Editor’s Note: This is the second of two columns by Sen. Donovan Dela Cruz discussing why Hawaii is not doing as much as it could to boost the economy and how it can be better.

In 2007, Forbes conducted a study ranking American cities with the best- and worst-paying jobs. Honolulu received top recognition with above average salaries for busboys, bartenders, and lifeguards. Albeit these are much needed services, Honolulu needs to push the envelope in reversing the brain drain and keep our local people here.  We need jobs in business, diplomacy, education, technology and science, energy, and film.  First we need to create the environment and the culture to attract investment to achieve synergy and scale to make those jobs real.

This idea of creating a globally competitive Hawaii also provides possible answers to dealing with budget deficits, developing public private partnerships and investment opportunities, reversing the brain drain, focusing growth in the urban core and stopping urban sprawl in its tracks to protect agricultural land. This can only be done by truly envisioning and achieving regional centers of industry along the rail line:

  • Technology (Silicon Valley)
  • Film (Hollywood)
  • Finance (Wall Street)
  • Diplomacy (Geneva)
  • Medicine and health

The possibilities are endless due to location, weather, climate, and culture but leadership, coordination and vision in government are required.  

Struggling with budget deficits

Nations, regions, and cities are struggling to develop and advance necessary policies to improve infrastructure, attract investment and industries, and transform existing struggling environments into dynamic communities.  Buffeted by budget deficits and fiscal realities, governments consistently attempt to redefine their priorities.  Although some programs are altered or cut, the result is usually status quo: more government spending and more taxes for short-term and band-aid solutions.

##Partnerships are the key

Not surprisingly, some governments have found better chances at success when they identify project partners with challenges and needs that result in similar or complimentary outcomes. These partnerships have developed strategies and regional plans.  Public and private resources are jointly harnessed to fund projects.  This is becoming a globally preferred process and Hawaii already has many tools to achieve strategic partnerships:  The Public Land Development Corporation, the Agribusiness Development Corporation, the High Technology Development Corporation, the Hawaii Strategic Development Corporation, the Hawaii Housing Finance Development Corporation, Natural Energy Laboratory of Hawaii Authority, and the Hawaii Community Development Authority.

These corporations and authorities have the statutory powers to jump start Hawaii’s economy but have never been truly utilized in a coordinated and strategic fashion to achieve synergy or scale.  These agencies can create the much needed incentives, financing opportunities and streamlining of government to attract partnerships with capital.  Creating opportunities for local small businesses and start ups must also become habitual for these government hybrids.

The University of Hawaii also has a role to play.  Most globally competitive universities leverage their research to attract companies, investors and foundations.  With the diversity of industries in our state, the University would need to continuously design and adapt a strategic curriculum for future workforces.  

In reverse, we also could solicit universities and schools all around the world to open a Pacific campus in Honolulu.  At a critical scale, we would see an economic impact and branding effects of our city overnight.  Students all around the world would find Hawaii the perfect place to learn as we simultaneously diversify our economy.

Leveraging infrastructure investment to attract private capital and industries

Canada is expanding its Public-Private Partnership (PPP) initiatives to address the revamping of growing facilities.  The U.K., despite operating under desperate budget conditions, has committed $326 billion over the next five years to continue infrastructure projects focused on rail, energy production, and broadband access.  Other European countries such as France, Germany, Spain, and Italy continue to build out rail and freight networks between their major cities. China, the manufacturing giant flush with cash from its exports, is moving forward with its rail network, newly constructed airports, ports, and subway systems which will help to address increasing congestion due to urban population.   

Fifteen months ago Japan was struck with a devastating tsunami.  As other countries in Europe struggle with financial and social conditions, Japan is diligently working to recover and maintain its status as an international financial center and become a visitor destination. Globally, cities are refocusing their priorities by streamlining the procurement process, seeking ways to efficiently attract private capital, and invest in projects with merit to be a global competitor.  

Examining and diversifying our portfolio called HAWAII

Last year, Hawaii hosted the Asia-Pacific Economic Cooperation (APEC).  Hawaii was able to prove that it can play host to some of the biggest political gatherings that take place annually across the world.  But what else did we have to show?  What else did we stand to gain?

Before we can even begin to solicit investment, we must clearly define the industries we want with the private sector, and possibly foreign investment.

Cities all around the world know what they want to be competitive at and how investment will be leveraged.  This takes us back to the political sound bites we have heard time and time again:  diversify the economy and reverse the brain drain.  But what does that mean, and how do we achieve it?

Hawaii needs to regain our stature at the top of the Pacific.  Unlike Hawaii, Japan has not increased the effort to promote tourism until recently.  Hawaii simply cannot continue to rely on visitor and military spending.  If you were to remove Hawaii’s military bases and white sandy beaches, what would Hawaii have to offer?  What activity would generate revenue for the state?

Tourism is one component to strengthening infrastructure, however, it can only contribute so much.  Hawaii is known for its hospitality but a lack of accommodation availability and dilapidated facilities are common issues. APEC was a key yet we missed an opportunity to showcase the future and how encouraging transit-oriented development along the urban core can entice new industries to Hawaii.

Dealing with a growing population and focusing growth

Yes, a challenge is infrastructure. And it will continue to be if urban sprawl is not halted in its tracks.  The U.S. Census report estimates the state’s population will increase by 115,000 people by the year 2030.  Instead of focusing development outwards, which consumes prime agricultural lands, development and redevelopment should occur in our urban core.  Our state legislature and county councils need to revisit our antiquated land use laws and implement smart-growth policies.  

It is no big secret; cities across the world have implemented smart-growth planning policies that incorporate urban development and public transportation.  The areas focused on include not just urban infill but open spaces along public transportation corridors.  This resulted in private-public partnerships flocking to these vacant areas developing mixed use, transit-oriented development.  Benefits from these smart-growth initiatives include workforce affordable housing, an increase in small business opportunities, neighborhood revitalization, and protection of farmlands.  These investments also reanimate our economy and reverse the brain drain.  Industries looking to relocate want to assure that the city they move to is not only attractive to their business, but to their employees as well.

Culture and Arts programs, twenty-first century schools, recreational activities, and commute times are factors that weigh heavily on industries and businesses of all sizes.

Yes, we are an island state.  Population will continue to increase and unless we plan for the future now, the endless rhetoric about the lack of jobs, affordable housing and farmland will continue without actually alleviating any root problems.  

Transit is an investment to spur industry diversification and stop urban sprawl

With the forward movement of the rail transit project, we need to engage in promoting Honolulu as a center for Asia-Pacific business, diplomacy, education, technology and science, energy, and film. Taxpayers cannot continue to afford tax breaks with no economic results.  We need to articulate our vision of focusing development on our residential areas and transit-oriented planning.  We must redirect investment into our urban core.  We need to convince industries that Honolulu is the place to do business; especially those that attract national and foreign investment by creating PPPs that can result in cost-neutral projects for Hawaii taxpayers.  

Honolulu’s rail project holds merit if it used, like other globally competitive metropolises, to create workforce and affordable housing, environments for companies to relocate, and improving infrastructure through PPPs.  By creating a global gateway for markets here in the Pacific, we can concentrate population and business activity which will result in an integrated infrastructure and land use planning to gain greater efficiencies.  This increases long-term certainty for capital improvement projects and federal funding.  

Honolulu is experiencing the trends: projects threatened by reduction in federal funds, lower tax revenues, which contribute to public transportation and public service deficiencies, aging infrastructure, and multiple conflicting state and county agencies.  As these trends become evident, more states and counties turn to PPPs.  Successful models in Virginia, Florida, Texas, Ohio and Colorado have financed new projects and raised revenues.  We all can benefit once we come to the realization that we have more to gain through a concerted effort to plan and pay for infrastructure improvements, development and redevelopment of our rural and urban communities, and engage in creative funding solutions with private operators.    

Walter Wriston said, “Capital will always go where it is welcomed and stay where it is well-treated.”  The same applies for workforce.  Year after year campaign platforms reaffirm that infrastructure repair is one of our highest priorities before we consider any further development, that we must maintain what we have before constructing new.  But, infrastructure maintenance should be the baseline and we should be setting our sites on macro and higher priorities — competing against other cities in diversifying our economy and becoming globally competitive.

About the author: Sen. Donovan Dela Cruz represents parts of central Oahu and the north shore. Most recently, he served as Chair of the Committee on Water, Land, and Housing.