A Honolulu City Council measure meant to give financial aid to eligible small businesses grappling with plummeting revenues due to rail-related construction has garnered little support from the city’s administration.
“I think the tough part for us is where do you draw the line for a business that says it has been harmed, when you just don’t know if the harm occurred due to the business’s own mismanagement and poor decisionmaking versus being directly impacted by rail construction,” city Budget and Fiscal Services Director Andy Kawano told the Council’s Committee on Budget on Tuesday.
“I think that’s going to be something that’s challenging for us to determine,” he added, “and it’s probably going to require a lot of work on our part to ensure that we get it down right.”
Co-introduced by Council members Radiant Cordero and Tyler Dos Santos-Tam, Bill 40, as drafted, would provide up to $10,000 in city grant assistance to eligible businesses that are majority-owned by city residents; have 15 or fewer employees; generate not more than $750,000 annually; and opened for business prior to commencement of active construction of the rail project, within the same city block as the business
location.
The measure is also meant to jump-start
the city’s existing yet dormant transit construction
mitigation fund.
Established through city legislation in 2018 under then-Mayor Kirk Caldwell, the fund was slated to “receive and expend money to mitigate negative economic impacts from the construction of the Honolulu High Capacity Transit project,” now known as Skyline.
That year, the Council appropriated $2 million to provide real property tax relief to eligible businesses. And the following year, the Council added $750,000 to the mitigation fund.
In 2019, Caldwell issued a message stating that from then on, the Honolulu
Authority for Rapid Transportation “should be responsible for the transit construction mitigation measures” and pay for any associated costs.
But in early 2023, HART’s board of directors voted unanimously to remove the rail agency from mention of having any responsibility for administering that fund.
Meantime, a program was never established for distribution of money in the mitigation fund — leaving affected businesses empty-handed. And, city officials assert, the fund itself is now wholly inactive.
Under the 2018 legislation, expenditures from that fund were to include grants to businesses forced to relocate due to rail construction; grants for business interruption to compensate businesses along the corridor for the loss of income due to construction impacts; and working capital advances — loans to cover business operating expenses required to continue operation during the rail’s construction phase.
But in spite of Bill 40’s purpose to get potential funding on track for small businesses — particularly for those located on busy Dillingham Boulevard affected by ongoing rail work — Kawano objected to the measure’s feasibility.
“The administration is still concerned about the bill,” he told the committee. “Although it has been made very much focused in terms of ensuring the benefit to smaller businesses with fewer employees and a fixed amount of benefit up to a maximum of $10,000.”
He further noted the city remains concerned over the years it will take to complete rail construction, and “the exposure to the city of having to pay out additional grants to businesses that allege that they’re harmed.”
Kawano said for those reasons the city could not support the bill.
In response, Cordero asked, “Even with the more focused approach and quantifiable amount of employees and access to the active construction sites or corridors and all of that?”
“What it gets down to is, where’s it going to stop?” Kawano replied. “Once we approve something like this, whenever the city is involved in any kind of construction throughout the island, there could be a request or claim for similar
legislation.”
Cordero then suggested language could be added to Bill 40 to specify funds be tied only to Skyline construction and to no other city transit projects.
Kawano said he had no further comment on the matter.
But Dos Santos-Tam also questioned the budget
director.
“Does the department or the administration have any other suggestions on how we can help these businesses?” the Council member asked. “What would the department say, or perhaps the mayor say, to these businesses? If not this bill, then what else?”
To that, Kawano said determining impacts to businesses had to be done with “more objectivity.”
“Because if we don’t clearly define how the assessment is done — and done in a manner that’s objective — essentially anyone … submitting an application probably would be subject to receiving grant moneys,
if they can show that their
financial status was
impacted,” he said, adding “At the end of the day, the general public, through real property taxes, would be paying out these grants if we adopt this legislation. And is it equitable, is it fair? That’s the part I can’t get over.”
A member of the business community also spoke at the meeting.
Andrew Min, of 74-year-old, family-owned Min Plastics &Supply Inc. at 921 Kaamahu Place, told the Council that due to rail construction along the Dillingham corridor, his company was forced to downsize.
“Over the past year I’ve had the opportunity to personally facilitate a reduction of force by 25%,” he said. “And I can see that it directly correlates to the construction as it moves closer.”
Min asked that Bill 40 also take into account larger businesses, not just smaller ones.
Afterward, Dos Santos-Tam said he’d like to
see more help go to businesses affected by rail
construction.
“Real businesses are suffering,” he said, noting he’d met with the owner of a Dillingham area Subway restaurant who claimed she had to close due to a drastic loss of revenue related to rail work. “Subway, which is a franchisee backed up by all the marketing in the world by Subway national — (if) they couldn’t cut it, I don’t know how other businesses are going to make it for the next several years.
“So, I’m disappointed that the administration is taking the stance of not supporting this bill,” said Dos Santos-Tam, adding, “What else is there to support these businesses? What else can we do? And I don’t want to take no for an answer.”
Ultimately, the committee voted to advance Bill 40 to the full City Council for a possible third-reading
passage.
The Council is expected to hold its next meeting
Jan. 24.
