligible to bid on billions of dollars a year in certain corporate contracts, according to the Women’s Business Enterprise National Council. And only 24 of those female-owned businesses are also certified as Women-Owned Small Businesses and eligible to bid on federal government contracts. Other federal small business certifications for government contracts include Veteran-Owned Small Business, Disadvantaged Business Enterprise, and 8(a) Business Development, which includes Native Hawaiian-owned companies. Also, several national corporate small business certifications are available, including those for female-owned, minority-owned and veteran-owned businesses.

Before 1978, the overwhelming number of federal contracts went to large white male-led corporations. That year, Congress passed Public Law 95−507, which resulted in 23% of all federal contracts being set aside for individuals underrepresented and underserved in federal contracting including minorities, women, veterans and other categories. But to access those contracts, small businesses had to be certified by federally approved agencies. This set-aside program impacted many corporations doing business with the federal government. The corporations were required to set aside a portion of their own contracts for underrepresented and underserved groups. This created two parallel small business certification systems: one for federal contracts and one for corporate contracts. Nationally, third-party certifiers that manage the certification processes include the Women’s Business Enterprise National Council, the National

Minority Supplier Diversity Council and the U.S. Women’s Chamber of Commerce. In addition to the federal and corporate set-aside programs, 42 states now have their own state, county or citylevel certification programs. Hawai‘i does not have its own state or county certifications, but nationally certified Hawai‘i small businesses can get “fast tracked” certifications to bid on contracts in those states. The certification programs provide businesses with the access, technical assistance, training and support needed to expand and market their goods and services to prospective government and corporate buyers. Once certified, many businesses significantly increase their revenue. Villa Business Consulting has specialized in government and corporate small business certifications since being mentored by the Walt Disney Co. in 2008, prior to the construction of the Aulani Resort. Since then, it has helped small businesses across Hawai‘i become certified to pursue government and corporate contracts.

THIS MONTH’S EXPERTS:

MARI AND JOSÉ VILLA, VILLA BUSINESS CONSULTING VILLA-BC.COM INFO@VILLA-BC.COM

H AWA I I B U S I N ES S

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Alexander & Baldwin: Adaptations and Pivots The 153-year-old kama‘āina company is selling properties unconnected with commercial real estate as a prelude to new acquisitions in that sector BY STEVE PETR AN IK

LEXANDER & BALDWIN

was founded in 1870 and was one of Hawai‘i’s Big Five companies during the sugar cane era. Today, the publicly traded company is focusing more and more on its commercial real estate properties. I interviewed Christopher Benjamin, its president and CEO, about the company’s recent adaptations and pivots. A&B IS THE LARGEST OWNER OF GROCERY STORE AND DRUGSTORE-ANCHORED RETAIL CENTERS IN THE STATE. AFTER ALL OF THE DISRUPTIONS CAUSED BY ONLINE SHOPPING, THE PANDEMIC AND THE DROP IN TOURISM, HOW IS THAT BUSINESS GOING? WHAT IS THE VACANCY RATE? HOW ARE YOUR TENANTS DOING?

We lost some tenants, but if you had laid out those factors for me three years ago, I would have expected we would be in a much worse place today than we are. Our occupancy is very, very high. In fact, we had relatively little drop-off as a result of the pandemic and we managed to backfill most or all of those spaces. Traffic through the centers is very strong. Many of our tenants are experiencing volumes and revenues greater than they were before the pandemic. I think a few reasons why is the economy is doing very well, unemployment is way down and those who want to be back to work seem to be back to work. While I can’t declare that we have de-urbanized, there’s no doubt people are spending more time in their local communities and less time commuting 20

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to the urban center. And our retail centers are in those communities. And there’s growing demand for services in the community. For example, we’ve had a number of new leases to veterinary clinics. People got pets during the pandemic and they need someone to take care of them. There have been tenants whose business models have been challenged by the pandemic, though I don’t think online retail has had nearly the impact we thought several years ago. Part of that is because a lot of retailers have online models, which allow customers to buy online, pick up in store. So overall, we’re feeling good about the sector we’re in and how it’s performing. THE PERMIT PROCESS IN HAWAI‘I HAS NEVER BEEN QUICK OR EASY. BUT THE PROCESS ON O‘AHU HAS GONE FROM BAD TO WORSE TO TERRIBLE. HOW HAS THAT IMPACTED TENANTS WHO WANT RENOVATIONS OR NEW TENANTS COMING IN?

That has had a significant impact. In many cases, we’ve signed the lease but the tenant has not yet opened because the permitting process has taken so long. We have to work with our tenants in those situations because it’s very difficult for them to have the burden of rent when they can’t even do their build-out. So we try to be accommodating in setting free rent periods, but there’s only so much we can do. We have a strong internal team that supports our tenants through that process, including architects and folks who

have deep knowledge of the permitting process. A lot of our tenants don’t have that experience. That’s a service we provide because it’s in both of our best interests to get them open as quickly as we can – and the community’s best interest. IN THE LAST FEW YEARS, A&B REDEVELOPED SOME OF ITS PROPERTIES. WHAT HAVE YOU EMPHASIZED?

Where possible, we’ve done adaptive reuse of existing assets. The two biggest examples are Lau Hala Shops, which was the old Liberty House/Macy’s in Kailua (now a collection of stores and restaurants) and at Aikahi Park Shopping Center (where the old movie theaters have

PHOTO: COURTESY OF ALEXANDER & BALDWIN

Rendering of the proposed refresh for Mānoa Marketplace.

become a veterinary clinic). We’re very proud of those redevelopments because, from an environmental standpoint, it’s much better to repurpose an existing property than it is to tear down and start from scratch. And as we approach those projects, we try to develop designs that repurpose it into buildings that retain the historical significance and authenticity of the buildings, but also modernize them and make sure they meet the needs of the community today, and by using native planting and creating a friendly, walkable environment. Next one up is Mānoa Marketplace. That’s been a couple stages. Several years ago, shortly after we bought the

center, we did some improvements – some behind the scenes – but the more visible one was completely redoing the parking lot. In response to strong support from the community for the monkeypod trees there, we redesigned the lot to create bigger planters that would protect the roots of the trees, while also allowing us to make the parking lot safe. The next phase is upgrading the center: refreshing the overall exterior facade, renovating the second-level balconies and restrooms, installing energy-efficient lighting throughout the center, as well as EV parking stalls, water-efficient irrigation, a family friendly plaza with a keiki play area. We want our centers to be gathering places for

the community. We hope people will not just pick up their order at a restaurant or retailer, but spend time there. We also have a significant focus on improving the sustainability of our commercial portfolio. We have a lot of rooftops that can post PV installations and we recently flipped the switch on a 1.3 megawatt PV installation on top of our Pearl Highlands Center. And it’s one of the largest of its kind in the state and it’s going to generate enough power to cover all of our common area needs, as well as a significant portion of our tenant needs. Our focus on sustainability includes both reducing our consumption of energy and water, but also generating as much energy as we can on our rooftops. H AWA I I B U S I N ES S

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Christopher Benjamin, president and CEO of Alexander & Baldwin

“WE’RE ALMOST NOW 100% FOCUSED ON COMMERCIAL REAL ESTATE. THAT’S A VERY IMPORTANT GOAL FOR US.” —Christopher Benjamin, President and CEO, Alexander & Baldwin

A&B HAD OWNED ALMOST 19,000 ACRES ON KAUA‘I. WHAT HAPPENED TO THAT LAND?

A SMALL PART OF YOUR BUSINESS IS RESIDENTIAL DEVELOPMENT. DO YOU HAVE ANYTHING IN THE WORKS?

The short answer is we don’t. The longer answer is that because we have had a history of residential development, and because it can sometimes be complementary to these communities we’re building, and because there’s such a need for housing, we continue to evaluate whether we could or should leverage that expertise. But it’s no longer our core business. 22

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YOU OFFERED A SUBSIDIARY, GRACE PACIFIC, THE STATE’S LARGEST ASPHALT PAVING CONTRACTOR, FOR SALE. ANY BIDDERS?

We’ve had indications of interest from potential buyers. We hope sometime in the first half of 2023, we will complete the sale – an important step in our simplification process. Our simplification began a decade ago when we spun off Matson. And it’s continued through our transition out of residential development, out of our sugar and coffee operations, out of some of our other smaller operating businesses, including renewable energy projects. And we’re almost complete in the sense that we’re almost now 100% focused on commercial real estate. That’s a very important goal for us.

WHAT ABOUT THE 4,300 ACRES OF AG LAND YOU STILL OWN ON MAUI?

We still have most of that land, but there are a couple of things going on there. One is that they’re scattered around the island, so there will probably be multiple buyers for that land. And we are donating 45 acres to the County of Maui for parks and public use. They are parcels that have been enjoyed by the public on Maui for generations and they really belong in the hands of the county. (The 45 acres are spread over 15 parcels, including land at Baldwin Beach Park, Baby Beach and other shorelines.)

PHOTO: COURTESY OF ALEXANDER & BALDWIN

We have already approved the next PV installation, which is going to go on our Kakaako Commerce Center and industrial property in Kaka‘ako.

We have now sold those acres on Kaua‘i as part of our continued simplification effort. Late in 2021, we sold our Kukui‘ula residential development on Kaua‘i to Brue Baukol Capital Partners. And during 2022, we were able to complete the sale of the other 18,900 acres of conservation land on Kaua‘i to the same company. So in a sense, those lands stay connected, because there are synergies between those lands. The sale allowed us to better focus on commercial real estate and also helped significantly reduce our debt, which puts us in a great position to now be an acquirer of additional commercial real estate in Hawai‘i. That’s the pivot that we’re making: We’re now pivoting back toward a primary focus on growing our commercial real estate portfolio.

RICKHAMADA WEEKDAYS 6AM TO 10AM KHVHRADIO.COM

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A Mission to Save Domestic Animals in Need Hawaii Island Humane Society cares for sick and abandoned pets and works to find them new homes BY AU ST IN B OUR C IER

HAWAII ISLAND HUMANE SOCIETY has taken big steps lately, says CEO

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HIHS Behavior Manager Lexi Anzai spends time with shelter dog Acorn outside of her kennel. Acorn has been adopted.

services like spaying and neutering, and pet food donations. It also partners with related organizations on pet transfers, and creates fun activities for its sheltered dogs. On average, the society cares for nearly 250 animals at any given time, including dogs, cats, rabbits and guinea pigs that are handed over by their owners, taken by animal control services or found as strays. Nickerson says caring for the mental well-being of both animals and staff is

critical, though not always easy. “Those of us who work in animal welfare are at high risk for burnout and compassion fatigue. We see some really hard things every day,” she says. That means cultivating a culture of comfort and support. “It is a really important part of my job to make sure that our staff has the tools and the support they need to be resilient, to be mentally healthy and keep showing up every day. Without them, we can’t help people and animals.”

PHOTO: LAUREN NICKERSON

Lauren Nickerson. “We have our brand new Animal Community Center, which is located on the Kona side in Hōlualoa. That is a 12-acre campus that’s been under development for the past 10 years and we moved into our shelter location in August 2020,” she says. A hospital will complete the campus and is scheduled to be completed early this year – allowing animals to receive treatment and other services all in one location. “It is going to include an intake lane for incoming animals, several surgical spaces, isolation units and diagnostic equipment,” Nickerson says. “We are excited for the lifesaving potential that the Anne Barasch Ryan Animal Hospital represents. It will allow Hawaii Island Humane Society to expand access to veterinary care for both our shelter animals and community-owned pets.” Hawaii Island Humane Society, which also operates a shelter in Kea‘au, has been helping domestic animals on the island since 1963. The nonprofit says it provides pet adoptions and foster care, outreach

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2O23

INDUSTRY OUTLOOK Hawaii Business Magazine asked companies on the following pages to provide our readers with an assessment of their industry in the coming year. The information provides a glimpse into the opportunities and challenges facing each one.

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INDUSTRY OUTLOOK 2O23

G70

ARCHITECTURE

Q& A WITH:

Charles Kaneshiro, AIA, LEED AP President & COO G7O Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them? The challenges that face our industry are no different than the issues facing our entire nation: Sharp rise in the cost of materials

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and goods. We have had projects come to a halt due to the increase in construction costs. For example, one of our clients received a construction bid of $6.7M, secured financing over 6 months based on this bid, but when the contractor attempted to lock in their pricing the total cost had risen to $7.9M. One strategy G70 has consistently relied on to control costs has been to partner with our clients very early on in projects. In our experience, collaboration with our clients from the point of conception has provided optimal conditions to engineer solutions that reduce cost, phase projects to meet budgets, and discover innovative ideas that save time and dollars.

What is your company’s biggest challenge in the coming year? Attracting qualified candidates and staff retention. Staff recruitment and retention is on everyone’s minds and as we transition through the pandemic, the entire workplace atmosphere has been forever transformed. The absence of qualified staff within the AEC industry is impacting the quality of work, causing firms to be more selective in the jobs they are accepting. This has been compounded by the growing momentum of new projects as we transition through the pandemic. The challenge – to compete for the best talent, remain competitive and relevant within the market. G70 has always tried its

best to look for ways to better its operations, office culture, uphold core values, and provide competitive compensation and benefits packages. We constantly review and refresh our offerings. One of the most popular benefits we were able to re-establish was our annual Christmas Party with a paid overnight stay at Aulani! We have fully adopted the hybrid work philosophy with the supporting technology to allow our staff the flexibility to work from home 2-3 days a week. We have also allowed our staff to live and work from neighbor islands and are currently exploring opportunities for staff to live and work from the continental US.

G7O 111 S. KING STREET, SUITE 170 HONOLULU, HI 96813 (808) 523 - 5866 G70.DESIGN

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Swinerton

CONSTRUCTION

Left, rendering of UH Mānoa Sinclair Library Renovation; above, rendering of Target Windward.

Q& A WITH:

Aaron Yamasaki, VP and Division Manager, Swinerton What are some of your company’s most important (or interesting) projects and plans for 2023? As we continue to push forward for a prosperous 2023, our mission remains the same: to be the preferred builder and trusted partner in every market we serve, proudly leading with integrity, passion, and ex-

cellence. In 2023, our focus will be on the execution of a flagship project bringing the very first distribution center of its kind to Hawai‘i. Our teams will also be working on delivering multiple retail big-box storefronts, as well as various hospitality renovation projects throughout the islands. What is the most important change or trend impacting your industry in 2023? An important trend that is impacting our industry, specifically vital here in Hawai‘i, is the emphasis on sustainable construction as well as sustainable job-site practices. The emergence of new concepts in building such as mass timber construction brings ‘green

building’ to the forefront with a new category of wood products. We are seeing that mass timber construction offers a viable eco-conscious, low-carbon alternative solution to traditional building concepts. We’re currently working on an emerging project in Maui that would be the first mass timber structure of its kind here on the islands. What is your company’s biggest challenge in the coming year? Although inflation remains a significant economic issue within the construction industry, we remain optimistic. The Federal Funds Rate is anticipated to increase from zero to around 4% by year-end.

This aggressive policy has taken a bite out of asset and commodity prices, lowering growth expectations across the globe. Many private sector markets will presumably continue to underperform because of higher borrowing costs and reduced market liquidity. But we do see opportunities elsewhere in education, healthcare, mass timber, energy, and the development of manufacturing and data facilities. Overall, the architecture billings and construction confidence hold steady, construction starts remaining strong, material prices are stabilizing, and unemployment remains low.

SW I N E RTO N 841 B I S H O P S T H O N O LU LU, H I 96813 ( 808 ) 521- 8408 SW I N E RTO N .COM a ya m a s a k i @ sw i n e r t o n.c o m l i n ke d i n.c o m / i n /a a ro n ya m a s a k i /

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2O23

Lawson & Associates, Inc. CONSTRUCTION SAFETY

The Safety Intelligence Institute training room, 1312 Kaumualli Street, Honolulu.

Q& A WITH:

Tracy Lawson, President & Founder, Lawson & Associates, Inc. What are some of your company’s most important (or interesting) projects and plans for 2023? We are expanding our Safety Intelligence Institute course offerings to include various on-demand competent person and awareness level courses. The concept for this learning platform started in 2020 with in-per-

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son courses, and it’s exciting to see it grow from being available locally to globally. Our clients have asked for more options to provide high-quality safety training to their teams with courses that are relevant, industry-specific, and improve field performance. The platform we’ve built is innovative and much needed. We are grateful to have this learning management system (LMS) technology when the need is so critical. Our driving motivation is supporting the hard-working people who construct our communities and buildings to help them go home safely to their families. Many of your customers and clients are facing huge challenges this

year. What are those challenges and how can you help them? It is hard to find qualified, certified safety professionals in Hawai‘i – and many of our clients need our help to staff projects and manage their safety programs. Lawson is growing and diversifying, with a team of over 25 people, a dedicated OSH training institute, and more products and services than ever before. We’ve spent years finding good people, building a solid culture, and providing them with the training and support they need to become some of the best in the State. We are helping our clients to be safer and more profitable while managing the complexity of OSHA compliance.

What is the most important change or trend impacting your industry in 2023? Our industry is experiencing significant growth in the demand for certified safety professionals, but the supply isn’t keeping up. Many of our clients don’t want to hire and then manage this unique position, so outsourcing with us is the way to go. We have developed a unique way to do this so that we integrate with the client’s business strategies, processes, and systems at many levels, bringing our technical support, planning, and experience to the table, which allows our clients to focus on their core competencies. We fully integrate into their organization to develop a safety management system instead of just managing a stand-alone program, which we believe is a ‘value-add’ proposition.

L AWSON & ASSOCIATES, INC. W W W.L AWSONSAFE T Y.COM

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Hawaii Foodservice Alliance LLC

WHOLESALE

PHOTOS: KAIMANA PINĒ

This photo: coastline of Ni‘ihau. Below: organic soil sampling.

Chad Buck, Founder, Owner, Hawaii Foodservice Alliance

Over the last two years, we invested in our systems and facilities and obtained organic certification for the entire island of Ni‘ihau and our processing facilities. Ni‘ihau is now the largest certified organic land mass with over 44,400 acres. In addition, Niihau Ahiu Provisions is the only certified organic antelope operation in the world.

a record 40-year high, here in Hawai‘i, the additional cost of shipping dramatically increases the cost of food for the Hawai‘i consumer. At HFA, we are rapidly expanding our end-to-end inventory management and logistics solutions to enable our customers to lower their cost of getting their product to markets across our island state.

What are some of your company’s most important (or interesting) projects and plans for 2023? Our most interesting project for 2023 starts in a few weeks as we upgrade our Niihau Ahiu Provisions operations with specialty equipment to enable us to add value to our antelope and lamb from Ni‘ihau.

Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them? The largest challenge we see for 2023 is the rising costs of fuel, labor, and equipment for all forms of transportation. While nationally, food inflation is at

What is the most important change or trend impacting your industry in 2023? Our focus at HFA is to provide our services, logistic capabilities, and economies of scale to local farmers, ranchers, and producers to help move Hawai‘i toward a more sustainable and food secure future. Along

Q& A WITH:

with expanding our local food production, we see an increased need to protect our local food and dairy producers from mainland agricultural products that are brought into Hawai‘i masquerading as locally grown. The trend to nurture and protect local food and producers is a rapidly growing trend for 2023.

HAWAII FOODSERVICE ALLIANCE LLC 2720 WAIWAI LOOP HONOLULU, HI 96819 (808) 839-20 04 HFAHAWAII.COM

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Hawai‘i Pacific Health H E A LT H C A R E

Left: Terence Young (center) at the groundbreaking ceremony for the new Straub clinic at the Town Center of Mililani. Below: Young at HPH’s COVID-19 vaccination site at Pier 2.

Q& A WITH:

Terence Young, COO, Hawai‘i Pacific Health Medical Group What are some of your company’s most important (or interesting) projects and plans for 2023? Hawai‘i Pacific Health’s mission is to create a healthier Hawai‘i. One way we’re doing this is by ensuring we meet people’s needs in their own neighborhoods. We have more than a dozen Straub

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Medical Center clinics across the state and in 2022, we broke ground on a new clinic at the Town Center of Mililani. This 24,000-square-foot clinic will be triple the size of our existing clinic and will offer expanded primary care, new urgent care and specialty care services. It will be HPH’s largest clinic to date. What is the most important change or trend impacting your industry in 2023? The way patients seek care, receive care and evaluate their care has changed. The pandemic accelerated a shift toward virtual care, and with that came a growing demand for virtual access to medical teams. HPH quickly responded to meet the com-

munity’s needs by enhancing MyChart, our online patient portal. MyChart allows patients to seek face-to-face care virtually, message care teams, make appointments, request prescription refills and complete contactless check-ins to streamline traditional office visits. What is the most exciting product or service you will be providing customers in 2023? HPH’s clinical services and locations are expanding. I am excited for Hawai‘i’s first pediatric catheterization laboratory at Kapi‘olani Medical Center for Women & Children. This cath lab allows us to perform specialized heart procedures so children and their families no longer have to travel to

the mainland for care. We now have a new pulmonology clinic at Pali Momi Medical Center to treat lung conditions and screen for lung cancer for families in Central and West O‘ahu. We continue to develop construction plans for our health care campus of the future at Straub Medical Center. On Kaua‘i we are enhancing our imaging services at Wilcox Medical Center with a new state-ofthe-art computed tomography scanner.

HAWAI‘I PACIFIC HEALTH 55 MERCHANT ST. HONOLULU, HI 96813 w w w.hawaiipacifichealth.org

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INDUSTRY OUTLOOK 2O23

Hawaii Dental Service

D E N TA L

education, and improve access to oral health care. The foundation will continue this commitment in 2023 and support its signature Dentist by One and Kupuna Smiles programs that emphasize the value of oral health for keiki and kupuna.

Q& A WITH:

Diane S.L. Paloma, PhD President & CEO, HDS Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them? Just when Hawai‘i families breathed a sigh of relief following the pandemic, they were pummeled with rising prices from inflation and supply-chain disruptions. Groceries and other

necessities suddenly took a larger share of our wallets, exacerbating Hawai‘i’s already high cost of living. Stress and mental health challenges are taking a toll on our oral health and our overall health and wellbeing. We grind our teeth in our sleep. We eat less healthfully, consuming more sugary foods to comfort us. We smile less and worry more. A focus on oral health is more important than ever. HDS will continue its outreach to more families in 2023 to “Live Well, Smile More,” paying special attention to improving access to quality oral health for everyone, especially those in underserved communities. What are some of your company’s most important

(or interesting) projects and plans for 2023? We are strengthening our partnerships with Hawai‘i’s employers, and encouraging their employees to take advantage of all of the benefits they are entitled to with incentives from SMILEWell, our innovative wellness program. New in 2023, HDS will be administering the contract to serve adults who are Medicaid beneficiaries. These adults will be able to enjoy a full spectrum of oral health care services for the first time in nearly 15 years, thanks to a new law signed last year. Last year, the HDS Foundation, the charitable arm of HDS, gave more than a million dollars to nonprofit programs that prevent oral disease, support oral health

What is your company’s biggest challenge in the coming year? Our biggest challenge is helping the community, including those who have access to dental care, see there is a connection between their oral health and their overall health. You cannot neglect to take care of your teeth and gums and expect to enjoy optimal health. Poor oral health affects other parts of your body. Dental check-ups can catch problems early and avoid unnecessary pain and costly procedures, so employers can do their part to make oral health a priority for their employees.

HAWAII DENTAL SERVICE 90 0 FORT STREET M ALL, SUITE 190 0 HONOLULU, HI 96813 HAWAIIDENTALSERVICE.COM

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INDUSTRY OUTLOOK 2O23

Hawaiian Telcom I N FO R M AT I O N T E C H N O L O GY

bility to cyberattacks and security risks.

What are some of your company’s most important (or interesting) projects and plans for 2023? With our expanded range of services and solutions, we’re seeing more opportunities to serve local businesses in 2023. Over the past 140 years, Hawaiian Telcom has evolved from our humble beginnings as Hawai‘i’s phone company into a technology leader. Since 2010, our company has invested more than $1 billion to expand our fiber footprint, maintain and increase the capacity of our communications network, and support our integrated communication solutions for businesses. This year, we are continuing to expand our fiber

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infrastructure to provide reliable, high-speed internet connectivity to serve more homes and businesses, particularly in underserved areas. Another growing part of our business is Advanced Services that includes Managed Network, Cloud and Cybersecurity solutions. Hawaiian Telcom partners with businesses to provide customized IT solutions that deliver measurable outcomes. Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them? Our customers are facing a convergence of new threats and opportunities.

More employees are working remotely from home, more businesses are accelerating their transition to the cloud, and especially here in Hawai‘i, there is a shortage of qualified IT professionals. New technological advancements have enabled Hawai‘i businesses to enhance their operational efficiency. Unfortunately, opportunistic “hacktivists” have also become more organized and sophisticated and are preying upon companies that are not protected by traditional firewalls. Hawaiian Telcom’s Advanced Services team can serve as an extension of in-house IT departments to ensure that organizations build in and manage the right security protocols to reduce their vulnera-

What is the most exciting product or service you will be providing customers in 2023? Our Advanced Services team will continue to offer customized end-to-end technology solutions to fill important gaps for Hawai‘i businesses. Our services complement Hawaiian Telcom’s ongoing investment in our statewide fiber expansion to deliver improved business outcomes. Hawaiian Telcom is committed to being a valued partner to Hawai‘i organizations, combining our deep technology experience with a personal approach. Our goal is to take care of our customers’ IT and technology needs so that they can focus on running their businesses.

HAWAIIAN TELCOM 1177 BISHOP STREET HONOLULU, HI 96813 W W W.HAWAIIANTEL.COM

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INDUSTRY OUTLOOK 2O23

Hub Coworking Hawai‘i

COWORKING

Left: Nam Vu, COO of Hub Coworking Hawai‘i

Q& A WITH:

Nam Vu, COO, Hub Coworking Hawai‘i What is the most important change or trend impacting your industry in 2023? After a couple of years of sharp decline and uncertainty, the coworking, or flexible workspace industry, is seeing high demand and is projected to continue to grow by 30% in 2023. Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them? The days of everyone working in the office 9 to

5, Monday through Friday are over. Employers and employees alike are trying to figure out how to navigate a world of the hybrid, remote, at home, and from anywhere workplace. A question I hear often these days is “What do we do about our office space?” For some companies, the right choice might be to downsize or close the office altogether. Hub Coworking has seen many customers who have made that choice and opted instead for no-lease offices with shared meeting rooms and shared amenities, resulting in cost savings. Providing employees with choices helps with retention and overall employee happiness and well-being. Whether it is working 100%

remotely, spending some days in the office, providing memberships to coworking spaces, or working 100% in office, the key is to provide flexibility and choices. What is the most exciting product or service you will be providing customers in 2023? Although the coworking concept has become more popular in recent years, Hub Coworking been in the industry since 2014. This year, Hub Coworking Hawaii is working on adding more locations to our current Kaka‘ako and Waikīkī spaces. The company’s goal is to have coworking spaces on O‘ahu, Maui, Kaua‘i and the Island of Hawai‘i, that will allow members to not only have choices

of workspace where they live, but also across Hawai‘i throughout a network of coworking spaces. We’re working on some exciting collaborations that will help companies transform and revitalize their workspaces. We’ve learned a lot about how people work through our day-to-day operations and we’d love to share that knowledge with others to help them find solutions. One thing we’ve learned, is that the increase in video calls has created a need for private and quiet spaces. For this reason, we have become a dealer for standalone meeting pods and will be able to help companies find solutions for their sound challenges.

H U B C OWO R K I N G H AWA I ‘ I K A K A‘A KO: 1050 Q U E E N S T R E E T #10 0 H O N O LU LU, H I 96814 WA I K Ī K Ī: 2330 K A L A K AUA AV E # 248 H O N O LU LU, H I 96815 (808) 66 4 3306 HUBCOWORKINGHI.COM

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INDUSTRY OUTLOOK 2O23

Prince Resorts Hawaii TOURISM

Bishop Museum and Honolulu Museum of Art. In the upcoming year, we’ll continue with these efforts and plan to debut other regenerative experiences.

Q& A WITH:

Shigeki Yamane, President, Prince Resorts Hawaii What are some of your company’s most important/interesting projects and plans for 2023? We believe our people are the key to our success. In 2022, we identified leaders across all of our operations and commenced a series of summits to harness their skills and talents while identifying innovative strategies for success. 2023 promises to be very exciting as we begin to put these collaborative ideas to work creating

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enhanced, personalized experiences for our guests and sustainable solutions for our communities. Striving to provide the best service in hospitality, we are continuing to find new ways to empower our frontline staff, enabling them to provide solutions to the hospitality challenges we face. Inter-hotel collaborative “work groups” and a newly expanded mentorship program promises to support and encourage our team to be even more effective in the new year. With an eye to the future, we will continue to invest in our community’s youth with expanded mentorship opportunities and alternative pathways for gaining hands-on experience and a true understanding of our hospitality industry. What is the most important trend

impacting your industry? Regenerative tourism is an important trend in Hawai‘i, and at its core involves counterbalancing the social, economic and environmental impacts of tourism by encouraging and educating the industry, as well as visitors, to go beyond being sustainable and leaving a place better than when it’s found. To our Prince Resorts Hawaii team, this is not so much a trend as it is and has always been a part of our core values. The challenge is to translate that into enhanced experiences for our guests. Currently, our guests (and staff ) are encouraged through incentives to participate with multiple community projects, offered opportunities to support sustainable initiatives, and given a chance to learn more about Hawai‘i’s culture with promotions at cultural and arts institutions, such as

What is your company’s biggest challenge in the coming year? We’re still dealing with the aftereffects of the COVID pandemic: staffing and worldwide supply chain shortages. The travel industry has yet to recover completely; international, business and convention/ group travel have yet to completely return. Our three hotels – Mauna Kea Beach Hotel, The Westin Hapuna Beach Resort and Prince Waikiki – are each unique, so each one is recovering on its own timeline and with its own challenges. Unable to control world events, our challenge is to successfully navigate those hurdles with the experience, flexibility, and creativity of our team.

PRINCE RESORTS HAWAII 100 HOLOMOANA ST. HONOLULU, HI 96815 (808) 956 -1111 CONTACT@PRINCEHAWAII.COM

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WHAT HAPPENS WHEN

P R I VAT E E Q U I T Y IS YOUR LANDLORD

The Blackstone Group and other private equity firms have been buying rental properties nationwide, including in Hawai‘i. We interviewed tenants, the companies, advocates for renters, academics and others to find out the impact across a series of properties in West O‘ahu. By N O E L L E F U J I I - O R I D E

AT FIRST GL ANCE , Jane thought the Ka-

polei Lofts seemed like a decent place to live. The 17-acre property’s 499 units were spread across 14 modern, low-rise buildings, and it had a gym, pool, walking path and community park. She had grown up on O‘ahu and lived in apartments all her life, and what she liked most about this complex was that it was new and 60% of its units were restricted to renters making less than 140% of the area median income. Then in 2018, more than a year after living there, private equity giant The Blackstone Group purchased the property for $197 million. Jane and her roommate saw their first rent increase – almost $200 a month – at their next lease renewal. She says new fees were added over subsequent years for parking, the unit’s water and sewer, common area water, pest control and mandatory personal liability insurance. By the time they moved out last year, these charges added more than $300 a month to their base rent. She says she also dealt with disruptive neighbors and that trash littered her building’s hallway, the parking lot and dumpster area. She says management

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would downplay or ignore her complaints and requests to enforce the community’s rules. “They don’t care, they only care that they get their money for their rent,” she says. “They don’t care about people that live there.” Jane is not her real name; we’re using a pseudonym because she says she fears her former landlord will retaliate against her. Private equity firms, private equity-backed firms, firms that offer private equity real estate funds, and firms with other private equity co-investors or joint ventures own at least 1 million apartment units in the country – around 3.6% of all apartments – according to a June 2022 research memo by Americans for Financial Reform, a nonprofit and nonpartisan coalition. Such landlords have a reputation for hiking rents, reducing upkeep, aggressively pursuing tenants in court, and imposing new or increased fees to extract profits from renters, according to the memo and coverage by ProPublica, Mother Jones, The Atlantic and other national media. Altogether, Hawaii Business Magazine spoke with 11 current or former

COR POR AT E L A N DLOR DS

PRIVATE EQUIT Y FIRMS generally acquire assets by assembling pots of money from insurance companies, university endowments, pension funds, wealthy individuals and other types of accredited investors. They typically seek 20% profits on their investors’ contributions, plus 2% management fees, according to PitchBook, a capital markets research company. Carter Dougherty, communications director at the Washington, D.C.-based Americans for Financial Reform, says private equity firms commonly do leveraged buyouts, where they use both equity and debt to make purchases. And unlike other entities, private equity firms generally hold assets only for three to five years, so there’s pressure to extract

PREVIOUS PAGE, PHOTO: GETTY IMAGES; PHOTO ILLUSTRATION: KELSEY IGE

renters of local private equity-owned apartments on O‘ahu. Some had positive things to say, but many shared stories of sharp rent increases, poor upkeep of their units and common areas, numerous fees, and a lack of transparency about how those fees are calculated. We verified their tenancy by asking renters to share with us leases and other documents. Several renters spoke with us on the condition that they not be named or that we only use their first or middle names because they worried that sharing their stories could jeopardize their leases or their work. And in some cases, current renters didn’t want us to disclose the size of their units, their rents, the number of people in their households or certain other specifics for fear of being identified. We only heard back from one private equity firm. Blackstone says that it’s had a positive impact on its O‘ahu communities by investing in improvements, increasing regular communications with renters and helping tenants who couldn’t pay their rent earlier in the pandemic.

profit for investors and pay off the debt. “That model is what is behind all this pressure on tenants in various ways, whether it’s raising the rents, skimping on repairs or adding fees,” he says. “Behind all those bad things is the private equity model of debt, of wealth extraction.” These firms have traditionally invested in promising private companies, though since the Great Recession, they’ve also assembled vast portfolios of single-family and multifamily homes. Today, they are some of the largest corporate landlords in the country. Private equity’s presence in Hawai‘i’s multifamily market is relatively new. The earliest record we could find was from 2003 when California-based The Bascom Group purchased what is now known as the Oasis Townhomes. Mark Bratton, senior VP at Colliers International Hawaii, says private equity and other institutional investors aren’t very active here because Hawai‘i only has about 30 market-rate residential properties with more than 100 units. Private equity firms typically want larger deals – $50 million or more – for investments to be worth their time and efforts, he adds. Plus, Hawai‘i has to compete with other, more attractive markets on the mainland. Colliers Hawaii tracks local multifamily transactions with sales prices over $1 million. Blackstone is currently the largest private equity landlord in the Islands, controlling 2,700 apartment units across the Kapolei Lofts, The Element, Kapilina Beach Homes and Kalaeloa Rental Homes. It uses Greystar as its property manager. Waterton Associates, which describes itself as a real estate investment and property management company based in Chicago, owns about 530 units at Waikele Towers and Oasis Townhomes in Waipahu and Palms of Kilani in Wahiawā. We include Waterton as a private equity landlord because its $1.5 billion Waterton Residential Property Venture XIV fund is categorized as a private equity fund in

its filings with the U.S. Securities and Exchange Commission. That fund was used to acquire two of its Hawai‘i apartment complexes.

PR ICED OUT

ON A WEEKDAY AFTERNOON, the streets of the Kalaeloa Rental Homes are mostly empty. Cars are parked in their driveways or under their carports, and the former military-housing apartments built in the 1970s and 1990s show no activity, save for palm trees blowing in the wind. Starting rents in December ranged from $2,900 for a 2-bedroom, 1-bathroom unit to $4,200 for a 4-bedroom, 2.5-bathroom townhome. Tiare and her family have lived in one of the 3-bedroom townhomes for several years, enjoying proximity to her kids’ schools and extended family. She’s also felt safe because security personnel drive around at night and the community is separated from the rest of Kapolei. Their rent was a little pricier than what they were used to and would increase at renewals before Covid, but it was still manageable. That changed after the pandemic-related eviction moratorium expired. Her rent increased almost 14% at her 2022 lease renewal, she says. The community’s office told her the increase reflected the unit’s market value. She had a couple of months’ notice, but a job loss during Covid had depleted her savings and other rentals were charging even more, so leaving Kalaeloa Rental Homes was not an option. “We’re still just suffering because of the rent being so high,” she says. “And it’s like OK, I have other bills that got messed up and you have to choose what is the better thing to make a payment on. Are you going to make your family homeless because you’re not going to pay the rent on time, and they’ll charge you all the attorney fees and all these extra percentage of fees because it’s late?” Joshua Abiva and his family moved out of their two-bedroom Kalaeloa home

last fall after only a year because their rent was expected to increase by $700. He questioned the landlord’s reasoning when he saw that an identical unit had been listed for $2,800 a month – $700 less than he was expected to pay. “If that’s the case then we have to move out because I don’t know who can afford $3,400 and that’s not even including the utilities, and it’s not even our own home,” he says. He, Tiare and other renters we spoke with say they know several local families that left Kalaeloa and the other Blackstone properties because they couldn’t afford the rent hikes. Starting rents at the Kapilina Beach Homes vary from $2,900 for a 2-bed, 1.5bath unit to $3,300 for a 4-bed, 2.5-bath townhome. The community comprises both military and civilian families. One renter we spoke with shared screenshots from the Kapilina resident Facebook group. They show that rent increases of several hundred dollars occurred prior to Blackstone’s ownership. Since late December 2021, when Blackstone acquired the property, renters have shared increases on the Facebook page ranging from $90 to $600. One renter, a single mom, told us it seems common for residents to leave after one year because of the high increases. She had moved her family from the mainland because she wanted her kids to grow up in a safer, more laidback community. She has anxiety about having to move again. Eight miles mauka at The Element, starting rents range from $2,300 for a 1-bed, 1-bath unit to $4,200 for a 3-bed, 2-bath unit. One renter told us their rent increased 14% last year. “Who can afford that?” the renter asks. “I’m just like, wow, y’all are greedy.” This renter did not want their exact increase or unit type specified in the article for fear that management could identify them. That renter says the military presence in Hawai‘i also contributes to the high rents at The Element and other area properties. Military service memH AWA I I B U S I N ES S

bers on O‘ahu receive a basic housing allowance, which in 2022 ranged from $2,000 to $3,900, according to the Department of Defense. Those with dependents and those with higher ranks have housing allowances on the higher end of the spectrum. “To me, these then are not built for local residents,” The Element renter says. “So my biggest question is, where do we go? What do we do?”

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about 10 leases from the apartment properties owned by Blackstone and Waterton. These documents were 30 to 50 pages long, depending on the included addendums. And while they included the fees that renters would have to pay, several tenants we spoke with said they felt these fees were hidden among the dense language of their leases, and that the properties’ staff were not transparent enough about what the fees would cover and how they’re calculated. The types of fees and their amounts vary from property to property, but renters are typically on the hook for parking, pet fees, common area maintenance, electricity, water, sewer, trash, pest control, late fees, and new payment account fees and monthly billing administrative fees for utilities, among others. Residents pay their utilities to a third-party company, rather than directly to the utility companies. Tiare, the Kalaeloa Rental Homes renter, says her utility bills come to about $900 a month. She says her monthly bill doesn’t tell her how much electricity or water she uses. She says she has to request that information, which provides meter reads and usage, plus the charges for each utility and fee. Her unit is supposed to be submetered, and her building has solar on its roof, but she doesn’t know where the meter is so she can verify that her bills are accurate. 40

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Abiva, who used to live in the Kalaeloa Rental Homes’ Kaimana apartments, says he would spend about $600 on his utilities. One of his bills from spring 2022 showed that he was being charged about $400 for electricity, $115 for sewer and $55 for common area maintenance, $25 for water, plus a $5.50 service fee. The Kalaeloa Rental Homes made the news in 2016 for having similarly high utility bills – ranging from $600 to over $1,000 – though it only seemed to impact the Kaimana apartments. The 120 units didn’t have separate electrical meters, so bills were based on square footage and the number of occupants. The former owner, Boston-based real estate private equity firm Rockpoint Group, later installed individual electrical meters at each home and solar panels on most buildings. A LivCor spokesperson wrote in an email that some residents directly benefit from its solar infrastructure and that their team is working on plans to expand the solar capacity at all its properties. LivCor is a Blackstone portfolio property responsible for the asset management of Blackstone’s multi-family communities. A couple that lives at the 50-unit Waikele Towers say they’ve seen more fees added to their bills over the years. The owner before Waterton required them to pay taxes, which were added to the base rent; mandatory renter’s insurance; maintenance fees; common area fees; and a pet deposit. Then, when Waterton came in, they also had to pay for common area electricity and a share of the building’s water. There’s also a $75 monthly miscellaneous charge, but they don’t know what it’s for. They’ve asked management to explain the fee, but management didn’t provide a straight answer. “They would say, ‘this is your amount you have to pay regardless,’ ” one of the couple says. “ ‘This is the amount that we’re charging you.’ Basically, ‘if you don’t like it, you can leave.’ Basically, just they’re saying like we had no choice to pay these without any explanation.” In total, the fees added about $300 to

their base rent. They later pushed back against some of the fees and no longer have to pay for all of them, but they say they still feel exploited by their landlord. “They’re just sucking us dry,” one of the renters says. “It’s to the point where, like, we’re worried … because it’s just every turn, it’s like, ‘You guys owe us more money, you guys owe us more money.’ ” They have wanted to leave Waikele Towers for a while but were stuck during Covid and relied on rent assistance to pay their bills. They’re planning to move as soon as their lease ends. They admit they didn’t read their most recent lease renewal as well as in prior years, so they missed the new addendum adding common area electricity and water to their bills. They say their lease wasn’t misleading, but it wasn’t very clear either. “We’re not just concerned about us, we’re concerned about everyone else in

“I’M REALLY WORRIED ABOUT THE OTHER FAMILIES AND THE FUTURE FAMILIES AND EVEN THE PAST FAMILIES THAT WERE HERE THAT KIND OF GOT SCREWED OVER BY THESE PEOPLE.” —A RENTER AT WAIKELE TOWERS

PHOTO: GETTY IMAGES; PHOTO ILLUSTRATION: KELSEY IGE

Below left, a playground at Kalaeloa Rental Homes; right, shoreline at the Kapilina Beach Homes.

this building that’s being affected, and they might not realize what’s happening … they might not be as attentive to things,” one of them says. “So I’m really worried about the other families and the future families and even the past families that were here that kind of got screwed over by these people.” Waterton and its local partner and property manager, Tower Development, did not respond to multiple requests for an interview. Dan O’Meara, Honolulu consumer and housing managing attorney for Legal Aid Society of Hawai‘i, says renters don’t always have time to read through complex, lengthy legal documents. The nonprofit serves low-income clients, including some at the Palms of Kilani who also have issues with numerous additional fees popping up on their leases. The Blackstone and Waterton leases are based on templates from the National Apartment Association. Their utilities addendums include brief descriptions for how a tenant’s utility costs are allocated. They might say that the electricity is submetered, for example, or that a tenant’s allocation is based on the number of people residing in the dwelling unit, the square footage of the dwelling unit or a combination of the two. But if the allocations are not based on renters’ actual usage, there’s no clarification as to whether tenants are sharing in the costs for utilities in vacant units. O’meara calls the fees “insidious.” “What happens is you think, ‘OK, $1,900 for this. OK, sounds good,’ without realizing when you add in things that you normally wouldn’t be paying for, like water, sewer, trash, common area maintenance fee and this administration fee, you might be paying an extra $150,” he says. “It’s really, apples to apples, you’re paying closer to $2,100 rather than $1,900 for your rent.” He says he’s seen other corporate landlords charge tenants numerous fees. Tenants would benefit if landlords were required to disclose estimated ranges for how much various fees will cost, before lease signing. In an email, Julio Morales, senior VP 42

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of asset management at LivCor, wrote that rents and fees are “thoughtfully set” to ensure they can provide a high-quality living experience. “Fees are comparable to similar apartment communities in the area – some fees are prorated based on unit size, and all are disclosed at lease signing before a resident moves in and are itemized for transparency,” he wrote. We reached Blackstone and its portfolio company through its local public relations company, Bennet Group, and they requested that we email them a list of questions. Justin Tyndall, a UHERO assistant professor, says landlords typically charge as much as they can, regardless of whether they are private equity or not. Private equity landlords, however, have more tools, personnel and data to act faster and more aggressively than smaller landlords, he says. For example, owners of apartments with artificially low prices might suddenly impose large rent increases if they find it will yield larger returns. “I think their incentives are pretty

similar to a mom-and-pop landlord but the speed with which they make reforms is going to be different,” he says. Tiare, the Kalaeloa renter, says she wishes her landlord was more supportive of local families and their struggles to stay in Hawai‘i. “We’re in a situation where we have no choices, we don’t have options,” she says.

F RUST R ATIONS W IT H U PK EEP

K APILINA BEACH HOMES SITS on 392

acres of Navy land at Iroquois Point. The more than 1,400 units are former military housing built in the 1960s. The community has been renovated since it transitioned to private ownership; one of the major projects was the construction of a new community center with a fitness center, kitchen and business room. Shoreline restoration work was completed under California-based Carmel Partners, the real estate investment firm that owned the property between 2012

PHOTOS: COURTESY OF BLACKSTONE

and 2018. Carmel Partners also renovated the units with new flooring, countertops, cabinets and other additions. Joshua Klaassen says he enjoys living at Kapilina. He is a special education teacher at Ewa Makai Middle School and has lived in a 3-bedroom single-family home at Kapilina for about seven years. The community was originally recommended to him by a coworker. He says he hasn’t encountered large rent increases or had issues with maintenance like some other residents. He says his rent increases have always been manageable, and he hasn’t noticed any differences under the property’s different owners. Since he’s lived there, the community has opened a splash pad, dog park, and a community center with a pool and fitness center. His family’s favorite amenity is the pool. And he likes that the community has grassy areas between the single-family homes, which is different from many other ‘Ewa neighborhoods that are located closer together. “What I like about it is it feels like a safe community,” he says, adding, “The

speed limits throughout the neighborhood are 15, so … I don’t worry too much about having my kid play outside and ride his bike up and down the streets of the neighborhood.” But other renters we spoke with say the homes need a lot of work. Renters in the Kapilina residents Facebook group have posted about plumbing issues, broken appliances and pests. And they relay their frustrations when Kapilina takes awhile to address them or makes things worse when doing repairs. The single mom at Kapilina who spoke with Hawaii Business Magazine says paint peels off her single-family home’s walls: “It’s like they’re doing Band-Aids on everything, and you can only do that for so long,” she says. “The homes desperately need to be renovated.” She also says she’s had termites crawling and flying inside her home. She says it took over a week for Kapilina to send someone to inspect the place. Once that was done, the company refused to fumigate and were only willing to replace a damaged built-in wooden structure. And

“WHAT I LIKE ABOUT IT IS IT FEELS LIKE A SAFE COMMUNITY. THE SPEED LIMITS THROUGHOUT THE NEIGHBORHOOD ARE 15, SO … I DON’T WORRY TOO MUCH ABOUT HAVING MY KID PLAY OUTSIDE AND RIDE HIS BIKE UP AND DOWN THE STREETS OF THE NEIGHBORHOOD.” —JOSHUA KLAASSEN, RENTER, KAPILINA BEACH HOMES

when she had mold in her home, she says, Kapilina failed to take her concerns seriously and showed no sense of urgency. “They continuously bank on people not knowing their rights, being stuck here and unsure where else to go, and being constantly terrified of the rent going up,” she says. “So in a sense, I’d venture to say the majority of people here feel held hostage by the conditions and treatment of management.” Xavier Bonilla, who moved out of Kapilina in March 2022, says mainteH AWA I I B U S I N ES S

OUR SEARCH FOR PRIVATE EQUITY LANDLORDS IN HAWAI‘I

We focused on multifamily properties and searched news articles, company websites, property tax records, Colliers International Hawai‘i’s investment reports and Hawai‘i Information Service’s tax map key database to identify private equity-owned apartments in Hawai‘i. This method may not have captured all private equityowned apartments. One of our challenges was determining whether a

nance workers were supposed to paint over a patched wall from a burst pipe in the four-bedroom townhouse he shared with four other adults and two kids. The maintenance staff was quick to fix the pipe and patch the wall, but once Blackstone took over in January, they never returned to paint. The wall was still unpainted when he moved out. Bonilla is also a plaintiff in a class-action lawsuit against Kapilina Beach Homes. The lawsuit originally asked the company to stop charging for rent and water when water was contaminated by fuel leaks at Red Hill between December 2021 and spring 2022 and waive exit fees if residents broke their lease. The lawsuit is now in federal court and seeks an unspecified amount of damages, return of rents and other remedies guaranteed by the Landlord-Tenant code, and attorneys’ fees and costs. Tiare, the Kalaeloa renter, says she has dealt with rats in her walls for years. She says she’d hear them scratching and squeaking at night, which gave her anxiety and prevented her from sleeping. Sometimes, they’d also run across the floor. She says she’d call the Kalaeloa office monthly, and maintenance staff members would give her a couple of traps to put outside her home. But they would only send their pest control worker on regularly scheduled days, so she’d sometimes have to wait a week for the traps to be re-baited. Frustrated with their slow 44

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company that selfdescribes as a real estate investment firm could also be considered a private equity firm or is backed by private equity funding. We used PitchBook, a capital markets research company, to help us look into various companies’ funding. Anikka Villegas, a fund strategies and performance analyst at PitchBook, wrote in an email that both a private equity firm and a real estate investment

company can invest in real estate, but the difference is that a private equity firm investing in real estate is a general partner that has limited partners and it uses a private equity fund structure. “Not all real estate investment companies are private equity firms because not all of them are in a general partner-limited partner relationship,” she wrote in an email. A few private equity companies,

response, she finally asked maintenance in 2022 to seal off the area where rats were entering her home. It’s helped, and she says it’s understandable that the area has rats because there’s a lot of trees nearby, but she’s disappointed it took so long to address the problem. She also had to buy her own traps because she says she needed more than the few that maintenance gave her. One month, she caught nine rats in traps, she says. “Never would I imagine five years ago that we’d be paying this much money in rent for problems,” she says. Rob Harper, head of Real Estate Asset Management Americas at Blackstone, wrote in an emailed statement that the company is “immensely proud of our track record in Hawai‘i, prioritizing our residents’ well-being while making a positive impact in West O‘ahu.” He added: “We have invested more than $17 million to improve our communities, boosted on-site staffing levels by 10%, increased regular communication to residents and introduced popular activities free of charge. Importantly, during the pandemic, we suspended evictions for nonpayment of rent for over two years and instituted generous support programs to help local families most impacted. Our commitment to being good owners and neighbors has resulted in a 22% increase in resident satisfaction rates as compared to the prior ownership.” State and federal laws prevented

like Blackstone, are publicly traded, so they are subject to Securities and Exchange Commission rules and regulations. But the overall private equity industry “thrives by exploiting exemptions and loopholes in securities law … fostered by decades of deregulation in private markets,” according to Americans for Financial Reform. That means it’s difficult to get a full picture of private equity portfolio holdings.

landlords from evicting tenants for nonpayment of rent. The state eviction moratorium was in place from April 2020 to August 2021, and the federal one from September 2020 to October 2021. Morales of LivCor, the Blackstone portfolio company, wrote that the $17 million investment included critically needed maintenance work, apartment renovations, and enhancements to shared spaces like parks, pools and gyms. More work is planned for 2023 and beyond, including efforts to make its communities more sustainable.

O T H E R I M PAC T S

BL ACKSTONE SAYS IT HAS HAD other positive impacts on its Hawai‘i communities. LivCor, the Blackstone portfolio company, wrote that it also developed a rental assistance advisory program to help residents apply for rental assistance and allow them to pay past-due rent via payment plans. The company also waived late fees and credit card fees, and allowed greater flexibility on lease breaks, transfers and roommate changes. And during the Red Hill water crisis, the company provided each household with a $1,000 grant to help with disruption-related costs, waived termination fees and water service charges through April 2022, delivered water coolers and

PHOTO: GETTY IMAGES; PHOTO ILLUSTRATION: KELSEY IGE

jugs, offered free compostable serving items and utensils, reimbursed off-site laundry service costs, and arranged access to off-site shower facilities, Harper wrote. A LivCor spokesperson also wrote that the company has “serious concerns with the integrity of (Hawaii Business Magazine’s) survey results given the sample size reflects a tiny fraction of our resident population and the publication took no meaningful steps to assure that those commenting even live in or have ever lived in our communities during our ownership period.” Hawaii Business Magazine issued a call on our website and social media channels to help us find renters who lived at private equity-owned apartments. We also found renters by talking with community members. We asked Blackstone via its public relations firm to provide us with tenants who would be willing to speak with us, but they did not provide any. We verified that the 11 renters we spoke with lived at these properties during the companies’ ownership periods by asking renters to share with us their leases and other documents to verify tenancy. We also spoke to two people who were happy with their rentals, and we have included their comments. For example, mom-of-two Rhee moved her family to O‘ahu shortly after the pandemic began. They had previously lived in Northern California and wanted to be around water and live in a place with more stable weather. They moved into a 2-bed, 2-bath unit at the Kapolei Lofts. Rhee says it was hard to adjust to a new home and new community during the pandemic, but she enjoyed living at the Lofts. She says she often spent time at the property’s pool, and that she loved that staff hosted a virtual paint night, socially distanced gift-wrapping events during the holidays, virtual scavenger hunts around the community and breakfast events. “Every time I do drive by, I’ll go, ‘Oh look, our first home,’ and I always smile because I made it as best as I possibly could and it really was a good experi-

ence,” she says. She and her family have since moved into their own home. Bratton, the VP at Colliers International Hawaii, says private equity and other institutional investors have had positive impacts on Hawai‘i’s multifamily market because they’re providing better products. “The vast majority are always reinvesting right away, trying to lift up the quality of the product for rental housing,” he says. He and his team worked on Waterton and Tower Development’s January 2022 acquisition of the Oasis Townhomes. Both companies’ strategies include making upgrades to their properties. According to Colliers’ Hawai‘i investment report for the second quarter of 2022, the Oasis Townhomes was in the midst of a more than $20 million renovation. Bratton adds that the property will soon have a new name.

SM A LL SH A R E OF R ENTA LS

PRIVATE EQUIT Y L ANDLORDS own a small

portion of O‘ahu’s overall rental stock. According to the U.S. Census Bureau, there were an estimated 183,000 renter-occupied housing units on the island in 2021. Deja Ostrowski, an attorney with Medical-Legal Partnership for Children in Hawai‘i, wrote in an email that she’s concerned about private equity’s presence here because it controls some of the larger projects that Native Hawaiian and Pacific Islander families need. And with 2,700 units in the ‘Ewa/Kapolei area, private equity may be the largest landlord in West O‘ahu. There are an estimated 10,700 renter-occupied units in the 96707 and 96706 ZIP codes for Kapolei and ‘Ewa Beach, according to the

Census Bureau’s 2020 five-year estimates. Numbers for 2021 were not available. Dougherty, with Americans for Financial Reform, says when private equity firms buy a bunch of units in a particular area, it creates a small monopoly within that neighborhood: “If you own them in a small geographic area where there’s a captive audience where they need to live there, then … you’re narrowing people’s choices,” he says. In some cases, like when private equity takes over all of the older, more affordable sources of rentals in a community, fixes them up and then charges higher rents for the higher-quality units, that presence can cause entire neighborhoods to no longer be accessible to certain tenants, says Mad Bankson, housing research coordinator with the Chicago-based nonprofit Private Equity Stakeholder Project. The stakeholder project aims to empower communities impacted by private equity investments. That has included helping renters get their corporate landlords to address repairs, neglected maintenance, and to halt or slow evictions and rent increases. Jordan Ash, the nonprofit’s director of labor/jobs and housing, says it’s hard to fully measure the impact that private equity landlords have had on tenants because many tenants are afraid to speak out. Those who have worked with the Private Equity Stakeholder Project tend to be part of an organization, like a tenants union. Ostrowski wrote that Hawai‘i needs to have a serious conversation about housing security and tenant rights: “We need massive law changes that will prevent rent gouging, regulate how much a landlord can increase rent, require landlords to have cause to evict someone, alH AWA I I B U S I N ES S

PHOTO: AARON YOSHINO; PHOTO ILLUSTRATION: KELSEY IGE

low people a grace period rather than 5 days before an eviction filing or 45 days to vacate a unit,” she wrote. “We need a workable way to withhold rent from a landlord that isn’t repairing a unit rather than requiring a tenant to bear the cost of that themselves first. We need to abolish laws that require a tenant to risk paying legal fees if they challenge a landlord who has an uninhabitable unit. We need to fund tenant union programs and our landlord-tenant hotline and DCCA to actually regulate bad landlords.” DCCA refers to the state Department of Commerce and Consumer Affairs.

“THOSE WHO WOULD FOCUS ON A PURELY PRIVATE SECTOR SOLUTION TO OUR HOUSING SHORTAGE, I THINK, ARE IGNORING THE FACT THAT THERE ARE A LOT OF PROBLEMS THAT COME WITH THESE REALLY AGGRESSIVE PRIVATE SECTOR INVESTORS AND LANDLORDS.” —STANLEY CHANG, STATE SENATOR

Retaliatory rent hikes and evictions are prohibited by the Landlord-Tenant Code, but the main way for tenants to dispute them is to go to court. According to DCCA, its Office of Consumer Protection may initiate investigations based on complaints, but, generally, the office is constrained by law from instituting legal actions on behalf of individual tenants. State Rep. Troy Hashimoto is the vice chair of the House Committee on Housing. He says that the topic of private equity landlords hasn’t become a big enough issue for the Legislature to address, but legislators are aware of it. He says his committee is focused on monitoring how the expiration of Covid rent relief will affect the overall rental housing market. Philip Garboden, affordable housing professor at UH Mānoa, says Hawai‘i needs to create more lower-income, subsidized housing, especially when in the state of Hawai‘i there are many mechanisms to make existing housing more expensive or create new luxury housing. One legislator who has been vocal about the need for public housing is State Sen. Stanley Chang, who has proposed several bills over the years to create a program in which the state would provide low-cost, high-density, for-sale leasehold housing on state lands. “Those who would focus on a purely private sector solution to our housing shortage, I think, are ignoring the fact that there are a lot of problems that come with these really aggressive private sector investors and landlords,” he says. He adds, “The reality is until we start building 10,000 homes per year, we are going to see more outside investment in our real estate market, we’re going to see more people forced to move outside Hawai‘i.”

A W HOLE LOT OF STR ESS

SOME OF THE CURRENT AND FORMER renters we spoke with say they felt

trapped living at the Blackstone and Waterton properties. Jane, the former Kapolei Lofts renter, says the property’s rule was that tenants must give 60 days’ written notice to break their lease and pay a lease buyout fee of one month’s rent. The Waikele Towers renters’ 2022 lease showed that they would also have to give 60 days’ notice, and their buyout fee would be two month’s rent. O’Meara, the Legal Aid Society attorney, says that 60 days’ notice is uncommon in Hawai‘i leases. And one of the challenges for renters is that the 60 days’ notice isn’t contemplated by the state’s Landlord-Tenant Code. “The Landlord-Tenant Code doesn’t address if you’re cutting out during the term of your lease, other than you’re still liable and that’s where there’s a duty to mitigate on the landlord’s part,” he says. Tenants could transition to a month-to-month agreement because the Landlord-Tenant Code allows month-to-month renters to provide only 28 days’ written notice. But those we spoke with say that shorter-term leases can be $100 or $200 higher each month than yearly agreements. At Kapilina, the single mom we spoke with says she is basically waiting every day for whatever issue comes next. “We want to be happy here because our kids are happy and it’s an enclosed community,” she says. “But there are many issues, and it’s hard to feel comfortable living in a community where the management actually does not care about you.” She says she feels exploited by her landlord and wouldn’t have moved her family from the mainland if she knew what living at Kapilina was going to be like beforehand. “It’s a whole lot of stress and worry for people because you just never know what’s going to happen from day to day,” she says. “And hearing this is so widespread in communities that are owned by the same corporation is not comforting at all. It’s good to know so that we can avoid those properties if we do have to move.” H AWA I I B U S I N ES S

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FE B R UA RY 2 0 2 3

HAWAI‘I HAS TENS OF THOUSANDS OF JOB OPENINGS AND NONPROFITS SAY “HIDDEN WORKERS” ARE CAPABLE OF EFFECTIVELY FILLING MANY OF THEM.

FINDING

UNTAPPED

TALENT BY C H AVON N IE R AM O S PHOTO G RAPHY BY A A R ON YOSHINO

H AWA I I B U S I N ES S

RICKEY WELCH WAS 19 WHEN HE ENLISTED IN THE AIR FORCE SHORTLY AFTER THE ATTACKS ON SEPT. 11, 2001. HE SERVED FIVE Y EARS AND S AY S HIS BIG G EST CH A L L E N G E S

when he returned to civilian life were post-traumatic stress disorder and being able to trust people. “The expectation when you get out of the military is that people are going to have your back,” says Welch. He worked in high-end retail, but says it was “super competitive,” and wanted a position where he felt like “part of a family.” U.S. Vets, a nonprofit that helps veterans transition to civilian life and start new careers, helped him get a job at a hotel in Waikīkī. Veterans are among the “hidden workers” – a relatively untapped pool of talent for companies nationwide – identified by a 2020 Harvard Business School study. The report says these hidden workers come from many backgrounds: They include onetime caregivers who are returning to the workforce, immigrants, refugees, those with physical disabilities, and people who’ve moved from one place to another and are now looking to get back to work. The Harvard study surveyed over 8,000 hidden workers and more than 2,250 executives across the U.S., United Kingdom and Germany. It says these individuals want to work but have trouble getting jobs because they don’t meet

FE B R UA RY 2 0 2 3

hiring requirements. The study concludes that many of these people could perform well in the jobs, but never get the chance. “Companies that don’t hire hidden workers foresee only problems, while companies that do hire hidden workers recognize the risks, but also see the gains,” the study reported. The gains are widespread, according to executives with companies that hire substantial numbers of hidden workers. “Nearly two-thirds of all such business leaders reported that, once hired, previously hidden workers performed better or significantly better in six key areas that matter most to employers: attitude and work ethic, productivity, quality of work, employee engagement, attendance and innovation.” Hawai‘i had approximately 46,500 job openings as of November 2022, according to Dr. Eugene Tian, the chief economist at the state Department of Business, Economic Development & Tourism.

JOB TRAINING OPPORTUNITIES

he nonprofit Easterseals Hawaii has services that help people with disabilities or special needs, including its Employment Services Program, which connects participants with employers and provides job training. CEO Andrea Pettiford says the program lets companies “tap into a group of prospective employees that they may not have known about and benefit from their commitment.” It provides training to an average of 90 people annually, with 15 people currently enrolled. Each participant receives tailored training and guidance on how to create a resume and apply for a job. Pettiford says Easterseals Hawaii tries to match participants with companies where their skills and interests are a good match. That way, she says, employees receive the support they need to succeed and employers have a more seamless way to fill their workforce gaps. Derena DeJesus, an employment services manager with Easterseals, helped 28-year-old Dylan Grantz get a job at Don’s Grill in Hilo in 2019. Grantz works as a busser at the restaurant, and says he enjoys the job because he can practice socializing with customers and co-workers. He goes in three days a week for four hours at a time and has multiple duties, including leading customers to tables and bringing them food and drinks. “Having this job at Don’s Andrea Pettiford has been a blessing and very CEO, Easterseals Hawaii and Northern California rewarding for him,” says Rochelle Grantz, Dylan’s mom. She says her son has learned to work during “busy, stressful hours, and with large groups coming in all at once,” which has added to his confidence. Danielle Hoopii, manager of Don’s Grill, says the restaurant has had workers with special needs before, but “always in the back of the house, in the kitchen.” Grantz was the first to work in the front of the house. “He interacts with the customers really well and we don’t really give him special treatment,” she says. Grantz tries to do everything, she says, but because of his physical limitations, he’s unable to carry heavy things. But, she adds, “He’ll try and try.”

“The hidden workforce helps us foster and create a more inclusive community where everyone can contribute in a meaningful way.”

Rickey Welch found work at a Waikīkī hotel through U.S. Vets Hawai‘i, which helps veterans translate their varied skills into resumes and successful interviews.

Hoopii’s hiring model is, “If you want to work, I don’t care if you have experience or not, I’ll train you.” Her advice to other employers: Be openminded and have patience when working with individuals with learning curves. “Everybody needs that first opportunity to get started,” she says.

REVAMPING JOB DESCRIPTIONS

ome employers use applicant tracking and recruiting management systems to organize and track resumes and how people apply for jobs. These tools “are designed to maximize the efficiency of the process,” according to the Harvard study, by filtering out applicants based on keywords and keeping the candi-

H AWA I I B U S I N ES S

Who Are the “Hidden Workers”? A 2020 Harvard Business School study says there 27 million hidden workers in the U.S. It splits them into three categories: • Missing hours: Individuals working one or more parttime jobs but are willing and able to work full-time. • Missing from work: Individuals who have been unemployed for a long time but are looking for jobs. These include mothers who raised children and other caregivers, and people out of the workforce while dealing with illnesses. • Missing from the workforce: Individuals who are not working and not looking for jobs but are willing and can work depending on the circumstances. 33%

Missing from the workforce

63%

Missing hours

27.4 M

Hidden Workers

10%

Missing from work

34%

50%

Economic reasons

Child/ family care

Health/ retired

Other reasons

12%

Inactive/ retired

31%

57%

Inactive/ other reasons

Want to work

38%

62%

Long-term unemployment

Very long-term unemployment

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BEING MORE INCLUSIVE

Source: Harvard Business School. Read the full report at tinyurl. com/HBSHiddenWorkerStudy.

dates that seem best suited for the job. However, the study says, this process excludes “viable candidates whose resumes do not match the criteria but who could perform at a high level with training.” Many companies acknowledge this flaw: 88% of employers in the Harvard study said “qualified skills candidates” were left out of the hiring process because they did not match exact criteria in the job description. Kaleikaulana Castillo, workforce development coordinator at U.S. Vets Hawai‘i, says veterans bring a lot of experience to the workforce but have difficulty translating that into resumes. She says veterans were required to do a variety of tasks in the military, so they have valuable skills in leadership, teamwork and working hard. In the military, she says, “They don’t really just have one job, they really do it all.” She says her organization helped 185 veterans in Hawai‘i find jobs in the last fiscal year. Greg Williams, executive director at U.S. Vets Hawai‘i and a veteran himself, says a typical military person is going to be a “very loyal employee.” “If they like your mission and they’re brought into your mission, they’re going to do whatever it takes,” he says. “Because the military mindset is, ‘I may grumble about it, but I’m gonna figure out how to get it done.’ ” Welch, the Air Force veteran, says persistence and hard work helped him get his current hotel job. When Hawaii Business talked to him last November, he was two weeks into his job and in the process of finding an apartment. “Just having a routine is something that the military definitely instills in you,” he says.

rior to the pandemic, the state’s employment rate for working-age people with disabilities was 38.9% compared with 80.1% for working-age people without disabilities, according to a database funded by the National Institute on Disability, Independent Living, and Rehabilitation Research. (tinyurl.com/DisabilityStatistics) Because they often face discrimination in hiring and promotion, many people will not disclose their disabilities. A 2017 study by the Center for Talent Innovation estimated that only 39% of employees disclosed their disabilities to their managers.

Williams agrees and says veterans are “not looking for a handout.” “I feel like we owe it to them to give them the best opportunity we can to find meaningful, gainful employment, to be a productive citizen,” he says. The nonprofit provides other support for veterans, including helping homeless veterans find housing. Based on U.S. Census Bureau data, the national Housing Assistance Council estimates that 5.5% of the 101,975 veterans in Hawai‘i live in poverty and 485 Hawai‘i veterans are homeless. (tinyurl.com/VeteranDataHI) Welch says U.S. Vets continues to help him through his journey by providing a “sense of security.” He calls himself a “naturally confident guy” but admits he was nervous about applying for a job. “They offered me words of encouragement, and for me that was huge because I was able to feel more comfortable,” he says.

About 19% of adults 18 years and older in Hawai‘i have a disability, according to the Centers for Disease Control and Prevention. It says the most common issues are with mobility (involving 8% of all Hawai‘i adults), cognition (7%), hearing (5%) and vision (4%), and that some people have more than one disability. Easterseals’ Pettiford says that taking advantage of “the hidden workforce helps us foster and create a more inclusive community where everyone can contribute in a meaningful way.”

SENSE OF SECURITY

.S. Vets, which has locations in Wai‘anae and Barbers Point, offers monthly classes in which veterans learn how to write resumes, interview for jobs and dress professionally. The program also helps employed veterans find higher paying jobs or more “meaningful” positions, says Castillo. “We’re not just a job placement program, we’re a meaningful job placement program,” she says.

Employers Highly Rate the Performance of Hidden Workers Business leaders were asked to rank the performance of hidden workers relative to the performance of their traditional workers. Here is the percentage who said hidden workers on average performed better.

60%

50% 40% 30% 20% 10% 0 Attitude and work ethic Source: Harvard Business School

Productivity

Quality of work

Employee engagement

Attendance

Companies that hire many hidden workers

Innovation

Companies that hire few hidden workers

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Shipping, Air and Transportation The Lifeline to Hawai‘i

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awai‘i saw a drop in the overall importation of goods in 2022. The numbers typically fluctuate month by month over the year, and last year the state saw a substantial decrease from August 2021 to August 2022, from $184 million to $172.6 million, according to The Observatory of Economic Complexity (OEC), and Knoema’s World Atlas data. The drop was notably seen from June 2021 to September 2022. However, “The overall domestic market volume remains relatively stable, as compared to the volatility we’ve seen in the international markets,” says George Pasha, IV, President and CEO of Pasha Hawaii. “The Hawai‘i market traditionally has some seasonality in the

import volumes from the mainland, and these seasonal trends have held up year over year.” Hawai‘i is still the 49th largest importer in the US by far, with petroleum as the largest import, followed by cars. The biggest news in Hawai‘i shipping continues to be investment in new equipment and eco-friendly technology, including progress on the Kapalama Container Terminal project. When completed, it will serve as the future home for Hawaii Stevedores, Inc. (HIS) and its parent company, Pasha. In November, the Hawai‘i Department of Transportation was awarded $47.3 million that will go towards renewable energies for the terminal, in an effort to reduce the emissions and environmental impacts of port cargo handling operations by outfitting the terminal with resilient zero-emission and electric technology. The funds will be matched by $92 million in private funds from HIS and

PASHA Pasha Hawaii is a third-generation family-owned company, dedicated to serving the 1.4 million people of Hawai‘i. The company’s strong sense of ‘ohana and personal pride from its 450-plus Hawaii team members serves as the foundation for Pasha Hawaii’s commitment to best-in-class service, on-time delivery, and environmental sustainability. For the Pasha family, investing in its employees and its Hawai‘i trade lane infrastructure remains a top priority.

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In August 2022, Pasha Hawaii added the Islands’ first natural-gas powered containership to its fleet. Named MV George III after the current CEO’s late father, MV George III will soon be joined by a second naturalgas powered containership called MV Janet Marie, named after the late wife of George Pasha, III and mother to current CEO, George Pasha, IV. These ‘Ohana Class containerships were designed and built to exceed the International Maritime Organization’s

The Pasha Group. The investment includes electrified ship-to-shore cranes, regenerative energy storage, microgrid battery storage systems, a solar power system for the terminal building, a micro wind turbine, and other state-ofthe-art sustainable systems. Pasha also recently launched the MV George III, Hawai‘i’s first containership to operate on natural gas. The company is also expecting delivery on the second of their two new LNG-powered containerships shortly. “The M/V Janet Marie will join the M/V George III in our weekly California-Hawai‘i Express service which will provide paired tonnage to strengthen our service profile with additional capacity for weekly volumes in the high-demand dry and refrigerated markets, and further support our environmental stewardship to the communities we serve,” says Pasha. YOUNG BROTHERS

The new terminal will also help Young Brothers to optimize their operations by addressing their current space constraints at the Port of Honolulu. “The Kapalama Container Terminal project will open up additional terminal

2030 ocean vessels standards, representing the most technologically advanced and environmentally friendly vessels to serve Hawai‘i.

PHOTO : COU PH OTO : COU RTES Y OFRTESY PA SHAOF PA SHA

S H I P P I N G / A I R / T R A N S P O RTAT I O N

Hawaii’s Steadfast Shipping Industry

Patrick Ono POSITION: District Manager LOCATION: Nawiliwili, Hawaii DATE HIRED: Feb 27, 1997 NOTES: Operations expertise from years of managing teams across the western region. Passionate about fighting community hunger. Serves on Hawaii Foodbank’s Kauai Advisory Board. Arranged transport of the Foodbank’s new refrigerated truck to Kauai. Champions food drives and distribution events to support organizations like Nana’s House in Waimea.

Matson’s people are more than Hawaii shipping experts. They are part of what makes our community unique. Visit Matson.com

SPECIAL PROMOTIONAL SECTION

containers each month,” Martin says. Although about 85 to 90% of the state’s food is imported, YB supports more than than 85 Hawai‘i farmers and food producers, and the local agriculture supply chain, helping Hawai‘i become more resilient and self-sufficient. “In 2022, we moved 90,701 tons in agricultural shipments. Also, our island agricultural product discount program helps Hawai‘i food producers connect their products with consumers in markets across Hawai‘i at a reduced cost, resulting in $2.2 million in savings for local farmers in 2021,” Martin says. In 2022, YB also invested $9 million to add nearly 400 pieces of new equipment —including new containers, reefers and chassis — to its shoreside fleet, increasing access and availability to tools when and where they’re needed. “Look-

YOUNG BROTHERS With more than a century of service, Young Brothers has witnessed the extraordinary evolution of the state’s shipping and transportation industry. “More than a responsibility, it’s been a privilege for us to evolve with the needs of the community,” says Jay Ana, president. “What we do impacts nearly every business, every person, every day—which is why we take our commitment to quality seriously.” At every level of their more than 380-person organization, their ‘ohana shares a vision to bring island communities closer through reliable ocean-bound transportation. Part of how they’re continuously improving customer service as well as interisland freight handling is through a significant investment—$100 million

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ing forward, we will continue growing our fleet and plan to add a new larger flat deck barge that will enhance our ability and capacity to serve our neighbor island communities,” Martin says. YB also has a new customer portal, that allows customers to manage their interisland shipping needs online by making reservations, getting tracking information for frequently-booked cargo, and by getting rate quotes. MATSON

Matson reports that in the near-term, the company expects to see continued economic growth in Hawai‘i, supported by a relatively tight labor market and increasing tourism traffic. However, a combination of negative trends are creating uncertainty

over five years—in equipment, facili- in these islands possible. With more planned ahead, they’re eager to show ties and technology. Most recently, they’ve concentrat- the community what they’re doing to ed their efforts on improving booking, create a brighter, more sustainable future for all of Hawai‘i. gate experience, equipment availTo learn more, please visit youngability and cargo tracking through the brothershawaii.com, call (808) 543introduction of their online customer 9311 or email info@htbyb.com. portal. With this tool, customers can now easily make reservations and track status for frequently booked cargo, and obtain rate quotes for shipments. Providing customers with greater convenience and better time management is just one of the ways Young Brothers is ensuring efficiency and resiliency. As an essential member of the state’s transportation community, Young Brothers never loses sight of their kuleana to support Young Brothers moves what matters most to Hawai‘i no Hawai‘i’s residents, farmmatter how big or how small: automobiles, construction equipment, canoes, food, livestock, biodiesel and more. ers, small businesses and Pictured here: Noe Hewlen, long-time machine operator, every industry making life one of 380+ team members statewide.

PH OTO : COU RTES Y OF YOU NG BROTH ER S

S H I P P I N G / A I R / T R A N S P O RTAT I O N

space at Pier 41, allowing us to partner with the State Department of Transportation Harbors Division to advance critical repairs at Piers 39 and 40 and enable Young Brothers to invest in a redesign of our terminal,” says Chris Martin, Director of Terminal Operations, Young Brothers, LLC. Young Brothers has been shipping goods for more than 120 years, and maintains 12 weekly sailings to the ports of Nāwiliwili, Honolulu, Kaumalapau, Kaunakakai, Kahului, Kawaihae, and Hilo. “Young Brothers transports 100% of all ocean cargo originating and ending in Hawai‘i. This past year, we moved an average of 45,690

FROM POINT A TO POINT YOU

Providing quality service you can count on is our promise. Our new online customer portal enables you to review pricing, make reservations and track shipments for frequently booked cargo when it’s convenient for you. Visit youngbrothershawaii.com/customerportal for information and access.

Connecting Our Island Communities

H AWA I I B U S I N ES S

SPECIAL PROMOTIONAL SECTION

in future economic growth. Those factors include weakening U.S. and global economies, lower household discretionary income as a result of higher inflation, higher interest rates, and the end of the pandemicera stimulus helping personal income, says Matt Cox, Matson’s Chairman and Chief Executive Officer. Although Matson saw higher volume in shipping in Alaska, it saw lower volumes in Hawai‘i and Guam over the year. The company’s container volume in Hawai‘i in the third quarter of 2022 was 7.1% lower, primarily due to lower retailrelated demand as compared to the pandemic spike in demand experienced during the same period a year ago, Cox says. Matson also closed its seasonal China-California Express in September, about six weeks earlier than expected, after spot rates on the trade lane collapsed, Cox says. He also expects to see even more capacity reductions and schedule changes in the next two quarters to meet lower consumer demand. 60

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“Currently, we expect the next two quarters to be challenging in the Transpacific trade lane as retailers’ inventories adjust to current consumer demand levels and as ocean liners reduce vessel capacity to meet lower demand levels.” Despite the outlook, Matson has signed $1 billion in vessel construction contracts for three new LNG-ready Aloha Class containerships. The company anticipates delivery of the first vessel to be in the fourth quarter of 2026 with subsequent deliveries in 2027. The 854-foot Aloha Class vessels are the largest containerships ever built in the U.S. and are designed to operate at speeds in excess of 23 knots, the company reports. The new vessels will be built specifically for the China-Long Beach Express service, with state-of-the-art green technology features and a fuel-efficient hull design, and are expected to help Matson achieve its 2030 reduced greenhouse gas emissions goal. Matson has set corporate goals to achieve a 40% reduction in greenhouse gas fleet emissions by 2030 and net-zero emissions by 2050.

A proud American shipping company with Hawaii roots dating back 140 years, Matson introduced containerization in the Pacific – an innovation that revolutionized the industry and became the worldwide standard – as well as the first automobilecarrying ship in the Pacific. Matson was also among the first containership operators to recognize an obligation to protect the environment and set another industry standard decades ago with its Zero Solid Waste Discharge policy. The company has set goals of reducing fleet greenhouse gas emissions by 40% by 2030 and achieving net-zero total Scope 1 GHG emissions by 2050. Matson provides industryleading on-time delivery of essential goods to the economies of Hawaii, Alaska, Guam, Micronesia, and South Pacific islands and premium, expedited service from China to the U.S. West Coast. A key supply chain partner, its dependable U.S.built, -owned and -operated ships and assets can be relied upon to continually replenish customer inventories. In recent years, Matson invested approximately $1 billion in new ships and terminal improvements to support its Hawaii service. In November, it committed an additional $1 billion to building three more new ships that will serve Hawaii starting in 2026. Matson contributes volunteer support and more than $3 million in cash and in-kind services to hundreds of nonprofits annually. As part of its pandemic response in 2020, the company committed to providing $5 million in shipping services to support Hawaii’s foodbank networks through 2023.

PH OTO : COU RTES Y OF M ATSON

S H I P P I N G / A I R / T R A N S P O RTAT I O N

MATSON

CONSTRUCTION IS CRUCIAL TO SOLVING SOME OF HAWAI‘I’S

BIGGEST PROBLEMS BY ST E V E P E T R A N IK

Five industry leaders talk about how to incentivize more affordable housing, coping with climate change, O‘ahu’s upcoming multibillion construction project and much more

AWAIIII BBUUSSIINNES ESSS HHAWA

61 61

PARTICIPANTS GLEN KANESHIGE

GERRY MAJKUT

President of Nordic PCL Construction

President of Hawaiian Dredging Construction Company

ALANA KOBAYASHI PAKKALA Executive VP and managing partner of Kobayashi Group

BETTINA MEHNERT President CEO of AHL

SARAH LOVE

STEVE PETRANIK

President of the Building Industry Association (BIA) Hawaii and a partner at Lung Rose Voss Wagnild

Moderator Editor of Hawaii Business Magazine

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

The discussion was conducted over Zoom on Dec. 8. Here is a condensed version of that conversation. 

PETRANIK: Let’s start with your outlook for the building industry in 2023. LOVE: I think everybody’s forecasting 2023 to be a transitional year. Higher interest rates will have a chilling effect on the industry, both in the residential and commercial sectors. Projects with secured financing are probably going forward; projects that still need financing are probably going to be relooking at budgets and whether the projects are feasible in today’s market or stall for a little bit or maybe a couple of years. BIA Hawaii is a part of the National Home Builders Association, which is already projecting a rapid decline in new housing construction starts in 2023, before maybe stabilizing in 2024. Nationally they’re saying we’re already in a recession based upon the decline in the number of housing starts, permits being pulled, new home sales and existing home sales. Hawai‘i and O‘ahu aren’t immune to this. Our members have started to feel the slowdown: new home projects in the design phase that don’t have financing yet are finding it difficult to secure financing. The permitting obstacles meant a lot of people who went in for permitting when interest rates were low are only now getting their permits. So they’re looking at either value engineering (finding ways to reduce costs) or not being able to go forward with the actual plans because their budget is completely out of whack with the new financing rates. On a brighter note, NHBA is reporting multifamily construction like apartments seems to still be pretty strong – at least on a national level – as well as remodeling projects. Also relatively unaffected are government-backed projects, especially with the federal infrastructure funds out there in the next couple of years. PETRANIK: What’s the outlook for your organization in 2023? MAJKUT: I’m pretty optimistic. Our company has quite a few projects ongoing and when federal funding gets released, that’ll open up a lot of projects. And with what Gov. Josh Green has planned for housing and people all across the state rallying together on a mission to provide housing, I’m somewhat optimistic.

PREVIOUS PAGE PHOTO: GETTY IMAGES

WE ALL WANT SMART ANSWERS ON THE AFFORDABLE HOUSING CRISIS, THE HIGH COST OF HOUSING IN GENERAL AND CLIMATE CHANGE. AND SMART ANSWERS ARE WHAT I HEARD WHEN I HELD A WIDE-RANGING AND COMPELLING DISCUSSION WITH FIVE LEADERS IN THE CONSTRUCTION INDUSTRY.

PETRANIK: What is the biggest federal project on the horizon?

PETRANIK: Does that include the hospitality sector or has that leveled off now that the pandemic is winding down and tourists are back?

MAJKUT: The really big one is the Shipyard Infrastructure Optimization Program at Pearl Harbor Naval Shipyard. That’s a multibillion-dollar project. And that’s looking to be awarded in the first quarter of 2023. KANESHIGE: That SIOP project is huge. It will create a new dry dock for modern nuclear attack submarines, because the existing dry dock was built around World War II. From what we understand, what is driving that is concern about China and Taiwan. If there is activity there, the Pacific Command will coordinate the joint forces from here. And the Navy will be key to deploying forces from Pearl Harbor into the Taiwan Strait. The other thing is definitely a big push for affordable housing: Every candidate in the election put affordable housing at the top of their platform. We’re about 40,000 to 50,000 units behind across the state. The controversial project still out there is the redevelopment of the Aloha Stadium site. We all expected the RFP (request for proposal) would be out by this time, but it’s not. So with the new governor, hopefully we get a better idea of what the plan is. (After this discussion, Gov. Josh Green announced he was reviving the idea of a public-private partnership for the stadium site; then-Gov. David Ige had shelved the P3 proposal.) As for the overall market, I’m cautiously optimistic. Because of our key position in the Pacific, we will always get our fair share of federal dollars for military projects. And the state has a pretty good budget this year, so look for the state to put out a bunch of things, like school projects and Aloha Stadium. The area of concern is the private work. As rates get cranked up by the Federal Reserve, we’re going to see some project postponements. We haven’t experienced a cancellation yet, but there are whole projects we should have started by now, but developers pushed them back to second quarter of 2023. They’re probably still trying to cut a deal with their lenders. MEHNERT: I’m quite optimistic. As designers, we often see opportunities before they go to the contractors. What we see is activity in almost all of our sectors. It is a lovely time to be an architect quite frankly. I agree that a lot of indicators warrant pessimism but the work we are approached with indicates our clients are moving forward, including the private, the institutional as well as government sectors.

MEHNERT: We are starting to see an increased interest on the hospitality side – particularly from owners who want to push the envelope with sustainable design. And those owners appear to value sustainability beyond just its marketing potential. And we expect to see more of that. I think they see the role they play in providing a sustainable product and reducing their carbon footprint. PETRANIK: What’s a major factor spurring development?

Glen Kaneshige

PAKKALA: The single greatest opportunity to spur responsible development, to spur affordable housing development, is probably FAR – floor area ratio. Height and density, they go hand in hand in many cases. Depending on the zoning and the site and other factors, every piece of land has an FAR that’s allowed for construction in that area. Basically that ratio times your lot area create square footage you’re allowed to build. If the state and county increase the FAR, that increase can help make projects pencil without actually costing government any dollars. There’s no cost to the city or state. In fact, in many cases, it’s actually a net positive because the finished project will generate more real estate property taxes, which fund our city. MEHNERT: I love that you added the height to this. Here I’m the architect on a personal box: The buildings in Hawai‘i all look as if they were cut off with a big knife at one elevation. There’s vibrancy and synergy that comes from different looking buildings with different tops and different heights. This FAR incentive would also help us create a more dynamic skyline.

Bettina Mehnert

PETRANIK: As a developer, how would you characterize the current prevailing attitude about development in Hawai‘i? PAKKALA: It really depends on what you’re developing and where. There’s a lot of pushback to the hospitality sector on Maui or any development on the North Shore on O‘ahu. I am seeing an openness to development when it’s addressing some major needs, especially affordable housing, although tragically even that’s not without challenge. We are so used to the challenges here of getting any projects approved or supported. But I’m incredibly optimistic about residential

H AWA I I B U S I N ES S

development in all spaces that we operate in: Low income by federal and state definition is rentals for people earning 60% or less of the area median income; workforce housing, defined as 80% to 140% of AMI; market rate housing that’s generally considered for those above 140%; and then luxury housing. We know residential sales are slowing down, but what really isn’t tracked is pre-construction buyers – where you’re putting down a deposit now but looking forward realistically to closing – even on a fast timeline – in three to four years if it’s a high-rise. We start our projects easily two years even before we go public about them. And we have multiple projects – one in each of those spaces – that we’re prepared hopefully to start construction in 2023. It has been incredibly challenging to get everything to balance financially. You’re seeing the purchasing power of our affordable buyers – really all buyers – decline as you factor in higher interest rates. But what if you’re closing maybe in 2025 or 2026 when rates may be lower? Of course, no one has a crystal ball on interest rates. So while residential presales – and I’ve been talking with other developers too – have cooled a bit, they’re still very active and very successful.

MEHNERT: Another big project worth mentioning is the new OCCC to be built at the old animal quarantine station in Hālawa. Parts of the existing building are over 100 years old and Hawai‘i has been working on a new OCCC for over four years. The Department of Public Safety will be in front of the state Legislature again this year for funding to move the project forward. PETRANIK: What about climate change? How is that affecting construction in 2023 and beyond? MEHNERT: One of the most climate efficient things we can do is adaptive reuse. It is wonderful to see more of the downtown office buildings being converted – one to a boutique hotel, several others to residential apartment buildings, both rentals and condos. Looking at new construction, we’re looking at different materials. In Hawai‘i, we’re looking at using albizia (an invasive tree species). I love bringing that up because it’s such a weed and it grows so fast. And we have it right here … everything else needs to be shipped here. We’re looking at carbon-sequestering concrete. Alana really deserves the credit for the first real

Left: Kō’ula at Ward Village Right: Victoria Place in progress Top: Maui Bay Villas Phase 1 | Center: Outrigger Reef Waikiki Beach Resort Renovation Bottom: Lima Wharf, Navy Base Guam, Apra Harbor FE B R UA RY 2 0 2 3

www.hdcc.com

application of that material. We have two water issues: flooding from rain and sea level rise. One way we have addressed both is there are no residential units being built on highrise ground floors anymore. One of our Maui clients has a historic building in danger of falling into the ocean. We’re helping that client to figure out how to extend the life of that building, and we’re anticipating more projects like that. I think innovative thinking by responsible developers needs to be incentivized and rewarded. PAKKALA: As a local developer, we have been really focused on sustainable design and how we can innovate. On every project, we push ourselves to do something new and different, usually taking great practices from other states or other countries, like CarbonCure, which has a lower carbon footprint. (CarbonCure says its technology allows concrete makers to inject captured carbon dioxide into fresh cement mix during mixing. It then gets converted into a mineral embedded in the concrete that increases the concrete’s strength.) Concrete and

Alana Kobayashi Pakkala

steel are two of the highest carbon footprint building materials, so innovating in that space without sacrificing structural integrity makes a big difference. Also innovating around energy efficiency – prioritizing passive cooling in the building and orientation to take advantage of trade winds. One of the challenges is that some tsunami guidelines are pushing us in the other direction, toward more structure, more concrete. And agreeing with Bettina about innovating in the water space: We’re working on two buildings that will be the first on O‘ahu to implement gray water processing and reuse on-site. (They are Kuilei Place, a development near ‘Iolani School with 603 affordable condos and 402 market rate condos, and Ālia, a luxury condo development, on Ala Moana Boulevard in Kaka‘ako.) Bringing gray water back into Kuilei Place and using it to flush toilets will save 11 million gallons of potable water a year. In another instance, processing gray water on-site and using it in a cooling tower – basically net zero water footprint for a chilled water AC system. These things are not proprietary: We want everyone to use CarbonCure. Ask us and we’ll share the data and share our experiences. And once we have gray water under our belt, we’ll help share

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WHAT’S YOUR SOLUTION TO THE AFFORDABLE HOUSING CRISIS?

BUSINESS LEADERS

GENERAL PUBLIC

Make it easier for homeowners to rent rooms and parts of their homes to local residents

81%

72%

Provide government-paid housing vouchers for low-income people

64%

71%

We surveyed local business leaders and the general public about which policies they favor

Provide more government-built and -owned housing complexes

61%

70%

BY ST EV E P E T R A N I K

Loosen a few building regulations

57%

51%

Allow higher density in residential areas, including multifamily buildings in neighborhoods currently zoned for single-family homes

46%

54%

Institute rent control

43%

70%

Eliminate many building regulations

39%

29%

Hawaii Business Magazine asks the Anthology Marketing Group to conduct surveys for us twice a year. We included housing questions in the latest version of the BOSS Survey of 421 local business owners and senior executives, and in the 808 Poll of 427 members of the general public. Respondents in both surveys were presented with a list of possible options to address the state’s affordable housing crisis and asked which they favored. They could choose as many as they wished.

The biggest difference between the two groups was on rent control, which was favored by more than two-thirds of the general public and less than half of business leaders.

M U LTI FA M I LY B U I LD I N G S

BUSINESS LEADERS

Respondents in both surveys who describe their primary residence as being surrounded mostly by single-family homes were asked if they would support the development of affordable two-story buildings that house four or more units on their block or street.

41%

Support

57%

3% dk/da* Methodology for both surveys can be found at tinyurl.com/BOSSMethod.

GENERAL PUBLIC

Support

59%

Oppose

0 dk/da*

Note: Percentages don’t always add to 100 due to rounding. *dk/da: Did not know or did not answer

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process has to be fixed, but what are the other solutions? Free land from the state or counties for housing? Is it building public housing and giving out rental vouchers? Reducing regulations might help, but which ones do we eliminate?

that information so that we can all work together to make a better future. MAJKUT: Bettina talking about adaptive reuse got me thinking about how we renovated our headquarters building a few years back (the former Honolulu Advertiser Building at Kapi‘olani Boulevard and South Street). The challenge for us as a contractor that’s concerned about the environment was to turn an old building into a new building. We did things like create the second floor from reused wooden blocks from the old printing press area. We renovated the building and got a LEED Gold certification for it. PETRANIK: I’m really personally grateful, Gerry, because I worked in that building for 20 years – first for the Star-Bulletin and later the Advertiser. I loved how you preserved so much of it. Sarah, your thoughts on climate change issues?

PAKKALA: Yes, to all of it. That’s what we need. There was a recent UHERO report that our state is the most highly regulated. That adds to the cost of housing, which makes it more expensive to live here. And there is discretionary regulation that you cannot predict and can’t plan for when trying to estimate costs for projects. Discretionary regulation can take different forms. For instance, when you go through the City Council for approval on a project, you’re following all the rules of one program, and then you’re being put through the lens of a different program by DPP (Department of Planning and Permitting). You’re going to different bodies of government to get approval with differing opinions and definitions of affordable housing. It is very, very challenging. State and county lands are key to affordable, as are the subsidies, the financing opportunities. But even if every developer stopped doing everything they’re doing, and only wanted to develop affordable housing, there actually wouldn’t be any more units produced, because every developer and project is competing for the same bucket of tax-exempt bonds. And that bond cap is reached every year.

Sarah Love

LOVE: In the private sector, we’re always trying to educate smaller homebuilders on things like sustainability, but also it’s important that when addressing climate change, that our legislators and everybody look holistically at what certain legislation may do to the cost of building. Sometimes legislators aren’t really looking at that aspect. I think it’s incumbent upon the industry to both be stewards of environmentally friendly building, but to also have an open dialogue with our lawmakers about the impact of legislation on the affordability of housing and how to balance those two interests, because sometimes the impact on smaller private projects is much greater than on other projects. PAKKALA: I totally agree with you: That’s such an important aspect to consider. We tend to do larger scale projects, so it’s completely different economics. We need every housing opportunity to be developed with as little red tape as possible. My personal passion lies with affordable housing and residential housing. And a lot of times making the right long-term decision after a life-cycle analysis is rarely the cheapest decision. If you’re trying to deliver a sustainable development with solar hot water and all these sustainable elements, then we can’t just always be rushing to the bottom of the cheapest. How can that be incentivized because, fundamentally, it costs more? How do we get it to pencil? PETRANIK: Let’s focus the rest of this conversation on affordable housing. We know the permit

KANESHIGE: I agree completely with Alana. You have to do all of that. We talked a bit about densities, allowing higher FARs so you can build more floor area. More multifamily, multistory residential work is going to be our best shot at meeting some of the demand. But also maybe reduce the parking requirements. The other critical thing is the state and counties have to get ahead on infrastructure especially in the downtown corridors, so there can be more development of less-expensive high density multifamily residential. Because if infrastructure costs have to be covered by the developer, they will be passed to the buyer. Gerry Majkut

PAKKALA: On top of that we should incentivize housing in areas that already have the infrastructure. Why aren’t we making it easier to develop in those areas? MAJKUT: On the nontechnical side of things, Steve, we’ve had the pleasure of doing several affordable housing projects with developers. And I think that everybody can agree that when you see those firsttime homeowners get into their affordable housing, with a smile on their face and they’re so happy to be a homeowner, that’s very cool.

H AWA I I B U S I N ES S

THE BOSS SURVEY & 808 POLL

WHAT LOCAL PEOPLE THINK We asked business leaders and the general public about: • recruitment and retention • remote work • their enthusiasm for attending events • mask wearing • tourism • made in Hawai‘i products • water consumption

W H AT A R E YO U D O I N G TO AT TR AC T E M P L OY E E S ? Business leaders were asked which strategies they’ve used during the past year to recruit and retain employees. They could select all that applied.

OFFER MORE FLEXIBLE WORKING HOURS FOR EMPLOYEES

AUTOMATE MORE PROCESSES

CHANGE PROCESSES SO FEWER WORKERS ARE REQUIRED

ALLOW MORE REMOTE WORK

54%

37%

35%

REDUCE HOW MANY PRODUCTS OR SERVICES ARE PROVIDED

CHANGE HIRING STANDARDS SO MORE PEOPLE CAN MEET THEM

REDUCE OPERATING HOURS

OFFER STARTING BONUSES FOR NEW EMPLOYEES

28%

23%

21%

11%

BY ST EV E P E T R A N I K

ER E IS SOM E OF W H AT W E LE A R N ED from the

latest versions of the BOSS Survey of 421 local business owners and senior executives, and the 808 Poll of 427 members of the general public. Other results were published in the December issue of Hawaii Business Magazine.

REMOTE WO R K We asked business leaders and the general public about which of these outcomes best reflected their workplace environment now as compared to pre-pandemic.

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O‘ahu (39%) businesses were more likely to allow remote work for their employees compared to businesses operating on the Neighbor Islands (25%). Neighbor Island businesses and visitor industry companies were more likely to have reduced hours of operation and to offer bonuses for new employees.

BUSI NE SS LE A DE RS

GENE R A L PU B L IC

64%

SAME AMOUNT OF IN-PERSON WORK

58%

16%

A BIT LESS IN-PERSON WORK AND A BIT MORE REMOTE WORK

20%

14%

A LOT MORE REMOTE WORK

15%

MOVED ENTIRELY TO REMOTE WORK

ALREADY ENTIRELY REMOTE BEFORE THE PANDEMIC

THE BOSS SURVEY & 808 POLL

WEARING FAC E M A S K S

HOW OFTEN ARE YOU ATTENDING IN-PERSON EVENTS?

Respondents were asked if they wear a face mask around co-workers, extended family and close friends.

Each respondent to the BOSS Survey and 808 Poll was asked what best reflects their personal views regarding work-related gatherings of 20 or more people.

Business leaders General public

I WON’T WEAR A MASK UNLESS REQUIRED

Business leaders General public

49%

41%

43% 34%

28% 27%

24% 17%

I WILL WEAR A MASK AS MUCH AS POSSIBLE

29%

0% I won’t go unless required

I will go if I feel it is valuable but that is much less often than before the pandemic

I am eager to go to events again

dk/da*

52%

Each respondent was then asked which of the following statements best reflects their personal views regarding social gatherings of 20 or more people.

I WILL FOLLOW OTHER PEOPLE’S LEAD AND WEAR A MASK IF MOST OTHERS WEAR ONE AND SKIP THE MASK IF MOST OTHERS SKIP THE MASKS

Business leaders General public

41%

19% 40% 35%

33%

18%

28% 21%

I WON’T WEAR A MASK IF NO ONE ELSE DOES BUT IF EVEN ONLY ONE OR TWO PEOPLE ARE WEARING A MASK, I WILL TOO

3% I won’t go unless I feel strongly obligated

I will go if I feel it will be enjoyable but that is much less often than before the pandemic

I am eager to go to events again

0% dk/da*

11% 2%

*dk/da: Did not know or did not answer Note: Percentages don’t always add to 100 due to rounding. H AWA I I B U S I N ES S

THE BOSS SURVEY & 808 POLL

HOW MANY TOURISTS?

Respondents to both the BOSS Survey of local business leaders and the 808 Poll of the general public were presented with the following statement: The peak year for Hawai‘i tourism was 2019, with 10.42 million visitors arriving in the Islands. This year, an estimated 9.2 million tourists will arrive. Which of the following three options best reflects your vision for local tourism in 2023?

BUSINESS LEADERS: VISITOR INDUSTRY COMPANIES

40% 29%

31% 0

No limit on tourism arrivals

Aim for about 10 million tourists, same as 2019

Aim for fewer than 10 million tourists

dk/da*

BUSINESS LEADERS: ALL OTHER COMPANIES

28%

34%

3% No limit on tourism arrivals

Aim for about 10 million tourists, same as 2019

Aim for fewer than 10 million tourists

36%

38%

dk/da*

GENERAL PUBLIC

26% 0 No limit on tourism arrivals

Aim for about 10 million tourists, same as 2019

Aim for fewer than 10 million tourists

dk/da*

or minus 4.78 percentage points with a 95% level of confidence. A survey within the main survey involved interviews with business leaders who describe their companies as having significant revenue from the tourism industry. A total of 112 leaders were surveyed in this segment;

their results were also included in the main survey results. In the 808 Poll, 427 members of the general public were surveyed from Sept. 20 to Oct. 9, 2022. The margin of error for a sample of this size is plus or minus 4.94 percentage points with a 95% confidence level.

M E T H O D O L O GY FO R B O S S S U RV E Y A N D 8 0 8 P O L L BOSS – the Business Outlook and Sentiment Survey – is a statewide survey of business leaders in Hawai‘i. The 808 Poll is a survey of the general public in Hawai‘i. Both are conducted twice a year for Hawaii Business Magazine by the research team at Anthology Marketing Group,

now part of the global agency Finn Partners. For the BOSS, a total of 421 random interviews were conducted with business owners and executives across the Hawaiian Islands from Sept. 22 to Oct. 31, 2022. A sample of this size has a margin of error of plus

Note: Percentages don’t always add to 100 due to rounding. *dk/da: Did not know or did not answer 70

FE B R UA RY 2 0 2 3

THE BOSS SURVEY & 808 POLL

MADE IN HAWAI‘I

Respondents in both surveys were asked if they made a conscious effort to buy made in Hawai‘i products when possible.

86%

72%

Yes

BUSINESS LEADERS

GENERAL PUBLIC

14%

28%

H O M E WATE R CONSUMPTION Frequent droughts and water contamination at Red Hill and elsewhere have threatened Hawai‘i’s drinking water supplies. Have you and your family reduced your water consumption in the past year for these and related reasons? Business leaders General public

Among business leaders, 93% of those on the Neighbor Islands said they made a conscious effort to buy local and 82% on O‘ahu. Among the general public, 86% of Native Hawaiians and 79% of Caucasians said they made a conscious effort, while 60% of Japanese said they did.

YES, SUBSTANTIALLY REDUCED OUR WATER CONSUMPTION

10% 10%

Next, each respondent was asked if they would be willing to pay a premium for Hawai‘i products as opposed to less expensive products made elsewhere.

Business leaders

General public

79%

YES, SLIGHTLY REDUCED OUR WATER CONSUMPTION

58%

32% 42%

30%

19% 2% Yes

NO CHANGE IN WATER CONSUMPTION

dk/da*

56% 53%

Those respondents who said they were willing to pay more for local products were asked how much more. BU S IN E S S L EAD E R S

GENERAL PU BLIC

61%

AS MUCH AS 10%

66%

30%

25% MORE

26%

50% MORE

DOUBLE THE PRICE

DK/DA*

OUR WATER CONSUMPTION HAS INCREASED EVEN THOUGH OUR FAMILY SIZE HAS NOT INCREASED

1% 2% OUR WATER CONSUMPTION HAS CHANGED ONLY BECAUSE THE SIZE OF OUR HOUSEHOLD CHANGED

2% 4%

*dk/da: Did not know or did not answer Note: Percentages don’t always add to 100 due to rounding. H AWA I I B U S I N ES S

CELEBR ATING THE 2O22

CEO Year OF THE

200 community leaders gathered on December 8, 2022 at the Japanese Cultural Center of Hawai‘i to honor Hawaii Business Magazine’s 2022 CEO of the Year Paul Yonamine of Central Pacific Bank. The breakfast celebration honored his 45-year career and the accomplishments in his four years at the helm of CPB, which was ranked #1 on Forbes Best-in-State Banks 2022 list.

MAHALO TO OUR SPONSORS & PARTNERS

Presenting Sponsors:

Supporting Sponsor:

Student Sponsor:

“Congratulations to Paul Yonamine for being named CEO of the Year. UHA Health Insurance is proud to support this award that recognizes leaders of integrity and character for their innovative vision to reimagine the workplace and their dedication to make Hawai‘i a better place to live and work.” — HOWARD LEE , PRESIDENT AND CEO, UHA HEALTH INSUR ANCE

“Congratulations again to Paul, an amazing leader and wonderful human being! A big mahalo to HBM for the opportunity - we were honored to co-sponsor this event and we look forward to continuing to work with industry partners on creating beautiful places to work, learn and heal.” — OFFICE PAVILION

“It was great to connect, in person, with the CEOs and other executives in attendance at the CEO of the Year event. Congratulations to Paul Yonamine on accomplishing so much in four years at CPB. Congratulations to Cheryl Oncea on her well deserved retirement. We look forward to CEO of the Year 2023.” — TERI FUJII , MANAGING PARTNER , CW ASSOCIATES

“Congratulations to Paul Yonamine for being recognized as Hawaii Business Magazine’s CEO of the Year. Paul’s decision four years ago to return home and join the team at CPB has not only truly solidified the legacy of CPB but also the many generations of the people of Hawaii by his humble visionary leadership and values of integrity, likability, being courageous and the importance of building, investing and treasuring authentic and genuine relationships.” — GER ALD TER AMAE , HEAD OF SCHOOL , ISL AND PACIFIC ACADEMY

AWA R D

W I N N I N G

Protecting Maui’s Land and Water BY NO ELLE FUJII-O RIDE

T W E E T I E A N D J O H N L I N D, C O - FO U N D E R S of Kīpahulu ‘Ohana and Kapahu Living Farm, are shown working in a taro patch in 1997 in the ahupua‘a of Wailua in Hāna, Maui. The Linds in October received the Kāko‘o ‘Āina Award from The Nature Conservancy, Hawai‘i and Palmyra chapter for their lifelong commitment and community leadership in protecting Maui. I asked Tweetie Lind about their work.

What does this award mean to you? I feel like it recognized all our conservation, community organizing and Hawaiian culture work. John, who passed away last year, had a gift for bringing people together and he made people feel like they were part of the community and these bigger efforts.

What is the importance of the Kīpahulu Moku Community Based Subsistence Fishing Area designation that Kīpahulu ‘Ohana has been working on? It will protect traditional subsistence practices and Hawaiian lifestyles. We just acquired ‘Ōpelu Point, which overlooks Lelekea Bay and is an important location for managing this designation. You can see the ocean, monitor people, check the weather, and it could become a birthing spot for akule. You’ve accomplished a lot. What efforts are you most proud of? Opening the taro patch up at Kapahu Living Farm, which is our baby. It’s a gold mine for us spiritually, physically, educationally, culturally. It’s also where we organize people. kipahulu.org

FE B R UA RY 2 0 2 3

PHOTO: COURTESY OF FAMILIES OF KĪPAHULU ‘OHANA

How did growing up in Hāna shape your and John’s appreciation for Maui’s lands and waters? It’s a lifetime story. John and his family were always farming, ﬁshing, surﬁng, throwing nets. This area was his playground. John and I got married right after high school and moved to O‘ahu, where he organized local meat cutters. We moved back to Kīpahulu in 1975 and started talking to the community about what they wanted for its future. The vision is to keep Hāna, Hāna because it is the last Hawaiian place. We went for simple things and we kept our vision focused on the Native Hawaiian culture.

SPECIAL PROMOTIONAL SECTION

3 Great Ways to Reach your Philanthropic Goals I N C O R P O R A T I N G C H A R I T A B L E G I V I N G I N T O YO U R E S T A T E P L A N N I N G D O E S N ’ T H AV E T O B E C O M P L I C A T E D .

so these are impactful, change-making gifts,” she says.

Photo: Courtesy of Hawai`i Community Foundation

F P H I L A N T H R O P Y I S O N YO U R L I S T of New Year’s resolutions,

thinking about legacy giving.

congratulations! Contributing to 1. Start the conversation. charitable causes is a rewarding way to There are so many worthy causes out help make the world a better place. And there that, even if you know you want to if you’re not quite sure exactly how to go help make a difference, it can be intimiabout setting up your charitable giving, the dating to figure how to get started. Not good news is that you don’t to worry! You can start have to go it alone: There are talking with your financial “Gifts made financial advisors with the advisor in general terms, through legacy expertise to help you make plans are usually and get advice on how the most of your donation so build out your giving 10 to 20 times what to you can reach your philanplans from there. Belcher donors can give says many of his clients thropic goals. As an attorney with the during their lifetime, start their philanthropy Hilo-based Hawaii Trust conversation that way: so these are & Estate Council, Kumu impactful, change- “They’ll come in and say, Belcher has been advising ‘We’re animal people,’ or making gifts.” clients on how to include ‘We want to help people in  M A L U D E B U S , H AWA I ‘ I charitable giving in their poverty,’” he says. C O M M U N I T Y F O U N D AT I O N estate plans for more than a Also, while making PH I L A NTH RO PY A DV ISO R decade, often working with targeted donations in the the Hawai‘i Community moment is great, consider Foundation (HCF) to help make their thinking ahead to see how philanthropy philanthropic goals a reality. could factor into your estate plan. Debus Belcher frequently works with HCF says planned giving is a significant driver philanthropy advisor Malu Debus to of funding at HCF. “Gifts made through implement his clients’ plans. We asked the legacy plans are usually 10 to 20 times two to share their advice on how to start what donors can give during their lifetime,

2. Consider an endowed fund. If you want to support a certain cause rather than a specific organization, an endowed fund might be a better vehicle than a direct donation to a single charity, Belcher says. With an endowed fund, you set up a fund at HCF that’s dedicated to the cause you’re supporting. You can also set guidelines for how the money can be used. HCF advisors then take over management of the account, and use their knowledge of local charities to make awards to the organizations that will do the most good. “Often the Community Foundation is a stronger organization than individual charities,” Belcher notes, “so they’re more likely to be around in perpetuity. It’s a way to make sure the client’s goals will be carried out forever.” 3. Set up a Memorandum of Understanding. Estate planning can be a long, drawn-out process, but if you know you’re interested in planning a future gift toward charity, one easy and flexible way to do that is to establish a Memorandum of Understanding (MOU) with HCF. This supports language in your will or trust about the terms of your gift, allowing you to easily update or change your wishes around how your bequest will be used, without having to go back and formally change your estate plan every time. “People’s intentions change throughout their lifetime,” Debus says. “We have seen a number of plans change as our donors get closer to the end of life, to reflect what is really hitting home for them at that point. It’s always a good feeling to know we’re able to do that hassle-free and make that an easy process for them.”

V I S I T H A W A I I C O M M U N I T Y F O U N D A T I O N . O R G/ D O N O R S T O L E A R N M O R E A B O U T H O W H C F C A N H E L P W I T H YO U R P H I L A N T H R O P I C P L A N N I N G .

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