Distinguished guests, ladies & gentlemen, aloha and welcome. I come before you tonight to talk about our future, and to outline my priorities for our City for the next two years. For the first time ever, a mayoral address is being broadcast live on network television. I offer my thanks to the management of Channels 2 and 9 for making this historic event possible. Eight years ago, I pledged to undertake a crusade. A crusade to establish Honolulu as the most livable City in the world. Our first goal was to enhance the quality of life on Oahu. Through the hard work of thousands of community leaders and our city team — we’ve done just that. We have built new police and fire stations, expanded our police force, increased the number of firefighters, and we are now the safest City of its size in the U.S. with the lowest rate of violent crime. Our fire department is one of only a few in the nation to receive national accreditation. Our bus system has been rated the best in North America. We’ve helped build a better economy by rebuilding Waikiki and bringing back local families — we’ve expanded our sports tourism industry with the construction of our soccer and baseball complexes in Waipio and Central Oahu. And through our Environmental Summits and the development of our Asia-Pacific Urban Institute, we’ve started to diversify our economy into knowledge-based industries by establishing Honolulu as an international leader in environmental science and technology. And we’ve democratized City government through the process known as Community Vision — inviting people to help make the decisions that impact their neighborhoods. I’m enormously proud of our progress in these areas. Our second crusade sought to protect and preserve the environment, and that’s exactly what we’ve done. Since 1994, we’ve budgeted almost $1 billion for upgrades to our wastewater system. We have increased recycling by 66 percent. We’ve increased park space by 28 percent, and planted over 18,000 trees in our City. We’ve transformed a deteriorating Hanauma Bay into a world-class nature-learning center, and we’ve adopted Sustainable Community Plans that establish hard and fast urban growth boundaries. We’ve been able to accomplish all these goals because of our success in our third crusade, which was to achieve smarter more efficient government. We reorganized city government and cut the number of departments. We reduced the number of government employees by more than 8 percent. We cut CIP. And by doing such things as automating refuse pick-up, privatizing city services, and implementing e-commerce, we have been able to increase services, while at the same time, dramatically lowering property taxes. In fact, since 1994, we’ve given property taxpayers $348 million of property tax relief; and we are running our City this year with property tax revenues $49 million lower than they were back in 1994. As a result of these initiatives, and others, we have been nationally recognized as having the best City website in the country, being the No.1 City in the nation for use of technology in the delivery of government services, and for being one of the 10 best managed cities in the United States. Proud as I am of how far we’ve come in the last 9 years, this is no time to rest on past accomplishments. Tonight, I renew my commitment of service to the people of Honolulu. And I ask for your support and partnership in tackling the important work that lies ahead. We stand this evening on the threshold of a new beginning for our island. A time of change. A singular moment when extraordinary opportunities are within our reach, if only we have the courage and vision to seize them. Waikiki can become a pedestrian oasis of natural beauty and Hawaiian culture. Our downtown can be a vibrant waterfront City with waterfront dining, shops, and bike paths, if the traffic is diverted through a Harbor tunnel. Aiea, Pearl City and Waipahu can be transformed into beautiful waterfront towns by relocating the warehouses and strip commercial that currently block those communities from the sea. We can protect our open space and produce more of the food we consume by reestablishing an agricultural industry. We can redo the Barbers Point plan, and working with President Dobelle, we can make Kapolei a vital university town. We can become a center for environmental and biotechnology and export our knowledge instead of just importing tourists, providing our children with professional jobs as scientists, engineers and doctors. Our island can be the international model for sustainability. Our City can shine among the great cosmopolitan cities of the world. The only thing that limits our horizon is the boldness of our vision. The only thing that limits our potential is our discord. We can achieve greatness if we can achieve unity. If we work in partnership, all our dreams can be realized. Those who criticize creativity and promote discord must not win! We must have a higher purpose — we must aspire to more than the failure of our opponents. We must aspire to the success of our society. The challenges we face are too urgent. Nothing must stand in the way of our City’s quest to reach its fullest potential. So tonight I call upon citizens and colleagues, both in and out of government, to join me in renouncing petty, partisan politics. I pledge my administration’s constructive cooperation in working with Governor Lingle, the Legislature, and with our new City Council. A year ago I spoke of our vision to make Oahu a sustainable island — a place where precious resources are recycled, energy efficient transportation systems link safe and clean communities, and a diversified economy provides stable jobs for our people. Less than two weeks ago, more than a thousand citizens came together with City, State and University leaders. We discussed island-wide sustainability in five key areas: economy, transportation, land use, energy and natural resources. Over the next 10 months, we will work in partnership with the University of Hawaii, the City Council and the community to put in place an action plan to achieve that goal. Tonight, I’ll outline some of the critical choices our city is making to set the stage for our sustainable future. ‘Economy’ Lets look first at our Economy. For our City to be sustainable, we must have a sustainable economy. The City’s recent revitalization of Waikiki was designed to make our visitor industry more sustainable. Today we see a glimmer of what Waikiki is destined to become — a beautiful place to live and visit — a Hawaiian place, rich in culture and history. But much more needs to be done if we are to fully realize Waikiki’s potential. Therefore, in the coming year, in partnership with the residents and the WIA, we will begin implementing the Livable Waikiki Plan by making major pedestrian improvements to Kuhio Avenue and by landscaping the Mauka-Makai avenues of Waikiki. And once the dredging has been completed by the State, we will begin transforming the Ala Wai Canal into one of Waikiki’s most precious resources. I envision this valuable waterway becoming the center for outrigger canoe activities, as well as a place where residents and visitors can enjoy small boats, take part in cultural activities such as Toro Nagashi, or simply enjoy beautifully landscaped bike paths along the water’s edge. I look forward to working in partnership with the Waikiki community to make this vision a reality. And to encourage the appropriate redevelopment of rundown areas of Waikiki, we’ll work with the community to revise the Waikiki Special Design District Guidelines. For the tourism component of our economy to be sustainable, tourism must enhance, not ruin the natural environment and the Hawaiian culture people come here to experience. Therefore, to protect our economy for the long run and to make our visitor industry more sustainable, I propose that each year we invest 10% of our Hotel Room Tax receipts in environmental and cultural enhancement programs. We must give back to this special place. Sports tourism is another area that offers tremendous promise for the sustainable growth and diversification of our local economy. Using the City’s Waipio Soccer Complex, the AYSO National Tournament brought more than $8 million into our economy last year. This year, the United States Youth Soccer Association’s tournament, and the U.S. Soccer Federation’s National Veteran’s Cup will bring in over $10 million. Our Central Oahu Regional Park, is attracting international and national visitors to our island. Three Korean professional baseball teams train at our baseball facilities. Next month, the 20 court tennis complex will open and host the USTA National Junior Tennis Championships, and serve as the home court for the University of Hawaii Women’s Tennis Team. This year our new softball complex will host three Western Regional Tournaments, and three Junior Olympic Tournaments, attracting both national and international teams. These successes in sports tourism are part of a broad strategy to market the City’s facilities to an international field of athletic organizations. This week I introduced an ordinance to the City Council allowing us to generate revenue from the use of our parks for commercial events. We will also seek proposals to privatize the maintenance and other selected operations at our sports facilities. Our true economic destiny is to be a center for knowledge based industries for the Asia Pacific region. We have developed the Asia-Pacific Urban Institute and established the Mayor’s Asia-Pacific Environmental Summit to position our City as a world leader in environmental affairs and urban technology. This summer Honolulu will host the third Mayors’ Asia-Pacific Environmental Summit with the support of the Asian Development Bank. In the space of just a few years, this prestigious gathering of urban leaders and environmental experts has brought international acclaim to our City as a center for highly specialized knowledge about urban environmental challenges and solutions. As a result of these initiatives, I am happy to announce that the United Nation’s sanctioned World Trade University has selected Honolulu as the site for its Pacific location and is developing its programs with HPU. The World Trade University will also utilize the City’s Asia-Pacific Urban Institute to conduct executive seminars for Asian leaders. ‘Land Use’ Respect for the land is one of our core values. In order to protect our open space, keep the country, country and stop the spread of urban sprawl, we have developed sustainable community plans and established urban growth boundaries. But to truly protect our important agricultural lands, I will urge the new City Council to pass Bill 36, to keep 87,000 acres of these lands in agriculture in perpetuity. With the demise of plantations, tens of thousands of acres of our prime agriculture lands in Central Oahu lay fallow. Our challenge now is to get these lands into productive agricultural use. The first step is to get the land into the hands of farmers. So in the coming weeks, I will meet with the large landowners of these fallow acres to encourage them to provide long-term leases to farmers. Farmers who are willing to make the land productive once again. For diversified agriculture to be successful, the land must have affordable water. Therefore, this year we will provide additional upgrades to our Wahiawa wastewater treatment plant so that this clean recycled water, as well as the water in Lake Wilson, can be used to irrigate a variety of new crops. ‘Transportation’ Nothing can cripple an economy and erode the quality of life more than traffic congestion. To improve the livability of our urban core, we need to improve mobility in our urban core. Therefore, this year, after years of planning, we will move forward with the construction of our Iwilei/downtown to Waikiki transit system. Dubbed “The Hart of Honolulu”, it can be operational in two and a half years. But, we also need to move forward on a regional transportation system for the commute between Leeward, Central Oahu and downtown. We simply waste too much time in traffic jams. Time better spent with family. Therefore, we’ll work with the City Council, the Governor, and the Legislature to create a political consensus for a regional transportation system to ease that commute. But we must move quickly, 32 years have been spent on studies — it’s time for action. And continuing to rely on fossil fuels for transportation simply isn’t sustainable. We need to use technologies that don’t produce air pollution and greenhouse gases, and that don’t rely on foreign oil. My goal is to transform our award-winning bus system into the first fuel cell powered fleet in the world. This technology promises to transform our world, and Honolulu will be one of the cities leading the way. Other high-tech improvements to our transit system are also on the way. For greater efficiency and customer convenience, we will implement smart card technology for the Bus. You will soon be able to buy a smart card that could be used as a bus debit card, or as an annual pass or monthly pass. And you won’t even have to take the card out of your purse or wallet when you step aboard. The bus will automatically and electronically debit your card — or read your pass. And this year’s Transportation improvements will extend to bikes, as well as buses, as we use our Bike Fund to implement our Bike Master Plan. ‘Sustainable Energy’ For decades, we have become more and more energy dependant, and much of that dependence was linked to imported oil. We need to become more sustainable in this area by reducing our energy demand and increasing our use of renewable resources. Last year, I signed a new City Energy Code into law, mandating energy efficiency in all new construction. That change is projected to save over 300 million dollars in energy costs over two decades. But, we can do better, and I will work with the City Council to update the code and save even more. One of our goals is to reduce the demand for energy in City facilities by 50 percent by the year 2010. Good building design and the right materials can also bring us closer to energy independence. As new City facilities are planned, we will apply new environmental design standards, and we will provide all developers with green building guidelines. And we will use our federally funded Rehab Loan Program to bring solar water heating to low and moderate income families in a public-private partnership with Hawaiian Electric and the Hawaii Solar Industry Association. And this year, 60% of our maintenance diesel-powered fleet will use biodiesel fuel, made from recycled vegetable oil. This reduces our fossil fuel diesel demand by 20 percent. ‘Natural Resources’ As island people, we understand well the reality of finite natural resources. If we are to make our island more sustainable, we have to change from a pattern of consumption and waste to one of conservation and reuse. Recycling is an important part of the City’s quest for sustainability. In 1994, the City recycled no bio-solids at all. Last year we recycled ten tons per day in a composting partnership with the U.S. Navy. Our goal is to increase that by another 20 tons per day by 2006 through another public-private partnership. This new recycling plant at Sand Island will be under construction this year. Back in 1994 we recycled 300,000 tons of municipal solid waste. Today we are recycling 500,000 tons per year, or 33% of our waste. An impressive increase, but we can do more. While many of our residents recycle their refuse at our school recycling centers, most do not. Therefore, to significantly increase household recycling, I’m pleased to announce that this year, we will initiate a program for monthly door-to-door curbside recycling and a twice a month automated pick-up of recyclable green waste. These services will be in addition to our regular twice a week refuse pick up. Most of the refuse that can’t be recycled is now turned into electricity at H-Power. At the City Council’s request, we are just completing a study to determine if other new technologies, such as plasma torch, could be used to dispose of our non-recyclables and generate energy. Within two weeks, we will issue a Request for Proposals to the private sector to provide a full service contract to finance, design, construct and operate a facility using cutting edge technology such as this to handle our waste. We will also issue a Request for Proposals for other private companies that want to become tenants at the City’s new recycling technology park, processing our municipal solid waste into marketable products. All of these initiatives are designed to eliminate the continual need for municipal solid waste landfills. In the last 9 years, we have budgeted over $942 million dollars for wastewater system upgrades. In the coming year, we will budget nearly $100 million in additional funds to continue these improvements. ‘Financial Sustainability’ This year, as in year’s past, we have a budget challenge to meet. This is not unfamiliar territory for this administration. And this year, as in year’s past, I will submit a balanced budget to the City Council. Each year between 1994 and 2002, real property values?the foundation of our revenue?plummeted. Each year we faced huge budget shortfalls. To offset those drops, we rolled up our sleeves, reorganized government to make it more efficient, reduced our workforce by leveraging technology, formed public-private partnerships and held the line on spending. Our goal was to keep taxes low and to keep money in people’s pockets. And that’s what we’ve done. Here are the facts about our City finances: *Considering inflation, our City operating budget this year is almost exactly what it was 9 years ago; *Since 1995, our City construction budget has on average been $100 million dollars a year less than the budgets during the first half of the 1990’s; *We are running the City today with 8% fewer government employees than it took to run the City in 1994; *We have provided real property taxpayers on this island with $348 million dollars in property tax reductions since 1994; *And property taxes this year are $49 million dollars lower than they were in 1994; *Since 1994, we have shown great fiscal restraint. We did not spend over $1.1 billion dollars of operating and capital money that was appropriated by the various City Councils for expenditure; *Because of our good financial management, we have earned an AA bond rating from the National Bond Raters — putting us in the top 15% of the best American Cities. And we’ve been rated nationally as one of America’s 10 Best Managed Cities; *Despite having less revenue, we have increased City services in almost every sector — more Police, more Firefighters, more Parks, more refuse service, more buses, more Satellite City Halls; *Not only have we expanded services, but we’ve done it with excellence — winning national acclaim in almost every area. Am I proud of our City team for these amazing accomplishments — you bet I am. As these facts attest, Honolulu doesn’t have a spending problem — we have a declining revenue problem. Obviously, we can’t continue in perpetuity to provide more services to a growing population with less taxes than we took in 9 years ago. Therefore, for the 2004 FY budget, we will propose modest increases in property tax rates, but we will still strive to keep property tax revenues below what they were in 1994. I’ll also submit a 2004 CIP budget that is over $100 million dollars smaller than the current budget. We are looking well beyond the fiscal year ahead. We want to develop reliable sources of revenue for the long-term, more efficiencies in operations, and a framework that fairly distributes the cost of services to those who benefit–both resident and visitor. While I’ll unveil our complete plan for fiscal sustainability in March, I would like to briefly touch on several of its major components now. The first is to eliminate unnecessary programs. Four years ago, we decided the City should not be in the housing business, and we eliminated the Housing Department. However, today the City still owns and manages over 1,200 rental housing units. I propose that the City sell these units to appropriate non-profits and eligible owner occupants, and retire the $120 million dollars of long-term debt associated with this housing. The second component of the plan is to privatize more City services. Currently over $230 million dollars of the City’s annual budget is privatized. I believe we can save money by privatizing additional services. Therefore, I will be proposing the privatization of the Waikiki Shell, the Blaisdell Arena, the Honolulu Zoo, and the maintenance of the Pali Golf Course, as well as the maintenance of certain parks. President Dobelle has advanced an exciting idea to transform the arena into a San Francisco type exploratorium. A third component of the Plan is to maximize the return on City assets and facilities. Changes include bulk marketing of tee times that now go unused at our less popular golf courses, and expanding golf course food concessions into full restaurant operations. And we will pursue a partnership with H.P.U’s Ocean and Marine Science Program for evening use of our Education Center at Hanauma Bay. These are just few of the initiatives we will propose in the coming weeks. But in order to provide for true fiscal sustainability, we need to realign the boundaries of responsibility and authority between the City and the State. We must have control over our own finances. To help achieve this, last week we presented a package of bills to the State legislature. Once enacted, they will provide our City with true financial home rule and the ability to achieve financial sustainability. Tonight it’s been my honor to talk with you–to share Honolulu’s triumphs, to sketch possibilities for the future S? and to thank you for your many contributions to our great city. It’s a privilege to be your mayor, and I’m especially proud of all we’ve done together. We’ve made remarkable progress, and I look forward to our achievements yet to come. Together we can take our vision to another level, to look beyond the short-term horizon and the daily problems that confront us to broader, more important issues. It has been said that the quality of life is not just about the place where we live, but about how we live. And so tonight I ask that you join me as we forge new partnerships and long-term commitments. Commitments that will leave our children a cleaner, more beautiful and vibrant city — a place of greater hope and opportunity. This is the time to put our differences aside. This is the time for all to come together and focus on our future. This is the time to answer your community’s call. Thank you and good evening.