Good morning folks and ALOHA!

Thanks for joining me here this morning. I’m so proud to present my State of the City address at the McCoy Pavilion.

We decided to hold it here for several reasons. Like every one of you, I have many great memories of coming to Ala Moana Beach to surf and stand-up paddle, and to have picnics with my sister Candy, who is here today, because it is a wheelchair accessible beach, and to take our daughter rollerblading when she was younger. It’s a very special place for those of us who live in Honolulu.

Did you know that one hundred years ago, this beach park didn’t even exist? It’s not a natural beach, but a man-made one, and it was started because Walter Dillingham had a dream. This area was first used as a place to dump dredged material from construction projects. The waters between the Ala Wai and Kewalo were once used for boat passage between the two harbors, but due to people’s demand for a swimming beach, sand was brought in and the beach park was built.

It is through the dreams of a community that places such as Ala Moana Beach Park, and in fact, whole cities, are built.

When I was serving in the House of Representatives, an elderly man used to come to my office and just sit on the couch, read the paper. I asked my office manager one day, "Who is that guy?" And she said, "Oh, that’s Najo Yoshinaga. He’d like to talk with you sometime, but he knows you’re busy."

Nadao Yoshinaga, or Najo as he was called, was a veteran of the famed 100th battalion and 442nd regimental combat team in World War II, a former State Senator and probably one of the most important political leaders in Hawaii’s modern history.

When we were a young State, Senator Yoshinaga helped shape the foundation on which we stand today, including establishing our landmark Prepaid Healthcare Law and the State Foundation on Culture and the Arts. His accomplishments were significant. So on the Opening Day of the Legislature in 2008, I decided that I wanted to recognize him on the floor of the House for all that he had done for us. Here is a picture from that day.

As we were riding down in the elevator to the House Chamber, I asked him, "Najo, looking back, is there anything you would have done differently?"

He stopped, looked me in the eye, and said, "I would have dreamed bigger." I will never forget his words of advice, and my dream is to build a city that thrives in the 21st century, with infrastructure that supports a healthy and high quality way of life for our people. Where we don’t forget the past, but carry it forward into the future, and I will work hard every single day to make Honolulu a better place, and to make this dream a reality.

THE PRIORITIES

Last year, in my first State of the City address, I outlined five priorities.

The first thing I want to do is give you an update, because this administration follows through on its commitments, and it’s important that I report back to you.

In my first year in office, here’s what we’ve done:

ROADS

The first priority was ROADS.

When I took office as Mayor, we set a goal to repave 300 lane miles of substandard roads per year for the next five years. Last year, we repaved 398 lane miles, exceeding our goal by more than 30 percent.

And, we’re going to keep pushing ahead. Already, this year, the city has repaved 66 lane miles, and if we keep up with this pace, we’ll exceed this year’s goal as well. In our upcoming budget, I am asking the Council to appropriate $140 million dollars for road repaving so that we can keep on track.

Wherever I go, people come up to me and thank me for repaving their road, or say they already see a difference in the condition of our roads.

I want to let you know that we are not going to slow down. I want to finish repaving all of our substandard roads in the next 4 years. On this, the community has spoken loud and clear.

I’m pleased to announce today that we’re starting the repaving work for Meheula Parkway the week of March 17th.

SEWERS

Fixing the SEWERS is another top priority. The city is now in the fourth year of a 25-year Global Consent Decree with the U.S. Environmental Protection Agency, and I’m proud to say we completed all of the third year milestones on time. We are finally fixing Honolulu’s sewers.

It may not be sexy, and you can’t see it. But, if we don’t rebuild and upgrade our sewer system, our health and safety is at stake, and we can’t thrive as a 21st century community.

We’re upgrading our sewer system so that the residents of Honolulu will have a safe and reliable system for generations to come. We finished the first 63 miles of sewers in June 2013, and we’re now working on the next phase, 81 miles of sewer lines, that will continue through 2020. The total cost will be about $4 billion dollars in upgrades, but it’s something we must do.

Last year, we worked on over 100 wastewater projects at our treatment plants, pump stations and collection systems, totaling over half-a-billion dollars.

We started construction on the second digester at the Sand Island Wastewater Treatment Plant. This will relieve stress on the first digester and support capacity for future development on Oahu, specifically for middle class housing in our urban core.

We also started work on the 3-mile long Kaneohe-Kailua Gravity Sewer Tunnel, a $360 million dollar project over 6 years. This will be the deepest gravity flow tunnel in the state, almost 400 feet below the surface, and it is a historic first. It will reduce the risk of overflows and spills on the Windward side, and save energy, too.

BUS SERVICE

We restored and improved service to nine bus routes last year, and I don’t want to stop there.

Public transportation is about social equity. It is the great equalizer for the people of our community, helping them get to their jobs, their shopping, and their medical appointments. It means giving people a way to get around town that is safe, affordable, and efficient.

In the upcoming budget, we’re proposing $20 million dollars in new or replacement buses and equipment, and for fixing bus stops.

The cost of operating our bus system is over $225 million dollars annually, and it’s heavily subsidized by City dollars. We need to find a steady revenue source that comes from somewhere other than the pocketbooks of transit riders and taxpayers.

That’s why I continue to support bus advertising because, as you can see, these are not billboards, which I will always oppose. I repeat, I will never support billboards on Oahu.

Bus advertising is something new for Oahu that will enable the city to enhance our bus system, and add new routes without placing the financial burden on all of you. The private sector will cover the cost. It’s a sustainable source of revenue that I ask the City Council to consider on behalf of the bus riders in your communities.

PARKS

Last year, I told you that our parks are Honolulu’s crown jewels, especially our iconic parks like Ala Moana. But we have over 300 parks and recreation areas on Oahu, and many of them need a lot of work. They are our communities’ front yards, and we should treat them as such.

Therefore, we are proposing $65 million dollars for operations and maintenance of our parks.

On a lean budget, that means using less water through more efficient sprinkler systems, and exploring different kinds of restroom facilities that stand up to vandalism and breakdowns.

We’re also proposing $39 million dollars for capital improvements to upgrade parks facilities, island wide, from Waimanalo to Waianae.

This includes $5 million dollars for work on Ala Moana Park, Thomas Square and a new cultural corridor that will extend from Thomas Square to the Blaisdell Center.

My administration is looking at potential public/private partnerships for these areas as a way to revitalize the park system in Honolulu. I’ll be announcing them in the coming year.

BUILD RAIL BETTER

My 5th priority was to build rail better. Not only did we re-start construction this year after successfully meeting our environmental requirements, I believe we did so with complete fiscal and management transparency.

It’s also great news that we have cleared all of our major legal hurdles, and while I can’t say we are forever out of the woods, the courts have given us the green light to go forward and complete the rail project.

HART, the Honolulu Authority for Rail Transit, has built more than 50 columns and 55 foundations, most of it since restarting construction last September when we had only 16 columns. They’re going gangbusters. By this summer, they expect to hit the one hundred column mark. By the end of 2014, more than 220 columns will be completed along the first 10 miles of the alignment.

HART has started construction of the train operations and control center, the nerve center of the entire system, near Leeward Community College. By March, the precast yard should be underway, producing roughly 12 guideway segments daily. The guideways are the spans between the columns, and the first guideway segment will be up by this summer.

The rail project has been great for our economy and is generating jobs. Nearly 1,000 people are employed and working on the planning, design and construction of the project, and in 2014, HART will be issuing contracts for work totaling more than $1 billion dollars.

We need the State to ensure on behalf of all of us on Oahu that the one-half percent surcharge on the General Excise Tax that goes toward the construction of rail is collected in a timely manner and in the full amount expected.

$1.55 billion dollars has been pledged to us for rail by the U.S. Department of Transportation, and we recently obtained the commitment of the next $250 million dollars from the federal government.

HOMELESSNESS

We started with these 5 priorities, but it’s always been clear that homelessness is a major problem that we must continue to address.

While the majority of homeless people are in shelters, the visual and physical impact of homelessness is affecting our businesses and neighborhoods, and generates more complaints than any other issue.

We must keep our streets, sidewalks and public spaces open and clean for the purpose they were intended, to be used safely by the public. At the same time, we also have compassion for those who are living without homes, perhaps with drug, alcohol or mental illness problems.

It’s a difficult balance to achieve.

Here’s what the city has been doing.

Based on complaints from our most impacted neighborhoods, the City has been clearing anywhere from 3 to 11 tons of items from city property every week.

Can you imagine what some areas would look like if the City stopped the enforcement and was not picking up tons of material every week? I know this would be unacceptable for all of us.

The only permanent solution to homelessness is housing and an effective support system.

Housing First is the model that clearly works best across the country. Housing First is about getting the homeless into housing immediately, without requiring that they be clean and sober. These are requirements that many homeless people are simply unable to meet without first getting help. Providing the homeless with a place to get stable, to feel secure, and to receive the services they need to get better is why Housing First works.

So, this is what we are going to do. I am including in my 2015 budget, a proposal to put $18.9 million dollars from the City’s Affordable Housing Fund into Housing First shelter programs.

In addition, I am asking for $3 million dollars to expand the City’s outreach efforts toward homeless people. $2.5 million dollars of that will be for wrap around services to providers who participate in the City’s Housing First program.

In addition, I want the providers, city and state, to work closer together.

I’m asking the providers to step up and lead the charge on homelessness, with the City and State providing the backup, funding and resources that are needed.

The providers must work in unison and place their efforts on Housing First rather than older, more traditional, models. The City should spend taxpayer dollars on programs that are proven game changers, and that get more people out of homelessness and into healthier lives.

These priorities will remain important initiatives. In addition, I’d like to tell you about two new ones.

TRANSIT-ORIENTED DEVELOPMENT

The first one is related to rail, and that is Transit Oriented Development.

I had the honor of welcoming President and Mrs. Obama when they arrived in Honolulu last December, and Mrs. Obama said to me: "I hear you’re building rail. That’s going to be a game-changer."

Development in communities around the stations is a big reason why rail will be a game changer.

In fact, I personally like the term Transit Enhanced Neighborhoods, because it’s a once-in-a-lifetime opportunity to design and recreate neighborhoods along the rail line.

That design will be driven by how people live, what people need, and what people want, while preserving what is best about our communities the lifestyle and the bonds of our neighbors.

As our keiki o ka aina President Barack Obama, has said, "Transit is not about getting someplace. It’s about building a better place."

If done right, rail will make it possible to build urban core housing for the middle class.

And, by focusing development along our urban corridor, we’ll preserve more open, green space in other areas of Oahu, such as the North Shore, the Windward Side, and the Waianae Coast.

The housing in these transit enhanced neighborhoods will be affordable for middle class working families like teachers, office workers, and young professionals, whose lives will be linked to where they work, play, and gather with family and friends.

That’s why I am putting $4.4 million dollars into our budget for planning, and $20.3 million dollars for complete streets, land acquisition for bus and rail hubs, multi-modal studies, and to plan the catalytic projects at Pearl Ridge and Kapalama transit stations.

BIKE LANES AND BIKE SHARE

Building new neighborhoods around the rail stations will help to reduce our dependency on oil and the automobile. For far too long, Honolulu has been a car centric culture. I want to build a transportation network for the 21st century and beyond, which includes supporting multi-modal thoroughfares for bikes, buses, pedestrians and vehicles.

It’s about building an infrastructure that will support the communities’ needs and values in the future.

To that end, we’re implementing two new initiatives.

One is Protected Bike Lanes, something we’ve never done before in the urban core. Protected bike lanes turn streets into places where bicyclists are welcomed rather than barely tolerated. They encourage people who may not ride a bike every day or may not feel comfortable competing with cars.

For the upcoming budget, I’ve included $1.4 million dollars for a bike plan and other bike lane improvements.

For example, I am committed to a protected bike lane on King Street, the major corridor between downtown Honolulu and the University area, and you will see progress on the King Street protected bike lane in 2014. That bike lane will be situated between the sidewalk and the parked cars, protecting the bike riders while preserving parking.

The other initiative is Bikeshare. In partnership with the State, the EPA, and private industry, I am prioritizing the creation of a robust Bikeshare program in Honolulu. This has been wildly successful in cities around the world, where bikes can be rented for short trips.

Honolulu is the perfect city, climate wise, for bikeshare. It also promotes good health, reduces traffic congestion, saves energy and reduces pollution. We’re actively planning for bikeshare. I’ve budgeted $1 million dollars for it, and you will be able to use it in Honolulu by the end of 2015.

ALTERNATIVE ENERGY

Finally, I am adding energy conservation as a priority.

I’m proud to tell you about a new project that we started last year as a pilot which showed exciting results.

We completed an LED street light conversion pilot which included replacing 180 old-fashioned street lights with equivalent LED lights. We confirmed that these new LED fixtures use 40% less energy while providing brighter directional lighting, which helps prevent crime and reduce accidents.

The initial projections show cost savings to be about $50 dollars per year, per light. For these 180 lights, that means a savings of $9,000 dollars annually. If we change all of the City’s 51,700 street lights, that could equate to a $3 million dollar annual savings.

We project that the savings will cover the cost of the investment in eight years, all the while reducing our energy needs. The lights also last longer which results in additional savings.

I announce today that given the success of this project, we set a goal of replacing all 51,700 City-owned street lights with LED fixtures over the next few years.

By the end of this year, we will select a proposal from the private sector to partner with on this project. As much as possible, I support public/private partnerships if they get the job done faster and are more cost effective.

We are committed to complete the conversion in about 4 years, to realize the cost savings and to reduce the City’s energy consumption.

BUDGET

I’ve shared with you a few of our budget requests as they relate to my priorities today. In a few days, I will be submitting to the City Council the administration’s total proposed budget for Fiscal Year 2015 that starts this July 1st.

This budget reflects my priorities and stays true to core services, which I believe is the critical function of any Mayor.

The first thing we did was to find savings… Right off the bat, in the current budget, we found $20 million dollars in savings after the budget was approved by the Council.

Next, we changed the budget process for the coming year.

For the first time, different from prior years, we produced a zero-based budget for next fiscal year.

This means we asked departments, wherever they could, to start from zero, and they were required to review and justify each expense.

Every single capital improvement project in the pipeline was prioritized based on current viability and funding amount. This has never been done before as far as we can determine.

For certain departments, we will be looking at performance-based budgeting in the future, just like they do in the private sector.

I am committed to reducing the size of government. Not to cut for the sake of cutting, but to ensure that we are striking the right balance between spending wisely and providing the best services for the people of Oahu. I really believe we can do this.

That’s why I’m announcing today that in the upcoming budget, we are deactivating 618 positions and cutting vacancies which is equivalent to $37 million dollars in position cuts.

This not only helps us in the short-term, but in the long-term it serves to reduce our massive unfunded liability for retirement and health care costs, which is a burden on all of us.

We will still need to find new sources of revenue, but they will be justified in order to provide the services expected and demanded by all of you.

We will tell you more about our Fiscal Year 2015 budget when we submit it to the Council on Friday.

CONCLUSION

When I was in Chicago last year, I met with Mayor Rahm Emanuel, who, prior to becoming Mayor of Chicago, served as President Obama’s chief of staff.

We talked about the challenges of managing large cities today, and we both agreed that the cities are now where things are happening and where things are getting done.

We’ve all struggled over the past 6 years to recover from the Great Recession, but it seems that the federal and state governments have been slower, perhaps because they are bigger.

With the gridlock in Washington, cities and metropolitan areas started to take things into their own hands.

Once cities started to get things done through their own initiatives and partnerships, they became the centers of action and creative power as well. Cities are now on the forefront of new initiatives all over our country, including Honolulu.

That’s why it is so exciting to be your Mayor.

I know I’ve said this many times before, but I really do love my job, and I love this city.

I’m proud and honored to be your Mayor.

I don’t want to look back at the end of my term and regret that I didn’t work harder or dream bigger.

I don’t want to let fear stop us from doing what needs to be done, or let politics stop us from doing what’s right. Lastly, I can’t do it alone. No one can. We need to work together; it’s as simple as that.

Mahalo for your time this morning. Thank you for helping to make Honolulu the best city in the world. I’ll see you around town.

Aloha!