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How to Build a High-End High-Rise

A Step-by-Step Guide

September, 2016

So, you want to build a high rise. Maybe you’ve got a couple hundred million dollars burning a hole in your pocket and an acre or two of vacant land in Kakaako, and you’re wondering: How can I get in on the action? Right now, a half-dozen high rises are going up around town, and another handful getting ready to break ground. So, just in case you were thinking of adding your own giant condominium tower to the Honolulu skyline, we’ve made it easier for you by putting together this step-by-step guide.


The obvious approach would have been to follow the construction of a single high rise from beginning to end. Unfortunately, the typical high rise takes almost three years to build, and that’s not counting the many years it usually takes for permitting or design. But we didn’t want you to have to wait that long.

It turns out that, as part of its Ward Village development, the Howard Hughes Corp. has three high rises going up right now, all within a couple of blocks of one another, and all in different stages of construction.  Waiea is almost complete; Anaha still has about six months to go; and Aeo is just coming out of the ground. That gave us a convenient way to telescope the process of high rise construction, dividing it into three stages. Along the way, we focus on parts of the construction that highlight just how much you’re going to have to depend on distant, often unseen partners to build your high rise.


STEP 1
COMING OUT OF THE GROUND

Before you start to build, you have to prepare the site. If you’re lucky, you start with bare dirt. More likely, you’ve got old structures to demolish, and pavement or old concrete slabs to remove. Even then, you’re probably not done. Much of Kakaako was built on low marshland. Aeo’s property, for example, was only a few feet above the water table. To gain a little elevation, the general contractor, Layton Construction, trucked in thousands of tons of gravel fill, then spent weeks compacting the ground so it would bear the enormous weight of the building. That also makes it possible for the backhoes to trench so you can bring in utilities from the street.

In a sense, though, construction starts with a soil scientist boring test holes in the ground. This is crucial, because your skyscraper is going to perch atop scores of narrow concrete piles that reach as far as 90 feet below the surface. These are augur-cast pi-lings, meaning they’re drilled into the ground with a powerful augur, then, the resulting holes pumped with concrete as the augur is removed. While the concrete is still wet, a cage made of reinforced steel bars – rebar – is lowered into the hole. Once the concrete cures, you’ve got a piling.

It’s the friction of the earth against the rough surface of these pilings that actually holds your skyscraper in place. That’s why you need so many. It’s also why the soil engineer is crucial. By studying the soil beneath the building, she calculates how much friction it will generate. That determines how deep you have to bore the holes for your piles. In some places, it might be 60 feet; in others, nearly 100 feet.

The deeper you have to dig, the more time it takes and the more concrete and steel you have to use. That all costs more money.

Once the pilings are in, they’re tied together by pile caps and grade beams. “Grade beams” is a misnomer, because they eventually lie below grade. Trenches are dug to expose the tops of the pilings, then lined with plywood or steel formwork, and filled with concrete and rebar. When the concrete sets, the formwork is removed and the trenches backfilled with gravel and dirt.

Pile caps are similar, but they tie together pilings that have been clustered to support major load-bearing features, like the elevator shaft or structural columns. Once the grade beams and pile caps are in place, the slab can be poured to tie the whole structure together.

Congratulations, your high rise has come out of the ground.

Left: Much of Kakaako is close to sea level. At high tide, the areas excavated for pile caps and grade beams can fill with salt water. Right, top to bottom: 1. Trenching reveals how much fill is used. 2. Clusters of piles exposed for pile cap. 3. Exposed rebar, ready for the next course of forms and concrete. 4. Building a high rise starts with digging.

Left: Much of Kakaako is close to sea level. At high tide, the areas excavated for pile caps and grade beams can fill with salt water. Right, top to bottom: 1. Trenching reveals how much fill is used. 2. Clusters of piles exposed for pile cap. 3. Exposed rebar, ready for the next course of forms and concrete. 4. Building a high rise starts with digging.

 

STEP 2
GOING UP

The articulating boom that delivers concrete to the top of the building is directed by remote control.

The articulating boom that delivers concrete to the top of the building is directed by remote control.

Congratulations, your high rise has come out of the ground. Thus begins the rhythm of construction. Floor after floor, formwork is built over the stubs of walls and structural columns. Rebar cages are fabricated and lowered into place. Utilities are led through conduits and ductwork. Then comes the slurry of concrete. The floors are poured, and the formwork filled, and the walls gradually rise, always with a toothsome row of rebar jutting out the top, ready to accommodate the next course of formwork and concrete. In fact, this is where it becomes clear that, although your high rise may ultimately look like it’s made of glass and steel, at heart, it’s a colossus of reinforced concrete.

1. Hoppers of extra concrete are hoisted by crane. 2. The concrete pump boom swivels on a tower of its own. 3. Until the new concrete has cured, the floor is supported by a forest of jackstands.

1. Hoppers of extra concrete are hoisted by crane.
2. The concrete pump boom swivels on a tower of its own.
3. Until the new concrete has cured, the floor is supported by a forest of jackstands.

One striking feature  to most modern high rises is the  engineering in the floors. They may look like simple slabs, but technology has evolved to make them thinner so you need less concrete and can have more headroom and more floor space to sell. You’re going to use the same method to strengthen your floors that they do at Anaha: post-tensioning.

Concrete is heavy and, when you pour a big slab, it tends to sag in the middle. This creates tension in the concrete and, while concrete is very good at handling pressure, it doesn’t take tension well. (That’s why concrete is always reinforced with steel.) To correct for sagging, hundreds of powerful cables are run through conduits in the floor and the concrete is poured over them. When the concrete is hard enough, jacks are used to pull the cables tight and the ends are secured to the edges of the floor. The effect is like a trampoline, with the post tensioning putting the concrete into compression instead of tension. In the old days, it used to take 14 days for the concrete to get hard enough. With modern concrete, the floors are ready in two to three days, greatly accelerating construction.

One key feature of high rise construction is the ability to pump concrete to the upper floors. That requires a massive pump and a giant, articulating boom to deliver the concrete to every point on the floor. The pump can stay on the ground, but the boom is attached to the pump by a large- gauge pipe that runs up the inside of what will eventually be the elevator shaft. That’s because the boom has to climb to keep up with construction. To accommodate that upward movement, it’s mounted on top of a self-climbing platform that also fits inside the elevator shaft. It’s a massive machine – 40 feet long, 12 feet wide and three stories tall – that uses hydraulics to hoist itself up tracks that are temporarily bolted to the walls of the elevator shaft. The construction crew often fit out the lower levels of this contraption with a microwave and bathrooms, using it like a temporary lunchroom, says Larry Schrenk, the director of construction in Hawaii for Howard Hughes. “On really big skyscrapers, they actually put in a Subway sandwich shop so the crew never has to come down.”

When the last floor is poured, the platform is disassembled and lowered to the ground by the crane.

STEP 3
FINISHING UP

The roof of Anaha’s garage doubles as the amenities deck and is completely waterproofed. It will eventually house the members’ club house as well as a pool and other waterworks. One end of the pool will be glass and hang out over the property.

The roof of Anaha’s garage doubles as the amenities deck and is completely waterproofed. It will eventually house the members’ club house as well as a pool and other waterworks. One end of the pool will be glass and hang out over the property.

So, your high rise has topped off.

The last floor (which is actually the roof) has been poured. The windows are all in. Now, it’s time to make the space livable. In some ways, this is the part of the process that most resembles the building of single-family homes.

To frame the interior walls, steel studs are bolted to brackets that have been attached to the ceilings and floors. Plumbers and electricians rough in the utilities. Then come the armies of drywall workers. The sheetrock is screwed to the studs. It’s mudded and sanded several times, then primed and painted. The ductwork is connected to the HVAC system. The hardwood floors are installed and the tile-work finished. Carpenters come to hang the cabinets in the kitchen so the appliances can be fitted into place and hooked up. It’s all very familiar to anyone who’s ever watched a house being built.

But there are still differences. For example, some of the penthouses at Waiea have a private swimming pool on the lanai. That calls for pool masons and specialty plumbing. Another example is the floor. Despite intensive efforts by the contractors to get the concrete even when they pour the floors, they’re rarely level. “You can’t imagine how it snowballs if you have a floor that’s even just an inch out of level,” says Howard Hughes’ Larry Schenk. “You’d be able to see that in each room. The lines where the walls or cabinets meet the floors would go up and down.”

Top: Many wires are routed through ducts concreted into the floor. Middle: Additional concrete is frequently needed to level the floors. Bottom: High-end buildings require high-end cabinetry and amenities.

Top: Many wires are routed through ducts concreted into the floor.
Middle: Additional concrete is frequently needed to level the floors. Bottom: High-end buildings require high-end cabinetry and amenities.

That’s not acceptable, particularly if you’re building a high-end condo like Waiea. To remedy this problem, once the walls are in, gangs come through and fill the low spots with an easy flowing layer of mortar. The high spots get chiseled away. This takes place all over the building, because you can’t install the hardwood or the tile until the floors are absolutely level. “We literally spend millions of dollars just getting things back to flat,” Schenk says.

Sometimes there are special considerations. Howard Hughes wants Ward Village to be the largest LEED certified community in the country. That imposes restrictions on the construction process. For instance, the ductwork and blowers for the air-conditioning system are put in fairly early in the finishing process, but they all have to be sealed in plastic. If the ducts and gratings were left exposed, they would likely be filled with dust during the drywall installation. But your AC system will have to be dust-free if you want LEED status. So the plastic can’t come off the ductwork until the construction is almost done.

The buyers of an expensive condominium unit often customize their finishings. Model units give them some design options and show the view.

The buyers of an expensive condominium unit often customize their finishings. Model units give them some design options and show the view.

One other thing: If you’re building a luxury high rise, like Waiea or Anaha, your buyers will often want custom finishes. That means you’ll be working with boutique suppliers and will need a way to track and store the products they send you. In other words, you’re looking at coordinating with more supply chains. And you’ve got to make sure the right products end up in the right units. To ensure that happens, every unit has its own “bible” hanging on the door. This folder can run to several pages and lists specifications for all the finishes in that unit.

HB-09-16-High-Rise_12When you build your own high rise, you also have a “bible,” albeit a figurative one. It contains the building plans and architectural drawings; the spec sheets and supply lists; and the schedules, with their critical path analyses and Gantt charts. Nowadays, all this information is digital, credited in programs like AutoCad or Revit. If you were to print them all up, though, they would come to thousands and thousands of pages. Sadly, there’s no shorter way to explain how to build a high rise. So we’d like to close our little guidebook with an admonition you often see on products: “Some assembly required.”

Please see instructions before you begin.


UNDERSTANDING THE SUPPLY CHAIN

The Concrete World

Your concrete is part of a vast, international industry.

HB-09-16-High-Rise_2By volume, it’s the most traded man-made substance on Earth, yet it has a deceptively simple composition: gravel, sand and cement. The gravel and sand provide the strength; the cement binds them. Cement production involves baking a mixture of crushed limestone and clay at 1450˚C to produce quicklime, which is mixed with a few other ingredients to create a hard substance called clinker. The clinker is then blended with a small amount of gypsum and ground to a find powder: the famous Portland cement.

Although Hawaiian Cement is one of a handful of local companies that mix and sell concrete, it’s the only source of cement in the Islands. All its cement is from Asia Cement. This massive Taiwanese conglomerate delivers as many as 10 shiploads a year to the deep water port at Kalaeloa. Last year, that came to $23 million of cement.

HB-09-16-High-Rise_3Hawaiian Cement has a pretty sophisticated system to handle all that cement. When it’s unloading a bulk carrier, the fine powder is moved pneumatically, sucked like a fluid from the hold of the ship and pumped into a pair of, hemispheric storage tanks that tower over the docks.

From there, a computerized overhead pneumatic system allows the company’s drivers to load the trucks themselves. In boom times, as many as 90 trucks a day pass through the Kalaeloa facility.

Of course, by weight, concrete is mostly aggregate – gravel and sand.

Hawaii, despite its famous beaches, has a shortage of sand. Hawaiian Cement has to import that from British Columbia, where’s it’s quarried from ancient dunes beneath the spruce and fir forests. About three times a year, a bulk carrier brings in about 40,000 metric tons of sand; so much that it takes 50 trucks five days to cart all of it from Kalaeloa to the Halawa facility.

In lesser quantities, Hawaiian Cement imports other ingredients. Certain chemicals can be added to concrete to make it flow better, or cure faster or slower. Some federal contracts require the use of fly ash, a byproduct of burning coal, as a substitute for some of the cement in concrete. All of these products are made elsewhere, adding to the layers of people involved in building your high rise.

The only local ingredient in your concrete will be the gravel. At its Halawa facility, Hawaiian Cement quarries, crushes, and grades millions of tons of gravel a year. Since the aggregate is what gives concrete most of its strength, this local basalt is what ultimately holds your high rise up. And, in an industry that’s famously dirty (worldwide, cement production accounts for 7 percent of human-produced greenhouse gases), Hawaiian Cement runs a surprisingly green operation. Concrete, for example, is water intensive – both for mixing and for dust suppression – but Hawaiian Cement recycles non-potable irrigation water from a nearby farm. They also scrupulously monitor Halawa Stream to make sure runoff from the gravel yard doesn’t alter the pH of the water. They even accept old concrete, crushing it to recycle the aggregate.

Concrete has to be tested. It takes as much as 50,000 cubic yards of concrete to make a high rise. That means mixing thousands of batches of concrete. Because of subtle irregularities in the cement, no two batches are necessarily alike. But your concrete has to meet strict engineering standards. It’s particularly important that the concrete harden quickly to keep construction on schedule.

HB-09-16-High-Rise_4That requires testing, says Gavin Shiraki, sales manager for Hawaiian Cement’s Concrete and Aggregate Division. “The contractor has a third-party lab that checks the concrete on a daily basis,” Shiraki says. Hawaiian Cement conducts similar tests. For every batch of concrete, several samples are taken and formed into four-inch cylinders. Then, at intervals, those cylinders are crushed in a powerful press to measure their strength. Only when the concrete reaches its prescribed hardness can you remove the forms and jack stands and move on to the next floor. Before you complete your high rise, thousands of these little concrete cylinders will be crushed.

 

It Looks Like It’s All Glass

The dominant feature of a high rise is frequently its glass facade.

In fact, with a curtain wall, sometimes that’s all you can see. Not surprisingly, that makes glass one of the project’s larger budget items. “The glass contract for Anaha is about $30 million. That’s over 10 percent of the total cost of construction,” says Larry Schenk.

So, if you want to understand why building a high rise is so expensive and complicated, the glass is a good place to start.

When you build a single-family home, most of the key elements are available at your local hardware store. In fact, the house was probably designed around the specs of standard windows, doors and hardware. That’s not the case when you’re building a high rise. Each high rise is unique and everything is made to fit. Especially the glass. As Schenk points out, “None of the exterior glass of Anaha is off-the-shelf. It’s all custom.”

All that customization means that, to build your high rise, you have to deal with an elaborate, highly specialized supply chain.

First of all, the technical name for modern plate glass or window glass is “float glass.” The term refers to the manufacturing process. For most of the 20th century, plate glass was made by flattening a blob of molten silica sand and a few other ingredients between a pair of steel rollers. This technique was cheap and yielded a relatively smooth surface, but the resulting panes of glass still had to be polished on both sides to be truly transparent. This was time-consuming and expensive. Then, in the late 1950s, an Englishman named Alastair Pilkington devised a quicker, cheaper approach. Instead of using metal rollers, the molten glass was poured evenly onto a bath of molten tin, where, because of the two materials’ difference in density, it floated like oil on water. Because the glass spread evenly over the tin bath, it was perfectly smooth on both sides. The thickness could be controlled by modulating how quickly the molten glass was poured onto the tin, and how long it took to cool.

Acccording to Dennis Jean, the senior project manager for AGA, the glass contractor for Anaha, the float glass for the building is manufactured by a California company called Guardian Glass at its Kingsburg plant. Guardian adds a tinted reflective coating to the raw glass to make it more energy efficient. Sometimes, it also adds spandrels to make it opaque. Then, they ship the glass to the next company in the supply chain: Northwestern Industries in Yuma, Arizona.

At NWI, the glass is cut to size and fabricated into individual window units. Each unit is composed of two panes of quarter-inch glass, with a half inch of space between them, and enclosed around the edges with a polymer seal. Sometimes, argon gas is injected into the space for additional insulation. These finished units are then trucked to AGA’s plant in Livermore, California, where they’re fitted into custom-made aluminum frames, packed into custom crates called “bunks,” and shipped in containers to Hawaii.

That’s the easy part.

A key design feature of Anaha is the curved glass at all four corners of each floor. If your skyscraper is going to use curved glass, that adds another step to the supply chain. Instead of Yuma, the raw glass is shipped from the Guardian factory to Standard Bent Glass, a specialty glass fabricator in Pittsburgh. There, each pane is heated until it’s plastic enough to bend over special forms. Only after the glass conforms to the proper radius can they fabricate the individual, double-paned units. Those are then installed in their custom aluminum frames, crated and shipped to Honolulu.

Getting the glass here is only half the job. It still has to be installed. On site, AGA’s local glaziers are responsible for the custom-made mounting brackets and molding that hold the windows in place. They also install each window. For curtain walls – the kind where the entire surface of the building is glass – they bolt the windows to aluminum brackets that were embedded in the edge of each floor when the concrete was poured. In this system, the weight of the glass is carried entirely by the brackets. For “window glass,” the weight of the glass rests on top of the floor or a wall; the brackets merely hold it in place.

The whole contraption is fabulously complex. “For Anaha,” Jean says, “each glass panel has 147 different parts: brackets, bolts, screws, glass, etc.” Maybe more to the point, almost every one of those 5,000-plus panels is unique.

Onyx Has Its Own Specialists

If you want to build a high-end skyscraper, you  have to include high-end finishes.

HB-09-16-High-Rise_14Each of those has its own supply chain, often with tentacles that reach around the globe. For example, the designers at Waiea wanted to use book-matched slabs of pink onyx to line the walls of the showers in several penthouse units. It turns out, though, there aren’t many sources for pink onyx. The giant slabs in Waiea came from an old, family-run quarry in Iran. But the trip from the mountains of Persia to Kakaako is circuitous. Bruce Kumove, whose company, BMK Construction, is responsible for the onyx, walks us through the process.

It starts with a man named Raoul Luciano, a Swiss stone expert who acts as a sort of third-party inspector and quality-control consultant. “This guy is the best,” Kumove says. “He did the stone at the new World Trade Center in New York and the stone for the Getty Museum. He’s been in the business for 35 years and has offices in London, New York, Los Angeles and Houston. This is all he does.”

Luciano’s main job was to make sure Waiea got onyx that would work for book-matching. That means taking a thick slab and slicing it into two thinner slabs, then opening them, like a book, so that the vein patterns in the onyx radiate symmetrically from the centerline. Onyx is quarried in giant blocks – in this case, with nine-foot faces – so it’s hard to assess the color on the inside. “Luciano hand-picked which blocks to use so they would mirror properly,” Kumove says.

Although the Iranian quarry had the best pink onyx, it wasn’t able to finish the stone to the standards Waiea required. “Once Luciano selected the blocks,” Kumove says, “they were put on 40-foot semi-trailers. They were so large that, if you were lucky, you could get three blocks to a trailer.” Then, the blocks were trucked through Turkey and Eastern Europe to Italy. It took six months to get the stone from the quarry in Iran to Italy.

Processing the marble took another eight months. The big blocks were cut into slabs using a gang-saw. This is a gigantic industrial device with a rack of evenly spaced saw blades at the top and a hydraulic lift at the bottom. It works by setting the onyx on the lift and hoisting it inexorably through the scything rack of saw blades, cutting the stone as clean as sliced bread. Then the slabs are carefully numbered so that adjacent slabs can be used for book-matching.

Cutting onyx is slow, but it’s not the only time-consuming process, Kumove says. “Onyx is a very unstable and brittle material. It cracks very easily because it’s full of cavities. So, once they cut the book-matched slabs, they have to fill the cavities with epoxy and polish it. They also apply a layer of epoxy and mesh to the backs of the slabs. That’s why onyx is such an expensive stone: it’s so difficult to work with. There’s also a lot of wastage. You might get 20 slabs out of a block, but 50 percent might be waste. And it takes a lot of time for all this to happen.”

Even after the onyx is crated and shipped, the international nature of the stone industry doesn’t end. “There aren’t a lot of people that understand how to deal with book-matched onyx,” Kumove says. “It takes experienced marble masons. To make sure the job is done right, we have a special crew that we built especially to handle these slabs. Most of them are Ukrainian.”


CHOREOGRAPHING THE WORKERS

Building a high rise calls for a lot of coordination between workers. Clockwise from top: 1. Concrete worker signals the boom operator. 2.The temporary elevator requires an operator. 3. Boom operator supervises concrete pour. 4. Metal formwork gives the concrete its final shape.

Building a high rise calls for a lot of coordination between workers. Clockwise from top: 1. Concrete worker signals the boom operator. 2.The temporary elevator requires an operator. 3. Boom operator supervises concrete pour. 4. Metal formwork gives the concrete its final shape.

The job of your general contractor is to organize all the different construction activities. Every subcontractor needs space and time for staging and loading. They need to be able to work without interference from other subcontractors. They have to be able to get supplies when and where they need them, so they need some of that scarce crane time.

And it’s not just the subs that need coordinating. As the contractor, you’ve got to deal with moving utilities, traffic stoppages and temporary structures to protect pedestrians. You’ve also got to respect the needs of your neighbors, some of whom may also be tenants.

For example, to make sure Pier 1’s and Nordstrom Rack’s stores would still be able to access their loading dock, Howard Hughes designed Anaha so the bottom level had enough vertical clearance for a semi-trailer to pull in under the building and do a three-point turn.

As each newly poured floor cures, work surges forward on the floors below. Each floor is divided into distinct areas, and crews rotate through them to do their work in the proper order. A gang comes through to mark the profiles of the non-load-bearing walls and permanent furnishings on the floors. Other gangs rough in the plumbing and electric. Still another gang comes through to install the windows. And all of this work reaches a crescendo after the glass goes in. Once the floor is weather proof, the finishing can begin.

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Trump’s Effect on Hawaii

The state’s congressional delegation lays out five risks, two opportunities and five strategies for Hawaii in the Trump era.

April, 2017

Interviewed for this story are the four members of Hawaii’s congressional delegation, all Democrats:

Sen. Mazie Hirono
Sen. Brian Schatz
Rep. Colleen Hanabusa
Rep. Tulsi Gabbard


FIVE RISKS

1 OBAMACARE

(The repeal of Obamacare would) have an impact on everybody on Medicare in Hawaii," says Sen. Mazie Hirono.

(The repeal of Obamacare would) have an impact on everybody on Medicare in Hawaii,” says Sen. Mazie Hirono.

One of the biggest changes proposed by President Trump is a repeal of the Affordable Care Act, with no specific replacement yet agreed upon. An estimated 20 million people nationwide receive health insurance through the ACA. In Hawaii, the potential loss of the ACA is mitigated by the state’s long-existing Prepaid Health Care Act, which had already provided health insurance to many of the categories of people covered by Obamacare elsewhere in the nation.

“In general, Hawaii and Massachusetts have been the two states that had the most difficulty complying with the exchange requirements of the ACA,” Hanabusa says. “That’s because we already had what I consider to be the best health care systems in the country.”

Those systems will largely remain in place if Obamacare is repealed, but many of those who keep their overall coverage will still lose some benefits. “It’s going to have a huge impact on everybody on Medicare in Hawaii,” Hirono says. “They will end up paying more for prescription drugs, for example. And they won’t get the kind of preventive care they get under ACA, even though a lot of them don’t realize that yet.”

Similarly, people who are self-employed or between jobs will either lose their coverage, or at least the subsidies that make their coverage affordable. Obamacare requires health insurance companies to cover people with existing medical conditions; many Republicans say they will continue that provision, but no longer require people to have health insurance coverage or pay a penalty. That requirement helped subsidize the premiums of less healthy people; without those subsidies, it’s likely that health insurance premiums will skyrocket.

2 IMMIGRATION

Hirono notes that Trump’s anti-immigration policies will be another risk for Hawaii, especially given his choice of Jeff Sessions as attorney general.

“Sen. Session’s position on immigration is very clear,” she says. “When I first got elected to the Senate, Democrats were in the majority. Since the majority members preside, I took many turns presiding over the Senate. Sen. Sessions would come down to the floor of the Senate on a regular basis to express his opposition to any kind of comprehensive immigration reform.”

That opposition was in the context of one senator among a hundred. As attorney general, Hirono says, Sessions will wield wide prosecutorial discretion. For instance, he could help decide what happens to the young people in the Obama administration’s Deferred Action for Childhood Arrivals program. That program allows some undocumented immigrants who entered the United States as minors to receive a renewable two-year period of protection from deportation and eligibility for a work permit.

“At his confirmation hearings, when he was asked if he would start deporting the DACA people, he wouldn’t say he wouldn’t,” Hirono says. “We have about 300 DACA people in Hawaii. And there are many more undocumented aliens not in DACA; they won’t come out of the shadows for fear of providing information that could be used against them in some way.”

Hirono is relatively confident that people who enrolled in DACA are safe for now. “I think there would be such a hue and cry if the DACA participants were targeted for deportation, because part of what they were told was that their information would not be used for those purposes – although there was always a caveat that could change.”
Noting she’s an immigrant herself – the only immigrant in the Senate – Hirono says, “I will do everything I can to make sure they’re not among those who are deported, just because they participated in DACA. Remember, DACA allows these young people to go to school, join the military, participate in the life of our communities in a way that brings them out of the shadows.”

3 ENVIRONMENT

Hanabusa, who sits on the Natural Resources Committee in the House, says one of the most important issues for Hawaii is how Trump and the Republican-controlled Congress approach key environmental issues, such as the Endangered Species Act. “For example,” she says, “there have long been attempts by the Republicans to, in effect, limit the number of endangered species, not allowing new species to be added to the list.”

Hawaii is the extinction capital of the world, and the Endangered Species Act has been a key tool in protecting some of the state’s most fragile habitats. Diluting the ESA, or limiting enforcement of its provisions, could affect everything from military training protocols to land-use practices in the state.

There’s also climate change. As a tropical island chain, Hawaii is especially vulnerable to the effects of climate change: rising sea level; the loss of coral reefs due to ocean acidification and warming sea surface temperatures; the increasing frequency and intensity of major storms; and the gradual loss of unique ecosystems. But Trump and many in the Republican majority are climate-change skeptics and support domestic oil extraction, fracking and the resuscitation of coal mining. All of these accelerate climate change. That’s why Trump’s nomination and the confirmation of Scott Pruitt – a climate-change denier and advocate of the oil, gas and coal industries – to head the Environmental Protection Agency is likely to have the most effect on Hawaii.

4 RUSSIA

All these issues – Obamacare, immigration and environmental policy – have long been part of the basic divide between Republicans and Democrats. But Hanabusa says the Trump victory has introduced new risks, though their specific impact on Hawaii may be more attenuated.

“One area that I feel will be a problem,” she says, “is the whole issue of the security briefings that we’ve received about the role of Russia in our election. It has nothing to do, necessarily, with this particular administration’s beliefs about Russia; it has to do with finding out exactly what happened. To have the three major intelligence agencies agreeing (that the Russians interfered in the election) I think is a major statement. So, I see lines drawn on this specific issue, but I don’t necessarily see it as Democrat versus Republican, because you hear Republicans, like John McCain, who feel there really needs to be an investigation of the actions taken by the Russians.”

Hanabusa, like all members of the House, has seen the classified version of the report on Russian meddling in the election. She say’s she’s confident in the conclusions drawn by the intelligence agencies.

“I think they were very careful, perhaps even too conservative in their conclusions. Maybe that’s a better way of putting it. I think that they could probably have gotten further than they did. But, that notwithstanding, there’s still the fact that they’re not finished with their investigation.”

5 UNKNOWNS

"We remain well situated to attract further Department of Defense investment." -Sen. Brian Shatz

“We remain well situated to attract further Department of Defense investment.” -Sen. Brian Shatz

Russia is a known risk, Hanabusa says, but it’s the unknown risks that are more worrying.

“I think the real issue for Hawaii is that we don’t know what a Trump administration is going to look like,” she says. “The concern I have is the fact that Trump got elected in such an unconventional manner. He wasn’t elected by the party; he’s an outsider. You don’t even know whether or not he’s interested in re-election. And it’s the desire for re-election that tempers what his next step will be.”

Trump isn’t the only source of worry, Hanabusa says. She points out that Republicans in Congress have also introduced some new and novel risks, though their exact impact isn’t clear yet. She gives the example of the Holman Rule, a procedure that allows any member of Congress to use the budget process to reach down to any individual in the federal government and cut their salaries. First enacted in 1876, before the advent of merit-based employment in the federal government, the Holman Rule was rescinded by Democrats in 1982. This year, though, reviving the rule was one of the first affirmative acts of the Republican-controlled House.

To federal employees, the return of the Holman Rule looks like a scary attempt to undermine the independence of the civil service – especially combined with early moves by the Trump administration to identify federal employees who disagree with administration policies. In a heavily Democratic state, like Hawaii, there are undoubtedly a lot of federal employees who would fit that category.

“People may not take the rules of the House seriously,” Hanabusa says, “but they have major implications. The Holman Rule is one component of that. There are also components regarding subpoenas. All this gives you an idea where they’re headed. But, when they implemented the Holman Rule, you have to wonder, How do they want to use this? What do they think they can do with it?”

TWO OPPORTUNITIES

1 MILITARY SPENDING

Increased military spending in Hawaii largely depends on whether the new administration sustains Obama’s “pivot” to the Asia-Pacific region. This plan reflects the growing importance of the region and shifts military resources so that, for example, 60 percent of the country’s naval fleet would be based in the Pacific. After all, the Pacific Command, based at Oahu’s Camp Smith, is responsible for 55 percent of the Earth and includes the world’s three largest economies: the U.S., China and Japan. Trump hasn’t said much specifically about the pivot – either on the campaign trail or as president – but he has advocated for a major increase in military spending. That bodes well for Hawaii, which depends heavily on military spending to balance the ups and downs of the tourism industry.
In some ways, the Asia-Pacific pivot and the potential increase in military spending in Hawaii predates and is independent of the Trump presidency, according to Schatz.

“There are some specific opportunities for Hawaii over the next four years that exist regardless of who’s the president,” Schatz says. “And we remain well situated to attract further Department of Defense investment.”
He points out that retired Marine Corps Gen. James Mattis and Rex Tillerson, the new secretaries of defense and state, both support the pivot, as do key members of Congress.

“My judgment is that Trump hasn’t thought very deeply about it, but that he will defer to his secretaries on this. And, at the legislative level, we now have a bipartisan consensus around Hawaii’s critical role. So, when it comes to the shipyard at Pearl Harbor, the Pacific Missile Range Facility on Kauai, the Pohakuloa Training Facility on the Big Island, the Jungle Operations Training Center at Schofield, all of the service branches are full speed ahead when it comes to defense investment.”

Gabbard, a member of the House Armed Services Committee, as is Hanabusa, notes there’s a similar consensus in the House. “I also see an interest and growing commitment in Congress to pass not only an authorization bill, but an appropriation bill in a timely fashion. One of the challenges for the private sector, as well as the military, is that when you have temporary continuing resolutions and temporary funding bills that only last for a month, or three months, or six months, that lack of certainty is quite harmful to our military capabilities. You can’t plan training activities, and it ultimately costs more in the long run. So, passing a funding bill where you know how much you have to spend for the year has been the No. 1 request from our military leaders in Hawaii.”

Although Trump hasn’t spoken much specifically about the pivot, he has said he wants to build more ships. That could bode well for Pearl Harbor, according to Hirono.

“ ‘Ships’ means ‘Navy’,” she says. “And the Navy’s presence in the Asia-Pacific is very much here in Hawaii.”
But Hirono expresses caution amid all the noise about increased military spending.

“There’s an issue as to how we’re going to pay for the over $350 billion increase in military spending over the next four years,” she says. “I certainly wouldn’t want to sacrifice the domestic programs that are so important. Not to mention that national security isn’t only dependent on what we do with the military; it’s also the appropriations and money that we give to the State Department, the FBI and Homeland Security. Those are all nonmilitary areas that are just as important for our national security. Then, there’s the state of our economy. If our economy is not flourishing, of course, that also affects our national security and our ability to do things for our country and our people. It’s all tied together.”

All the same, military spending looks like one area where Trump will prove to be an asset for Hawaii.

“Everybody knows I’m not a Donald Trump fan,” Schatz says, “but one thing I’ll say for him: He’s not a small-government guy. So, from the standpoint of being worried about a massive reduction in federal funding, that’s a little lower on the list than other risks, like geopolitical instability and unlawfulness.”

2 INFRASTRUCTURE

"The Armed Services Committee is the most partisan in the House." -Rep. Colleen Hanabusa

“The Armed Services Committee is the most partisan in the House.” -Rep. Colleen Hanabusa

Trump’s willingness to spend also bodes well for infrastructure investment in the state.

“Hawaii is not different from most other places,” Gabbard says. “The infrastructure needs we have across the state, in each of our counties, is great. This is the same challenge in many states in this country, and it’s an area where both Democrats and Republicans and this administration, I think, have an opportunity to work together and actually get an infrastructure bill passed. This would be good for Hawaii and for communities across the country.”

The question, of course, is: Why would the Republicans in Congress pass an infrastructure bill now when they steadfastly refused to increase infrastructure spending during the Obama administration? Maybe it’s because now Republicans are working with other Republicans, rather than across the aisle. Whatever the reason, Trump has created momentum in Congress to do something about infrastructure, Gabbard says.

“Republicans are talking about the need to pass an infrastructure bill, and the president has already begun to meet with different building-trade unions, as well as with Democrats and other Republicans to begin forming an idea of what an infrastructure bill would look like. Democrats in the Senate are putting forward their own ideas. So, on both sides, there’s interest and an appetite for working together and passing this legislation.”

It’s easy to overstate this consensus, though. Democrats, still stinging from the Republicans’ treatment of Obama, remain skeptical. Also, the two parties have widely divergent philosophies about how to pay for any infrastructure bill. Trump’s “plan,” for example, is largely funded through an 82 percent tax credit for private investment. In other words, investors would build roads, schools, airports and bridges largely on the taxpayers’ dime, and then own them and collect the tolls or rents. To Democrats, that looks like a government handout to wealthy investors. Democrats, on the other hand, want to pay for infrastructure through taxes, ideally on the rich; but the tightfisted Republicans in Congress have long balked at new taxes of any kind.

So, while everyone seems to want an infrastructure bill, it’s not clear there’s a plan they can all agree on. Gabbard remains optimistic.

“I think it’s premature to say there’s any one, specific plan that’s been put forward. There have been a lot of different ideas, and I think some have potential and others don’t. The point is that the conversation is happening, and that’s what’s necessary in order to end up with a final product. Hopefully, that will be able to pass Congress with bipartisan support.”

FIVE STRATEGIES

1 COMMITTEES

Broadly speaking, Hawaii’s congressional delegation agrees on the big issues in the Trump era. The real question is: How should they address those issues?

One thing working for them is that all four Hawaii members of Congress serve on committees that are strategically important for the state. In the House, both Gabbard and Hanabusa are on the Armed Services Committee. Hanabusa also serves on the Natural Resources Committee, and Gabbard is on the Committee on Foreign Affairs. Between them, the two congresswomen are well situated to participate in the debates that most affect Hawaii. The problem is that the House of Representatives is a purely majority-rule body. That means Democrats in the House have almost no power. To get anything done, they have to work with Republican allies. That’s easier on some committees than others. Given Hawaii’s reliance on military spending, it’s fortunate that Armed Forces is one of the easiest committees on which Democrats can find Republican allies.

“The Armed Services Committee is the most bipartisan in the House,” Hanabusa says. “So, if we’re able to share our concerns about how we address the Asia-Pacific, in terms of China and North Korea and those issues, if you can find a partner on the other side of the aisle who shares similar concerns, we can get a lot of things done.”

She points to her work on the National Defense Authorization Act with Randy Forbes, the former Republican congressman from Virginia. The NDAA, which funds the military, is the one piece of legislation that always passes the House in a bipartisan manner, she notes.

“When I was in Congress before, Randy Forbes and I had a series of meetings about, ‘What does the pivot to the Asia-Pacific mean?’ Working together on that issue, we were able to put what I consider to be necessary pieces of legislation in place through the NDAA, and we were able to address a lot of the Asia-Pacific questions. That was only because Congressman Forbes and I shared the same interests and concerns.”

Gabbard offers similar examples of partnering with Republicans on issues important to Hawaii.

“One is the Native Hawaiian Education Act,” she says. “This was a piece of legislation that Sen. Inouye and Sen. Akaka had championed when they were in the Senate. It required reauthorization, but it faced opposition from some Republicans and even potentially some Democrats. I was able to work in a bipartisan way with both Republicans and Democrats to be able to get this legislation included in a larger education bill that passed the House of Representatives. This wasn’t something that was necessarily easy to do, but by having a working relationship with my colleagues on both sides, treating them with respect and Aloha, this kind of collaboration resulting in passing legislation is possible.”

2 RULES

Collaboration isn’t the norm in the House. That’s because the Republican majority of 237 to 193 (with five vacancies) is large enough that the votes of Democrats, like Gabbard and Hanabusa, typically carry no practical weight. It’s also why House Democrats are sometimes forced to resort to political stunts, like their sit-in on the floor of the House over gun control last June.

Even in the Senate, where you need 60 votes to get some things done, Democrats are sometimes obliged to resort to symbolism – for example, boycotting confirmation hearings, even though Republicans would simply change the quorum rules and vote with no Democrats present. These tactics may not affect legislation, but they have meaning, according to Hirono.

“Majority rule is a lot more challenging,” she says. “So, in a place like the House, the voice of the loyal opposition becomes ever more important. That’s why, when they held the sit-in, it was an important symbolic action. And symbolism can go a long way. Look at the Women’s March, for example. You can call that symbolism if you want, but I think that, to the extent that all these millions of people marched all over the world, and that they continue their engagement, that will make all the difference.”

Senate rules make that chamber of Congress much more bipartisan than the House. Consequently, Hawaii’s senators are better positioned to block some of Trump’s proposals. Hirono serves on five committees, including the Armed Services Committee, where, as the ranking member on the Subcommittee on Seapower, she can be an important voice for Pearl Harbor and the shipyard. But it’s Schatz who’s probably best positioned to resist some of the more controversial proposals of the Trump administration and the Republican majority. As a member of the powerful Appropriations Committee, and the ranking member of the Subcommittee on Military Construction, Veterans Affairs and Related Agencies, Schatz has real say on how Congress actually spends our tax dollars.

But, regardless of their committee seats, the members of Hawaii’s congressional delegation still have to make strategic decisions about how to deal with Trump and the Republican majority. This is a dilemma faced by every Democrat in Congress. Some believe Democrats should pick their battles and cooperate when Trump proposes things like increased infrastructure spending, or paid family leave – policies that have long been planks in the Democratic platform.

Others advocate full resistance. They say the party should do what the Republicans did to Obama: Oppose everything the Republicans and the Trump administration propose. Hawaii’s Congressional delegation isn’t that revolutionary and they look for opportunities to work with Republicans. According to Hanabusa, Russia is one area where Democrats can find enough Republicans who share their concerns about Trump.

“I think you’ll find Congress will come together on that,” she says. “It’s not just a matter of whether (Russian intervention) affected the victory of Donald Trump or the loss of Hillary Clinton; it transcends that. It’s about the integrity of our system and whether we’re going to allow a foreign power, or the leader of that country, to interfere with something as sacred to the people as our electoral system. I think that’s going to be a major surprise. I don’t thing they will stick to the party line. I think you’ll find both sides agree on that. I think you’ll also find the House Oversight Investigation Committee will hold meetings on that.”

3 SENATE

Any hopes for resistance to the Trump agenda likely rests in the Senate. Not long ago, that opposition would have centered around the confirmation hearings for Trump’s cabinet nominees. Hirono and Schatz voted against most of Trump Cabinet nominees, but all those who didn’t withdraw were confirmed despite Democratic opposition.

This highlights how the Senate’s vaunted 60-vote rule has diminished since the Democrats, under then-Majority Leader Harry Reid, changed the rule that required 60 votes to confirm presidential nominees. Now, except for Supreme Court nominees, approval only takes a simple majority. That’s what every Trump Cabinet nominee got, though Betty Devos needed a tie-breaking vote from Vice President Mike Pence. This raises questions about how Hawaii’s two senators will approach Trump’s nomination of Neil Gorsuch to the Supreme Court.

“I will be spending a lot of time going forward on the Supreme Court nominee,” says Hirono, who sits on the Judiciary Committee. “That person could have a very pivotal impact on individual rights. For example, this court has, I think, tipped the scales in favor of corporations against individuals. I can cite a number of cases that exemplify this: Lilly Leadbetter, Hobby Lobby, Citizens United. Many of these were five-to-four decisions, so the next person on the Supreme Court could make the difference.”

At press time, a Supreme Court nominee still needs a super-majority of 60 votes to avoid a filibuster in the Senate. The question is whether the Democrats will be willing to use a filibuster to try to block Gorsuch (or any Trump nominee) from taking the bench. If they do, they risk Republicans invoking the so-called “nuclear option,” using the same procedure as Harry Reid to get rid of the filibuster for all executive nominations. Even given that risk, Hirono is unequivocal about her willingness to use the filibuster to protect issues important to her.

“If the nominee is someone that raises concerns regarding fairness, access of individuals to the courts, and things like that, I would do everything I could to raise those concerns. I really care about the potential of overturning Roe v. Wade.”

4 APPROPRIATIONS

"On both sides, there's interest and an appetite for working together on infrastructure." -Rep. Tulsi Gabbard

“On both sides, there’s interest and an appetite for working together on infrastructure.” -Rep. Tulsi Gabbard

Regardless of what happens with the Gorsuch nomination, the Senate’s 60-vote rule still applies to legislation. That’s part of what makes Schatz’s role as a member of the Appropriations Committee so important. The House of Representatives may pass a budget on a simple majority vote, but Appropriations has to pass a bill that actually authorizes how that money is spent. Ending debate and bringing that bill to a vote will still require 60 votes.
Perhaps more important, Schatz says, the Appropriations Committee is one of the last bastions of bipartisanship in Congress.

“It takes a certain kind of senator to even want to be on that committee anymore, because there’s not a lot of fighting. There’s negotiating, but we try to hold each other and our priorities harmless from whatever battles are happening on the Senate floor or in the country. So, although I’m never overconfident, I’m reasonably certain that, when it comes to people like Thad Cochran and Pat Leahy, when it come to myself, as the top Democrat on the Military Construction and Veterans Affairs, and Related Agencies Subcommittee, this is about what’s in the country’s best interests and what’s in our own states’ best interests. It’s especially true that my being the ranking member on the Military Construction Subcommittee puts us in a better position to make sure that resources continue to flow into Hawaii. There’s never zero risk and, with Donald Trump as president, there are tremendous challenges ahead. But, when it comes to making sure that federal investment continues to come to Hawaii, the Appropriations Committee is where the rubber hits the road.”

Schatz’s optimism about the Appropriations Committee extends to its role in limiting Republican plans to gut Obamacare. The House can act alone to cut the program’s funding, using a procedure called reconciliation. But they can’t pass a new law without going through the Senate. “So, they can only ruin the current law,” Schatz says. “They can’t do any fixing without 60 votes, and without the participation of multiple committees: the Health, Education, Labor and Pensions Committee; the Finance Committee; and the Appropriations Committee. My judgment is that it is now more likely than not that the Republicans will either leave the Affordable Care Act alone, or make minor tweaks and call it something else.”

Schatz also thinks the political and economic realities of gutting Obamacare are causing many in the Republican majority to lose their nerve.

“I’ve learned, since 2016, that I’m not very good at predicting,” he says, “but I think it’s fair to say that they’re realizing the promises they’ve made on the Affordable Care Act just don’t add up in terms of the math. Just to take one part of this: They promised to provide coverage to people with pre-existing conditions; they want to extend coverage to young people until they’re 26; and yet they want to eliminate the individual mandate. That will not work. We need a risk pool to be able to subsidize people who may require more expensive care.

“The Republicans didn’t have to worry about any of that as long as Barack Obama was president; they could pass all these irresponsible bills (confident he would veto them), But now it’s, ‘You break it, you bought it.’ They don’t have President Obama as a foil anymore, so if they muck with the health-care system and make it worse – and they’re certainly going to make it worse – they’re going to own that. They’re terrified of that prospect.”

5 ENVIRONMENTAL RISKS

Even on the environmental side, where Trump and the Republican majority are probably most at odds with the Democrats, Schatz is curiously optimistic. Although he and Hirono were both among the most ardent critics of Scott Pruitt, Trump’s controversial choice to head the Environmental Protection Agency, Schatz doesn’t believe the survival of the nation’s major environmental laws is at stake. More to the point, he’s confident the election of Trump doesn’t spell disaster for Hawaii’s delicate environment.

“On the Appropriations side,” he says, “we think that we have a pathway for dollars to continue to flow to Hawaii for environmental priorities. Of course, on the policy side, it’s fair to say we’re not hopeful about making progress on any new laws. But the Endangered Species Act, the Clean Water Act, the Clean Air Act – those all remain federal law. So, regardless of the pronouncements of the new administration, they are duty-bound to obey the law.”

Schatz’s argument can be extended to address how Democrats should deal with Trump’s propensity to ignore the truth: It’s OK to search for common ground with Republicans, but you have to stake out principles that are non-negotiable.

“There’s a tendency in this administration for the president to declare things to be true that he wishes to be true, and to try to short circuit the arduous process of making or changing public policy. While I understand we’re not going to make a ton of environmental progress under Trump, there’s no reason to accept that we’re going to backslide on the bedrock of environmental law in this country. That includes clean air, clean water and endangered species protection.”

Schatz pauses a moment for emphasis before adding, “That’s an area where I’m perfectly willing to engage and fight.”

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Twins: First Hawaiian and Bank of Hawaii Share More Differences Than Similarities

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Can Hawaii Feed Itself?

Richard Ha and I climb into the cab of his big pickup and drive up the mountain.

I’ve come to Hamakua Springs, Ha’s 600-acre farm in Pepeekeo on the Big Island, to help see the future of Hawaii agriculture. Ha is a resourceful and outspoken farmer, and I want to hear his views on the increasingly fashionable notion that Hawaii could grow most of its own food. The issue, known variously as food security, food sustainability and food sovereignty, hinges on a few key questions: Can the land and water once devoted to the big sugar and pineapple plantations now support diversified agriculture? What investments and resources are necessary to make Hawaii agriculture more efficient? Finally, can the state’s growing welter of small farmers – most with much smaller operations than Hamakua Springs – ever compete with cheap imports from the mainland and the world? With a few important caveats, Ha says he’s optimistic about the future, and he wants to show me why.

We drive slowly uphill, traversing the length of the farm. The truck rumbles past packing sheds and outbuildings, past dozens of greenhouses bursting with tomatoes, past neat rows of banana trees and fields of taro, and, higher up, past fallow fields thick with weeds. Finally, in the topmost corner of the farm, we stop near a grove of trees that runs along the edge of a gulch.

Here, a finger of Ha’s farm reaches out and touches the Waiaama River. This land, he says, was thrown in almost as an afterthought when he bought the property. The idea was to ensure he would always have access to water. Today, this trickle of water represents the future of the farm – not just for irrigation, but as the centerpiece of Ha’s evolving ambitions: hydroelectric power.

Running along the high bank of the gulch is an old concrete irrigation flume, a relic of the defunct Pepeekeo Plantation. A shallow stream chuckles down the flume before spilling into a new concrete diverter.
“I think the general term for this is a headworks,” Ha says.

He shows me how, as the water is shunted to the right, it riffles briefly over a fine grate. The grate allows some water to pass over it and sluice back into the Waiaama; the rest, now filtered of debris, falls through the grate into a 22-inch pipe. This buried pipeline is called the millrace. It runs more than a kilometer down the hill to a 20-foot container that houses Ha’s new hydro plant. There, the surging water powers a turbine-driven, 115-kilowatt Lincoln generator before tumbling out the spillway into an irrigation ditch.

Ha says this system, which cost hundreds of thousands of dollars and will likely take years to amortize, can generate nearly twice the 50 kilowatts the farm currently consumes. Although HELCO, the local power company, won’t buy his excess power, Ha isn’t worried. He plans to use the surplus to transform the way Hamakua Springs does business.

Driving Down the Cost of Energy
Like most farmers, Richard Ha understands how the high cost of energy in Hawaii hampers agriculture. Energy runs your trucks and tractors and, in many cases, the pumps that irrigate your fields or water your cows. Electricity keeps your processing plant humming, cools your chiller and powers your milking barn. Energy runs a farm like it runs any business.

Hawaii farmers are at a particular disadvantage because of the state’s reliance on petroleum – a dependence that their farming competitors on the mainland and around the world rarely share.

“More than 70 percent of Hawaii’s electricity is generated from oil,” Ha says. “On the mainland, it’s only 1 percent. That’s why we can’t compete with anything manufactured on the mainland when it has electricity costs embedded in it.” That’s why he invested in hydro and why he supports geothermal and other renewable energy sources.

“If we were able to figure out a way to get cheaper electricity, over time, we could get an advantage, and then we could start doing other things.”

Ha is still trying to figure out what those “other things” are for his farm. He envisions Hamakua Springs as an agricultural hub that provides space and services to other farmers, such as a certified kitchen, fertilizer manufacturing and a packing plant. All those become possible when energy is cheap, and all affect the price of food.

“In the final analysis,” Ha says, “it’s all about costs. The customers will go to where it’s cheapest. So if our electricity was cheaper, the people would buy the stuff made here.”

Raising Cattle in Hawaii or Shipping ’Em Out?
Energy poses a special problem for ranchers. Although more and more people are turning to grass-fed beef – for both health and ethical reasons – most Americans still prefer the marbled meat that comes from grain-finished beef. For the most part, that means a Hawaii rancher who wanted to sell beef here would either have to ship in feed for finishing or grow his own. Shipping grain isn’t economical – it takes seven pounds of grain to produce a single pound of beef – but growing your own is also impractical. It would require you to ship in fertilizer and pesticide, and it might require irrigation, another energy hog.

So, for the most part, Hawaii ranchers quit finishing their cows here in 1990, after the last feedlot closed on Oahu. “Most ranchers here are cow/calf operators now,” says Jason Van Tassell, livestock manager for Parker Ranch. In other words, they keep just enough cows – “stockers” – to breed a herd of calves to sell. “Hawaii’s great for that, because we have good grass here. The model has been: You have a calf, and when you wean the calf, it goes to the mainland, where it’s grown out and marketed. Then, all that beef gets shipped back for local consumers.”

Ranchers were surprised to find they actually made more money this way than finishing the cows themselves. At least for a while.

“That model worked for a couple of years,” Van Tassell says, “because the shipping costs were low. But, later, the shipping costs got more expensive. And, remember, it’s shipping two ways. It’s shipping the calf there, and then shipping the food product back.” Those costs cut into ranchers’ margins.

Not surprisingly, many of them now are looking at the trend toward grass-fed beef as an option. In fact, many ranches have always retained a few stockers for local finishing. But now, well-known operations, such as Kualoa Ranch and Kuahiwi Ranch, are actively marketing a grass-fed product. And last March, Parker Ranch, the largest ranch in the state, launched the Paniolo Cattle Co., a joint venture with the Ulupono Initiative, Pierre Omidyar’s impact-investing arm in Hawaii, to develop a statewide grass-fed beef industry. This is precisely the sort of partnership that will be necessary for local ranchers to meet a significant percentage of the state’s protein demand. But it won’t be easy.

Van Tassell points out that managing a herd for grass-fed beef is a different operation. “With a cow/calf operation, you take a cow and she can survive on pretty marginal land. She can raise a calf pretty efficiently. But when we take the calf from the cow, it becomes our job to make sure it has the right nutrition in its diet. The quality of forage has to improve in the stocker stage, which is between 450 pounds and 800 pounds. That’s when it needs to be on its very best forage. The plan of nutrition for that animal needs to be on a steady upward incline. We have to be allocating our resources to put the right animal on the right acreage at the right time. That’s really what we’re striving to do with Paniolo Cattle Co.”

Even in such operations, Hawaii is at a disadvantage with ranchers in temperate climates, Van Tassell says.
“On this island, we grow an abundance of grass. But we’re in a subtropical area, so the types of grasses that grow here are warm-season grasses. They have a high moisture content, and cattle aren’t as efficient on that type of grass.” The difference isn’t negligible. Range-fed beef in Hawaii gain about a pound a day. In temperate grasses on the mainland they would double that. At a mainland feedlot, they would gain nearly four pounds a day.

“One advantage we do have, though,” Van Tassell says, “is our grass grows 12 months out of the year. That makes it economical, from a business point of view, so we’re able to graze these cattle here.”

But Parker Ranch’s Paniolo Cattle Co. is still in its early stages. It has only about 1,400 stockers in the grass-fed beef program, out of the ranch’s herd of about 40,000 animals. If market demand materializes, the company plans to increase that to 4,000 head or so – still only 10 percent of the total operation.

To understand why ranchers are reluctant to go all in on grass finishing, look at the numbers. Jill Andrade-Mattos, president of Hawaii Big Island Beef, sketches those numbers out from the perspective of both a rancher and a processer.

“These weaners, they come in at 400 to 550 pounds,” she says. “Then, the rancher keeps them another six months and sends them off to the mainland. So, he makes $780 to $1000 per animal in just six months. But you’ve got to hold grass-finished animals for close to a year and a half before they’re ready to go to the processor.” When the rancher does the math, the numbers don’t add up.

Jason Moniz, a state veterinarian and owner of KK Ranch, tallies the figures for a hypothetical 700-pound steer at the current price of $1.65 a pound.

“They’re making $1,155 on a grass-finished animal, if they keep it another year and a half. But, in that time, you could have raised another calf and a half. So, you can take the $780 for a calf and multiply by two and a half. That’s $1,950.” In other words, the rancher loses almost $800 of potential income on one hypothetical 700-pound steer. It’s not hard to see why grass finishing remains a hard sell for most ranchers.
That’s not to say there isn’t some reason for optimism in the grass-fed beef industry. First, the demand, while still small as a percentage of the total market, is real. Whole Foods Market sometimes pays as much as $2.00 a pound, which is more than ranchers get for calves.

There are also promising developments for processors. For example, Hawaii Big Island Beef, which runs the Hawaii Beef Slaughterhouse, has worked with partners such as Ulupono and landlord Kamehameha Schools to improve the neighboring pastures using irrigation, fertilizer and new forms of forage. The idea is that ranchers can sell their weaners to the processor for finishing.
All that is critical for the state’s limited number of processors, most of which, like Hawaii Beef Slaughterhouse, are underused.

“I have fixed costs in the plant,” says Andrade-Mattos. “My refrigeration, my pumping and my well – those are all fixed costs, so, no matter what I do, those costs are there. In order to lower the cost per animal, I have to increase throughput. If I have that throughput, I can pass along more money to the ranchers.”

Technology Is Crucial to Sustainability
Closely tied to the energy challenge is the issue of technology. Most of the increases in productivity (and reductions in cost) in agriculture over the last century have been because of advancements in technology. That’s just as true in Hawaii as anywhere else.

John Cross, the land manager for Olson Trust and, before that, for the Big Five company C. Brewer, likes to chart the role technology has played here. “There’s no farmer on this earth that’s smarter at growing tropical crops than the Hawaiian farmer,” he says. “We have an agricultural college. We’re affluent. We know what we’re doing. We’re smart. We can take a crop from the 19th century and turn it into a 21st century crop within a couple of years. With the university and the Department of Agriculture and the tenacity and willpower of the Hawaiian agriculturalist, we are world leaders. The problem is that the rest of the world comes over here and copies us and takes that knowledge back to Taiwan or the Philippines or Thailand, and now we’re battling against our own knowledge being used against us in a Third-World country.”

He gives examples, such as phaelianopsis orchids, sugar cane and even macadamia nuts, for which Hawaii farmers developed the varieties of crops and methods of growing, only to be out-competed by copycat farmers in Latin America, Africa and Southeast Asia. Nevertheless, he says, technology is still our edge.
The problem is that today’s technology is often too capital intensive for Hawaii’s small farmers. It’s also often not efficient on a small scale.

Dean Okimoto, owner of Nalo Farms in Waimanalo, gives an example. “About seven years ago, I went to see the Dole Fresh processing facility in Salinas, Calif. The facility is 6 acres under roof. It has 24 wash lines, with each line producing 55 bags of greens a minute. So, how can small guys compete?”

A local example is Larry Jefts, who came to Hawaii from the mainland 40 years ago and brought some mainland economies of scale with him. With thousands of acres in production on multiple islands, his Sugarland Farms is probably the largest farm in Hawaii. Because of that scale, he can use technology like GPS-guided combines that would make no sense on the average 5-acre farm. That way, he’s able to drive down his costs and, for some crops, even compete with mainland producers on price.

But agricultural technology is about more than machinery, Jefts says. “Here, we find academics working on things important to us and we partner with them. We provide the infrastructure for their research trials, and we get to use the technology they develop.” That allows Jefts to introduce new crops or improved processes.
Jefts points to the Big Island Dairy on the Hamakua Coast as another example of capitalizing on technology. It’s another mainland company that made a big investment because it saw opportunity in Hawaii. It reportedly spent $14 million to buy the old Island Dairy and then added more investments. According to Jefts, it also built a big, modern milking barn. Each cow there has a chip implanted in its ear so sensors can track its productivity. That technology made the Hamakua operation plausible: The company realized Hawaii’s dairy cows were under-producing and thought it could do better.

Maybe you see a trend here: big mainland farmers using the advantages of technology and scale to make farming in Hawaii work. Jimmy Nakatani, executive director of the state’s Agribusiness Development Corp., gives another example: Stephen Pianowski, a mainland farmer who set up a bean operation on Kauai.
“The other farmers were skeptical,” Nakatani says. “The first question they asked him was: ‘Who’s going to pick your beans?’ And he said, ‘Don’t worry, I have machines to do that.’ ”

If Hawaii is really going to grow its agricultural base, Jefts says, it’s going to be because of people like himself – people with the capital to invest in technology and large-scale operations. “We’re not going to build that kind of agriculture with 800 small farmers,” he says. “It’s going to be commercial operations with state-of-the-art agriculture. This is not a popular position, but we have to be efficient at what we’re going to do or we’re not going to be competitive.”

Jason Van Tassell, from Parker Ranch, puts it another way: “When the general public thinks of sustainable farming, I think they see a guy out in a field hand-picking vegetables and hoeing weeds. But I think sustainability means using every bit of technology that’s out there, putting it to use to improve productivity. We’ve been around since 1845. That seems sustainable to me.”

Plenty of Land, But Not ENOUGH Farming Infrastructure
Of course, the issues of energy and technology are moot if we don’t have enough land and water to feed ourselves. But, first, what do we mean when we say “feed ourselves?” By some estimates, we import 90 percent of our food and export 80 percent of our agricultural production. How can we make a dent in those numbers?

“Step inside a Safeway and see what a supermarket really sells,” says Richard Ha. “Most of it is some sort of processed food. It’s dried or frozen, made or manufactured somewhere else. If you look at the produce department as a percentage of the entire store, it’s not very large.” Most of what’s in that supermarket will never be replaced by Hawaii products, even the basic food stuffs. No one expects that Hawaii farmers will ever produce the wheat, corn and rice that make up so much of our locally consumed calories. So, as Ha suggests, when we speak of “feeding ourselves,” what we really mean is fresh produce and a few value-added products. That’s a smaller nut to crack; we already produce relatively high percentages of the fruits and vegetables we consume here.

With that limitation, let’s ask the question again: Do we have enough land to feed ourselves? Most experts think so. Giorgio Caldarone, regional asset manager for Kamehameha Schools, the largest agricultural landholder in the state, says, “We’ve heard there’s more than enough land here to feed ourselves if we wanted to.”

Sydney Keliipuleole, operations director for the land assets division at Kamehameha, goes even further.
“I think we have enough acres just on Oahu,” he says. “People estimate it would take between 3,000 acres and 30,000 acres to do it. There’s all that state land in the central part of Oahu. If we were to replace all of that with commodity-level farms, we could get pretty close. Not including beef. Hawaii Island is the key to beef.”

The problem with much of the best land in the state, Caldarone says, isn’t quantity, it’s neglect.
“As the plantation era sort of came to a close, with the end of sugar and pineapple, large landscapes reverted back to the landowners in various states of disrepair. And, for those last 20 or 30 years, the writing was on the wall, so the plantations weren’t making investments in things like irrigation systems. By the time we got the properties back, a lot of the systems were in pretty bad shape,” says Caldarone.

Since then, Kamehameha has invested heavily in that infrastructure on Oahu. It has spent millions of dollars on the irrigation systems and roads for its properties on the North Shore and in Punaluu. It has also been investing in farmers, trying hard to identify and support people who can work all that land.
That’s not to say Kamehameha Schools is overconfident. Keliipuleole points out that a lot of the non-farm infrastructure necessary for food self-sufficiency is missing.

“That’s the processing, the value-added services, the delivery, the market connections.” All that infrastructure, he says, has to be in place before we can address the food-security question. On the whole, though, Kamehameha seems confident that its investment in agriculture will pay dividends.

Ulupono’s Kyle Datta is also confident. “Do we have enough land to feed ourselves? The answer is unequivocally ‘yes.’ Of the food we eat that is fresh food, outside of the grains and the oils that go with the grains, a significant portion can be locally grown at prices affordable to everybody.” But Datta adds a pair of provisos: “We have enough land and water to achieve that – if we use some best practices in terms of agricultural productivity, and if we honor and respect how land is zoned.”

Ulupono is focused on both those caveats. On the issue of best practices, for example, Ulupono plans to borrow grass-fed-dairy technology from New Zealand for its own dairy operation on Kauai. Similarly, it has worked with University of Texas researchers to study how to best use Hawaii’s water resources. And, as we’ve seen, it has done market studies to assess the demand for homegrown food in Hawaii, an issue important to any local farmer.

On the issue of zoning, the most famous controversies, of course, surround urban development of agricultural lands – places like Hoopili and Koa Ridge on Oahu. Advocacy groups, like the Sierra Club and the Hawaii Food Policy Council, view the loss of these important agricultural lands (a descriptive term that sometimes overlaps with the legal classification, Important Agricultural Lands) as catastrophic. Even if the agriculture system is able to weather the loss of agricultural hot spots, like Hoopili, the controversy highlights some of the inherent conflicts between agriculture and development. For example, if landowners believe they may one day be able to convert their inexpensive farmlands into valuable subdivisions, they’re unlikely to offer long-term leases to tenant farmers. Absent long-term leases, farmers are reluctant to invest in infrastructure and often unable to get loans. Many of Hawaii’s small farmers are on year-to-year, even month-to-month, leases – hardly encouraging for a young farmer.

The encroachment of development on agricultural lands creates other problems. When Ulupono tried to help revive the state’s moribund dairy industry with a startup, 583-acre, grass-fed dairy on Kauai, its Mahaulepu neighbors, including the Grand Hyatt Kauai Resort, balked at the idea. Even though the property was zoned agricultural, and most neighbors were required to get variances to build in the area, they objected to some of the nuisances of being next door to a working dairy. Ulupono relented, announcing it would reduce the initial size of the herd from 1,800 cows to fewer than 700.

The same kind of scenario has played itself out in the GMO debates and the pesticide fights. Whatever side you take in these arguments, it’s clear that farming and development don’t mix. As suburban sprawl moves people closer to agricultural areas, conflict is inevitable. So, while we may have plenty of farmland available, the people of Hawaii are less and less likely to want large-scale farming in their neighborhoods. That makes the question, “Do we have enough land?” something of a red herring.

Economics Suggests Hawaii Should Specialize
Maybe the question isn’t, “Can we feed ourselves?” but “Should we feed ourselves?”

According to modern, liberal economic theory, maybe not. As pointed out by Peter Garrod, an agricultural economist and the former vice chancellor for research at UH, individuals, companies and even countries reach their greatest efficiency when they specialize.

“Most of your readers, I suspect, are specialized. They do one thing quite well, and they use their earnings from that to buy lots of other goods. If they tried to produce everything they wanted, they probably couldn’t do everything very well.” The same is true for countries and states. The argument is quite simple: If we can buy cheaper food elsewhere, we should focus our efforts on more profitable activities.

It’s not that Garrod thinks we should give up on agriculture; we should just be realistic about our goals.

“Can we feed ourselves?” Garrod says. “If all we did was produce food for ourselves, we would be able to come close. But we would become an agrarian society. On the other hand, could we feed ourselves more than we do now? Absolutely. But even that probably involves a change in consumer values, which I think is already occurring. Buy local, fresh foods, farmers markets, grass-fed beef – these are all trends that allow us to produce more of our own food. But, what proportion of our food should we produce? Well, we’re going to have a hard time if we want wheat and rice and all those other things we enjoy eating. I don’t think we’re going to produce those here.”

Economics does suggest what kinds of agriculture, other than the obvious export crops, make the most sense in Hawaii.

“Transportation costs do make the transaction costs higher for importers,” Garrod says. “This aids local producers. If we had essentially free trade with the mainland, a lot of our local producers would have a hard time competing. We have expensive land, expensive water, expensive labor. But we don’t have free trade; we have a pretty substantial transportation cost. That gives local producers a sort of tariff protection. Goods come here with the cost of transportation added on. We don’t have to pay the transportation cost, so we can compete with that. Our products can be fresher.”

For Larry Jefts, that calculus is an explicit part of his decision on what crops to grow: If the shipping costs for mainland producers exceed the added cost of growing that product in Hawaii, it’s a potentially profitable crop. For instance, that’s why Jefts grows a lot of watermelons.
Anthony Aalto, secretary of the Sierra Club’s Oahu Group, points out there are other economic advantages to the grow local movement. For example, it allows us to capitalize on the Hawaii brand for export or for sale to tourists.

“We have the ability,” Aalto says, “to grow things that can then be processed to generate added value. If we grow cacao then we could then turn it into chocolate. And because Hawaii in and of itself is such a unique brand and has such an image attached to it, organic chocolate grown in Hawaii is instantly going to have a cachet and a brand and a value attached to it that can generate huge amount of income to bring back to the state.”

Even the food grown for local consumption has important economic impacts at home, Aalto says. “When you talk about import replacement, you’re talking about dollars that are going out to the mainland, or to Asia or somewhere, that could stay here. Every dollar spent on a food item that’s grown in Hawaii is a dollar that doesn’t go to California and it stays to boost the local economy.”

Yet, most economists believe the benefits from specialization and trade outweigh the costs.
“The basic issue,” Garrod says, “is that we could become more sustainable if we were willing to decrease our lifestyle. ‘Decrease’ is probably the wrong word, but it helps to remember that trade increases total social wealth. The more sustainable we became, the less time we would have to make money doing something else.”

Government’s Role, Though Diminished, Remains Crucial
If the idea is to increase Hawaii’s production of food, what role does government play in that process? Well, for one thing, it’s shrinking.

“Do you know what the percentage of the state budget the Department of Agriculture gets?” says Dean Okimoto. “It’s 0.7 percent – not even 1 percent. Somebody recently told me that, in the 1960s and 1970s, it was about 15 percent.” To Okimoto, this decline reflects similar changes in the Legislature.
“Did you know, in the 1960s, the majority of our legislators were farmers. So they understood agriculture and could help agriculture.” Today, Okimoto says, only one or two legislators are true farmers. “So, it’s difficult for these guys to understand the issues. And even if they do understand, if there’s a vocal minority out there, they will kowtow to the vocal minority.”

Others are more upbeat about the role of government. On the Hamakua Coast, ranchers such as Jason Moniz praise the state government for allowing ranchers to buy discounted water from the Hamakua Ditch. Starting in January, they’ll pay 25 cents per thousand gallons. That’s still higher than the 10 cents they were seeking, but it’s low enough to start using pasture irrigation in a few key areas.

John Cross, at Olsen Trust, highlights another important point about government’s role. “We have a department that’s run by one of us,” he says. “Who gets appointed to head the Department of Agriculture? It’s not a politician; it’s a farmer. The current guy, Scott Enright, used to grow guava and, before that, sugar.”
Similarly, Jimmy Nakatani, the director of the Agribusiness Development Corp., the other key agency promoting diversified agriculture in the state, is a former farmer and former chair of the state Department of Agriculture. At least, the bureaucrats are technically savvy.

That’s especially important at the ADC, which was created in 1994 to help Hawaii agriculture find its way after the demise of sugar and pineapple. Its primary mission is to acquire and manage key agricultural infrastructure – irrigation systems and high-grade lands – that were once the purview of the big plantations. Nakatani, who took over as executive director in 2011, gives a few examples of how the agency works.

“One of the first projects ADC started with was the Waiahole Ditch,” he says. This was the controversial case over the diversion of water from Windward Oahu to the big sugar plantations on the Leeward side. With the demise of Big Sugar, communities like Waiahole and Waikane wanted that water to remain on the Windward Side and flow through their valleys. Although cultural and environmental advocates prevailed in getting more water for loi and higher stream flow, Waiahole Ditch still delivers water to some of the largest farms in the state in Leeward Oahu.

“I think that went very well,” Nakatani says, “if you look at the number of jobs that are there because the ditch is there. I always look at it as 1,500 to 2,000 jobs, or $150 million worth of business for the state. It doesn’t seem like that because it’s kind of an innocent-looking ditch – plus an amazing tunnel – running from one side of the island to another. But it services the prison. It services Mililani mortuary. It services Mililani Golf Course. And, of course, it services a lot of farms. I’m not sure how many farms, but it includes Larry Jefts and Aloun Farms, of course Monsanto and Syngenta, and then there are a lot of small farms at Mililani Agricultural Park. It’s quite an amazing system.”

ADC also oversees a large and somewhat controversial project on Kauai. “In Kekaha,” Nakatani says, “in the Mana plains, we’ve got approximately 4,000 to 5,000 acres of good land. Most of the land is currently occupied by the seed corn companies, who came in and took care of the infrastructure. We got criticism for that, but you have to have transition. You have to have resources to help you.”

Now, a couple of large vegetable farms have subleased land from the seed-corn companies. It’s a symbiotic relationship, Nakatani says. Because of the way seed corn is grown, with extensive buffer zones and long fallow periods, as much as 80 percent of the Kekaha land is unused at any given time. Nakatani hopes to eventually see 500 or 1,000 acres of diversified agriculture there on the Mana plains.

A Model for the Future
The jewel in the ADC crown is probably the Whitmore Project in Central Oahu. Like many plantation towns, Wahiawa went through a precipitous economic decline when the Dole Plantation closed in 1991. The Whitmore Project, the dream child of state Sen. Donovan Dela Cruz, is an ambitious attempt to take the old, derelict pieces of the pineapple era and use them to create a thriving diversified-agricultural hub. It’s had a promising start.

At the core of the Whitmore Project is the 1,700-acre Galbraith Estate, which was purchased in 2012 with funds from the state, the City and County of Honolulu, the U.S. Army, the Office of Hawaiian Affairs and D.R. Horton Schuler Division. This acquisition gave the ADC 1,200 acres of long-fallow land (OHA received the other 500), which it has already begun to clear and lease to farmers. ADC is also planning and developing the necessary irrigation systems.

The Whitmore Project isn’t just another way for the state to lease agricultural lands. The state also authorized the purchase of an additional 24-acre parcel to serve as an “Ag-Tech” hub, as well as an old industrial warehouse in downtown Wahiawa to be used for packing and processing. In addition, ADC has partnered with the Hawaii Housing Finance Development Corp. to acquire a small parcel of urban land near Schofield Barracks. Dela Cruz envisions this property, adjacent to the area’s only high-rise, as the site of high-density workforce housing. There’s more in the works, including the imminent purchase of 20,000 acres from Dole Food for $175 million.

All these acquisitions surround downtown Wahiawa and Whitmore Village, the former plantation town across the gulch. Dela Cruz believes that, by clustering all these agricultural services, ADC can create the right environment for diversified agriculture to thrive. It certainly seems to solve many of the most persistent problems for farmers: short-term leases, distance from market, access to processing and packing, even capital.

Dela Cruz cites the example of Ho Farms. “They have 50 acres, more or less, in Kahuku, and they were selling their produce to Costco. But, when Costco started to implement new food-safety rules, almost overnight 80 percent of their production was lost. But, because they’re on a short-term lease at Kahuku, they cannot get a loan to build a food safety facility. As part of the Whitmore Project, though, they can get a long-term lease from ADC.” That gives them land, access to capital and proximity to their major markets.

Shin Ho of Ho Farms and state Sen. Donovan Dela Cruz stand in an old warehouse outside Wahiawa that Ho Farms plans to renovate into a food-safety facility. Dela Cruz hopes the Whitmore Project can convert the remains of Wahiawa’s pineapple plantations into the infrastructure for a diversified agriculture center.

The Ho family is also leasing an old warehouse in the Ag-Tech Hub and refurbishing it as a modern food-safety facility. This project will likely cost more than $1 million, which the Hos will fund using rent credits from ADC. In other words, their rent is reduced for a certain time to help defray the cost of the build-out.
The beauty of this approach, Dela Cruz says, is there are no out-of-pocket costs to ADC. “By using rent/lease credits, ADC doesn’t have to subsidize anything.” In fact, ADC has a comparatively small operating budget, generating most of its own income from rents and fees. (Acquisitions, though, are usually paid for with state capital spending or general-purpose bonds.)

The most remarkable feature of the Whitmore Project is that so much of it has either already happened, or the funds have already been appropriated. That’s largely due to Dela Cruz’s work, both as a state senator and, before that, as a city councilman.

Aware of the politics involved, Dela Cruz has scrupulously cultivated partnerships with the agencies and people that can impact the project’s success. He has conducted over 70 site visits and tours for the board members and key leaders of these organizations – not to mention press tours and community outreach. Now, each of these organizations has a role to play in the Whitmore Project: The Hawaii Public Housing Authority and HHFDC will help with workforce housing; the Department of Education will help with workforce readiness; the UH College of Tropical Agriculture and Human Resources will help with research and development and extension services; the High Technology Development Corp. will help with food-safety applications. At least 12 agencies have a stake in the project’s success.

In short, building a diversified agriculture hub takes a lot of footwork and coordination.

Not everyone is happy, of course. ADC director Jimmy Nakatani says some people have complained that the ADC favors larger farms, which don’t need the help as much as the small ones.

“When somebody asks, ‘What about the new farmers?’ I say, ‘New farmers are the responsibility of the Department of Agriculture.’ That’s just the way it goes. ADC is about development. I don’t want anybody who doesn’t have any experience, because the likelihood of them succeeding is not very good.”

Some farmers have also complained the project is too focused on one area. But Dela Cruz views the Whitmore Project as a template for other regions to apply according to their own circumstances. Nakatani agrees.
“If you look at Wailua (on Oahu’s North Shore), there’s an industrial area; there’s agricultural land surrounding it. And it’s probably better off than Whitmore because Wailua was sugar, so it had better irrigation.”

“I can also see it in Pahala, on the Big Island,” he says. “It’s far away from anything. In fact, that’s even a better template. There is infrastructure over there. There’s development with agricultural land surrounding it. There’s a hub for marshaling, so if you have to go sell your produce to Hilo, you just load up in one central area and one guy makes the run, not 20 of them.”

Of course, what these communities need might not be more agricultural resources, but a resourceful and energetic politician like Dela Cruz.

If all of these elements – energy, technology, coordination and more – come together, they probably won’t be enough to make Hawaii completely self-sufficient in food – something we haven’t seen since the days of the Hawaiian kingdom. But that doesn’t mean we can’t rejigger the system to make local farming more productive and enable it to grab a bigger share of locally eaten fruit, vegetables and other foods. Sometimes, that may mean building a Whitmore Project or farmers coming together in a cooperative. It could be an organization like Ulupono or Kamehameha Schools absorbing some of the costs of research or infrastructure. Ultimately, whatever it is, it has to make farming more profitable if we’re going to grow significantly more food in Hawaii.

“That’s something I learned a long time ago,” Richard Ha likes to say. “Food security has to do with farming. If the farmers can make money, farmers will farm.”

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The Next Wonder Drug

For centuries, people around the world knew that chewing on the bark of certain willow trees could ease the pain of a toothache or a migraine. By the mid-19th century, scientists in France and Germany had isolated the chemical, salicylic acid, responsible for willow bark’s analgesic and anti-inflammatory qualities, but it proved too harsh on the stomach to be of real medicinal value. Then, in 1897, a German chemist named Felix Hoffmann synthesized a purer, less irritating form of the natural compound. This new chemical, acetylsalicylic acid – better known as aspirin – became the best-selling drug of all time and is still the foundation of the multibillion-dollar corporation we now know as BayerAG. In a modest way, a similar story may be under way in Hawaii.

Twelve years ago, scientists at Cardax, a small biotech company nestled in the Manoa Innovation Center, synthesized a form of astaxanthin, a naturally occurring chemical found in shellfish and micro-algae and, like aspirin, a powerful anti-inflammatory. The natural form of astaxanthin is already a well-known dietary supplement – sometimes called a nutraceutical – believed by many to reduce the threat of heart disease. Kona-based Cyanotech, for instance, is a major manufacturer. But CDX085 – the latest in a suite of similar Cardax-patented compounds – is so much purer and more potent than natural astaxanthin, and the number of potential uses so much larger, that Cardax’s team believes it may become the next billion-dollar drug. They could be right.

Despite all this promise, Cardax’s path to success has been long and complicated and is far from over. Like so many startups in the life sciences in recent years, Cardax has been in a life-or-death struggle to find enough money to continue to operate. For the company to follow the traditional developmental route for startup drug companies, investors may have to pony up more than $100 million to conduct the expensive Phase-2 and Phase-3 clinical trials necessary for FDA approval of a pharmaceutical drug. So there are still many hurdles for Cardax.

But, last April, the German pharmaceutical giant BASF finally exercised a longstanding option to become the exclusive licensee of Cardax’s nutraceutical. Then, in October, Cardax announced it would use an arcane device called a reverse merger to go public. That succeeded in attracting millions of dollars in new investment for the company, setting in motion a plan to have a still unnamed nutraceutical product on the market by the end of 2014. So the company may finally have turned the corner.

All of which makes the ongoing saga of Cardax and its promising family of anti-inflammatory compounds a good introduction to the current state of biotechnology, venture capital and the evolving world of drug discovery.

Body Fights Back

To make sense of the Cardax story, you have to understand a little about inflammation. Almost all chronic diseases are inflammatory, including heart disease, osteoarthritis, diabetes and even some cancers. But inflammation itself isn’t a disease. It’s the body’s natural response to heal damaged tissue and defend against unknown pathogens. The redness and swelling associated with an infected cut or a case of strep throat is just the body’s attempt to isolate that infection and promote healing. In a tip of the hat to Celsus, the Roman encyclopedist, medical science still characterizes inflammation by the four cardinal signs: tumor, rubor, calor and dolor –swelling, redness, heat and pain. (The Greek physician Galen, no poet, added a fifth characteristic: “functio laesa” or loss of function.)

Inflammation may cause discomfort, but it’s an essential function of our immune system. There are two kinds of inflammation, though. Acute inflammation, despite the name, is the normal swelling and pain associated with minor infections. Physiologically, though, it’s astonishingly complex. When tissue cells are damaged, they release histamines and other chemical signals that mediate the body’s inflammatory response. This causes cytokines, small proteins in the bloodstream, to induce a dilation of the veins, bringing more blood to the injury. That makes an infected cut turn red. The dilated veins also become more porous, which allows plasma to leak through the vascular walls into the surrounding tissue. That causes swelling. Along with the plasma comes a flood of cells from the immune system called leukocytes, including bacteriophages that directly ingest bacteria, and enzymes that attack the structure of the pathogen. As the infection or injury abates, the body returns to normal. This type of acute inflammation is typically brief and effective.

But the inflammation associated with chronic disease is a different story. Rather than stem from a specific event, like a wound, chronic inflammation appears to be the result of the low-grade irritation of whole bodily systems, such as the cardiovascular system in the case of heart disease or the respiratory system in the case of asthma. Similarly, chronic inflammation isn’t a reaction to a specific pathogen; rather, it seems to arise from more or less permanent stimuli, such as smoking or chemicals in the environment. That may be why diseases associated with chronic inflammation are so much more prevalent today than in the past.

Modern medicine has done a good job dealing with the infections and communicable diseases that used to be the primary causes of death. In 1850, the life expectancy of an American at birth was only 38 years – largely because of the high level of infant mortality associated with childhood diseases. But, because of the advent of antibiotics and vaccinations in the 20th century, the average life expectancy today is over 74 years. As we’ve begun to live longer, though, chronic diseases have overtaken infections as the leading causes of death.

It’s unclear though, whether inflammation is a cause or an effect of chronic disease. “That depends,” says Deepak Bhatt, executive director of cardiovascular programs at Brigham and Women’s Hospital in Boston and a member of Cardax’s scientific advisory board. “For arthritis, I think it’s largely the cause of disease, because inflammation in the joints can cause pain, damage or even disfigurement in the joint space. In that case, an anti-inflammatory drug would be expected to directly influence the disease process. In cardiovascular disease, it’s a little less clear, but I think the majority of cardiovascular experts think there’s a causal relationship between inflammation and the disease, as opposed to inflammation being some kind of ‘innocent by-stander’ effect.

“My own feeling is it’s probably a little of both. There are cases where smoking or high cholesterol, for example, can damage the inner lining of the arteries – what we call the endothelium. That can certainly lead to inflammation in the arteries and the accumulation of plaque, which can cause heart attacks. But there are also people who are exposed to all those risk factors but exhibit no signs of inflammation or cardiovascular disease. So, sometimes inflammation may be the result of cardiovascular disease, and there are cases where inflammation is the primary bad actor.”

Cardax’s Compound

At the cellular level, chronic inflammation is the result of something called “oxidative stress,” the buildup of an excess of molecules called “reactive oxygen species.” These so- called “free radicals” are a normal product of the metabolism of cells. “Under healthy conditions, the body has ways to deal with free radicals,” says Cardax CEO David Watumull. “Some reactive oxygen species are even used by the immune system to attack and kill pathogens. But with chronic disease, an excess of free radicals begins to cause inflammation and, ultimately, cellular damage.”

This is what’s now thought to happen in athereosclerosis, a common form of cardiovascular disease. Oxidative stress causes inflammation of the cells lining the arteries, which induces the buildup of plaque. It’s plaque that causes heart attacks and strokes. Antioxidants like astaxanthin appear to provide a vehicle to remove free radicals from the cell, although the use of antioxidants to prevent disease is still controversial.

What makes Cardax’s compounds differ from other antioxidants is how efficiently they work. In highly magnified X-ray diffraction images of cell membranes, it’s possible to compare the antioxidant activity of Cardax’s compound with other antioxidants. In a 2007 paper in the journal Biochimica et Biophysica Acta, scientists reported that they found that, while other antioxidants damage the integrity of the membrane, or provide only a partial membrane spanning, CDX085 bridges the cell membrane completely, dramatically reducing the number of free radicals inside the cell. Just as important, CDX085 appears to be incorporated in the mitochondrial membrane, the most important site for free-radical production in the cell.

This might explain the unusual effectiveness of the Cardax compounds in animal studies. Although there are plenty of anti-inflammatory drugs available today, including some of the most profitable pharmaceuticals on the market, most of these compounds can be surprisingly toxic, especially when taken in high doses or for long periods of time, as is usual for chronic disease. That’s why the TV ads for pharmaceuticals, even blockbuster drugs like Lipitor or Viagra, can be so scary. On the other hand, in pre-clinical tests, the Cardax compounds appear to have had no side effects. In the industry lingo, they’ve shown “no known dose toxicity.” If that holds true in clinical trials on humans – and, given the long history of astaxanthin as a nutraceutical, there’s no reason to think it won’t – this new class of anti-inflammatory drugs could treat a wide range of diseases. That’s part of whyCardax looks so promising.

Then, of course, there’s the size of the potential market for Cardax compounds. CDX085 was patented as a treatment of cardiovascular disease – specifically, it reduces the level of triglycerides in the bloodstream, a precursor to heart disease – but CDX085’s sister compounds have been tweaked to treat osteoarthritis, diabetes, cognitive decline and other inflammatory diseases. These are all enormous markets. For example, in 2013, the pharmaceutical giant AbbVie (formerly Abbott Laboratories) sold more than $10 billion of Humira, a popular anti-inflammatory that originally targeted rheumatoid arthritis.

There’s also the nutraceutical market, which includes unregulated products like vitamins, enzymes and herbal remedies that are mostly sold over the counter. Nutraceuticals have some restrictions. Because they lack FDA approval, only limited claims can be made about their uses and efficacy. This makes them less lucrative than pharmaceuticals, which can make specific therapeutic claims. As Watumull points out, “If the FDA allows you to put ‘for pain associated with osteoarthritis,’ your market penetration will go way up.”

Nutraceuticals don’t have that option. But that doesn’t mean nutraceuticals are small potatoes, especially if they have a history of safe usage. “As a dietary supplement,” Watumull says, “we think the best comparison for Cardax is chondroitin/glucosamine, a nutraceutical commonly used to treat osteoarthritis. It’s marginally efficacious at best, but it still sells about $2 billion a year, because it’s safe. So, you have these enormous markets out there for safe anti-inflammatory drugs.”

As a pharmaceutical, he says, the numbers for the Cardax compounds are even more eye-opening. “We asked the members of our scientific advisory board, a panel of unpaid medical experts who serve as independent third-party advisors, ‘What percentage of your patients do you estimate would take this drug?’ We thought that something like 10 percent would be great; the smallest number anyone gave us was 90 percent. They told us, ‘You don’t understand how desperate we are for a safe, effective treatment.’ So, if you’re asking, ‘Who is the market for our compound?’ the answer is: Anybody who has an inflammatory problem.”

Venture Capital

The question is: If Cardax is such a good bet, why aren’t they already a big success? The answer, as always, is money.

It’s expensive to be a biotech company. If you’re developing a new drug, those costs can stop a company in its track. For example, the natural next step for Cardax would be to subject its compounds to human clinical trials. But Phase-2 clinical trials, usually conducted on just a couple of hundred individuals, can cost as much as $20 million. Phase-3 trials, which can involve thousands of individuals, can bring those costs to more than $100 million.

“Big Pharma,” the giant pharmaceutical companies that have dominated drug development for the last hundred years, will often buy or invest in companies with promising Phase-3 drugs. The Phase-2 part of drug development, though, has traditionally been funded by venture capital, and the VC world is in flux.

“They just aren’t funding life sciences anymore,” Watumull says. “They used to fund pre-clinical trial companies and take them through clinical trials, but they stopped doing that about five years ago to any meaningful extent.” In part, he says, it’s because of the risk. But it’s also because of changes in their own incentives as VC funds have grown.

“Back in the 1980s and 1990s,” Watumull says, “the largest funds raised like $200 million. If you’re a VC, you collect 2 percent of that as your annual fee. That’s just $4 million a year for expenses.” Divvied up among all the fund partners, that’s not a lot of profit for such a risky investment. Thus, to get the high rate of return that investors and the VCs themselves expected, they had to gamble on early-stage companies. That used to be the essence of the VC model: If you invested in 10 startups, five would fail, three would break even or make a modest profit, but one or two would be home runs and generate the 15X or 20X yields that made venture-capital investment viable. It was a numbers game.

“But, if you have $4 billion under management,” Watumull says, “that 2 percent management fee is now $80 million a year. That’s without doing anything. So now, VCs are less interested in investing in small, early-stage companies like Cardax. Why take the risk? Most of the companies they invest in today are Phase-3 deals.”

Watumull doesn’t think this is sustainable. The VC model depends on the high returns provided by those high-risk startups. If you remove the riskiest investments, you also remove most of the reward, and the returns on the less risky investments just don’t justify the risk. He explains it this way: “A 7 percent upside for a successful company, against a 100 percent downside for a company that fails – that doesn’t work. The amount of risk the VCs perceived was just wrong. If you wait until a company’s in Phase-3 trials to invest, you have to put up at least $100 million, so there’s no way you can make 10 times or 20 times on that Phase-3 company. But you can still lose 100 percent of your investment.”

Watumull says this miscalculation is reflected in the recent financial performance of the major venture-capital funds. “Their returns have been mediocre at best over the past five years. That means VCs also haven’t been able to raise as much money. Now, it’s all going to private equity capital.”

Nevertheless, Cardax tried to get VC funding. Like executives at most promising startups, Watumull and his team traveled around the country, making pitches to dozens of VC firms. Cardax even had some success, attracting interest from Ivor Royce, an icon in the VC world whose own life science companies, Hybritech (bought by Eli Lilly and Co.) and especially IDEC (merged with Biogen), more or less created the San Diego biotech community, one of the largest in the country. But the VC model had already begun its decline.

“He really wanted to do a deal with us,” Watumull says. “He even gave us a term sheet, but he was unable to raise money for another VC fund. Here’s a guy who’d made literally hundreds and hundreds of millions of dollars in biotech, but he was unable to do it. That was two years of our time that we spent going in the direction that he wanted to go, but it didn’t lead to anything. That was very discouraging.”

Cardax is far from alone in its VC woes. In fact, it’s become a kind of parlor game among biotech company executives to try to explain the flaws and failures of the VC model. And, although there are signs of improvement, VC money remains tight.

Watumull cites Bill Hambrecht, the billionaire founder of Hambrecht & Quist, the investment bank that underwrote the IPOs of Apple Computer, Genentech, Adobe and Amazon: “I was at a meeting in New York where he gave the keynote speech, and he said, ‘If you’re a biotech company today and you are not already VC funded, the probability of you getting VC funding now is probably almost zero.’ ” That means biotech companies like Cardax aregoing to have to come up with a new mechanism to bring their drugs to market.

Big Pharma

Historically, the exit strategy for most biotechs has been Big Pharma. A company like Cardax will come up with a good product, VCs will fund its early development, then a giant pharmaceutical company like Merck, Pfizer or GlaxoSmithKline will either buy the company outright or license its technology. Even when biotech companies go public, as more than 30 did last year, they tend to partner with one of the Big Pharma companies to market their product. So, Big Pharma has always been the ultimate cash cow for emerging biotechs.

But the view is different from Big Pharma’s perspective. The centerpiece of drug development for these big companies used to be their enormous research and development departments. Some of the larger companies employed tens of thousands of chemists, doctors and engineers in R&D, and for decades, these departments churned out incredibly successful drugs. Right up through the 1990s, Big Pharma was one of the most profitable industries in the country.

In the last decade or so, though, all that began to change. The R&D departments became increasingly bureaucratic and slow to develop new ideas; promising drugs that the companies invested hundreds of millions of dollars in failed in clinical trials; and, while the pipeline for new products became weaker and weaker, the patents on some of their most profitable drugs began to expire. Something had to change.

Many people, including Cardax’s David Watumull, blame Big Pharma’s woes on something called “targeted drug development.” Instead of developing drugs from promising compounds that already exist in nature – salicylic acid, astaxanthin, curare, etc. – targeted drug development looks at the molecular pathway of a disease or a medical condition, and uses sophisticated technology to invent artificial compounds that interfere with or enhance that pathway. For example, cholesterol is produced through the regular metabolic activity of certain cells in the liver. An enzyme called HMG-CoA reductase regulates the rate of cholesterol production by binding to specific receptors on the membranes of these liver cells. Lipitor, a popular statin used to reduce blood cholesterol, works by binding to that same cellular receptor, preventing the HMG-CoA enzyme from binding there and stimulating more cholesterol production.

In other words, instead of looking at the whole animal, targeted drug development focuses on the structures of single enzymes or proteins. The idea is to create small organic molecules that either stimulate or inhibit the function of the large biological molecules in some metabolic pathway. It’s all about understanding the architecture of these molecules.

Targeted drug development has been wildly successful in helping us understand how disease works at the cellular and molecular level. And, because it relies on sophisticated tools, like computer modeling and high-throughput screening techniques, this approach has also industrialized the drug-discovery process, making it faster and more efficient. But critics say targeted drug development has a fatal flaw: Because it’s focused so narrowly on a single gene or a single target on a specific protein, it fails to account for how a new drug will interact with the whole body or with other systems in the body.

The result, Watumull says, is an inevitable rash of side effects. “For chronic diseases, like osteoarthritis, you need systemic answers, systemic solutions.” That used to be a controversial opinion, but it’s increasingly common in the biotech world.

“Scientifically, targeted drug discovery is very elegant,” says Deepak Bhatt. “And it makes sense in an intuitive way. But ultimately, it may not be highest yielding approach to drug development anymore.”

Like Watumull, Bhatt thinks we don’t know enough about how drugs work in the body. “We do have a fairly refined understanding of the role some receptors play in the development of certain diseases. What we don’t have is a refined view of what targeting that particular receptor will do to the whole system. The problem is, by antagonizing one system, there might be counter-balancing effects in another system or a couple of other systems.” While Bhatt acknowledges that targeted drug design has produced important advances in the treatment and diagnosis of some diseases – notably for rare and genetic disorders – he basically agrees with Watumull: targeted drug design has hit a wall.

“The pattern of drug discovery that’s evolved over the past 10 to 15 years or so,” he says, “may no longer be that productive. There aren’t as many blockbuster discoveries as there once were. So, maybe the approach that Cardax is espousing is a good one. If compounds like astaxanthin already exist in nature, if they’re durable and there’s an evolutionary reason to conserve them, that could be an appealing way to screen for different drug therapies. Certainly, that type of compound might have real appeal to patients. Patients love the idea of natural treatments.”

Nevertheless, targeted development is still the dominant paradigm of drug discovery for Big Pharma. And that spills over into the VC world, where investors want to make sure the product they’re selling is attractive to the pharmaceutical companies that must ultimately buy it.

“These guys do tend to all run after the same stuff,” said former Cardax chief medical officer Fred Pashkow, not long before he died. “VCs get enamored with the same kinds of sexy science that Big Pharma does – things like RNA interference, which affects genomic translation, or personalized medicine. They’ve poured a ton of money into the genomics thing that really didn’t turn into any new drugs. There’s been a lot of chasing after big science projects in the VC world. In my judgment, the VC model has not been working for years.”

New Paradigm

At Big Pharma companies, the response to the laggard pace of drug development has been to slash their own R&D departments. In the last five years, the industry has laid off more than 100,000 of the chemists, bio-engineers and medical doctors that it takes to run a modern drug-research program. Instead, Big Pharma is betting it can do better by buying companies that already have promising drugs in the pipeline. But, like the VC community, Big Pharma is mostly interested in products far down the development road. In effect, they’ve decided to pay more for their new drugs, but shift the risk of R&D to the small biotech companies.

Deepak Bhatt points out that this has major implications for how drugs are developed. “I think, in some respects, this is good for small companies like Cardax,” he says, “because it creates an opportunity that really wasn’t there before. That’s a plus. But these small companies now also have to take things a lot further than they had to in the past. In the past, many times they would just do very basic work on a compound, and Big Pharma would take over the R&D. Now, those larger companies really want data from further along in the research continuum before they decide to invest in a compound. For small companies, that requires you to have a different set of skills. You have to be able to build things.”

That’s the convoluted Catch-22 Cardax is in. It needs investors to pay for clinical trials, but it needs clinical trials to attract Big Pharma investment. It has what it feels is a low-risk product, but it still doesn’t match Big Pharma’s risk profile.

One Big Pharma executive, speaking on background, tried to explain why a company like Cardax still looks risky to Big Pharma: “You can’t always tell if a product is going to take off or not. It’s not simply a matter of being ‘first to market.’ Being first sometimes just means that your R&D costs are tremendous. While you’re blazing a trail through the regulatory and approval process, the FDA may get worried and say, ‘Increase the size of your study.’ If it’s a new target, they don’t know what the risks are, so they may make you the guinea pig. But a company that’s second or third or fourth to the market already knows the approval path. They can say, ‘We don’t have to do it the way Pfizer did it or the way Merck did. If the FDA made them start over and use a bigger study group, we can just start out that way.’ Similarly, if the bigger study group turned out not to be necessary, the FDA may not require it for the new company. That means their costs can be lower. For example, if you look at the statin market, Lipitor wasn’t first to the market; it was like fifth or sixth.”

But Watumull sees the risk/reward equation differently. “We’ve done a significant amount of animal studies that give us confidence that the clinical studies will be successful,” he says. “With target-based drug study, the risk is much higher. But the active drug in our compound is the same as in astaxanthin, so the probability of success is much higher than if the drug was coming in de novo. Certainly, using one or another of our compounds with animals, the efficacy has been very strong. That’s what gives everybody here confidence. But you don’t go from theory to human clinical trials without money, and the last few years it’s certainly been challenging finding enough capital coming in. That’s the main thing.”

Finding a Path