New Hawaii DBEDT director getting down to business

On a whiteboard in the top-floor corner office in Hono­lulu’s historic No. 1 Capitol District building, several objectives are charted out that could have big implications for Hawaii’s economy.

The list, which includes righting an upended $2 billion-plus Aloha Stadium redevelopment project and snagging a potential $1 billion federal prize to produce hydrogen for local use and export, need the utmost attention of the relatively new occupant of this office, Chris Sadayasu, who describes the challenges as “fires.”

Sadayasu was appointed director of the state Department of Business, Economic Development and Tourism by Gov. Josh Green last month. He is also focused on securing funding for the Hawaii Tourism Authority from the Legislature and helping HTA, which is attached to DBEDT, procure a marketing and management contract for Hawaii’s biggest industry after two disputed and canceled contract awards.

“I’m really putting out fires,” Sada­yasu said, referring to dealing with DBEDT’s major objectives.

Embers from one initiative, the tourism marketing contract procurement, flamed up recently after Sada­yasu told members of two state Senate committees that he was planning to take over procurement for part of the contract from HTA.

“We’re going to take a bold move,” he said at the Jan. 25 meeting with the Ways and Means Committee and the Energy, Economic Development and Tourism Committee to discuss budget priorities. “The DBEDT director’s office is going to take on the USA marketing (request for proposals) and we’re going to issue it ourselves.”

Sadayasu’s move, which he clarified at the briefing as being contemplated rather than decided, surprised committee members and HTA President and CEO John De Fries.

Sen. Donna Mercado Kim, a member of both committees, criticized Sadayasu’s move and compared it to what DBEDT’s previous director, Mike McCartney, did in canceling two contract awards in the wake of objections from losing bidders and then personally trying to broker a settlement with a split contract that ran afoul of state procurement law.

“I think you’re inserting yourself just like Mike McCartney did without really having good reasoning for that,” said Kim (D, Kalihi-Fort Shafter-Red Hill).

The next day at an HTA board meeting, Sadayasu said he had dropped his procurement takeover plan and he apologized to HTA officials.

“I apologized for what I did,” he said in an interview. “I said, ‘I’m sorry.’ I stepped on their toes.”

DBEDT’s realm

Being the head of DBEDT, in Sada­yasu’s view, does not put him in a position to rule over every director or CEO of the 10 agencies administratively attached to DBEDT, including HTA, the Stadium Authority, State Energy Office and the Hawaii Technology Development Corp.

However, the degree of influence or control over attached agencies, some of which have independent boards, can produce friction as illustrated by DBEDT’s involvement with HTA and work by the Stadium Authority to redevelop Aloha Stadium.

The Stadium Authority had been working on a plan for several years to solicit bids from private developers to replace the largely condemned 47-year-old stadium in Halawa and surround it with housing, retail, restaurants, a hotel and other things as part of a more than $2 billion endeavor called the New Aloha Stadium Entertainment District.

That plan was upended after lawmakers attached the Stadium Authority to DBEDT last year, a move that led McCartney, under then-Gov. David Ige, to pursue forming a special team to seek low-bid contract proposals to design and build a new stadium instead of letting developers propose ideas for designing, financing, building and maintaining a new stadium along with surrounding development.

Sadayasu said DBEDT has not yet committed to a redevelopment model from options that include the Stadium Authority’s original plan, McCartney’s idea or something else that could include an entity not only producing but also operating a new stadium.

“We’re evaluating all options,” he said. “We want to make sure it’s the right structure.”

The broad goal for Sada­yasu leading DBEDT is “moving the needle” on diversifying the economy and helping attached agencies collaborate with one another to achieve economic development goals while also overseeing several divisions of DBEDT that include economic research, the foreign trade zone program and business development and support work.

“Governor Green’s initiatives pretty much touch all of our divisions or attached agencies,” Sadayasu said.

These initiatives include investing over $1 billion in affordable housing, establishing a $100 million climate change mitigation fund and expanding renewable energy production.

‘Breaking silos’

One example of collaboration could be the Hawaii Housing Finance and Development Corp., an agency attached to DBEDT that helps facilitate affordable-housing production, supporting expansion of the film industry or agriculture by helping provide housing for workers in those industries supported by the Hawaii Film Office, part of a DBEDT division, and the Agribusiness Development Corp., an attached agency.

“It’s all about being the face and owning it — putting together a plan and breaking the silos,” Dane Wicker, whom Green appointed DBEDT deputy director, said in an interview.

Some state lawmakers at a continuation of DBEDT’s briefing Monday explored how the agency might help businesses promote or sell made-in-Hawaii products to people visiting state park websites run by the Department of Land and Natural Resources, an agency not attached to DBEDT.

One attribute giving Sadayasu a good perspective on collaboration initiatives is his prior work at four agencies attached to DBEDT during 22 years in local government.

An attorney by trade, Sadayasu was HTA’s tourism brand manager from 2016 to 2021. He also worked for the Hawaii Community Development Authority from 2010 to 2014 in various roles including compliance and asset management; was a development manager with the Aloha Tower Development Corp., which is no longer attached to DBEDT, from 2008 to 2010; and a housing development specialist with HHFDC from 2001 to 2008.

Wicker also gives DBEDT an asset in dealing with the Legislature, given that he was once chief of staff to Sen. Donovan Dela Cruz (D, Mililani-Wahiawa-Whitmore Village), the Ways and Means chair holding considerable sway over the state budget.

Green’s biggest priority as governor is affordable housing, and HHFDC provides hundreds of millions of dollars in bonds, loans and tax credits for private developers to produce such housing. Green also has said he would like more priority given to affordable housing in the stadium redevelopment project.

Hydrogen hub bid

Another initiative Green has high hopes for is being led by the State Energy Office to win federal funding to develop a regional production hub for hydrogen energy, which Sadayasu considers one of the “fires” he is tending to because of an approaching deadline.

The U.S. Department of Energy in September announced the availability of up to $7 billion for establishing six to 10 hubs producing clean hydrogen as a foundation for a national hydrogen energy network.

Under the Ige administration, a consortium of industry partners helped the State Energy Office produce a 20-page concept paper submitted to the federal government by a Nov. 7 deadline, a day before Green was elected.

Department of Energy officials last month encouraged 33 out of 79 competitors, including the Hawaii consortium, to submit detailed applications by April 7.

The plan from the Hawaii group includes producing hydrogen, possibly using geothermal and solar energy, to make fuel to power vehicles, ships and the electric grid as well as for fertilizer and export.

There are about 20 team members, including Hawaiian Electric, Kauai Island Utility Cooperative, Puna Geothermal Venture, Hawaii Gas, the state Department of Transportation, the Hawaii Natural Energy Institute at the University of Hawaii, the National Renewable Energy Lab, Switzerland-based energy firm Hitachi Zosen Inova and New York-based hydrogen development firm Enso Infrastructure.

Proposals selected by federal officials are expected to receive as much as $1 billion to implement their plans.

Sadayasu believes the Hawaii consortium has a good shot at success, in part because of the state’s natural energy resources, military ties and geographic positioning between Asia, Australia and the mainland.

“I like our chances,” he said.

Winning proposals are expected to be selected this summer.