It's The Economy


Most of Hawaii’s electricity is generated via petroleum, all of it imported. Given the long term price trends, the State and Hawaiian Electric (HECO) on O’ahu have been motivated to find some alternatives, the most obviously being wind and PV. HECO being a traditional, big power supplier, prefers to go big and centralized when going green.

There is a wind farm on O’ahu at Kahuku, but HECO is looking for a bit more elbow room than Honolulu County provides, and is looking at putting wind and PV farms on Lana’i and Moloka’i. There has been some resistance to the idea out on these neighbor islands (what’s in it for us?), and back on O’ahu (who’s paying for this?).

The big ticket item for this plan is the fat, thick, 12 and 27 mile long undersea power cables to get the juice to market: $1 billion, just for the cable installation.

GE (US) is the sole source for this cable, and should they get the contract, they can guarantee repeat business. Unlike undersea communication cables, if they leak or break, there’s no patching or splicing the damage. They have to replace the whole thing. The system would be a underwater landslide, dragging ship’s anchor, or storm damage at the cable landing sites away from a major bill for the rate payers.

Imagine taking that first billion, and making it the only billion, via distributed, decentralized power generation on O’ahu (and the other islands). PV panels generate two things: power and shade, and in the tropics, shade is a valuable commodity. PV panels on a roof reduce the owner’s electric bill via the feed in tariff for power sold to HECO, and reduced need for a/c. Ditto for PV over parking lots, road ways, and public areas. In addition, there’s still suitable, windy locations on the island for more windmills.

Distributed, decentralized power provides a robust, secure supply, and can save the rate payers money. The only real question is: can HECO think that far out of their box?

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Based on Pamela Tumpup’s most recent (2/20/2010) The Chamber View column, I think we can sum up the Maui Chamber of Commerce’s view of the draft Maui County General Plan as relax, don’t do it. Let’s address her beefs and/or suggestions:

  • The draft plan is aspirational – Of course. This isn’t North Korea. The County hopes to achieve balanced economic growth, and encourage an improved quality of life. On the other hand, Ms. Tumpap complains that the document micromanages business interests. This is incorrect. In short, the plan hopes to prevent the County from turning into a grimy mess. But, there’s easy money en route, so she objects to any detour. In fact, Many of the proposed “implementing actions” explicitly support small business and the visitor industry. But, I’ll bet she blanched at the policy to put a time limit on development entitlements, currently valid indefinately.
  • Pamela suggests detailed plans for any new services, but it’s not clear if she wants them inserted into the general plan, or is just restating what the County government already does.
  • No population projection – This is incorrect.
  • There is a no-growth overtone to the plan – This is incorrect. It does seek to limit the addition of visitor rooms, but not overall growth.
  • Collaborate better with the visitor industry – Tourism accounts for 39% of Maui’s economic output, vs. 19 to 29% of the other counties, so there has obviously been plenty of collaboration already. The plan looks toward economic diversity. To allow room for diversification, it seeks to prevent unlimited proliferation of visitor rooms, while improving and broadening the experience for visitors filling the existing room count.
  • Build greater flexibility into boundaries – I’m sure the concept of urban growth boundaries is at the top of the Chamber’s shit list. It’s a key concept for smart growth, and maintaining the qualities that make Maui a desirable spot to vacation and live. If there’s anything in the plan the County needs to maintain a hard line on, it’s this. The County has a history of being free with zoning variances, and if it holds to that m.o., it might as well not set any limits to begin with.

This “Chamber View” isn’t evil, it just reflects the fact that just about any County planning policy will tend to conflict with the CoC memberships’ laissez-faire ideals. I’ll pray that the County council keeps this in mind as they review the draft General Plan.

Alexander & Baldwin is one of the Big 5 companies that traditionally ran the State of Hawaii. A&B’s major lines of business include Matson Shipping, real estate sales and leasing, and Hawaiian Commercial & Sugar Company. Sugar once defined A&B, but since the late ’90s the fields have contributed nothing to the bottom line. From a corporate viewpoint, HC&S is a land bank. One of their recent Annual Reports listed over 11% of their 60,000 ag acreage on Maui as available for near term urban development. (Click to enlarge plots)

A&B Revenue

Whether they farm or develop, A&Bʻs business needs water. Their 100 year old East Maui Irrigation subsidiary supplies most of their needs, the rest purchased from Wailuku Water. In either case, stream water is diverted into ditches, very little being left to support downstream farmers or fresh water fish stocks. The ditch system supply is total dependent on rainfall, which has been on a downward trend for several decades. Although their cultivated acreage has dropped by thousands of acres, and now use drip irrigation, these changes arenʻt reflected in their water draw. There is anecdotal evidence that the company is dumping water to justify a continuing share of water resources for their post-agricultural plans.

A&B Net Revenue

In Hawaii, all fresh water resources are considered a public trust, and the State Water Commission has been slowly moving forward to reallocate water resources to other uses, such as the Maui County Department of Water Supply, taro farmers, and stream maintenance. During October, HC&S mobilized some of its 700 remaining employees to fight to continue the company’s current water draw by appearing at news conferences, Commission meetings, and with letters to the Maui News, casting the issue in terms of well paid jobs that would be lost if existing sugar cane acreage can’t get water.

A&B Margin

Unfortunately, a look at the books tells the tale. It seems clear that A&B is biding its time, keeping its ag operations on life support as they transfer cane fields to their very profitable real estate development and leasing unit. In the meantime, I’d argue, the HC&S field and sugar mill staff are being used in a PR campaign to retain claim to millions of gallons of public water.

Data source: http://www.alexanderbaldwin.com/investor-relations/financial-reports/

Pursuant to the the Maui County Charter, the General Plan Advisory Committee has spent several years putting together a County zoning plan to take us through 2030. The draft went to the Planning Commission, whose members proceeded to extend the urban growth boundaries to include a number of developments that otherwise would have had to seek a waiver from the County Council to proceed.

The Draft Plan already allowed for considerable growth in population, so I’m not clear as to what’s driving a couple of the Planning Commission’s actions, which included support for:

  • Oluwalu Town: the former sugar growing area is now home to about 20 families, a French restaurant, a general store, and one of the few stretches of undeveloped coastline that’s easily accessible. The development would add 1500 homes and a large retail core.
  • Pulelehua: this mixed use development would grow up the hillsides above the Honokowai area. The developer has put considerable effort into highlighting the parts of the project that include less expensive homes, condos, and rental apartments as an opportunity for local working class families to live and work on the west side. The original plan put homes and businesses right up the Kapalua Airport fence. The draft plan added over a 150 acres of buffer space around the airport, which the Planning Commission removed.

By removing the airport buffer, the County would implicitly be saying they want the airport, which is owned by the State, closed. Once people started moving into Pulehua, it’s inevitable that they’ll complain about the noise. I contend that the Planning Commission should explicitly address the issue.

For Olowalu, Planning Commissioner Hiranaga stated that he was moved by those of the 20 families asking for local job opportunities, and was taking a leap of faith that Olowalu Town LLC wasn’t going to screw up the local environment. I find the idea of driving a major project forward to save a handful of people a morning commute laughable, and I wouldn’t be surprised if they’re more interested in a rapid run up in the value of their lots when next door to a high end development.

Also, it’s not coincidental that the few non-degraded coral reefs lie off undeveloped beach fronts, such as Olowalu. Based on experience with all major development and redevelopment projects in west and south Maui over the last ten years, it is inevitable that Olowalu Town would lead to short term mud runoff into the reefs, and long term yard chemical and asphalt runoff feeding algae blooms, invasive sea weeds, and depleted fish populations.

Wired Magazine’s September 17th issue makes a good case for why we seem to be settling for “good enough” when purchasing goods and services. Why pay for more quality than you need? But, what’s really driving this trend? Hmmm, could it be… wages?

Median Wages Since 1970

Median Wages Since 1970

The red line is adjusted for inflation. As a whole, US wage earners haven’t had a real raise since 2000. All of the growth has all been at the high end. That discussion is a post for another day.