July 2015 E-Mail Update

Here is our 7/10/2015 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website.
Oahu’s June median sales prices in March were $700,000 for single family homes (same as June 2014) and $338,500 for condos (6.0% lower than June 2015).  Sales price increases remain relatively tame even though inventory remains tight and demand was strong.  There is currently 3.2 months of remaining inventory for single family homes and 3.5 months of remaining inventory for condos.

The U.S. Army has announced that it will reduce the number of soldiers stationed at Schofield Barracks and Fort Shafter by 1,443 over the next two years as part of its 40,000 active-duty force reduction nationwide.  Since three of Hawaii’s four members of Congress are relatively new and were not in office when sequestration was passed, they quickly tried to distance themselves from the economic impact that the reductions will have on Oahu communities.  U.S. Senator Mazie Hirono, who voted for the Budget Control Act of 2011 as a member of the U.S. House of Representatives, tried to deflect criticism by calling for an end without proposing budget cuts elsewhere.  Hawaii’s military presence helps provide a floor under market rents in neighborhoods near military bases.  Market rents, and in some cases sales prices, do tend to drop when force reductions occur like they did back in the 1990’s.

The USS Arizona Memorial reopened for visitors on Friday, June 5th; nine days after the USNS Mercy damaged the memorial dock while leaving Pearl Harbor.  U.S. Navy divers, the Seabees, Air Force civil engineers, crane operators, and safety inspectors have been working night and day since the damage occurred to complete the repairs.  Demand for tickets was high since visitors have been unable to see Oahu’s #1 tourist attraction for nine days.

The shareholders of Hawaiian Electric Industries, Inc. have approved NextEra Energy’s $4.3 billion purchase of Hawaiian Electric.  The deal still has to receive approvals from several regulatory bodies including the Hawaii Public Utilities Commission, and the U.S. Securities and Exchange Commission before the merger can be finalized.

Kualoa Ranch has signed a letter of intent to lease heavily discounted agricultural land at Kawailoa Plantation that will also be home to a 50 MW solar farm to raise sheep for local consumption.  SunEdison received authorization to build the project on June 9th.  The height of the Photovoltaic panels allows sheep to graze underneath.  Grazing on solar farms has been already been established on Kauai, in parts of the United States, and in Europe.  Parker Ranch’s Paniolo Cattle Company would also like to expand their operations beyond the Big Island and raise grass fed cattle on an adjacent piece of land.

A wave energy device has been deployed in waters off the Marine Corps Base Hawaii in Kaneohe to begin a one-year test in the hopes of commercializing the technology.  The grid-connected device is the first to be tested and validated by an independent third party.  The University of Hawaii is responsible for the data collection, analysis, and reporting.  In addition to evaluating system performance, Northwest Energy Innovations looks to more accurately assess costs and annual energy production.

Competition in the shipping sector has heated up with Pasha adding a dedicated Los Angeles to Hawaii shipping route that leaves Los Angeles on Wednesday and arrives on Sunday.  Increased competition with Matson should be a win for local businesses and consumers.

PVT Land Company, Oahu’s only construction and demolition debris management facility on Oahu plans on expanding the West Oahu facility’s recycling and feedstock generation operations.  The company has changed its focus from landfill operations to recycling over the past ten years.  The proposed expansion would allow the company to increase capacity over 60%, provide enough renewable energy feedstock to supply 20,000 homes with electricity, and recycle up to 120 tons of material per day.  PV already supplies power to the offices and the company plans to add solar panels to closed areas of the landfill operation that have been closed to replace a fossil fuel generator that powers the recycling operations.

Hawaii has recently ranked the worst state to do business according to CNBC for the second time in the past three years.  Hawaii was ranked 49th last year before falling to the bottom once again.  Major factors in earning the dubious ranking included the high cost of doing business, the high cost of living, poor infrastructure, poor performing public schools, and a business unfriendly regulatory environment.

Governor David Ige signed into law legislation that allows Maui’s state-owned hospitals to enter into a public-private partnership to help ease the budget woes of Hawaii’s state run hospital system.  The Maui hospitals recently announced $28 million in cuts to jobs and services at the state run facilities.  Hawaii Pacific Health and Kaiser Permanente Hawaii have expressed interest in entering into a partnership.  The partnerships should improve services since the private hospital providers are further ahead in their implementation of electronic health records and data systems and they have more efficient workforce models.  In return, the private partner will be able to lease the facilities at $1 per year and seek up to $32 million annually for operations.

The imminent passage of a bill to allow and regulate medical marijuana dispensaries in Hawaii is creating a lot of excitement.  Even though medical marijuana has been legal in Hawaii for the past 15 years, patients that receive prescriptions had to grow marijuana themselves since there was no legal mechanism to purchase it.  The bill will become law on July 14th unless Governor Ige signs the bill into law prior to that date.  A three-day Hawaii Cannabis Business Expo is scheduled to begin on July 17th.  Companies from several states are expected to submit applications for the dispensaries on January 12, 2016 when the state will start accepting applications.  The state has just six months to adopt administrative rules when it normally takes the state two years to adopt new rules.

Now that Kilauea’s immediate lava threat has subsided, Big Island residents and businesses can once again apply for property insurance from the Hawaii Property Insurance Association (HPIA).  The HPIA was created to insure homes in high-risk areas like Pahoa, the neighborhood that was almost cut off from the rest of the Big Island by a lava flow earlier this year.  The Hawaii Insurance Commissioner is encouraging those residents in high-risk areas to take advantage of the opportunity now that the moratorium on new policies has been lifted.

Drama continues to unfold on the summit of Mauna Kea as protestors try to block construction on the Thirty Meter Telescope (TMT) after Governor David Ige stated that the project completed all necessary steps to move forward.  Protestors placed rocks and stone altars on the road to block construction crews and their equipment on June 25th and arrests soon followed.  Protestors had agreed to move the rocks on the road on the following day and the altars were removed over the weekend.  Tourists have recently been unable to reach the visitor center as the protestors continue obstructing access to the summit.  Hawaii’s Attorney General is prepared to take all lawful steps necessary to reopen the Mauna Kea access road and states:  “Deliberately building a rock wall in the middle of the road without warning threatens public safety.  Purposely placing boulders in a road could get someone killed.  Commercial activities and camping in this protected area without a permit are against state regulations.  This is not a statement against the content of the protest, but the conduct.”

Protestors on Maui, apparently taking notes from their Big Island compatriots, have blocked equipment from being transported to the Daniel K. Inouye Solar Telescope at Haleakala.  The telescope has been under construction for more than two years.

The University of Hawaii law school, the Hawaii State Judiciary, and environmental groups launched the state’s environmental court on July 1, 2015.  The Hawaii Supreme Court chief justice will designate one or more environmental judges for each circuit and for a district court for each circuit.  The court will hear cases involving historic preservation, litter control, recycling, solid waste, safe drinking water, air pollution, and environmental impact statements.

The University of Hawaii received one of 15 $750,000 grants from NASA for research in remote sensing, nanotechnology, astrophysics, and aeronautics.  The three-year award was granted to develop Unmanned Aerial Vehicle (UAV) observations of active volcanoes.  The goal is to determine how lava flows change in terms of topography and gather information on gas flux from volcanic plumes.   The science should provide Big Island officials a better understanding of lava flows from the active Puu Oo source as well as health and safety standards.  NASA will assist UH in its training to receive certification from the Federal Aviation Authority to fly the UAVs or drones with attached research instruments.

A partnership between Waianae Coast Comprehensive Health Center and the A.T. Still University School of Osteopathic Medicine in Arizona graduated nine more doctors in its fourth year of operation.  Medical students may participate in clinical rotations on Waianae, the neighbor islands, American Samoa, Beau, New Zealand, Nepal, France, or Africa where they receive hands-on experience in addition to academic study.  The program aims to train and recruit doctors to serve in rural and underserved communities with a focus on outpatient services rather than services performed at hospitals.  Several graduates have returned to Hawaii after completing their residencies.  One doctor just joined the Molokai Community Health Center.

Elected officials at the City and County of Honolulu appear to be getting desperate in their attempts to deflect criticism of the traffic mess in Waipahu, Pearl City, and Aiea.  The headline in the local section of the Star Advertiser exclaims, “Firms can cut traffic, official says.”  City Councilman Brandon Elefante introduced a resolution to urge public and private employers to sponsor van pools, subsidize bus passes, and provide flexible schedules.  The Star Advertiser acknowledged that the measures were not feasible for most small businesses just striving to stay in business.  Tim Kelley had the pleasure of driving along Kamehameha Highway in Pearl City at lunchtime on a June weekday and experienced the lane closures due to rail and other city projects.  He was happy that he had an all-wheel drive Subaru to navigate the “off-road” conditions on one of Honolulu’s major roadways.  The pain and suffering for West Oahu commuters has just started and will continue for the foreseeable future.

The federal government has warned the state that federal funding for highway projects may get pulled if the state does not start construction within 180 days from the time the federal government commits funds for each project.  It currently takes the state of Hawaii about 270 days on average to start construction once funding approval is received while nine other states start construction in 80 to 100 days on average.

HomeAid America, a national nonprofit organization, has partnered with the Building Industry Association of Hawaii to develop housing and shelter for Hawaii’s homeless population.  HomeAid America uses private capital to build shelters and identify nonprofits to run the shelters once built.  HomeAid America has built 440 multi-unit shelters throughout the United States over the past 26 years.  Hawaii has the highest rate of homelessness in the nation, twice the national average.