Governor questions Ko Olina tax breaks
By Kevin Dayton
Advertiser Capitol Bureau Chief
A plan to offer up to $100 million in tax credits to developers who chip in to finance an aquarium and marine research facility at Ko Olina is "on it's face, outrageous," Gov. Ben Cayetano said yesterday.
But Cayetano stopped short of saying he will veto the proposal, which has been approved by the state Senate and is advancing in the House. Cayetano said his staff is still studying the idea, and he plans to meet with supporters for a briefing on the plan.
Developer Jeff Stone contends the plan to offer 100 percent tax credits to investors who finance the aquarium and research facility will create an important new attraction to draw tourists to the state and will spark development of at least two new hotel and time share projects on the West O'ahu resort property.
But Cayetano said that "to give a 100 percent tax credit amount to a public subsidy of a development. On it's face, I would say I have great concerns about it.
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"When you give tax credits, there should be a strategic purpose, so you give tax credits to develop new industries like high tech or biotech, but tourism is an old industry, and it's not like we're hurting for resorts."
The marina is a recent addition to Ko Olina on West O'ahu. Developer Jeff Stone is seeking tax credits for new development.
Stone, who is manager of the Ko Olina Development Company LLC, called the proposal the only true economic stimulation project left alive in the House and Senate.
"Basically in the end, it is a way to keep the ball rolling," he said.
Under the proposal, developers who sink money into the project could recoup their investment by over the next five years by claiming state tax credits equal to their investment. The credits would be used to offset any state taxes the investors owe from their other Hawai'i operations.
Stone estimated the construction and other jobs and business activity generated by the project would land the state an $195 million in additional tax collections, more than twice what the state would give up in credits.
"I'm glad he's taking another look at it," Stone said. "I've been waiting to see what he might say. I think the House and the Senate are waiting, too."
Also yesterday, Cayetano said he withdrew his nomination of former Hawai'i County Planning Director Virginia Goldstein to the state Board of Land and Natural Resources after receiving an "impassioned plea" from Sen. Lorraine Inouye, chairwoman of the Senate Water, Land Energy & Environment Committee.
Inouye, D-1st (Hawi, N. Kona, Waimea), said she met with Cayetano last week after receiving numerous faxes and e-mails from people worried Goldstein would be too pro-development.
Inouye asked that Cayetano find someone else for the post, and "there were other nominees that we have submitted that I did not want to put at risk. I think Miss Goldstein is a very, very good, qualified person, but under the circumstances it was probably appropriate for us to (withdraw her name)."
Goldstein, who could not be reached for comment, would have replaced Dr. Fred Holschuh on the board.
