Gov. Josh Green said Chris Sadayasu “would have made a good DBEDT director” and they’ll discuss “next steps.”

A Senate committee rejected the nomination of Gov. Josh Green’s economic chief on Thursday, a decision that could make it difficult for the governor to advance parts of his agenda on affordable housing and could toss the future of Aloha Stadium and tourism marketing into limbo.

The Senate Energy, Economic Development and Tourism Committee voted 4-to-1 against Chris Sadayasu’s nomination to lead the state Department of Business, Economic Development and Tourism.

A separate committee gave preliminary approval to Kali Watson, Green’s pick to lead the Department of Hawaiian Home Lands.

Both nominations still must go before the full 25-member Senate in the coming weeks, unless Green withdraws Sadayasu’s nomination. Earlier this year, Ikaika Anderson withdrew his bid to lead DHHL after being rejected at the committee level.

In a written statement, Gov. Josh Green called Sadayasu a “good, hard-working man.”

“He would have made a good DBEDT director,” Green said. “We will be talking with him about next steps.”

A Senate committee recommended against Chris Sadayasu’s nomination to lead the state Department of Business, Economic Development and Tourism. (David Croxford/Civil Beat/2023)

Sadayasu has more than 20 years of experience in government work and spent much of that time working for DBEDT’s attached agencies, including the Hawaii Tourism Authority as well as those that deal with development and housing like the Hawaii Community Development Authority and the Hawaii Housing Finance and Development Corp. He’s held at least nine different positions in state and county government and was a rare pick in that he spent years working in rank-and-file positions for the department he was chosen to lead.

“It’s been an opportunity each time to get a new skillset to be able to gain perspective at different agencies, understand legislation, budgeting, project management, procurement, contract management and execution,” Sadayasu told the committee.

His nomination received no testimony in opposition. The executive director of the Natural Energy Laboratory of Hawaii, Greg Barbour, called Sadayasu ” a breath of fresh air.”

“He doesn’t run away from problems,” Barbour said.

Concerns About Collaboration

But that vast experience and qualifications appeared to not be enough for the panel of senators vetting his nomination. Sen. Lynn DeCoite, the committee chairwoman, told Sadayasu “it’s not personal” after recommending that the senators vote against his nomination. She cited concerns with his outreach efforts and “honesty of information.”

Sen. Carol Fukunaga, the lone vote in support of Sadayasu, called DBEDT one of the most heavily scrutinized departments in the state. But, she pointed out that many of its responsibilities — which have grown to include affordable housing development, Aloha Stadium and tourism management – are set by the Legislature.

“With the Legislature ultimately being the key agency for setting the direction of these state agencies, I think it’s the department’s job to execute many of the Legislature’s priorities,” Fukunaga said.

In January, DBEDT leadership struggled through an hours-long budget hearing before the Senate Ways and Means Committee. Its overall budget request for the next fiscal year, largely inherited from Gov. David Ige’s administration, grew 17% from the current fiscal year, which ends June 30.

The senators tasked with directing government spending were alarmed by the sudden growth and quizzed Sadayasu and the heads of other DBEDT divisions on why they needed the money. The lawmakers didn’t feel Sadayasu properly vetted each of the budget requests after he responded that the budget requests represented what each DBEDT office believed it needed to succeed.

“This is out of control, out of control,” DeCoite said during that hearing, later adding that she had no problem with cutting the department’s budget.

Senators resurfaced those issues and others during Sadayasu’s confirmation hearing on Thursday. The lawmakers focused many of their questions on how collaboratively Sadayasu has worked with various offices in DBEDT since January, specifically the Hawaii Tourism Authority.

HTA is on its third round of trying to find entities to manage tourism marketing and destination management for visitors from the mainland. Sadayasu was taking the lead on procuring a marketing contract while leaving a separate management contract to the HTA board of directors.

The Senate Energy, Economic Development and Tourism Committee grilled Sadayasu on the state’s tourism contract and his attendance at meetings. (David Croxford/Civil Beat/2023)

The senators didn’t think bifurcating the process was a prudent decision and questioned to what extent Sadayasu collaborated with the HTA board.

“It makes no sense to me,” Sen. Donna Kim said, later adding that she worries that Sadayasu will have a “knee jerk” reaction to other projects DBEDT takes on.

One other point of contention for some senators was Sadayasu’s absence at meetings with lawmakers and boards that oversee HTA and Aloha Stadium.

DeCoite recalled one meeting earlier this year where Sadayasu left a department presentation to attend a performance of the play “Hamilton.”

“Is this going to be something repetitive?” DeCoite asked.

Sadayasu said that day was a planned vacation day for him and that he attended the meeting on his time off. In response to another question about his dedication, Sadayasu said he canceled a recent trip with his wife and daughter to the mainland for spring break so he could tend to matters at the Legislature.

Kali Watson Approved

Watson cleared the Senate Hawaiian Affairs Committee on a 4-to-1 vote, with Sen. Kurt Fevella voting “no.”

At a press conference on Wednesday, Fevella questioned Watson’s character. He provided reporters with hundreds of pages of emails between Watson and DHHL officials over a leasing dispute.

Watson’s nonprofit, the Hawaiian Community Development Board, owed more than $100,000 in back rent for a DHHL parcel that it leases. There were also environmental concerns over a Kalaeloa industrial park HCDB leases. The emails describe automotive work and other industrial uses on those lands.

On Thursday, Watson said he initially wanted to dispute the rental charge but ended up paying it.

“I don’t want any dispute over delinquent rent interfering with what I’ve got to do,” he said.

Watson said the nonprofit has also remediated the environmental concerns and hired a consultant to oversee the work. HCDB is also in the process of evicting tenants who are “flagrant” in their use of the department, according to Watson.

On Thursday, the committee honed in on Watson’s potential conflicts of interest that could arise because of his position on the Hawaiian Community Development Board, which has partnered with various for-profit entities over the years to build affordable housing.

“You need to know the line and leave your favorite (company) out, not bring it over to the department,” Sen. Les Ihara said.

Watson said his son works as in-house counsel for one of Watson’s development partnerships ‘Ikenākea. Watson said he would step away from HCDB and development companies and recuse himself from any decisions between those entities and DHHL.

Kali Watson, Gov. Josh Green’s pick to lead DHHL, faced questions over potential conflicts of interest. (David Croxford/Civil Beat/2023)

Watson said he wants to speed up development of DHHL construction while staying within the parameters of a spending plan approved by the Hawaiian Homes Commission to build more than 3,000 housing lots using $600 million appropriated by the Legislature last year.

Watson led the department between 1994 and 1998. Some events that happened during his first tenure led some in the audience to oppose his nomination.

“He has so much in his background that is questionable,” Waimanalo homesteader Kapua Medeiros told the committee.

She reminded the senators of Hilbert Kahale Smith, a Kauai homesteader who died in his home in 1996 during an eviction after spending years fighting DHHL in court. Construction in Smith’s house was defective, Watson said. He called it one of the most tragic events during his administration.

“I regret that it happened,” he said.

Watson’s supporters pointed to his work in the Hawaiian community and his development work. Consultant Curtis Crabbe, who counts Watson’s nonprofit among his clients, said Watson always pays his bills on time.

“We’re in business, he makes things happen,” Crabbe said. “Kali makes things happen.”

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