Economist tallies toll if telescope is scuttled

Hawaii island’s economy has been resilient in the face of tropical storms and overflowing lava but now faces another potential financial blow in the form of disruption of the Thirty Meter Telescope on Mauna Kea.

If protesters successfully block construction of the TMT, it likely would mean $20 million per year less in local spending, $10 million per year less in local income and the loss of more than 275 potential jobs, said Jack Suyderhoud, a professor of business economics at the Shidler College of Business at the University of Hawaii at Manoa and an economic adviser for First Hawaiian Bank. Suyderhoud gave his assessment of the economic impact of the TMT on Thursday at separate economic forums in Hilo and on the Kohala Coast sponsored by First Hawaiian Bank.

Construction of the $1.4 billion telescope began in March after seven years of environmental studies, public hearings and court proceedings. The company building the 18-story telescope, TMT International Corp., suspended construction in April when protesters, who consider Mauna Kea sacred, blocked the road to the summit. On Aug. 27 the state Supreme Court heard oral arguments in an appeal of the telescope’s construction permit. Construction has not resumed, and the delay has been costly for TMT International, which had targeted 2024 for the telescope’s completion.

TMT said its site, which is visible from just 14 percent of the island, was selected because it poses no risk to rare or endangered plants, insects or animals. TMT also has committed to a lease payment of $1 million a year, with 80 percent of the money going to the Office of Mauna Kea Management to safeguard the mountain and its cultural treasures. The remaining 20 percent will go to the Office of Hawaiian Affairs.

The California-based nonprofit also has committed $1 million a year for Hawaii island science, technology, engineering and math programs, plus another $1 million for Hawaii island workforce development.

Aside from the TMT project, Suyderhoud said the observatories on Mauna Kea generate $59 million in annual local spending, $28 million in local income and 806 local jobs. The 11,288-acre Mauna Kea Science Reserve, administered by the University of Hawaii, now hosts 13 telescopes.

“Last year our concern was about how Hawaii island’s economy would handle storms and lava,” Suyderhoud said. “Nature proved sparing, and people came together to deal with and mitigate the adverse effects. Hawaii island has proved its resilience, and the economy continues to expand. Now the question is how the island will deal with uncertainties of the man-made variety.”

Also being closely watched are the financial problems at Hawaii Health Systems Corp., and in particular Hilo Medical Center, where there have been cuts in staff and services.

“If more draconian cuts occur at Hilo Medical Center or elsewhere on the island, and if the Thirty Meter Telescope construction is further delayed or even halted, 2016 could still be positive, but less so,” said Suyderhoud.

Suyderhoud said strength in tourism and a rebound in residential construction should be the main drivers for the island’s economy next year. He said there’s a dichotomy when it comes to tourism on the island, which is the least dependent on tourism for its economic base among the major neighbor islands. The west side is more tourist-dependent than either Maui or Kauai, while the Hilo side is even less affected by tourism than Oahu, he said.

“Tourism dependence can be a blessing or curse, depending on that sector’s economic cycles,” Suyderhoud said. “In the last few years for Hawaii island, it has been somewhere in between.”

Air seat capacity was up 21 percent this year through July to Kona — the biggest increase for any island destination — while air seats to Hilo were down 9.8 percent over the same period.

Visitor arrivals on Hawaii island inched up just 0.7 percent in 2014 from the previous year to 1.4 million.

Through July of this year, it’s been a mixed bag with visitor arrivals ahead 5.3 percent over the year-earlier period, visitor spending up just 0.5 percent and per-person, per-day spending down 4.4 percent.

Next year looks brighter, though, with group incentive bookings strong for both 2016 and 2017, he said.

Suyderhoud said multifamily residential construction “is moribund, although single-family residential permit growth has been occurring.”

“In spite of contradictory permits and jobs data, my discussions with those in the Hawaii island construction industry indicate that times are good,” Suyderhoud said.