It has been a precarious financial roller coaster when it comes to the Hawai‘i Convention Center. The latest nosedive came last week via news that the Hawaii Tourism Authority still owes $317 million in principal and interest for the project, which opened nearly two decades ago.
The staggering amount owed was a shocker, but equally upsetting was that the debt had been restructured a number of times — unbeknownst to at least a few key lawmakers of the House Finance and Senate Ways and Means committees.
“Critical decisions like that, because it’s such a large amount, because it has an impact on the bottom line for the state and for the Legislature, that warrants the involvement of the legislative branch as well,” said Ways and Means Chairwoman Jill Tokuda.
The convention center cost $350 million to build, which means HTA still owes more than 90 percent of what the center originally cost. What’s more, over the past two decades taxpayers have paid about $450 million toward the cost of the center.
Randy Baldemor, HTA chief operating officer since last year, argues the cost of the convention center is an “investment this community is making” for the state’s record-setting tourism industry. Even so, no project deserves to be exempt from accountability for a questionable financial scheme that spans far too many years.
Hints of the project’s shaky financial plan seem to have been there as early as 1999, when the former convention center authority restructured the debt to extend the repayment period to 25 years from 20, adding to the interest debt.
Then in 2001 and 2002, the HTA made no payment on the debt “because there was a certain degree of uncertainty on who owed the debt, between us and the Department of Budget and Finance,” said Marc Togashi, HTA’s vice president of finance.
In those two years the department made payments on the bonds that financed the center — and in 2011 state budget officials again restructured HTA’s repayment schedule, adding two more years of payments to recoup that money.
House Finance Chairwoman Sylvia Luke correctly said the debt and the payment history deserve more scrutiny.
If the current payment schedule stands, the center will be paid off in 2027. That’s more than three decades after payments began in 1995, for a convention center budgeted at $350 million.
The convention center might well be a valuable resource for the state, but 20 years in existence, it has yet to live up to expectations. The center has continually operated in the red, to the sum of about
$4 million per year. Under a new management team, however, losses are expected to lessen, to about $2.6 million this year, perhaps lower.
Managers appear to be moving the needle in the right direction, but bold steps will have to be taken for the convention center to become profitable.
To now learn there is more than a decade to go before HTA pays off its convention center construction debt is a huge disappointment. It should draw the public’s ire — and certainly, legislators’ scrutiny of past financial practices, as well as of options to reduce that debt.
