STATE OF HAWAIIHAWAII COMMUNITY-BASED ECONOMIC DEVELOPMENTTECHNICAL AND FINANCIAL ASSISTANCE PROGRAM

FY 2016
ANNUAL & FINANCIAL REPORTS
TO THE 29th LEGISLATURE

Executive Summary

The Legislature created a Community-Based Economic Development (CBED) Programin 1991 in the Department of Business, Economic Development & Tourism (DBEDT)
with Act 111, SLH 1991, codified as Chapter 210D, Hawaii Revised Statutes. As part ofthe statute the CBED Advisory Council and the CBED Revolving Fund were also
created.

The Council reviews CBED financing requests and makes its recommendations on theawarding of loans and grants, subject to the final approval of the DBEDT Director. The
Council also advises the Director on program implementation and members represent
their island in liaison with community-based organizations.

The Hawaii Community-Based Economic Development Revolving Fund (CBED
Revolving Fund) was established to provide training and capacity-building opportunities,
and invest in community economic development projects that result in measurable
economic impact. Sources of revenue include repayments of loan principal, loan interest,and interest from the department’s participation in the State’s investment pool.

Beginning balance as of July 1, 2015
Revenues for fiscal year
Loan Interest Payments
Loan Principal Payments
Investment Pool Earnings
Transfers
Expenditures for fiscal year - loans
Encumbrances (CBED Accelerator)
Balance as of June 30, 2016

$158,434
2,021
12,056(61,425)(10,000)$101,086

The CBED Revolving Fund may be used specifically for loans, grants and technicalassistance. The CBED Program has focused most of its recent efforts on 1) loans to small
businesses that have expansion plans or projects with a community economic impact;
CBED Program Annual Report 2016-1-

and, 2) Technical assistance that can grow small businesses and non-profits seeking todiversify their funding streams with recurring revenue-generating projects.

Through the CBED Revolving Fund, the CBED Program may assist eligible communitybased organizations (CBOs) with financial and/or technical assistance. The CBED
Program continues to support community efforts statewide. In FY2016 the CBED
Revolving Fund continued its partnership with the Department of Agriculture’s MicroLoan Fund on each of the four agricultural business loans ($25,000 CBED investment ineach loan) made in 2013 through 2015.

The total number of CBO’s, Co-ops, and Small Businesses assisted in FY 2015 held
steady at more than 500 through the co-sponsorship of the two per year Hawaii Small
Business Fairs and other outreach initiatives on all major islands providing businesstraining workshops and technical assistance. DBEDT co-hosted two “Launch Your
Dreams into Reality” Hawaii Small Business Fairs in 2015 and 2016, both at UH
Community Colleges. More than 500 small business owners, entrepreneurs, andcommunity organizations attended the two events. The free one-day events held at both
Honolulu Community College and Leeward Community College featured a combined 56
business-related workshops, one-on-one business counseling sessions conducted by the
Hawaii Small Business Development Center and SCORE, and exhibits with more than 40
business resource exhibitors from Federal, State and local agencies, private non-profit
organizations and financial institutions (CDFIs).
In the spring of 2015, the CBED AcceleratorTM was launched. This new program isdesigned to assist community-based non-profits that have an economic impact mission.
The program specifically seeks to diversify non-profits’ funding streams through thedevelopment of projects that generate recurring revenue. DBEDT launched theaccelerator and selected, through an RFP process, CNHA-Technical Assistance Services
to administer the program and work with five non-profits on their recurring revenue
generating projects.
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Fifteen (15) months after establishing the Community-Based Economic
Development (CBED) Accelerator Program to assist with financial and technicalassistance, milestones achieved for the five (5) non-profit organizations selected
include, but are not limited to:
1. Waimea Nui Community Development Corporation – Secured landlease; developed website; created a fee schedule for land plots; developed
plot application forms; developed digital membership database file; anddeveloped social media kit.
2. Hawaii Tropical Fruit Growers – Developed a website; created social
media guide; completed Board training on social media and website
maintenance; developed an action plan for data management.
3. Hawaii Forest Industry Association – Coordinated a community outreachplan; completed research and development of a Saw Mill Social Enterprise;completed an inventory of timber for the Saw Mill project; completed afeasibility analysis and business plan for the Saw Mill Project.
4. Garden Island Arts Council – Organized an (Arts) Advisory Council;
developed 2-3 products through the Advisory Council; developed aMarketing and Outreach Plan; implemented a pilot product development
initiative.
5. Homestead Community Development Corporation – Coordinated andrecruited retail shop employees from homestead association members; hired
a graphic designer; developed 2-3 new products; collaborated with Small
Business mentor/consultant to advise on business development; completed
business operations & accounting training; implemented a start-up businessand training facility.
The CBED Program staff continues to develop program strategy and partnerships that
help revitalize the CBED Program’s Loan, Grant and Technical Assistance initiatives that
support DBEDT’s goals. Entrepreneurial small businesses and community-based
economic development initiatives to be funded by the CBED Program and Revolving
Fund are anticipated to support a broad range of agricultural-related and urban businesses
and projects such as small business manufacturing enterprises, food security, andagricultural enterprises, including value-added business development and manufacturing.
The CBED Micro-Loan Fund, technical assistance, and capacity-building program
initiatives will continue to be a crucial resource for Hawaii’s entrepreneurs and
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community-based organizations to implement or expand their businesses and revenue
generating initiatives. Community-based economic development is a bottom-up approachand can play an important role in the State’s larger economic development strategy. As
the assistance from the CBED Program helps rejuvenate the entrepreneurial andcommunity economic development sectors, the CBED Program itself will also be
rejuvenated.
The CBED Revolving Fund

The Hawaii Alliance for Community-Based Economic Development (HACBED) wasestablished in 1989 by a group of community development practitioners. HACBED
formulated strategies for the State government to support community-based organizations(CBOs) that wanted to create economic development initiatives. These efforts resulted inprogram legislation to provide financial and technical assistance to local groups. The
Legislature created a Community-based Economic Development (CBED) Program in the
Department of Business, Economic Development & Tourism (DBEDT) with Act 111,
SLH 1991, codified as Chapter 210D, Hawaii Revised Statutes. The legislation created
the CBED Advisory Council and the CBED Revolving Fund with an appropriation of$900,000 in 1991. Today, more than ever, Hawaii must move towards a new economy.
The forces of globalization and economic transition have created great challenges in theworld economy. Hawaii’s isolation and dependence on tourism and fossil fuel energy
have made the islands more susceptible to these effects.
CBED strategies and practices can play a valuable part in an overall economic
development strategy for Hawaii. Specifically, CBED is a bottom-up economic
development initiative that can supplement more centralized or top-down approaches.
This bottom-up approach begins by sourcing economic development opportunities fromlocal communities themselves, which can be “demographic communities” or“communities of interest.” These opportunities, which usually become projects, then not
only have community-backing, but usually some form of community control. The CBEDCBED Program Annual Report 2016
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approach can help build new infrastructure for a more sustainable Hawaii economy,
based on decentralization, partnerships, human resource development, and innovation.
The foundation created by community-based economic development leads to long-term
capacity-building for local communities and residents, and provides backward linkages toancillary firms to sustain and expand the main sectors of the economy. Hawaii’s economy
is in need of true diversification. CBED is a practical way to achieve a true restructuringof Hawaii’s economy. As the old economic engines become obsolete, the state must lookfor new alternatives. CBED is a key strategy for not leaving behind the lower income
urban and rural communities in the State of Hawaii.
The Hawaii Community-Based Economic Development Revolving Fund was establishedto provide training and capacity-building opportunities, and invest in community
economic development projects that result in measurable economic impact. Sources ofrevenue include repayments of loan principal, loan interest, and interest from thedepartment’s participation in the State’s investment pool.
Beginning balance as of July 1, 2015
Revenues for fiscal year
Loan Interest Payments
Loan Principal Payments
Investment Pool Earnings
Transfers
Expenditures for fiscal year
Encumbrances (CBED Accelerator)
Balance as of June 30, 2015

$158,434
2,021
12,056(61,425)(10,000)$101,086

The CBED Revolving Fund may be used for loans, grants and technical assistance. The
CBED Program has focused most of its efforts on 1) Loans to small businesses that have
expansion plans or projects with a community economic impact; and, 2) Technicalassistance that can help grow small businesses and non-profits seeking to diversify theirfunding streams with recurring revenue-generating projects.

CBED Program Annual Report 2016
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CBED REVOLVING LOAN REPORT

Borrower name (last, first) / Loanno.
Chanthabouasith, Sing CBED 2-13

LoanamountLoan Purpose

Presentbalance$25,000 Provide capital$17,915.09
to relocate his
farm to a nearby
14-acre parcel
located in
Kahuku.
Mr. Chanthabouasith was able to successfully relocate his Kahuku farm in 2013 and in subsequent
visits, the new farm has been found to be operating well and is very productive with a wide varietyof crops being grown such as sequa, eggplant, sweet potato, long beans, chili pepper, okra,
bittermelon, jackfruit, bananas, cucumber, taro and long squash. His produce is sold at his retailvegetable stall at the Kam Swap Meet and to a vegetable wholesaler. This loan is performing welland payments are current.

Chanthabouasith
Farm
Sweet Potato

Skinny Eggplant

CucumberLong Beans

CBED Program Annual Report 2016-6-

Borrower name (last, first) /Loan no.
Luangrath, Ounheauane
CBED 3-15

LoanamountLoan Purpose

Presentbalance$25,000 Provide working$21,059.32
capital and funds
to purchase farm
supplies toexpand farm
production to an
adjacent 8-acreparcel.
Mr. Luangrath was successfully able to put the 8-acre parcel into production
with a variety of crops such as sweet peppers, tomatoes, long beans, string
beans, eggplant, and cucumbers. Besides providing additional production
area, the land allows Mr. Luangrath to properly rotate his crops, which helps
to improve the productivity of his crops and reduce the incidence of disease
and pests. This loan is performing well and payments are current.
Loan
Present
Borrower name (last, first) /amountLoan Purpose
balance
Loan no.
$23,353.62
Chandara, Khammouane$25,000 Provide funds
CBED 4-15
for farm supplies
and working
capital needed to
expand crop
production.
Loan funds were disbursed in July 2015 and division staff learned in
November 2015 that Mr. Chandara had sold his farm and equipment toanother farmer. Due to an inability to contact Mr. Chandara, this case wasreferred to an investigator with the Department of the Attorney General in
January 2016 for assistance in tracking the debtor.

CBED Program Annual Report 2016-7-

Borrower name (last, first) / Loan no.

LoanamountLoan
Purpose

Hawaiian Agricultural
Products, LLC,
Hirata, Ken and Yumiko
CBED 1-11

Presentbalance$25,000 Finance the$17,827.51
purchase andinstallation ofa steam boiler
for a shochu
distillery.
The distillery began production of shochu in 2013 and it is currently producing at its capacity of
approximately 6,500 bottles per year. The distillery is operating well and kept in immaculatecondition. Owner Ken Hirata reports that approximately 80% of his bottles are sold at a retail priceof $39.00 each with the remainder sold at the wholesale price of $27.00 per bottle. He has developed
a second product which is a pineapple-sweet potato shochu called Namihana-Banzai Strength #1,
which was released in December 2015. This loan is performing well and payments are current.

CBED Program Annual Report 2016
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CBED: A Continuing Strategy
Community-based economic development is specifically a strategy for addressing theneeds of low–income communities. CBED has been implemented in the United States formore than 40 years, and in Hawaii for 20 years. As the dialogue about incorporating
community vision and values into present day Hawaii continues, CBED stands out as aneffective strategy to achieve those goals by empowering the community, increasing
capacity, and conserving local resources. CBED is a proven strategy that differs fromtraditional economic development because it emphasizes community reinvestment andlocal economic opportunities. It is a complete process that addresses a community’s
economic and social needs. CBED strategies help maintain Hawaii’s cherished quality oflife for its residents over the long term, while CBOs provide social services and ecosystemservices that make a locality attractive to new, appropriate investment and economic
development. In the spirit of creating “Public-Private Partnerships”, the CBED Program
has focused on partnering with other State, Federal and private agencies to help build thecapacity of community-based organizations through training workshops and other events.
CBED’s Technical Assistance Activities
The number of CommunityBased Organizations, Co-ops,
and Small Businesses assisted
held steady in FY 2016 at morethan 500 through the cosponsorship of the Hawaii
Small Business Fairs and other2015 Business Fair Exhibitors

outreach initiatives on all majorislands providing businesstraining workshops and technical assistance.

CBED Program Annual Report 2016
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On Saturday, August 8, 2015 at Honolulu Community College, DBEDT co-hosted the 2015
Hawaii Small Business Fair, “Launch Your Dreams into Reality.”
Nearly 300 business owners and individuals with start-up ideas and businesses benefitted
from a day spent at the no cost Hawaii Small Business Fair, held on Saturday, August 8that Honolulu Community College (HCC). Co-hosted by DBEDT, attendees enjoyed awide range of thirty (30) businessworkshop topics that included:
Copyrights, Patents &Trademarks, Financing Your
Business, Professional
Networking, and Tax Tips for
Small Business, and much more.
SCORE professionals were on
hand to provide small businessowners and entrepreneurs free,invaluable one-on-one business counseling while a wide-range of more than thirty
support agencies, financial institutions and other were also on hand to provide businessresources and information.
Recently added to the bi-annual Fair’s workshop schedule were the "Industry Insights"
workshops which presented a deeper review of Fashion, Retail, and Food industries,
covered in a two-hour session. Leading the “Industry Insights” workshops were Melissa
May White, co-founder of the Hawaii Fashion Incubator (HIFI), Poni Askew (Street
Grindz), Chef Lee Shinsato (KCC Culinary Program Instructor), and Peter Oshiro (State

CBED Program Annual Report 2016-10-

Department of Health). These
industry experts guided
attendees through best practices
and what it takes to be
successful in these industries.
Comments provided byattendees were almost uniformly
positive “I was impressed with

Ron Umehira andStudent Volunteers

the turnout and thequality of the guest speakers. I really learned a lot from all three workshops I
attended.”“Great service for the community.”“Excellent workshops, excellent vendors. Thank you!!”“Very valuable information.”“It was great! I look forward to the next fair.”

On Saturday, February 20, 2016 DBEDT again co-hosted the bi-annual Hawaii Small
Business Fair, “Launch Your Dreams Into Reality” at Leeward Community College.
The free one-day event featured 29 workshops and over 30 exhibitors from federal, stateand local agencies and non-profit organizations. It was attended by more than 250
business owners and entrepreneurs interested in expanding or starting their own
businesses.
These free workshops and exhibits provided an opportunity for small business owners
and future business owners to learn to grow or start their business.

CBED Program Annual Report 2016-11-

Attendees enjoyed a wide range of workshop topics that included Industry Insights
modules focused on Tech Start-Ups, Manufacturing in Hawaii and Agriculture Start-Ups.
Other courses included: Financing Options; Starting a Food Truck Business; Social
Media Marketing; Federal Income Taxes; and Copyrights, Patents, and Trademarks.
One-on-one business counseling was also offered by SCORE.

Bryson and Tanna Dang, Lynn and Mel Tanioka

The fair closed with a ‘Secrets to Success’ presentation featuring the owners of Tanioka’s
Seafood & Catering of Waipahu, and local clothing boutique Eden in Love. Participants
heard from these successful entrepreneurs about their challenges and milestones as small
business owners.
Through a partnership between the Department of Business, Economic Development andTourism and other Federal, State, and a local CDFI, the free workshops and exhibits
provided a great opportunity for more than 500 small business owners, future businessowners, and community organizations to learn how to grow or start a businesses.

CBED Program Annual Report 2016-12-

Business resource exhibitors provided information and assistance that included more than
40 different agencies and organizations including agencies such as DBEDT, SCORE,
State Department of Transportation, USDA Rural Development, State Department of
Taxation, State Department of Health, Office of Hawaiian Affairs, Patsy T. Mink Center
for Business and Leadership, local banks and many more.

Small Business Fair Planning Committee: from the left: Jerry Hiromoto (IRS), Debbie Luning (Ewa
Beach CBDO), Jayna Uyehara (DCCA-Business Action Center), Mary Dale (SBA), Joseph Burns(Small Business Development Center), Naomi Masuno (Bank of Hawaii), Wayne Thom (DBEDT),
kneeling: Ron Umehira (Dean-LCC).

CBED Program Annual Report 2016
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CBED AcceleratorTM Program
In the spring of 2015, the CBED AcceleratorTM
was launched. This new program is designed toassist community-based non-profits that have an
economic impact mission. The program
specifically seeks to diversify non-profits’ funding
streams through the development of projects that generate recurring revenue.
DBEDT launched the accelerator and selected through an RFP process CNHA-Technical
Assistance Services to administer the program and work with five non-profits on theirrecurring revenue generating projects. CNHA-TAS is a division of CNHA, a national
network of Native Hawaiian Organizations, providing assistance in accessing capital andtechnical resources. Its mission is to enhance the cultural, economic, political, andcommunity development of Native Hawaiians.
Fifteen (15) months after establishing the Community-Based Economic
Development (CBED) Accelerator Program to assist with financial and technicalassistance, results for the five (5) non-profit organizations assisted include, but are
not limited to:1.

Waimea Nui Community Development Corporation – Secured land lease;developed website; created a fee schedule for land plots; developed plot
application forms; developed digital membership database file; and developedsocial media kit.

2. Hawaii Tropical Fruit Growers – Developed a website; created social
media guide; completed Board training on social media and website
maintenance; developed an action plan for data management.
3. Hawaii Forest Industry Association – Coordinated a community outreachplan; completed research and development of a Saw Mill Social Enterprise;completed an inventory of timber for the Saw Mill project; completed afeasibility analysis and business plan for the Saw Mill Project.
4. Garden Island Arts Council – Organized an (Arts) Advisory Council;
developed 2-3 products through the Advisory Council; developed a

CBED Program Annual Report 2016-14-

Marketing and Outreach Plan; implemented a pilot product development
initiative.
5. Homestead Community Development Corporation – Coordinated andrecruited retail shop employees from homestead association members; hired
a graphic designer; developed 2-3 new products; collaborated with Small
Business mentor/consultant to advise on business development; completed
business operations & accounting training; implemented a start-up businessand training facility.
CBED Advisory Council
The CBED Advisory Council consists of 12 members. The Director of DBEDT, theChairperson of the Board of Agriculture, and the Chairperson of the Office of Hawaiian
Affairs, or their respective designees, are ex-officio members. The Governor appoints
the remaining nine members, representing each major island plus one member who has
specific commercial finance experience.

The Council reviews CBED financing requests and makes its recommendations on theawarding of loans and grants, subject to the final approval of the DBEDT Director. The
Council also advises the Director on program implementation and members represent
their island in liaison with community-based organizations.

Council members bring a myriad of skills sets to the Department and the CBED Program.
Skill sets of current CBED Advisory Council Member include, but are not limited to:Strategic Communications, Program Management, Community Outreach, ProjectManagement, Government, Strategic Planning, Public Speaking, Nonprofits, Leadership,
Business Strategy/Business Analytics, Financial Modeling, Process Improvement,
Finance, Risk Management, Public Policy, Grants, Public Administration, Customer
Service, Legislative Relations, and Policy Analysis.

CBED Program Annual Report 2016-15-

Current CBED Advisory Council Members:

Mr. Dean M. Matsukawa, Representative for Chair Russell S. Kokubun,
Department of Agriculture (DOA)

Mr. James Patterson, Representative for Chair Robert K. Lindsey, Jr.,
Office of Hawaiian Affairs (OHA)

Mr. Dennis T. Ling, Representative for Director Luis Salaveria, Department of
Business Economic Development & Tourism (DBEDT)

Ms. Rachel James, CBED Advisory Council Member (Oahu)

Ms. Elvira Lo, CBED Advisory Council Member (Oahu)

Mr. Kaleokalani Kuroda, CBED Advisory Council Member (Oahu)

CBED Program Annual Report 2016-16-

Ms. JoAnn Inamasu, CBED Advisory Council Member (Maui)

Ms. Lyn McNeff, CBED Advisory Council Member (Maui)

Ms. Jane Horike, CBED Advisory Council Member (County of Hawaii)

Mr. Mark J. Ritchie, Dept. of Business, Economic Development & Tourism
Branch Chief, Business Support Branch
CBED Staff

Mr. Wayne Thom, Dept. of Business, Economic Development & Tourism
Manager, Community Economic Development
CBED Staff

In this next year (FY 2017), the CBED Program staff plans to utilize the tremendous
amount of expertise of the CBED Advisory Council to develop a CBED Strategic Plan
that focuses the programs resources to maximize both financial and technical assistancethat will more efficiently enable communities to plan, implement, and better measureeffectiveness of economic development projects and ventures in communities. The
development of this Strategic Plan will also work to further realize the Department’s
mission to support business development, create jobs, and improve Hawaii’s standard ofliving through economic diversification, expanding existing businesses, and attracting
and developing new economic activity to the State.
CBED Program Annual Report 2016-17-

Council Members will be asked to re-evaluate the current CBED Mission Statement,
develop a common CBED Council Vision for Hawaii’s communities, update program
Goals, revisit program Resources, identify and update areas of Technical Assistance,
identify new organizations in Hawaii regions that may benefit from participation in the
New CBED Accelerator Program, plan and develop strategies for Leveraging New
Partnerships, plan and develop a CBED Program Action Plan, and develop new
Metrics and Reporting Procedures to better measure success.

Conclusion
Traditional top-down economic development is focused on business and profit; but manyof Hawaii’s rural and disadvantaged urban communities and residents do not reap the
benefits or resist a centralized approach to economic development. Hawaii must look atalternatives for economic development in these communities. CBED is a positive programthat empowers the community, strengthens the knowledge base and provides access to theresources to expand economic and social development. CBED supplies the infrastructure
for long-term self-sufficiency, entrepreneurial opportunities, jobs, and revenue for
Hawaii’s local communities. Community-based economic development is a bottom-up
approach and can play an important role in the State’s overall economic development
strategy. An expanded fund commitment to the Statewide CBED Program serves to makeHawaii stronger by empowering communities and increasing self-sufficiency andeconomic diversification.

CBED Program Annual Report 2016-18-