Maui Files Suit Claiming it was Stranded with $44 Million in Debt Securities

By Wendy Osher

The County of Maui is demanding a jury trial in a lawsuit it filed last week against Merrill Lynch Pierce Fenner & Smith Inc. The county claims it was stranded with $44.2 million in debt instruments when the firm abandoned its practice of supporting auctions for the SLARS or Student Loan Auction Rate Securities.

According to the docket filed with the U.S. District Court of Hawaii, the County of Maui purchased the securities on or after August 16, 2007.  The suit claims the firm abandoned its practice of supporting SLARS auctions on or about February 13, 2008, claiming it could no longer sell the securities at par.

Today, the County of Maui owns $32 million of SLARS that are not liquid.

The County of Maui further claims it would not have purchased SLARS at all if it had known of the grown risks associated with the investments.

SLARS are secured by pools of student loans guaranteed by government agencies under the Federal Family Education Loan Program.

Maui Mayor Charmaine Tavares is expected to comment on the litigation during a press conference in Honolulu later today.

VIDEO: Tavares Issues Challenge on TAT in her State of the County Address

By Wendy Osher

In her fourth State Of The County Address today, Maui Mayor Charmaine Tavares challenged the state administration and the Legislature to examine other sources of revenue before cutting the counties share of income from the hotel room tax.

Maui Mayor Charmaine Tavares, State of the County 2010. Photo by Wendy Osher.

“Taking away the TAT revenue from the counties breaks a promise and shifts the tax burden for these costs from the visitors to local residents,” said Tavares.

Tavares said, without the Transient Accommodation Tax revenues, the county’s shortfall will rise from $50 million to $70 million.  Fellow Mayor Mufi Hannemann agreed with Tavares saying the counties at the end of the day are the key to the visitor industry.

“You can do all the marketing in the world.  But if people don’t feel that it’s safe to visit Maui, the Big Island, Kauai and Honolulu, they will not come.  That’s what we do: we’re the home of the first responder, we fix the infrastructure, we maintain the parks, we’re there 24-7.  So that’s a very important message that was said today,” said Hannemann.

In addressing the county’s economic climate, Tavares said she wants no part of the layoffs seen at the state level.  She said the options are simple:  a combination of raising revenues and cutting spending.

“In my mind, we must have a combination of those choices—reduce services and raise revenues—to find a balance that will enable us to keep our community strong,” said Tavares.

Looking ahead to the future Tavares said, the county’s “quest for energy independence through renewable energy resource development is one of the most important programs our county can pursue to ensure success in the future.”

Large Swell Expected, High Surf Warning IssuedLarge Swell Expected, High Surf Warning Issued

The National Weather Service issued a High Surf Warning for the North and West facing shores of Molokai and the North facing shores of Maui until 6 p.m. Thursday.

A High Surf Warning indicates that dangerous battering waves will pound the shoreline.  This will result in very dangerous swimming conditions and deadly rip currents.

A large West-Northwest swell will arrive in the islands tonight and affect various North and West facing shores through Thursday.  In addition to the high surf, moderately high tides are expected during the warning period which can cause additional beach run-up.

Surf along north facing shores of Molokai will be 20 to 30 feet.

Surf along west facing shores of Molokai will be 15 to 20 feet.

Surf along north facing shores of Maui will be 20 to 25 feet.

Forecast surf heights are estimates of the height of the face or front of waves.

A high tide of approximately 2.5 feet is expected between 1:35 a.m. and 2:53 a.m. Wednesday morning.

PRECAUTIONARY MEASURES:   A HIGH SURF WARNING INDICATES THAT DANGEROUS, BATTERING WAVES WILL POUND THE SHORELINE.  THIS WILL RESULT IN VERY DANGEROUS SWIMMING CONDITIONS AND DEADLY RIP CURRENTS.  BEACH GOERS ARE URGED TO STAY OUT OF THE WATER AND WELL AWAY FROM THE SHORE BREAK DUE TO THE HAZARDOUS WAVE ACTION AND STRONG RIP CURRENTS.

INFORMATION:   Maui County Civil Defense will continue to monitor the situation.  Please listen to your local radio and TV stations or NOAA Weather Radio broadcasts for any updates.   NOAA Weather Broadcasts can be reached by calling 1-866-944-5025.   NOAA Weather Internet services can be found at www.prh.noaa.gov/hnl.

Tax Return Delay Implemented to Save State Money

The State Department of Taxation will delay payment of tax refunds for 2009.  The action to delay payment until July 1, 2010 is being taken to mitigate the state’s projected $721 million revenue shortfall.  Tax officials say delaying the refunds will provide an estimated one-time savings of $275 million which will go towards balancing the state budget.

The Tax Department will release refunds beginning in July on a first-in-first-out basis, ensuring that early filers receive their refunds first.

State tax officials say the action complies with the legally allowed 90-day refund period.  Under current Hawai‘i law, if the director of taxation approves a refund voucher within 90 days from the due date or the date the return is filed, whichever is later, and the refund check is mailed 45 days from the date of the director’s approval, no interest is paid.  However, if either of these time limits is exceeded, interest will be paid.

For faster receipt of refunds, taxpayers are advised to have their refunds directly deposited into their bank account by providing their bank routing number and account number and indicating the type of account (savings or checking) on their individual net income tax returns. Direct deposits will be the most efficient way to receive refunds.

The refund delay was originally announced in the executive supplemental budget that was submitted to the Legislature on December 21, 2009.  Beginning July 2010, taxpayers may contact the Taxpayer Services Call Center during business hours at 808-587-4242 or 1-800-222-3229 (toll free) for information on the status of their refunds.

1,517 Acres of Maui Forest Considered for Inclusion in Natural Area Reserve

By Wendy Osher

The Department of Land and Natural Resources is proposing the designation of more than 15-hundred acres on Maui for inclusion in the State’s Natural Area Reserve System.

The land is located in the Nakula region of Haleakala and includes a tract of Koa dominated forest that state officials say is rapidly disappearing from the leeward slopes.

A forest restoration program, including construction of fences intended to improve habitat for other rare forest birds is ongoing at the location.

DLNR officials say the area includes native plant communities, the majority of which are imperiled, and none of which are well represented within the statewide NAR system.

The item comes up for discussion in a meeting of the land board on Thursday.  The board will consider a request for a public hearing on Maui regarding the proposed addition of Nakula into the Natural Area Reserves System, and withdrawal from its current designation as State Forest Reserves land at Kahikinui.

Hawaiian Homelands Casino Bill Introduced by Carroll of Maui

Representative Mele Carroll (House District-13th) of Maui, Chairwoman of the House Committee on Native Hawaiian Affairs, introduced a bill that, if passed, would give the Hawaiian Homes Commission the right to build and operate gaming facilities on Hawaiian Home Lands with the approval of the beneficiaries. HB 2759 specifies that 20% of revenue would go toward the State’s general fund and 80% would go toward the Hawaiian Home Lands trust.

Rep. Mele Carroll of Maui introduces gaming legislation. Courtesy Photo.

The legislature appropriates $30 million annually to the Department of Hawaiian Home Lands (DHHL) due to a prior lawsuit, but the allocation is due to expire in 2015.  In a testimony by DHHL Chairman Kaulana Park noted that approximately 25,000 applicants for Hawaiian Home Lands have been waitlisted and DHHL is only able to process between 500 and 1,000 applications per year with current funding.

Carroll introduced HB 2759 in part to provide a mechanism in which DHHL could generate funds independently and diminish its reliance on the state.  When questioned by Rep. Carroll about the department’s ability to decrease the waitlist when the $30 million goes away, Bobby Hall, Executive Assistant to the Director of DHHL, said that the department is looking at an aggressive approach to replacing the funds and has made great strides to create revenue-generating projects to support the department’s mission.

DHHL currently earns about $16 to $17 million dollars in commercial lease properties. Their operations cost about $15 to $16 million dollars per year, essentially breaking nearly even.  “This is scary and I don’t want to wait until we see that day where the resources are gone and we are back to step one waiting to get on the lands,” says Representative Mele Carroll.  “We need to take bold steps and creatively do something now.”

HB 2759 stipulates that casinos must submit receipts of their monthly earnings, which would be taxed and closely monitored for discrepancies.  Representative Mele Carroll notes that “Since we want the money to go back into the community, we would set up safeguards to prevent the embezzlement of the funds or other illicit activities.  I’m introducing this bill not as a commercial enterprise, but as a mechanism that would allow DHHL to decide whether they want to consider gaming as a way to put more people onto Hawaiian Home Lands and to better fund their infrastructural and social programs.”

With the approval of the governor, the Hawaiian Homes Commission would have the power to decide whether to allow gaming and on which land to build gaming facilities.  At that point, each DHHL community would have the final say as to what type of gaming facility, if any, they want built and what games would be permitted within that structure.  According to Representative Mele Carroll, “The intent of this bill is to ensure that communities who decide to permit gaming would be able to customize the facilities and services to their particular homesteads.”

Carroll introduced HB 2759 in part to provide a mechanism in which DHHL could generate funds independently and diminish its reliance on the state. Courtesy photo.

In addition to generating funding for DHHL and its beneficiaries, this bill is also aimed at invigorating Hawai`i’s economy by creating jobs for those in the construction and entertainment sectors as well as boosting occupancy at our hotel resorts.  Representative Mele Carroll suggests that “gaming facilities could serve as a place where native Hawaiian entrepreneurs could promote their goods and services to a wider audience.” Moreover, Hawai`i residents who travel to Las Vegas for gaming in that city could be able to partake of the same activities without spending money on airfare, hotel rooms, rental cars, and other travel expenses in other states.

Twenty-two years after U.S. Congress passed the Indian Gaming Regulatory Act, John Radcliffe, a former resident of Wisconsin who now serves as President of Capitol Consultants, Hawai`i, notes that the Pottawatami reservation “is still gorgeous,” but now most residents have new houses and cars.  He proposed that gaming could lessen Hawai`i’s dependency on Federal monies and either supplement or supplant such at-risk federal social welfare programs as Social Security and Medicare.

Kale Gumapac, spokesperson of the Kanaka Council Moku O Keawe, witnessed a similar scenario at the Tulalip Reservation in Washington.  He says, “the benefits of gaming would be tremendous for the Hawaiian people in realizing health, social, and economic revitalization.

Carroll said, “With courageous and strong leadership, I think that this bill has the potential to vastly improve the lives of Native Hawaiians and the State at large.”

(Posted by Wendy Osher; supporting information courtesy Office of Rep. Mele Carroll)

Maui County to Publish Green Book Directory of Eco Conscious Businesses

Eco-conscious businesses are invited to submit their information for inclusion in The Maui County Green Book.  The publication is scheduled for release in May and will be printed on recycled paper with soy ink.

The guide is being created in partnership between the County of Maui and Haynes Publishing Company of Wailuku.  The directory will include eco-conscious businesses on Maui, Molokai and Lanai that provide sustainable, and, or, environmentally friendly products or services.

In addition to the printed version, The Maui County Green Book will also be available digitally in the form of a searchable, interactive web directory.

To have your company included in The Maui County Green Book, fill out the application available at www.mauicountygreenbook.com , describing products and, or, services offered.