Waste + Fraud exposed on Hawaii Sunshine, Pricebusters Sale, More Rod Tam, Rate Hikes and Other Smart Business Hawaii News

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BY SAM SLOM – Hope you and your family had a wonderful Thanksgiving. Here we are in the final month of the year. Many will be glad to see the end of 2010.

The preliminary data show that there were modest retail increases on Grey Thursday, Black Friday, Small Business Saturday and Cyber Monday. Whew! Lots of shopping. That was a lot of marketing/PR and price cutting on loss leaders.


The UH Economists (UHERO) will release their newest state economic outlook on Friday. Meanwhile, forecasts nationally have been much more conservative. Recovery? What recovery?

Thursday there is an informational briefing in the State Senate’s Commerce & Consumer Protection Committee on the entrance of PASHA Hawaii into interisland cargo service. The briefing is open to the public (but no testimony) in room 229, State Capitol, at 9:30 am.

Monday, Hawaii gets a new Governor, Neil Abercrombie, and Lt. Gov., Brian Schatz, at noon, at Iolani Palace.
Many will shortly miss the Lingle-Aiona administration of the past 8 years.

Abercrombie named some of his 16 cabinet level nominees this week. They include community activist and former candidate for Governor, William Aila, to head the DLNR, and Senator Dwight Takamine to head the Department of Labor and Industrial Relations. Should be interesting. So will the remaining choices coming soon. All will face Senate hearings and confirmation.

Current Attorney General Mark Bennett, will head up a private law firm and specialize in complex litigation cases..

The Democrats in the State House were still playing “Let’s Make a Deal,” at this writing, in selecting their next Speaker. Calvin Say has held that post for many years but faces a serious threat to his leadership. Bet on him retaining his hold on the House. Nothing can be done till the House Democrats- 43 of 51 members-pick a leader. No calendar, no committee leaders, officers, or reapportionment commission selections. The Senate has been organized since a week after the election.

The final elected Board of Election members were sworn in Monday. The Legislature will formulate rules to allow the Governor to appoint future BOE members as a result of November 2nd’s constitutional amendment. Rules could come as early as March.

Yesterday, the Grassroot Institute of Hawaii (GRIH) unveiled a new web site that promises to revolutionize government accountability in Hawaii by revealing waste, fraud, and abuse of taxpayer dollars at the state and local level. GRIH president, Jamie Story, announced the new website, HawaiiSunshine.org which exposes line item details for more than $12 billion in state spending and transfers since 2008.

GRIH filed hundreds of open records requests to procure spending data from nearly every state agency, and has placed it online in an easily searchable database, for free use by interested citizens. Not only will taxpayers be able to investigate how their tax dollars are being spent, but they will also be able to report questionable spending using “Pork Alerts” and strategize with other users in the site’s discussion forum. Check it out.

ERT Sales of Hawaii, Inc., the owner and operator of the Price Busters and Let’s Party chain of stores in Hawaii, announced plans to sell substantially all of its assets to Retail Partners Hawaii LLC, a newly formed venture between The MacNaughton Group and Kobayashi Group.  The MacNaughton Group has extensive experience in retail operations including owning and operating Blockbuster Video, Starbucks Coffee, Jamba Juice and P.F. Chang’s in Hawaii. The Kobayashi Group is a Hawaii-based real estate development and investment firm specializing in residential, resort and commercial projects.  MacNaughton and Kobayashi have teamed up together on a number of successful projects over the last few years.

Honolulu City Councilmember Rod H.C.G. Tam pled guilty last week to two counts of Theft in the Third Degree, eleven counts of Theft in the Fourth Degree, and thirteen counts of Unsworn Falsification to Authorities. The Department of the Attorney General filed a complaint alleging that Tam, as a Councilmember, submitted false claims for reimbursements of meals during fiscal years 2007-2008 and 2008-2009.  Tam knowingly charged the City higher amounts than the actual receipts paid for the meals, and was therefore overpaid in reimbursements.

The amounts of the individual overcharges described in the complaint ranged from $8.00 to $267.55 and were incurred at various restaurants in Honolulu. Under a plea agreement with the Department of the Attorney General, Tam pled guilty as charged to all 26 counts. Sentencing is scheduled for January 27, 2011, before the Honorable Randal Shintani. Theft in the Third Degree and Unsworn Falsification to Authorities are misdemeanors punishable by up to one year in jail, a fine of up to $2,000, or both.  Theft in the Fourth Degree is a petty misdemeanor punishable by up to thirty days in jail, a fine of up to $1,000, or both.

Hawaii Attorney General Bennett and Citigroup Global Markets Inc. (Citi) announced that the State of Hawaii and Citi have reached a resolution concerning the State’s purchase of auction rate securities. The State currently owns approximately $869 million in such securities, which were the subject of auction failures beginning in 2008.  The State is currently earning interest on these securities, but the market value of the State’s portfolio has significantly decreased.  The State has already liquidated approximately $200 million worth of securities at par value since February 2008.

The agreement principally provides:

1) In June 2015, the State will have the option to require Citi to purchase some or all of the State’s remaining auction rate securities portfolio at par as well as to have Citi make up the difference between liquidation price and par on any of the State’s auction rate securities which have been previously involuntarily liquidated below par, which means the State’s taxpayers will lose no principal on any of the State’s auction rate securities investments.

2)  Starting in July 2012, the State will have the ability to obtain interim liquidity on its auction rate securities portfolio of up to $150 million worth of the securities, at market value, with the difference between that market value and par paid by Citi in July 2015.

3) The State has released potential claims against Citi and any affiliated entities or individuals in connection with its investments in auction rate securities, and Citi admits no wrongdoing.

Attorney General Bennett stated:  “These negotiations have been complex and difficult, but from the beginning the State and Citi worked hard to find a resolution.  I believe this settlement is in the best interests of the State, and provides substantial value to the State.  The State will essentially get back what it paid for these securities, plus interest collected on them.  The alternative-lengthy, expensive litigation-would have provided no certainty, and might, in the end, have been unsuccessful.  Bottom line-taxpayers will not lose out on the principal value of these securities, and that is a good result for Hawaii and its citizens.  I would like to commend Citi for this agreement, for the way it has approached this matter, and for its good faith efforts to resolve this issue.”

The Hawaii-American Water Co. notified state regulators in the Public Utilities Commission of another rate hike early in 2011 for sewer services provided to Hawaii Kai and Kuliouou. About 30,000 homes are affected; it is the only non-City, private sewer operator on O’ahu. The size of the rate increase has not yet been determined. Hawaii-American Water, is a subsidiary of New Jersey-based American Water.  In September of this year, the company started work to replace part of pressurized pipeline along Kalanianaole Highway and Lunalilo Home Road Hawaii-American Water’s last  rate hike was an average 8.4 percent interim increase granted by the PUC in October 2008. That  rate boosted the  sewer fee to $58.70 from $54.55  per month for single-family homes, and has yet to receive final approval from the PUC.

Two weeks ago I erroneously called for support of the UH Rainbow Warriors against UNLV; it was San Jose State! This Saturday, December 4, the UH football team, now ranked #25 in the nation, seeks its 10th victory (UH is 9-3 now) against UNLV. UH then appears on Christmas Eve in the Sheraton Aloha Bowl at Aloha Stadium, opponent yet to be named. (June Jones’ SMU Mustangs??)

There is no scheduled monthly SBH Sunrise Networking breakfast in December. Sunrise will return Thursday, January  27 at the Pineapple Room, Macy’s Ala Moana, 7-8:30 am.

There is still time to make good end of year business and financial decisions. SBH can help you with YOUR business. Just starting a business?  Call me personally for help at 808-396-1724 or email: SBH@lava.net. Smart Business Hawaii Means Business and we’re here to help you.