Posted on: Tuesday, November 20, 2001

Island Voices
Imagine the worst; it could happen

By Michael P. Hamnett
With the Social Science Research Institute at the University of Hawai‘i

Three months after the event, unemployment will be at 25 percent. Nine months later, unemployment will have dropped to 10 percent. Eight percent of O'ahu's residents will lose their homes and the event will seriously impact another 30.9 percent of homeowners.

By the end of the first three months after the event, visitor expenditures will be near zero. After six months, 25 percent of the previous year. The visitor industry will lose $6.5 billion in sales and workers will lose $2.2 billion in wages in the first year following the event. The City and County of Honolulu will also lose $411 million in tax revenue from tourism.

One or more of Hawai'i's property insurance companies will become insolvent, and over 40 percent of homeowners will have their insurance policies cancelled. The cost of reinsurance will increase dramatically, and the state will have to reactivate the Hawai'i Hurricane Relief Fund (HHRF).

No, this is not the economic fallout of the horrendous events of Sept. 11. But it could be the economic crisis after the next major hurricane.

The governor wants the $213 million in the Hawai'i Hurricane Relief Fund to deal with the current economic downturn. Two years ago, a matching grant program was proposed to allow people to harden their homes against future hurricane losses. The governor said a feasibility study should be done. Last year, with the preliminary results of the feasibility study complete, the governor vetoed a bill authorizing a pilot program. He vetoed that bill, which had almost unanimous support in the Legislature because the feasibility study was not completed, the terms and conditions and the grants were not well enough spelled out, and the grant program should be open to all homeowners.

Now, with the $725,000 feasibility study complete, the governor wants to use the HHRF trust fund to deal with the current situation. The feasibility study says the grant program will return $1.80 in avoided future residential property losses for every $1 provided in grants. The matching program will stimulate up to $20 million per year in economic activity for roofers and contractors, and harden 10,000 homes per year for three years.

I sincerely hope the Legislature continues to see the wisdom in the HHRF matching grant program.