State lawmakers advanced a bill by the Legislature session deadline that will significantly change the governance model for the Hawai‘i Tourism Authority for the first time since it created the agency in 1998.
A Senate and House conference committee delayed votes on Senate Bill 1571 on Tuesday, Wednesday and Thursday, and met three times on Friday before finally approving a conference draft just before the 6 p.m. deadline. The bill heads to the full House and Senate for a final vote this week.
At least four conference drafts emerged throughout last week, indicating that Senate and House conferees were engaged in robust discussion.
HTA’s overall governance structure had been discussed during previous legislative sessions. Various bills also have been introduced but not advanced in recent years to explore whether HTA’s structure as outlined in Hawaii Revised Statutes is the best approach for managing tourism, a top economic driver.
However, legislators showed that some lingering doubts about HTA’s capabilities remained when they repealed HTA’s exemption from the administrative supervision of boards and commissions, which went into effect July 1. The exemption was its last after the Legislature took away its procurement exemption in 2021, and in 2022 the agency lost its special fund status.
Late last month, state lawmakers renewed efforts to tighten oversight of HTA after the agency underwent more leadership shake-ups while dealing with ethics allegations that procedural deficiencies allowed for inappropriate freebies at the Hawai‘i Convention Center and that Hawaii Tourism Conference partnerships were inconsistent.
There also were allegations about potential procurement violations, and late payments to contractors.
Sen. Lynn DeCoite (D, Hana-East and Upcountry Maui-Molokai-Lanai-Kahoolawe), chair of the Senate Committee on Energy, Economic Development and Tourism, and chair of the Senate conferees for SB 1571 said Friday that the HTA bill “represents our efforts to improve and strengthen the organization.”
DeCoite acknowledged the hard work of Rep. Adrian Tam (D, Waikiki), chair of the House Committee on Tourism, who chaired the House conferees noting that “it’s been back and forth between the both of us.”
The conference draft eventually approved by conferees includes the following key changes, which go into effect if the bill becomes law:
>> Downgrades the HTA board to an advisory board.
>> Amends eligibility requirements to serve on the HTA advisory board.
>> Removes the director of the state Department of Business, Economic Development &Tourism from the board.
>> Requires a member of the board to represent a tourism-impacted entity.
>> Allows the House speaker and the Senate president to each appoint an HTA advisory board member.
>> Exempts all positions filled by HTA within DBEDT from the state civil service law.
>> Allows the HTA advisory board to appoint the HTA president and CEO, subject to the advice and consent of the Senate.
>> Requires the HTA president and CEO to report to the governor.
>> Allows the HTA advisory board to set the term of the HTA president and CEO in the hiring contract.
DeCoite said that tourism is the biggest economic engine for Hawaii, and that the HTA must increase leadership and accountability “to rebuild public trust within our community.”
She said the bill may not solve all of the problems that lawmakers heard that HTA was experiencing this session, but would provide “a time out” to “get us on the right track.”
Tam told the Honolulu Star-Advertiser that the bill represents the biggest governance changes to HTA since it was created, but said, “It’s been a long time coming. HTA was plagued with issues prior to me becoming chair of the House Committee on Tourism. I’ve leaned on people with past experience to help me reform it.”
Tam said even so, he was hesitant at the beginning of the session to move SB 1571 forward but the idea gained traction during the session as he lost confidence in HTA.
The HTA Budget, Finance, and Convention Center Standing Committee held a meeting this month and disclosed that the state Attorney General’s Office is reviewing whether the HTA must pay $780,000 in interest for millions of dollars in late payments to a major contractor.
At the same time, DBEDT Director James Kunane Tokioka told the committee that another pending issue is a possible procurement violation in relation to a $1.5 million Los Angeles marketing contract executed with the Hawai‘i Visitors and Convention Bureau last fall as part of a Maui recovery plan.
David Arakawa, a HTA board member and chair of the standing committee, also brought up the issue of sponsorships and questioned why premier conference partners for the HTA’s fall Hawaii Tourism Conference did not pay sponsorship fees.
Caroline Anderson, interim HTA president and CEO, told the Star-Advertiser that premier conference partners were different than sponsors without that designation. It’s unclear where the discussion about semantics will land.
But Tam said with the passage of SB 1571, lawmakers are “hoping to gain a level of ethics on the advisory board and trying to prevent the actions of what has happened that transpired and lead us to this point in the past and is happening again.”
“There are actors out there who can find loopholes in anything and anything can be abused, but we’re hoping that this makes it harder,” he said. “As Sen. DeCoite said, this won’t solve all the problems, but it’s a fresh start.”
The board already has undergone leadership changes and had been vetting a new governance model on its own.
Todd Apo was elected by the HTA board to serve as its chair in late March. Apo replaced former chair Mufi Hannemann, who stepped down from the role but remains on the board.
“I appreciate all the work on (SB 1571). The upside is that we now know … the foundational landscape that we need to work in,” Apo said. “Uncertainty is the biggest risk, so we, from an authority standpoint, a board standpoint, and an industry standpoint understand what we need to work within.”
Apo said HTA will need to factor the changes that SB 1571 will bring into its ongoing review of a third-party governance study.
“I hope we can do that in relatively short order so that we can spend the bulk of 2025 getting HTA and the industry in the best position to serve Hawaii,” he said.
In 2023 with the looming threat of bills calling for HTA’s repeal, the HTA decided to fund a third-party governance study. Through a competitive bidding process, Better Destination LLC, founded by Cathy Ritter, was selected for a $294,400 contract, and the top recommendation released in the summer was for HTA to restructure into a destination stewardship organization with a new name.
The recommendations were presented to the HTA board June 27 and have been under consideration by the HTA Governance Study Permitted Interaction Group.
For the governance study recommendations to move forward, it also requires the support of state legislators, who may be resistant to giving up even partial control of the state’s tourism industry — a cash cow that delivers some $1 billion annually in transient accommodations taxes.
Apo said board members will need to take some time to understand what the new changes mean for HTA now and in the future.
“Working with both the department and DBEDT as well as the governor’s office, we’ll figure it out,” he said. “We’ll look at the details of the language of the final bill, but our job is now to implement it and put our leading state industry in the best position that we can.”
