Bill would end secrecy at state tourism agency

The Hawaii Tourism Authority faces losing its sunshine exemption in the wake of criticism from lawmakers and members of the visitor industry that it isn’t transparent about how it spends tens of millions of taxpayer dollars to market the islands.

State Sen. Glenn Wakai (D, Kalihi-Salt Lake), chairman of the Senate’s Tourism and International Affairs Committee, plans to introduce a bill today that would end a 2010 law allowing HTA to discuss “competitively sensitive” information behind closed doors. Wakai’s bill would mandate that HTA provide unredacted budgets to the leaders of the legislative tourism and finance committees.

Wakai’s proposed bill follows a few weeks of fireworks for HTA, which was blasted by the Senate Ways and Means Committee on Jan. 10 for lack of transparency and what was called “unsustainable” spending and debt management. Wakai said his legislation seeks to provide lawmakers and the public with the ability to evaluate whether HTA is properly spending public funds.

HTA gets $82 million in transient accommodation taxes for marketing and operations, and $26.5 million in transient accommodation taxes for the Hawai‘i Convention Center.

HTA officials declined to be interviewed for this story.

“We aren’t able to comment on the pending legislation until we have seen what’s been introduced,” Charlene Chan, HTA’s director of communications, said in an email sent by HTA’s public relations firm, Anthology.

HTA President and CEO George Szigeti, who came from the private sector, and HTA Board Chairman Rick Fried, a prominent Honolulu attorney, said earlier that their decisions meet exemptions in the state’s open-­records and sunshine laws.

But Wakai said HTA, which took more than five weeks to provide him with a detailed budget, is abusing those exemptions.

Honolulu Star-Advertiser research, published Jan. 16, also showed that the public portion of the meetings has decreased while the closed-door executive sessions have lengthened substantially since Szigeti assumed leadership of the agency in May 2015. The percentage of closed-door business HTA conducts under Szigeti was more than 50 percent — at least double that of his two most recent predecessors going back to 2011.

Likewise, the Star-Advertiser has been pushing HTA to release the prices for individual sporting events since September. On Jan. 12 HTA finally provided prices for some sporting contracts but redacted costs for eight. HTA sent the newspaper a redacted Los Angeles Clippers contract Friday that was scrubbed of all price information.

“We take our statutory charge to protect certain competitive-sensitive contract information seriously,” HTA contract specialist Ronald Rodriguez said Friday in a letter to Star-Advertiser Editor Frank Bridgewater. “We are always balancing the public’s intrinsic right to know how its money is being spent against the unintended and potentially disastrous consequences of letting certain sensitive information fall into competitors’ hands.”

After reviewing previously withheld budget information, Wakai said he’s not buying HTA’s arguments.

“If you have this awesome, thoughtful strategic plan, keep it secret, but they can’t even begin to come up with something like that, so, no, it’s not proprietary,” Wakai said. “The reason for their lack of transparency was clear. There were a lot of really sketchy line items.”

Wakai said he questioned HTA on a $4.6 million market development fund, which can be dispensed without approval from Szigeti or HTA’s board. Requests under $50,000 require approval only from HTA Chief Operating Officer Randy Baldemor, while higher amounts need only Fried’s added signature.

“This is essentially a slush fund for Randy Baldemor and Rick Fried,” Wakai said. “Where is the board oversight of this huge pot of money? There are no checks and balances, and there is no place for that in government.”

Wakai, other members of the Senate Ways and Means Committee, and some members of the tourism industry also are asking Szigeti to justify awarding hefty pay raises to several employees in 2016, despite a 2015 reduction in the agency’s administrative cap that resulted in restructuring and several high-profile layoffs.

Szigeti, whose salary is $283,500, told the Star-Advertiser last week that raises were necessary to “attract and keep” the “best and brightest,” who have seen responsibilities grow. For example, Jadie Goo was named director of marketing, which increased her salary by $27,900 to $95,004. Marc Togashi’s promotion to vice president of finance caused his salary to rise $25,596 to $130,008. Chan, director of communications, was not promoted; however, her salary increased $30,000 to $115,008.

Several Hawaii visitor industry members said such pay raises fall outside industry norms.

“A one-time jump like that is big. In a government agency you are putting yourself at some risk even if it’s the right decision,” said Keith Vieira, principal at KV &Associates, Hospitality Consulting.

Mufi Hannemann, Hawaii Lodging &Tourism Association president and CEO, said Wakai’s bill is needed to address emerging concerns.

“It’s unfortunate that the Legislature has to go this route to require them to be more open and transparent and that we’ve seen a pattern of oft-repeated executive sessions to shield the public from information,” Hannemann said.

The visitor industry also supports a more expedient turnover of the HTA board, he said.

“It’s clear that the board has been lax in its oversight of HTA staff. We need a board that understands our industry and can help with some of the decisions being made that are causing such great concern for our legislators,” Hannemann said.

Because the private sector far outspends HTA, the agency’s plans must be broadly communicated so that all involved can coordinate activities, said Frank Haas, president of Marketing Management Inc.

“Everything was sunshine when I was there, but we never had a problem,” said Haas, HTA’s vice president of tourism marketing from 2002 to 2007. “Our contractors signed deals and we signed deals with all kinds of sports stuff and Miss Universe without giving up sunshine.”