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The Honolulu Advertiser
Posted on: Monday, April 5, 2010

Honolulu's tab for hosting APEC at least $28M and rising

By Sean Hao
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

At the 2008 APEC summit, hosted by Peru, world leaders donned traditional Peruvian ponchos for their official photo in Lima.

Associated Press library photo

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The anticipated taxpayer bill for hosting next year's Asia-Pacific Economic Cooperation meeting is $28 million and climbing.

That's how much city agencies are now expecting to spend on security-related responsibilities in hosting the November 2011 gathering of 21 heads of state from the Asia-Pacific region.

The estimate is only for city costs for security, and does not include state costs or potential beautification efforts.

Still, if Hawai'i can host the event for even $50 million, it will be far cheaper than most APEC meetings in recent years.

Yokohama, Japan, plans to spend nearly $200 million hosting this year's summit, which eclipses the $71 million Singapore spent to hold the event in 2009.

For Honolulu, the economic impact of the conference could be bigger than the National Football League's Pro Bowl, but smaller than the Honolulu Marathon. However, the event is more about showcasing Hawai'i's serious side than filling hotel rooms, said state tourism liaison Marsha Weinert.

"From Day 1, the various partners that actually supported bringing APEC to Hawai'i, putting in the bid, knew that it wouldn't necessarily be an economic engine, but it had the potential to reposition Hawai'i as a place to do serious business, which we have strived for for years, as well as branding us as a place where East and West meet," Weinert said.

Costs associated with hosting the meeting come at a time when city and state governments are struggling to balance budgets. The event, expected to draw President Obama and other leading dignitaries , also has stirred worries about possible violent protests and acts of terrorism, and the harm those could do to Hawai'i's image.


Security concerns and the potential for major protests are behind much of the $28 million in costs already identified. The city is considering spending $14 million starting in July and another $14 million the following fiscal year on training and equipment for the event.

About $9 million of the first $14 million will go to the Honolulu Police Department, with another $4.8 million going to the Honolulu Fire Department. The money will pay for added training, much of which must be done on overtime to avoid jeopardizing public-safety staffing levels.

"Historically, you will have professional protesters that come into our town and they are bent on creating havoc and they have done that in other municipalities," said Honolulu Fire Chief Ken Silva in recent budget testimony. "We're trying to prepare for that."

The last high-level international gathering for Honolulu was the Asian Development Bank meeting in 2001. That also had stirred worries of violent protests, but the meeting went smoothly, with only small, nonviolent demonstrations.

Most of the costs associated with the Waikīkī event are expected to fall to the city. However, the state also is expected to incur costs. It's still unclear how much the state will need to spend hosting the event, said Weinert, who's coordinating state APEC efforts.

Any beautification work leading up to the event would be done with money already budgeted for airport modernization and highway improvements, she said.

"That type of thing has not been put in the budget, unless it was a (capital improvement) project that was already planned," Weinert said. "You know what the state's budget situation is like."


State and city officials hope that some security-related costs will be reimbursed by the federal government. The Department of Homeland Security could designate the meeting a National Special Security Event. If that occurs , the Secret Service would take over security operations.

Gov. Linda Lingle applied for that designation in late January in hopes that local government agencies could be reimbursed for some federally mandated security costs relating to the event, Weinert said.

According to a March 2009 report by the Congressional Research Service, 28 events have been designated National Special Security Events from 1998 to 2008. Those included presidential inaugurations, presidential nominating conventions and sporting events.

Meanwhile, many key details remain unknown, including what the security requirements will entail and the number of visitors who will come to Hawai'i and their likely duration of stay.

APEC could generate about $55 million in economic activity, according to state formulas for estimating the economic benefits of major events. That figure assumes that the event will draw 10,000 people staying nine nights in Hawai'i. The actual economic impact could be larger or smaller depending on how many people attend, how long they stay and how much they spend.

The $55 million in economic activity would put the APEC meeting above the NFL's Pro Bowl but below the Honolulu Marathon.

The state will pay the NFL $4 million annually in 2011 and 2012 to host the all-star game. The event generates $28.6 million in visitor spending, $2.9 million in state taxes and attracts 18,000 visitors, according to the Hawai'i Tourism Authority.

In contrast , December's marathon pumps an estimated $100 million into the state's economy and generates $5 million in tax revenues, according to Hawai'i Pacific University professor Jerry Agrusa. The event, which draws more than 16,000 visitors, primarily from Japan, relies on no city or state subsidy.

APEC should help Hawai'i financially while broadening the state's visitor base, Agrusa said. However, the event's security concerns add an element of risk.

"There is risk because we're not known for that and we're not prepared for that," Agrusa said. However, "APEC is going to be huge. The initial positive is having all those people come, but the second is the exposure.

"We are always known as a leisure destination and (it helps) if we can somehow change that or even put a slight twist in that."

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