XVII. DEPARTMENT OF RESEARCH AND DEVELOPMENT

ROLE AND DUTIES

The Department of Research and Development is charged with the responsibility of promoting economic development in Hawaii County and collecting and developing data for decision making, program development and policy making. The department's focus encompasses numerous programs which include tourism, agriculture, new industry and industry development and research and statistics. The state funded energy coordination program as well as the emerging film industry also fall within the department's responsibilities.

STAFF

The department is staffed with two appointed personnel:

Diane S. Quitiquit, Director

Elaine K. Fukui, Private Secretary

four permanent personnel:

Howard I. Nakamura, Economist II

Margarita L. Hopkins, Economic Development Specialist III

Colette Rapozo Yamamoto, Resource Materials Specialist

Lorilei L. Andrade, Account Clerk

one temporary personnel:

Jodie Keenan Batin, Clerk Typist

and a state funded personnel:

Raymond G. Carr, Economic Development Specialist III

(Energy Coordinator)

Tourism

Headed by Director Diane S. Quitiquit.

Agriculture

Headed by Margarita L. Hopkins, who has an undergraduate degree in accounting and a M.S. degree in agricultural economics. Prior to joining the department, Hopkins had taught and conducted research in agricultural economics and marketing at several universities and research institutions both in the U.S. and abroad. She has been with the department since 1989

as an Economic Development Specialist III and provides vital coordinative and clearinghouse services for the many agricultural communities and individuals on this island.

New Industry and Industry Development

Headed by Howard I. Nakamura, a graduate of Hilo High School and the University of Hawaii, receiving his undergraduate degree in agriculture and MBA degree. Nakamura began his service to the County of Hawaii in 1971 with the Legislative Auditor's Office. In 1975 he joined the R&D staff and has since been the economist.

Municipal Reference Center

Headed by Colette Rapozo Yamamoto, who joined our department as the Resource Materials Specialist in April 1994 and serves as our information specialist. Colette received her Bachelor of Arts degree in sociology from the University of Hawaii at Hilo and her Master of Science in Library and Information Science degree from Simmons College in Boston. Colette has 20 years experience working in academic, health science, law and public libraries in Boston and Hawaii.

Energy

Headed by Raymond G. Carr, Ph. D., who joined department as an Economic Development Specialist III in June 1993 and serves as our Energy Coordinator. Carr received his doctorate in metallurgical engineering from London University, England. Besides a 20 year career in the engineering field, Raymond has also worked private business, teaching and financial services. He has been a resident of the Big Island for the last 10 years


PROGRAM BUDGET

Agriculture $188,050

Energy Program $ 39,258

New Industry Program $168,500

Tourism Program $682,600

HIGHLIGHTS, ACTIVITIES AND ACCOMPLISHMENTS

Agriculture

The sugarcane industry on the Big Island came to an end in April 1996. Our agriculture industry is now faced with challenges totally different from those faced by highly developed sugar plantation agriculture. Hawaii County must find suitable and productive use of sugarcane lands that would perpetuate agriculture as a way of life and a source of alternative revenue. Being the major producer of agriculture products in the State, Hawaii County has to be the leader in developing policies and programs that will perpetuate diversified agriculture in our County.

Our department, with input from the agriculture community, worked with the Finance Director and the Real Property Tax Office in proposing a comprehensive revision of the County Tax Code which will include removal of hindrances to the development of diversified agriculture and encouragement of commercial agriculture activities. Bill 289 Draft 2 was submitted to the Council and deliberations were started at a special meeting of the Finance Committee on June 28, 1996. The deliberation of the bill was still continuing in early August when this report was written. The department is also involved in developing a system to identify and map important agricultural lands in Hawaii County.

RESEARCH GRANTS

R&D has been very instrumental in insuring that locally relevant applied research problems are investigated. With a very limited research budget, R&D has been very successful in leveraging additional State, Federal and private funds, using County funds as seed money.

The widespread outbreak of bacterial wilt of ginger has caused significant losses during the last two years. R&D provided supplemental grants for the development of disease resistant cultivars and techniques for detecting the disease on ginger seeds. From these County funded projects, ginger farmers now have access to free bacterial wilt testing of ginger seeds at the UH Hilo College of Agriculture.

An initial $6,000 grant provided by R&D for the containment of miconia on the Big Island has resulted in additional funding of $75,000 from the County Council.

During the fiscal year 1995 96, R&D awarded eight research projects with a total cost of $33,796 (plus another $75,000 supplemented by the County Council):

Abbreviated Title Institution Amount

Impact of Grazing Methods on University of Hawaii $ 5,000

Kikuyu Grasslands

Wilt Pathogen Detection University of Hawaii 4,846

In Vitro Triple Indexing of University of Hawaii 5,000

Edible Ginger

Hot Air Treatment for Control University of Hawaii 4,000

of Ginger Wilt

Taro Variety Trials Along University of Hawaii 4,950

Hamakua Coast

Low Input Sustainable Ag. University of Hawaii 5,000

Demonstration Farm

Solar Kiln Drying of Crops Hawaii Taro Growers HUI 5,000

Miconia Eradication on the University of Hawaii 75,000

Big Island

ON GOING RESEARCH (Initially funded in previous years)

Target

Abbreviated Title Completion Date

Integrating Biogas System with Farming 12/31/96

Disease Resistant Ginger Cultivar 12/31/96

Cost and Returns of Selected Crops in Hawaii 1/31/97

Taro/Aquaculture in Waipio 6/30/97

Papaya Variety Trial in Hamakua 9/30/97

Papaya Ringspot Virus Control Program 12/31/97

Perennial Forage Peanut Pastures 6/30/98

for Cattle in Hamakua

RESEARCH PROJECTS COMPLETED

Abbreviated Title

ˆ Economics of Commercial Koa Culture in Hawaii

ˆ Determining Nutrient Requirements for Roses

ˆ Biological & Cultural Control of Pests

ˆ Solarization of Potting Media

ˆ Mapping of Miconia Population on the Big Island

ˆ Nutritional Profile and Shelf Life of Grass fed Beef

MARKET DEVELOPMENT AND PROMOTION GRANTS

Until recently, Kona coffee was the only coffee grown commercially in the State. Kona coffee has an established reputation of having superior quality and taste. To insure that the identity and prestige inherent to Kona coffee is protected, R&D developed a consumer awareness campaign program for 100% Kona coffee. In mid June, R&D unveiled the County of Hawaii's 100% Kona coffee logo program. The program is administered by the Kona Coffee Cultural Festival.

R&D participated in the "Made in Hawaii" Tradeshow in Oahu. Big Island businesses, many of which were new, received tremendous exposure to business contacts and consumers. To encourage the expansion of the tropical fruit production on the Big Island, R&D supported the efforts of the Department of Agriculture in the test marketing of irradiated Hawaii tropical fruits in the U.S. mainland markets. This project was highly successful. To assist in the promotion of Big Island products, R&D continued to co sponsor trade shows, agricultural festivals and fairs, and to develop agricultural product brochures. In fiscal year 1995 96, R&D awarded 12 market development and promotion grants with a total cost of $51,664:

Abbreviated Title Institution Amount

Big Island Agricultural Big Island Farm Bureau $ 3,000

Products Promotion

HIACC Promotional Brochure Hawaii Island Ag. Community 2,214

Committee

1996 Big Island Farm Fair Big Island Farm Bureau 5,000

Mid Pacific Horticultural Trade Hawaii Export Nursery 5,000

Show and Conference Association

Big Island Product Brunch Kona Coffee Cultural Festival 5,000

Hilo Macadamia Nut Festival Hawaii Macadamia Nut 5,000

Association

Abbreviated Title Institution Amount

100% Kona Coffee Logo Kona Coffee Cultural Festival 7,500

Consumer Awareness Program

Banana Promotion Big Island Banana Growers 2,450

Association

Trya Papaya Festival Papaya Administrative Committee 2,500

Tropical Flower Promotion Hawaii Tropical Flower Council 8,000

Kona Farmers Market Kona County Farm Bureau 1,000

Marketing of Irradiated Department of Agriculture 5,000

Hawaii Tropical Fruit

INFORMATION AND EDUCATION GRANTS

An increasing number of Big Island farmers are interested in growing bamboo as ornamental as well as a source of building, materials and food. However, our farmers have very limited information on the potential commercial uses of bamboo. Last May, R&D co sponsored the first International Bamboo Conference and Trade Show on the Big Island. The conference was very successful. It attracted around 400 participants which were mostly farmers. The trade show which was open to the public attracted an audience of over 1,000 people.

R&D continued to sponsor meetings, workshops and conferences for our various commodity groups. These programs are very successful in delivering information to our farmers about the current agriculture developments at the local, national and international levels. To cater to

those farmers and interested members of our community who are unable to attend the meetings, R&D continued to fund the publication of conference and workshop proceedings. In fiscal year 1995 96, R&D awarded seven agriculture information and education grants with a total cost of $23,850:

Abbreviated Title Institution Amount

Big Island Bamboo Conference Big Island RC&D $5,000

36th Macadamia Nut Conference Hawaii Macadamia Nut 4,500

Proceedings Industry Association

5th International Tropical Hawaii Tropical Fruit Growers 5,000

Fruit Conference

Forum for the Center for University of Hawaii 2,000

Agricultural & Rural Dev.

Forage Industry & Education University of Hawaii 3,000

Field Day

John Jeavons Bio Intensive Hawaii Center for Integral 2,700

Mini Farming Workshop Healing

Big Island Beekeeping University of Hawaii 1,650

Educational Booklet

In addition to providing grants, R&D continued to provide vital coordination and clearinghouse services for the many agricultural communities and individuals on this island. R&D also participates in various committees which were formed to address the crisis in Hamakua and Ka'u.

Energy

The main focus of activities in the energy program was in the development of a "performance contract" for an energy efficiency retrofit to the Hawaii County Building. In a performance contract, the cost of the energy conservation measures is financed by the Energy Service Company (ESCO) carrying out the retrofit. The ESCO is subsequently compensated for these up front costs through proven energy cost savings resulting from the retrofit over the term of the contract, typically ten years. In times of tight governmental budgets, this is an attractive method for the County to up grade its facilities and reduce the economic and environmental impacts of its energy use. In addition, business activity is stimulated for companies involved in the design, supply and installation of the energy efficiency measures. A successful demonstration of performance contracting with the County Building is intended to lead to energy efficiency retrofits to other County facilities.

In fiscal year 1995 96, a Request for Proposals (RFP) was drafted in cooperation with the County agencies involved and under the guidance of the consultant contracted to provide technical assistance for this project. This RFP was issued in January 1996 and proposals were received from three ESCOs. These proposals were evaluated and ranked and negotiations were entered into with the first ranked ESCO. It is expected that these negotiations will be completed early in fiscal year 1996 97 with installation of the retrofit measures taking place soon afterwards.

The Public Utilities Commission approved the residential and commercial Demand Side Management (DSM) programs contained in HELCO's Integrated Resource Plan (IRP) filed in 1994. These four DSM programs are the result of more than five years of IRP activities by HELCO with input from the IRP Advisory Group made up of members representing a wide cross section of societal interests, including the Hawaii County Energy Coordinator, and have been implemented with the object of reducing future demands for electricity through the installation of cost effective energy efficiency measures throughout the utility customer base.

The Energy Coordinator also participated as a member of the on going Externalities Advisory Group formed by the three affiliated utilities (HECO, MECO and HELCO) to provide input to the process of determining "externality" values related to the production and distribution of electricity in Hawaii. An externality can be defined as a hidden cost, either positive or negative, that is not included in the sale price of electricity and can include environmental, health, economic or cultural impacts.

In April 1996, a report was issued concerning demands for liquid fuels on Hawaii island projected out to Year 2014. Two scenarios were developed. In the low scenario, total demand for liquid fuels was projected to increase by only 20% from 1994 values based on significant improvements in the efficiency of electricity generated and energy usage. In the high scenario, demand was projected to increase by 90% over 1994, much of this resulting from assumed increases in the refueling of heavy jets at Keahole airport. For the high scenario, the further development of west side facilities for importing, storing and distributing liquid fuels became economically justifiable.

During fiscal year 1995 96, the department awarded two research grants. One grant for $16,330 was for field tests to provide information on growth rates, yields and production costs for various "energy crops," such as, napier grass for the production of ethanol and electricity. A second grant was awarded for $10,000 to conduct a test program on the drying of agricultural produce using a solar kiln dryer located in Kapoho, Puna. The object here is to provide farmers with a cost effective means to process farm produce, including surplus and off grade product, into value added commodities. Processing data and information will also be collected for the design of a larger facility to service a wide range of products and commodities grown on the Big Island.


Municipal Reference Center

The Municipal Reference Center (MRC) is a service agency of the County of Hawaii currently charged with a twofold responsibility. As the library, its original and continuing function is to meet the information needs of the Department of Research and Development. The Library provides a full range of information services in support of the promotion and economic development of the Big Island. As the MRC it centralizes the holdings of 12 County departmental collections, currently with 9,077 titles on file.

The MRC is responsible for classifying and cataloging all resource materials and for adding and deleting entries in the Library Information System (LIS) database. The LIS database is available to all County personnel via the County's WANG VS 100 system.

The MRC is a depository for some U.S. Bureau of the Census publications, State statistical sources, and the Federal Register, a daily publication of proposed rules, legal notices and regulations of the United States government. The MRC promotes economic development through continuous data collection and documentation for public use. County of Hawaii Statistics tracking building permits, tourism counts, labor force, gasoline consumption and tax collections are updated (and distributed upon request) on a monthly basis. A newspaper clipping file of articles of interest to, and in support of, departmental activities and of the County in general, is also maintained and updated on a daily basis.

The MRC provides reference service to County departments, other governmental agencies, businesses, students, and the general public. During the 1995 96 fiscal year, informational requests averaged over 50 per week.

Publications: County of Hawaii Data Book 1995 (the most comprehensive source of demographic and economic information about the Big Island).

County of Hawaii Facts & Figures 1995 (printed jointly with the State Department of Business, Economic Development and Tourism).

New Industry and Industry Development

HILO FOREIGN TRADE ZONE (HFTZ)

After six years of work on the project, R&D has completed the Hilo Foreign Trade Zone (HFTZ) project. With assistance from the Public Works and Planning departments, R&D acquired funds and land for the building, subdivided the property, and found an operator and tenant for the zone.

NIC Americas, Inc., HFTZ's first tenant, will manufacture tabletop incinerators for the disposal of hypodermic needles. Components for the incinerators will be imported from foreign sources, assembled in the HFTZ, and exported for sale. By assembling the incinerator in the HFTZ, NIC Americas, Inc., will avoid duty payments on the foreign components while creating as many as l25 jobs.

Because all 25 acres adjacent to the HFTZ can be activated for foreign trade zone use, R&D is now exploring other uses for the property. Crucial to the further development of the area is the upgrading of the existing infrastructure. R&D is exploring means of funding such improvements.

The department assisted with the annual conference of the National Association of Foreign Trade Zones (NAFTZ) which was held at the Waikoloa Hilton during October 1995. Over two hundred attendees and their families met for five days to discuss matters pertinent to foreign trade zones. Retired FTZ 9 administrator, Homer Maxey, was instrumental in getting the NAFTZ to hold their conference on the Big Island.

ENTERPRISE ZONES (EZ)

Governor Ben Cayetano's recent approval of the Southern Kona Enterprise Zone brings the Big Island count to five zones spread throughout the County. Since l994, R&D has delineated five areas for Council designation, all of which have been approved by the State of Hawaii.

Present designations include the Northern Kona Enterprise Zone, the Southern Kona Enterprise Zone, the Ka'u Enterprise Zone, the Hilo Puna Enterprise Zone, and the Hamakua Enterprise Zone. Enterprise zones extend certain tax benefits to companies to encourage startups or expansion of existing businesses. To date thirteen companies on the Big Island are enrolled in the program.

HAWAIIAN HERITAGE CORRIDOR

Strong interest in preserving cultural and historical aspects of the Big Island's plantation heritage has been the driving force for this program. Recent closings of sugar companies have contributed to this interest. Since no sugar company will be in operation on the Big Island, it has become critical to preserve what is available at this time.

R&D has made grants to assist with projects in the South Hilo area, in Laupahoehoe, Paauilo, Wailea, and Honokaa. Residents of these communities have identified projects which would contribute to the preservation of various aspects of the plantation era, and benefit residents and visitors in the future.

ASTRONOMY CENTER

The astronomy center conceptualized by Hilo Main Street, the R&D, and the Lyman Museum is becoming reality. Under the guidance of Dr. Leon Bruno, the project was designed for space donated by the museum. Construction is underway to accommodate the project which should open in January l997.

The purpose of the Astronomy Center will be to educate the visitor about basic astronomical concepts and astronomy in Hawaii. The Center will feature exhibits, scale models, and computers linked to the observatories on Mauna Kea, all set against the backdrop of a starlit night atop the mountain. Several scale models of the Mauna Kea observatories (MKO's) will be displayed, one of which will be an interactive model. Also available at the Center will be computers linked to the web pages of the MKO's, via the internet. Web pages will contain current information about the projects being worked on by the observatories.

KA'U ECONOMIC DEVELOPMENT

R&D continues to seek means of assisting with economic development in the Ka'u area. While the main thrust appears to be in the agricultural use of the vast acreages, other sectors with potential, such as in tourism, may be explored.

NA LEO 'O HAWAII

Na Leo 'O Hawaii is the non profit organization which works with the State of Hawaii and cable television companies to assure public, educational, and governmental access to cable TV. R&D presently represents the County administration on the board of directors of NaÿLeo. Na Leo is seeking to establish an I net system which would link east and west Hawaii by providing real time visual communication.

FILM INDUSTRY

The Big Island Film Office (BIFO) functions under the auspices of the Department of Research and Development through a contract with Ms.ÿMarilyn Killeri. During the past year, BIFO sought to achieve several objectives which would put the Big Island on the map as a filming destination.

The film office provided support to local, national, and international businesses doing film and video production and to businesses providing support services to the industry. As the film coordinator, Ms.ÿKilleri set up BIFO to be the resource office with 24 hour access to filmmakers. In this same regard, BIFO responded to more than 300 individuals and businesses with phone calls, photo files and promotional materials. It is estimated that successful productions contributed $4.2 million to the Big Island economy during this fiscal year.

Because of heavy competition in marketing locations, BIFO promoted the Big Island extensively among U.S. and international film and video producers, and provided support for these producers when they worked on the Big Island. BIFO created a promotional package which was sent to all filmmakers requesting information about the Big Island.

Promotion was increased via a Big Island web site on the Internet, the creation of a film office logo, the distribution of a Big Island calendar, and advertisements in KempsÿInternational, Locations Magazine, and the Media Index, Hawaii State Film and Video Directory.

The film coordinator also conducted familiarization tours for Amblin Entertainment, Warner Brothers, and Disney.

Throughout the year, BIFO sought exposure for the Big Island at various trade shows, festivals, and conferences. BIFO's participation included the Wheel of Fortune Committee, the Hawaii International Film Festival, the Sundance Film Festival, Locations '96 trade show, the Association of Film Commissioners International Cineposium, and other functions relevant to the industry.

The film coordinator and R&D continue to market the Big Island as the location in the world for producing films and video. As this program evolves, the Big Island will be recognized for its abundance of resources and its ability to support film making at any level of production.

NEW INDUSTRY

With continued interest and development of the health and wellness industry on the Big Island, R&D will do preliminary work on the potential for this sector of the economy. Of special interest to R&D is the establishment of private sector retirement communities adjacent to health centers.

Tourism

The recovery has been slow in this sector of the economy; however, the outlook is beginning to brighten. The two major markets for the Big Island, California and Japan, have seen slight improvement although the share coming to the Big Island has not regained its full strength. What success this segment has had is basically due to a cooperative working relationship between the County R&D department, the Big Island Chapter of HVB, the Big Island Group and the various destination associations. We continue to strive for ways to increase our market share, improve our product and increase our level of visitor satisfaction. The total funding for this program area in Fiscal Year 1995 96 was $682,000.

AIR SERVICE

One of the major objectives of the department during the past year was to encourage increased air lift to the Big Island of Hawaii. We reported last year about Canada 3000 who brought charters to the Big Island from December through April of that year. We are pleased to report now that Japan Airlines (JAL) began direct service to the Big Island of Hawaii via Keahole Kona International Airport on June 2, 1996. This represents the first direct international flights to the island. Temporary approval has been given to JAL through October 26, 1996, to fly three 747 aircraft. Because of this interest in the Big Island, three Japan wholesalers have opened offices on the island and the passenger count is steadily increasing. Equally as exciting, United Airlines, who has one direct flight from San Francisco daily to the Big Island, has added a second

daily flight from Los Angeles. The demand for the Big Island as a visitor destination is definitely increasing.

The County of Hawaii statistics for June 1996 as compared to June 1995 reflect the impact of these additional flights:

June 1995 June 1996 Variance

Number of westbound visitor arrivals 71,620 75,140 +3,520

Number of Eastbound visitor arrivals 20,470 22,090 +1,620

Hotel/condominium resort occupancy 53.2% 61.5% +8.3%

The Department of Research and Development is continuing its work with the State, the Big Island Chapter of HVB and other organizations to maximize the use of our Big Island airports. This goal affects not only passenger counts but also cargo and other economic development opportunities on a global scale.

VISITOR SATISFACTION

In addition to programs to attract visitors to the island, the Department of Research and Development also works with industry groups to positively impact their level of satisfaction. One of the most successful programs is the ship greetings that occur on both sides of the island. The department provides matching funding for personalized greeting of all ship passengers. Entertainment is provided as well as information on where to go and what to do and see while the ships are in port. This sharing of the Aloha Spirit gives our visitors a taste of the real Hawaii and encourages them to return. This past year the greetings were also offered to passengers arriving on the Canadian flights at Keahole Kona International Airport, Japan Airlines flights, and select direct United Airlines flights.

ECOTOURISM

The department along with the Big Island Chapter of HVB and the Hawaii Economic Development Board sponsored an all day ecotourism conference entitled "The Road Less Traveled." Issues affecting the development of ecotourism on the island were discussed and partnerships developed. This conference will act as a springboard for development of future ecotourism type activities.

TOURISM PRODUCT DEVELOPMENT

In an effort to try and develop "new things to do on the Big Island," R&D applied for State funds to develop:

A driving tour map of the Kona coffee lands called the Kona Coffee Cultural Driving Tour. Just released, this gives the visitor an opportunity to discover how coffee is grown and processed and purchased the product to take home.

Mountain biking maps have been developed to identify safe, accessible trails for the resident and visitor alike. These maps will help to promote the sport and the island to mountain biking enthusiasts.

Restoration of the Punaluu Petroglyphs There is a petroglyph area in Punalu'u that was discovered by school children under a parking lot. This project seeks to restore these petroglyphs to their original state. This project is being spearheaded by County Parks and Recreation.

Sampan Bus Funding was secured to purchase another sampan bus for Hilo. This bus will be used to show both visitors and residents the unique and historical sites in Hilo.

FESTIVALS AND EVENTS

The department continues to support local festivals and events:

Events and Festivals Funded:

Description of Contract Contractor Amount

Aloha Festivals Aloha Festivals, Hawaii $ 10,000

Island

Hilo Harbor Pier Greetings Destination Hilo 4,550

Kona Pier & Airport Greetings Destination Kona Coast 12,000

Senior Skins Game 1996 HVB, Big Island Chapter 150,000

1996 Mardis Gras Festival Hilo Downtown Improvement 1,000

Association

International Festival of the Japanese Chamber of Commerce 5,000

Pacific & Industry

Wheel of Fortune Big Island Group 100,000

Na Mea Hawaii Program Volcano Art Center 1,270

Hawaiian International Billfish Hawaii International Billfish 5,000

Tournament Association

1996 Merrie Monarch Festival Merrie Monarch Festivals 5,000

A Taste of Kohala Festival Hawaii Island YWCA 2,500

Kona International Brewer's Recycle Hawaii 1,700

Festival

Promotional programs that have been the focus of the department include:

Description of Contract Contractor Amount

Asia Pacific Promotions Hawaii Visitors Bureau 50,000

Big Island Advertising Program Big Island Group 150,000

Tourism Promotion Hawaii Visitors Bureau 85,000

Update Walking Tour Brochure Hilo Downtown Improvement 5,000

Promotional & Educational Materials Tropical Reforestation and 3,000

Ecosystems Education (TREE)

Paniolo Style Heritage Brochure Hawaii Island Economic 5,000

Development Board

1996 Waimea Calendar Waimea Preservation 2,000

Association

Eco tourism Project TOPIC Inc 1,100