Harris’ plan gets
cautious response

The city would take over the convention
center and its debts in exchange
for hotel room tax control

By Gordon Y.K. Pang
Star-Bulletin

Mayor Jeremy Harris' proposal to have the city take over the Hawai'i Convention Center is getting a cautious response at Honolulu Hale, the state Capitol and in Waikiki.

Harris is proposing that the city assume all debts and receive all revenues associated with the $350 million convention center.

In exchange, the city and the other counties would get authority to impose their own hotel room taxes. The plan was part of a 23-bill Harris "wish list" made public yesterday.

Harris' plan contrasts with the one being espoused by Gov. Ben Cayetano and the state Economic Revitalization Task Force.

The task force proposes increasing the so-called transient accommodations tax -- or TAT -- from 6 to 7 percent, and reducing the counties' share, as a way to stimulate the economy and the tourism industry.

"What's on the table right now at the Legislature is simply unacceptable," Harris said.

The city has been getting about $47 million annually in transient accommodations taxes, but projects it would lose about $18 million under the task force plan.

"Almost all the services that are provided to the tourists come from the city -- lifeguards, beach parks, roads, police," Harris said. "And yet almost all of the money that the tourists pay in taxes go to the state."

Under the mayor's proposal, the city also would take over payments for the center.

City Budget Director Malcolm Tom said the center's debt service is about $20 million this year, $23 million next year, $38 million in 2000 and about $40 million annually over the subsequent years of the 20-year debt.

He put operating costs, including marketing, at about $5 million a year.

The counties also would be responsible for visitor industry marketing, which would entail making decisions on funding for the Hawaii Visitors and Convention Bureau, Harris said.

The bureau's budget, the mayor said, "would depend on how high the visitor industry wants to go with the hotel room tax. That would basically be at (the industry's) discretion."

The task force proposes putting $60 million into a reserve fund exclusively for the visitors bureau. Tom said each 1 percent increase in the TAT rate represents about $20 million.

House Tourism Chairman Romy Cachola (D, Kalihi Kai) said he is willing to give the mayor's bill a hearing if the counties assure him they will dedicate $60 million to the visitors bureau.

The key to whether he and others support the bill, however, will hinge on how much in TAT dollars the counties would need, Cachola said.

House Speaker Joe Souki (D, Wailuku) described the Harris plan as a "bold" one, but added, "At this point, he has a lot of convincing to do."

Alan Hayashi, executive director of the Convention Center Authority, said his concern is whether the city would be able to "objectively" continue the center's policy of promoting all of Hawaii's islands for pre- and post-convention tour packages.

City Council Finance Chairman John Henry Felix and Economic Development Chairman Mufi Hannemann said they like the mayor's proposal, presuming the city's calculations are correct.