In front of a Korean fried chicken eatery and next to an active rail- related construction zone along busy Dillingham Boulevard, Mayor Rick Blangiardi on Friday formally signed a bill allowing the city to provide financial assistance to eligible small businesses struggling to stay open as the Skyline fixed- guideway rail system draws near.
Adopted by the City Council in January, Bill 40 is meant to provide up to $10,000 in grant funding to eligible businesses that opened prior to Jan. 1, 2022. Qualifying businesses would receive the grant each year, but only as long as active construction of the Honolulu Authority for Rapid Transportation’s nearly $10 billion rail line remains in the area.
Expected to take effect July 1, the measure would apply only to small businesses that are majority-owned by residents, have 15 or fewer employees, generate less than $750,000 a year and opened for business prior to commencement of active construction of the rail project, within the same city block as the business location.
Bill 40 also would feature a community outreach component — under city agencies yet to be designated by the Mayor’s Office.
Before the bill signing, Blangiardi noted early on rail construction between East Kapolei and Halawa had caused many small businesses to go out of business — “out in Waipahu especially,” the mayor said.
“And we’re determined to not have that happen again despite the fact that we’re about to begin the most challenging part of rail construction, which is coming down the Dillingham corridor, and what we’re about to do over the years ahead.”
“So this is something that I really feel very good about, because as we all know, small businesses … are the backbone of our community,” he said.
One small-business owner also attended the bill signing.
“We need a little help, for sure,” said Yudai Fukuda of U-Kitchen, a Japanese fusion restaurant at 565 Kokea St., on the makai side of Dillingham Boulevard. “We still have to pay the (rent), we still have to keep our employees and we don’t have anywhere to go now.”
Fukuda said it wasn’t always like this for a business that employs 14 people.
When he opened the eatery two years ago, he said, about 1,200 customers would visit daily. Fukuda said he’s now lucky to see 500 patrons a day.
“So when we started it was pretty good, but since this construction happened our sales dropped down about 60%,” he said, noting rail construction curbed vehicle access to his business. “Some of the customers straight up told me that they cannot turn left, and on their lunch break they cannot come in anymore.”
Bill 40 — introduced by Council members Tyler Dos Santos-Tam and Radiant Cordero, who each represent portions of Kalihi — effectively jump-starts 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 effects 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 HART “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.
And a program was never established for distribution of money in the mitigation fund — leaving affected businesses empty-handed. 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 those along the corridor for the loss of income due to construction impacts; and working capital advances — loans to cover business operating expenses required to stay open during rail’s construction phase.
By 2022, HART awarded Nan Inc. a $496 million contract to undertake utility relocation work along Dillingham Boulevard as the rail line advances toward downtown. That work — called the City Center Utilities Relocation project — would, among other things, see one of two 138-kilovolt electrical transmission lines put underground.
Nan’s construction along the Dillingham corridor is expected to last through 2026, though the rail line is not expected to be completed until 2031.
Before the bill signing, Dos Santos-Tam responded to reporters’ questions, including one asking how many businesses had closed due to past rail construction through West Oahu towns like Waipahu.
“I wish I knew that number. I wish that number were zero, but I know that there had been some and we didn’t want to see that here,” he said while standing outside Soul Chicken at 1095 Dillingham Blvd. — whose owner, Anthony Han, previously told the Honolulu Star-Advertiser that his business has suffered due to rail construction. “We wanted to make sure that here on Dillingham and moving forward, that there is some sort of lifeline for these businesses.”
But Dos Santos-Tam added that “a lot of other municipalities all around the country have programs like this. We’re not the first ones.”
“We said if this is working in places like Minneapolis and Salt Lake City and Mesa, Ariz., and a bunch of other places, we can make it work here, too,” he said, adding that along Dillingham Boulevard “there’s probably several dozen businesses at least that would qualify.”
He added that the Council plans to work with “the mayor and his administration … to develop the final set of new rules around this” program.
Grants will continue to be available for businesses along the rail line as construction continues toward the planned Civic Center Station site in Kakaako, the city says.
