Opposition to Home Depot
is not about competitionResearch shows big-box stores
By Carol Ai
don't live up to promises of
more jobs and lower pricesWHEN my grandfather started City Mill in 1899, Hawaii was undergoing tumultuous change. A kingdom was becoming a territory. In the years that followed, our business grew -- along with thousands of others -- to serve Oahu. Although we became the largest building material supplier on this island, there was always room for new enterprises. Many businesses, in fact, were started by our former managers and employees.
Competing against each other, we all played an integral part in Hawaii's growth. In addition, government and business worked closely together.
Despite this symbiotic relationship, many businesses and individuals are afraid to speak out on certain issues, particularly if it involves pointing out irregularities in government.
I myself write this with trepidation -- worried that there might be political retribution for our company. However, I feel compelled to voice my opinion on the proposed rezoning of Pearl City Junction/Manana property for Home Depot.
It is unfortunate that Home Depot, through its lobbying and PR efforts, is trying to paint its local detractors as "some hardware stores" that don't want competition. Additional competition is not the issue. If this were the case, there would have been a huge public outcry over the Home Depot already under construction at Dole Cannery in Iwilei.
Our primary concern is the need and desire for government to provide a level playing field for all businesses. This is the reason more than 100 diverse companies, of which only four are hardware stores, are supporting the effort to stop the current sequence of events surrounding the proposed rezoning for Home Depot.
Small businesses are up in arms because they were not afforded the special treatment by our government that is being given to Home Depot. They would like this particular business and the city administration to abide by the same laws and procedures followed by existing companies.
Typically, a private enterprise looks for property that is zoned to fit its needs, then purchases or leases that land. It complies with current laws, pays property taxes and often waits 2-5 years for zoning variances.
In this case, however, the city has reversed the process. It has contracted to sell the Manana property to Home Depot with the promise of guaranteed rezoning. This sets a dangerous precedent.
Any attorney or Realtor will tell you that this is highly unusual and irregular. Yet government is fast-tracking this retailer through the long zoning process.
It's a fact that the city is selling its property to a private enterprise with the promise of guaranteed zoning. At the same time, the city has the power to rezone. Isn't this a conflict of interest?
Councilman Steve Holmes has correctly pointed out that the city marketed the whole block of property in a way that could only attract a big-box store. Which came first -- Home Depot or the decision to bid the property in its entirety? Smaller parcels of land would give more businesses a chance to bid on this valuable property, as well as bring in additional income for the city.
On a grander scale, I am concerned about the overall quality of life and landscape of our islands.
National research indicates that big-box retailers like Home Depot cause more job losses than gains, lead to fewer middle-management jobs in competitive and supporting businesses (accounting firms, distribution, trucking companies, advertising agencies, etc.) and result in an overall reduction of the tax base. Their profits leave the state and reduce competition in the long run.
Stephany Sofos' "Paradise Tax" research indicates that it costs 15-18 percent more for a Hawaii-based business to operate in this state than a mainland-based business, largely because of the latter's advantages of economy of scale and need for fewer support staff in Hawaii.
While big-box stores do initially bring jobs for about 6-9 months, they start laying off workers after their grand-opening hype. At first, they do bring low prices and selection. But Oahu should look at what has happened on the Big Island. In Hilo, Walmart has obliterated its competition and has now started to increase prices.
Yes, Hawaii must remain progressive. We all must embrace change to some degree. But that change must not occur to the detriment of our already fragile economy.
We need to be reminded, often, that small business creates two out of every three new jobs, and that it supports 97 percent of all jobs in Hawaii.
There are examples of progressive zone planning in other cities on the mainland that can accommodate both small, medium and large businesses. We can follow their lead, and help to keep Hawaii unique.
The members of our City Council, especially, need to examine these examples. If other cities can do it, so can Honolulu.
In the meantime, the city needs to proceed in the proper legal sequence with respect to Home Depot. It must:
1) Have the Navy clean up the contaminated property.
2) Master plan the property.
3) Rezone the land.
4) Develop, sell or lease the land.
If this is done, no one can accuse the city of giving Home Depot special treatment to the disadvantage of existing businesses.
Given the polarizing nature of this controversy, it makes sense for our City Council and city administration to step back and revisit this deal. The public is concerned about the economic ramifications, greatly increased traffic in an already congested area, and the special treatment being given to one retailer.
With the general feeling that something is not quite right here, while city officials are trying to expedite this deal, our administration should put the brakes on this process.
Carol Ai is vice president of City Mill.