The director of the state Department of Business, Economic Development and Tourism is calling for a timeout, and said he does not recommend replacing the Hawaii Tourism Authority’s top leader before the next legislative session starts.

Current HTA President and CEO John De Fries’ decision not to agree to a renewal of his contract, which is ending Sept. 15, was announced June 15 by HTA board Chair George Kam following a more than two-hour executive session during a special meeting of the board.

HTA Chief Administrative Officer Daniel Naho‘opi‘i will serve as interim HTA president and CEO and will be assisted by HTA Chief Brand Officer Kalani Ka‘ana‘ana and HTA Vice President of Finance Isaac Choy.

The HTA board has not discussed its transition plan outside of closed-door executive sessions. However, DBEDT Director James Kunane Tokioka spoke about the transition during the Honolulu Star- Advertiser’s “Spotlight Hawaii” livestream program June 23 — which preempted a June 29 HTA board meeting, where another executive session was held.

During the interview, Tokioka said, “Let’s just do a reset and figure out what it’s going to take for the Legislature to trust the authority moving forward. We wouldn’t want to hire someone and that person starts the job, comes in and the job no longer exists. That wouldn’t be fair to anyone in this community.”

Tokioka said, “That could change if there is a voice to give us the green light to move forward.”

However, he emphasized, “That’s not my position to name a new (president and CEO) before the legislative session starts.”

Kam told the Star-Advertiser on Sunday, “Director Tokioka has made his wishes known, and those things will be taken under consideration with the full board at the appropriate time.”

Kam added that an HTA board-permitted interaction group is slated for this week to discuss moving forward on a third-party study to determine the best governance model for HTA.

“I think it will help stabilize a lot of things,” he said.

During this year’s legislative session, HTA became caught up in a crisis of confidence that threatened its very existence. If House Bill 1375, introduced by state Rep. Sean Quinlan (D, Waialua-Kahuku-Waiahole) along with other House members, had not been deferred, it could have repealed the HTA in favor of establishing an Office of Tourism and Destination Management within DBEDT.

While HTA was saved by the deferral, it was left without funding as its operational budget was not in the final version of a state budget bill. Lawmakers, however, did open the door in the final days of approval for the state budget bill for HTA to petition for money from the state Budget and Finance Department.

It appears that HTA will receive $71 million, enough to fund its obligations, including $11 million for the Hawai‘i Convention Center.

However, the agency is continuing to lose posture, especially now that Gov. Josh Green, Tokioka and some members of the state Legislature are publicly calling for changes that historically have been board decisions.

In a “Spotlight Hawaii” interview on June 16, Green said, “It’s not like I’m pointing a finger at anybody, but it’s no coincidence that the HTA, the (Board of Education) and the (University of Hawaii Board of Regents) are all getting some change in their leadership structure, because I can’t have these entities be in conflict with the Legislature and then see underfunding for our university, our schools or the tourism efforts that we have to make.”

Green said he thought HTA’s De Fries had done “good work,” but added, “We had to make change at HTA because frankly, it was about to get dissolved completely, and that was a problem so much so that I had to come over the top to fund the (tourism) contracts.”

When asked about De Fries’ replacement, Green said, “I still have to leave that up to the HTA board.”

But Green said he does have two interim HTA board appointments to make and that Tokioka will be one of them.

DBEDT officials said Friday in an email to the Star- Advertiser that lawmakers in 2022 again made the DBEDT director, or the director’s designee, an ex- officio voting member on the HTA board per the Hawaii Revised Statutes. However, they said a DBEDT director has been unable to serve up until this point because the HRS state that the board of directors shall consist of 12 members, and a member has to come off first.

DBEDT department officials said the director, or a designee, is an ex-officio voting member on a number of boards or authorities of its administratively attached agencies, including the Agribusiness Development Corp., Hawaii Community Development Authority, Hawaii Green Infrastructure Authority, Hawaii Housing Finance and Development Corp., Hawaii Technology Development Corp., Natural Energy Laboratory of Hawaii Authority, Small Business Regulatory Review Board and the Stadium Authority.

“It is anticipated that Governor Green will announce new HTA board members in early July. An ex-officio member would not require senate confirmation to serve on the HTA board,” the officials said. “Additional responsibilities have been placed on HTA’s management team and Director Tokioka and his team, who will be working closely with HTA’s board of directors to improve the communication and to rebuild confidence with the Legislature.”

Quinlan, chair of the House Committee on Tourism, said Tokioka’s recommendation to wait to replace De Fries is practical, “partially because we have taken a lot of (HTA’s) independence away.”

“It feels to me like the Legislature is really driving the bus much more so than in the past because we are funding them from a budget proviso,” he said. “We are really exercising a really fine degree of control over their operations, I just don’t think it would make sense to bring in a brand new CEO.”

Quinlan added that he had “a lot of faith” in Naho­‘opi‘i, Ka‘ana‘ana and Choy.

Keith Vieria, principal of KV &Associates, Hospitality Consulting, said he also has faith in Tokioka, who came from the hospitality industry ranks.

“As far as James, he’s a good guy; maybe being on the HTA board will help things move along,” Vieira said. “When I look at the fiasco that we had with (former DBEDT Director) Mike McCartney and his procurement interference, it gets a little scary, but James isn’t Mike.”

Still, some HTA supporters are citing governmental overreach in the wake of Toki­oka’s recommendation for a reset, and Green’s decision to make Tokioka a voting member of the HTA board.

Others noted that Toki­oka’s role on the HTA board could create a conflict of interest given that he is HTA’s head of purchasing agency, a major role in state procurement.

DBEDT department officials said, “As the HOPA, Director Tokioka would not participate in any of HTA’s evaluation committees so he could still have the ability to resolve procurement conflicts. If there are any foreseen conflicts of interest, he would have the option to recuse himself.”

Another fear among HTA supporters is that a lengthy period without a permanent top leader could make it challenging for HTA to prove its usefulness to state lawmakers. Last session, some of the most critical lawmakers questioned why the agency was even needed given the huge role that McCartney played in HTA procurements for the U.S. tourism contract, which had to go to a third round.

Quinlan told the Star- Advertiser, “That’s a very fair point to make. Maybe there are other people who wanted HTA to prove themselves in different ways. I never felt that way. I think that HTA did its mission as they were intended to do, which was to bring in lots and lots of visitors. I don’t need them to prove anything to me. I want to update their mission to better reflect current trends and what our communities want.”

Quinlan said his preference heading into next session is for HTA to stay an independent agency; although he said there are varying viewpoints among lawmakers.

“My goal is still very much to fix HTA in place as it stands. If that means changing their governing statutes, than we’ll change their governing statutes. If that means updating things, then we’ll update them,” he said. “My thing is we need destination management, I insist upon it.”

Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, said it’s hard to say what the latest developments mean for HTA’s future.

“But considering the Legislature virtually defunded the agency over its past two sessions, perhaps it’s time to recognize why Hawaii doesn’t need such an agency anyway,” Akina said. “After all, the industry’s major players are more than capable of funding and guiding the future of tourism on their own.”

“In addition, if we really want to diversify Hawaii’s economy, we need to stop interfering in the marketplace and expand economic opportunities outside of the state-supported tourism paradigm,” he said.