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

FY 2022
ANNUAL & FINANCIAL REPORTS
TO THE 32nd LEGISLATURE
As required by Section 201-10, Hawaii Revised Statutes
and Section 201D-14, Hawaii Revised Statutes

CBED Program Annual Report 2022

Table of Contents
Executive Summary……………………………………………………………………… 2

CBED Mission………………………………………………..………………………….. 3

CBED Advisory Council…………………………………………..……………………... 4

CBED Loan Program (Revolving Loan Fund)…………………………………………… 8

Current Loans in FY 2022………………….…………………..………………………… 9

CBED Technical Assistance Grant Program…………………...…………………..…… 12

Conclusion………………………………………………………...…………………….. 13

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EXECUTIVE SUMMARY
The Legislature created a Community-Based Economic Development (CBED) Program in1991 in the Department of Business, Economic Development and Tourism (DBEDT) with
Act 111, SLH 1991, codified as Chapter 210D, Hawaii Revised Statutes. As part of thestatute, the CBED Advisory Council and the CBED Revolving Fund were also created.
The Council reviews CBED financing requests and makes 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 theircounty 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. As ofJune 30, 2022, the CBED Revolving Fund had a balance of $274,393.
CBED offers micro-loans usually from $50,000 to $125,000 to eligible small businesses
that support economic development in their communities. The CBED program helps small
businesses to develop viable, sustainable ventures that serve local needs and are compatible
with the vision, character and cultural values of their communities. The CBED loan
program supports a broad range of businesses, including agricultural producers,
manufacturers and wholesalers.

CBED currently has co-lending and loan servicing

arrangements with the Hawaii Dept. of Agriculture (HDOA), Feed the Hunger Foundation,
Hawaii Community Reinvestment Corporation and the Waianae Economic Development
Council (WEDC), an “emerging Community Development Financial Institution (CDFI”).

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CBED partners with various organizations to target “hard to reach” sectors of Hawaii’s
business community to present information on business resources and educate communitybased organizations, such as non-profits, on how to strengthen their economic development
capabilities or further sustain their revenue generation initiatives.
CBED MISSION
Through loans, grants and technical assistance the Community-Based Economic
Development (CBED) program provides training and capacity building opportunities topromote, support, and invest in community-based development projects that result inmeasurable economic impact.
CBED ADVISORY COUNCILThe CBED Program is guided by an Advisory Council comprised of community leadersfrom around the State.
The CBED Advisory Council reviews all requests for financial assistance (loans andgrants) to assess whether the proposed community-based economic development activity
or enterprise is likely to achieve the purposes of the CBED program. The Council makes
recommendations to DBEDT regarding the appropriateness of the proposed activity orenterprise, and DBEDT then has final authority to approve or disapprove the financial
assistance.

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CBED Advisory Council Members

COLLEEN MCALUNEYTEENA RASMUSSEN
JANE HORIKEERNEST MATSUMURA
KALEOKALANI KURODA
NANCY ELVIRA LO
ROBBIE MELTON

Oahu
Exp: 06/30/2025
Maui
Exp: 06/30/2023
HawaiiExp: 06/30/2025
HawaiiExp: 06/30/2022
Oahu
Exp: 06/30/2023
Oahu
Exp: 06/30/2023
Kauai
Exp: 06/30/2026

DENNIS T. LING
Ex-Officio Representative for Director Mike McCartney
Department of Business, Economic Development. & Tourism

DBEDT
Representative

CASEY BROWN
Ex-Officio Representative for Chair Carmen Hulu Lindsey
Office of Hawaiian Affairs

OHA
Representative

MATTHEW K. LOKE
Ex-Officio Representative for Chairperson Phyllis ShimabukuroGeiser, Department of Agriculture

DOA
Representative

Council members bring a myriad of skills sets to the Department and the CBED Program.
Skill sets of current CBED Advisory Council Members 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.

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During strategic planning sessions, the Council has voiced its agreement and understandingof the importance of partnerships and emphasized the need to leverage and obtain
additional CBED funding and seek loan servicing services to address the fact that DBEDT
does not have a loan officer to service loans made through the CBED Revolving Fund.
The CBED Advisory Council listed the following as desired program goals:
Create jobs and opportunities (such as new businesses) in economically disadvantaged
areas and empower communities to control their own economic destiny by:Targeting communities in disadvantaged areas of the state such as those located inenterprise zones (EZ);1) Supporting start-ups, business expansions, social enterprises, co-ops, andentrepreneurship;2) Considering youth training and mentorship/apprentice programs in projects;
3) Facilitating sustainability among communities and organizations so they cancontinue operating;4) Including multiple communities – by demographic, by island;5) Leveraging program funds through partnerships;
6) Dovetailing the CBED program with the Hawaii Enterprise Zone (EZ)Program and other state, county, federal, private programs;7) Seeking ways CBED can uniquely impact, not replicate, what others are
doing.
The Council also noted that while specific industries should not be targeted or given
preference, the CBED program should consider which industries will create the most jobs
and jobs requiring skilled workers.
CBED Tools/Resources/Strategies/Program Activities
In implementing the CBED program, chapter 210D, Hawaii Revised Statutes, allows
DBEDT to make grants, loans and offer technical assistance.
The Council’s guidance on how to use these tools were as follows:
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Grants should be used for:

Non-profit organizations determined to be exempt from federal
income tax by the IRS;

Technical Assistance for grant writing – “Grantsmanship Center”
and other resource centers for grant writing;Train-the–trainer programs – i.e., HANO; Hawaii Community
Foundation;Capacity-building – building a community’s financial expertise;

Development of business mentorship programs;



The Council suggested that grants be 10% of the CBED budget with 90%
for loans and technical assistance.

Loans:


CBED could use EZ program as “filter” for guidance – geographic
target areas such as Enterprise Zones;Consider start-ups/business growth/entrepreneurship/youth
training;

Targets for loans may include for-profits, nonprofits, social
enterprises and cooperatives that produce and/or utilize community
resources/products;

Consideration towards partnerships to leverage CBED funds:- State Department of Agriculture- Hawaii Community Reinvestment- Feed the Hunger Fund- Pacific Gateway- Office of Hawaiian Affairs (OHA)- Contact counties and Federal business support agencies to
identify other organizations providing micro-loans;Council agreed that loans could on average be as low as $25,000
but can go as high as $100,000 or more depending on the projectand co-lending partner(s).
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Technical Assistance:
For consideration:
One Stop Centers/CBED Resources;

Web portal site for Hawaii community-based economic
development;

Financial Information/Training;Business Resource Centers – i.e., SBDC, UH & Community
Colleges; Innovation Centers

Accelerators – Designed to assist community-based non-profitsthat have an economic impact mission. Seek to diversify nonprofits’ funding streams through the development of projects thatgenerate recurring unrestricted revenue.

Outcomes/Metrics-Measuring Success
The Advisory Council agreed on the following tracking metrics that could be used tomeasure success:Jobs created

Jobs retained

Earnings

Training hours



Revenue increases



Local sourcing of inputs (multiplier effect)Satisfaction by program

Social impact – use same metrics as partner non-profit
organizationNew businesses created

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CBED LOAN PROGRAM – REVOLVING LOAN FUND
The revolving fund, technical assistance, and capacity-building program initiatives willcontinue to be a crucial resource for Hawaii’s entrepreneurs and community-basedorganizations to create jobs, implement or expand their businesses, and develop sustainable
revenue generating initiatives. Community-based economic development is a bottom-up
approach and can play an important role in the State’s larger economic development
strategy. As the assistance from the CBED Program helps rejuvenate the entrepreneurialand community economic development sectors, the CBED Program itself will also be
rejuvenated.
The Hawaii CBED Revolving Fund (now called a “Special” Fund) was established toprovide 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, “Transfers” of revenue collections fromother closed DBEDT loan programs (i.e., Capital Loan Program, Small & Large Fishing
Vessel Loan Programs), and fees from community conferences and other events sponsoredthrough the CBED Program.
CBED Revolving Fund AccountBeginning balance as of July 1, 2021
Revenues for fiscal year:
Loan Interest Payments
Loan Principal Payments
Investment Pool Earnings
Transfers
Expenditures for fiscal year
Encumbrances
Balance as of June 30, 2022

$ 479,798
1,827
15,647
121(207,500)(17,474 )$274,393

The CBED Revolving Fund may be used for loans, grants and technical assistance. The
CBED Program focused most its efforts in FY21 on technical assistance grants to help
grow and develop small businesses, job creation and non-profits seeking to diversify their
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funding streams with recurring revenue-generating projects, providing assistance foraccessing Federal financial assistance for COVID-19, and outreach to promote services
and financial assistance available through DBEDT.
In FY 2021, the CBED Program staff applied for and was awarded a grant of one million
dollars ($1,000,000) from the U.S. Economic Development Administration (EDA) in the
U.S. Department of Commerce.

The one million grant was matched by a CBED

commitment of $250,000. Funds from CBED and EDA are committed to make loans tosmall businesses that are ready to expand their businesses, create additional jobs and can
exhibit community benefits through their expansion.
The additional EDA funding into the State of Hawaii’s Community-Based Economic
Development Revolving Loan Fund (CBED RLF) will enable the State to move towards amore sustainable economy by: (1) supporting certain types of business activities as outlinedin the Comprehensive Economic Development Strategy (CEDS); in particular,
manufacturing; the diversification of agriculture and value-added agricultural productionand (2) growing jobs in economically challenged areas of the State. CBED RLF loans canbe used for: start-up costs and working capital; construction or improvement of facilities;
purchase of equipment ; payment of production and marketing expenses, including
materials, labor and services.
CURRENT LOANS IN FY 2022
CBED Funded Loans
Kohala Meats & Deli - February 2017, this is a joint loan with the Department of
Business, Economic Development and Tourism's Community-Based Economic
Development Program (CBED) and the State Agriculture’s Loan Division (SALD).
The $$50,000 joint CBED-SALD loan to Mr. David Fuertes and wife, Carolyn Fuertes,
was made towards completing renovations of a 1,592 square foot leased building thathouses the meat market and deli and to refurbish the chill box. Mr. and Mrs. Fuertes
have contributed $100,000 of their own funds towards the project. Terms of the loan
for CBED are: $25,000 for 10 years at 3.375% interest per annum, fixed. Payment of
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principal and interest to CBED is approximately $300/month to CBED. As of June30, 2022, the Fuertes’ owe CBED a balance of $5,850.
Hawaiian Agricultural Products, LLC - Ken and wife, Yumiko Hirata continue to pay
monthly on his 10-year CBED $60,000 loan made in April, 2020, matched with a $60,000
loan (Total $120,000) from the State Department of Agriculture’s Loan Division (SALD).
CBED Revolving funds were used primarily for the purchase and installation of additional
brewing and holding equipment needed to expand production and distribution of shochu
made at their distillery in Haleiwa. Terms for their CBED $60,000 loan were: 120-months;
3% interest – P + Simple Interest = $580.00/month.
This is the second CBED loan we have approved for Hawaiian Agricultural Products. The
first was made in November, 2011 for a $25,000 CBED loan, matched by a SALD loan of$25,000. Funds were used primarily for the purchase and installation of a boiler, the lastcrucial piece of equipment needed to complete the distillery. Terms for the first loan were
for a 10-year loan at 3% interest. Monthly interest only payments of $62.50 for one (1)year, followed by monthly principal and interest payments of $264.42 until maturity. The
first loan was paid in full prior to making the second loan.
EDA/CBED Funded Loans
Re-Use Hawaii – October, 2021, DBEDT Director approved a Community-Based
Economic Development-EDA Revolving Fund loan of $50,000 to non-profit Re-Use
Hawaii to be matched with a $50,000 loan from Hawaii Community Reinvestment
Corporation (HCRC). CBED Revolving funds will be used primarily for the purchase of
equipment and transportation needed to expand deconstruction, acquisition and storage,
and transportation equipment.
Haleiwa Distilling Company – December, 2021, DBEDT Director approved a
Community-Based Economic Development-EDA Revolving Fund loan of $175,000 to
Nathan Sisler, to be matched with a $175,000 loan from the Feed The Hunger Fund
(FTHF). CBED Revolving funds will be used primarily for the purchase and installationof additional brewing and holding equipment needed to expand production and distributionof whiskey, rum, liquors and gin made at his Waialua Sugar Mill distillery.
Maika`i Health Corporation was approved in February, 2022 for a CBED-EDA
Revolving Fund loan of $50,000, matched with an additional $100,000 loan through aparticipation loan agreement between Hawaii Community Reinvestment Corporation(HCRC-$50,000) and Hawaii Island CDFI-Lei Hoolaha (LH-$50,000). CBED-EDA
Revolving funds will be used primarily for leasehold improvements and operating capitalneeded towards expanding services and operations. Funding will allow Maika`i HealthCorporation to retain seven (7) full-time jobs and two (2) part-time positions. Expansionof services will add additional positions which will be tracked.

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HB Baking, Inc., was approved in April, 2022 for a CBED-EDA Revolving Fund loan of$25,000. CBED-EDA funds will be used primarily for the purchase of an ice cream truck
to sell at pop-up markets on the Island of Oahu and any operating capital needed towards
expanding services and operations. Funding supports the retention of two (2) full-time
employees and two (2) part-time employees. Expansion of services will add additional
positions which will be tracked.
Lubrco, LLC, was approved in May, 2022 for a CBED-EDA Revolving Fund loan of$125,000. CBED-EDA funds will be used primarily for working capital and operating
capital needs towards new product development, scaling production and purchase orderfulfillment. Lubrco develops, processes, manufactures and packages disinfectant andcleaning solutions in Hawaii for product distribution to all islands, the Pacific Rim andNorth America. Funding supports the retention of five (5) full-time employees at thecompany’s manufacturing site.
Amro-Asian Trade, Inc., was approved in May, 2022 for a CBED-EDA Revolving Fundloan of $100,000.
The company operates in the General Merchandise, Non-durable
business/industry within the Wholesale Trade-Non-durable Goods sector. CBED-EDA
funds will be used only for the purchase of inventory. Amro-Asian Trade, Inc., offers
innovative, high-speed denominating counters. Currency Discriminators and Sorters are
manufactured in Japan and South Korea. Funding supports the retention of four (4) fulltime employees.
Farm Link Hawaii, Inc., was approved in June, 2022 for a CBED-EDA Revolving Fundloan of $100,000, matched with an additional $100,000 loan through a participation loan
agreement between Feed the Hunger Fund. CBED-EDA funds will primarily be used forworking capital. Farm Link Hawaii connects local growers and buyers via its innovative
online marketplace and supply-chain infrastructure. Farm Link Hawaii connects
household and commercial buyers to local farmers for delivery or pickup. The company’s
mission is to build a thriving, equitable food system in Hawaii by empowering local
farmers and improving access to local foods. The company currently employs twenty-two(22) people. In 2021, Farm Link Hawaii purchased over $1 million of local produce andproducts from over two hundred (200) local farmers and ranchers, and sold to over two
thousand (2,000) unique buyers.
Pomai Kulolo, was approved in June, 2022 for a CBED-EDA Revolving Fund loan of$105,000, matched with an additional $395,000 through participations loans between Feed
the Hunger Fund ($150,000); Lei Ho`olaha ($100,000); and the Hawaii State Departmentof Agriculture ($145,000). CBED-EDA funds will primarily be used for upgrading current
facilities, expanding operations, and securing a supply chain for future growth. Pomai
Kulolo currently employs twenty-five employees and will create four (4) additional
positions.

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CBED TECHNICAL ASSISTANCE GRANT PROGRAM
Grant Writing Technical AssistanceIn response to the COVID-19 pandemic, the Federal government has made available grantfunding through the majority of Federal agencies.
On June 24, 2020, the CBED Advisory Council recommended approval for grants toprovide grant writing technical assistance to nonprofit organizations with projects that arereadily implementable. Projects must exhibit components that incorporate community
economic development benefit and show sustainability with the ability to create andmaintain jobs in the community.
Applicant Requirements:
1. Be a nonprofit organization determined to be tax exempt by the U.S. Internal Revenue
Service and registered in the State of Hawaii;
2. Provide a cash match of 25% of the technical assistance request;
3. Demonstrate a community-based economic benefit if the organization’s project issuccessful;
4. Be able to exhibit that the organization’s project is advanced enough to begin
implementation within a very short period of time, given sufficient funding.
5. Be ready to apply for Federal and/or private foundation grant funding (State grantfunding is excluded)
In FY 2022, CBED approved five (5) new Grant Writing Technical Assistance Grants in asecond round of grant funding. Two of the new grants approved were to first roundorganizations both of whom completed their first round of grant agreements and were very
successful in obtaining community economic development funding in the first round. The
Waianae Economic Development Council, in the first round of CBED funding wasawarded a total of $1,118,550 for the Waianae community; and, the Friends of Iolani Palace

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were successful in obtaining grants through Federal and private foundation funding for a
total of $224,650 for their community economic development initiatives.
The remaining three (3) organizations to receive second round CBED technical assistancegrant funds were:

Whitmore Economic Development Group ($5,000); Friends of

Waimanalo ($5,000); and, Common Ground Collective ($4,500). All five organizations
are anticipated to complete their grant agreements by December 31, 2022.
The CBED Technical Assistance Grant-writing Initiative, with a CBED grant of $5,000 for
the services of a grant writer, is proud to report that the Friends of Iolani Palace, led by
CEO Paula Akana, in the first round of grant funding, was awarded grants totaling$224,650 from the Foundation on Culture and the Arts ($15,000, Bank of Hawaii($10,000); and the National Endowment for the Humanities ($199,650).

CONCLUSION
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 more than 25 years. As the dialogue aboutincorporating community vision and values into present day Hawaii continues, CBED
stands out as an effective strategy to achieve those goals by empowering the community,
increasing capacity, and conserving local resources. CBED is a proven strategy that differsfrom traditional economic development because it emphasizes community reinvestment
and local 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 Community-Based Organizations (CBOs)
provide social services and ecosystem services that make a locality attractive to new,appropriate investment and economic development. In the spirit of creating “PublicPrivate Partnerships,” the CBED Program has focused on partnering with other state,
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federal and private agencies to help build the capacity of small businesses, entrepreneurs,and CBOs through training workshops, conferences, conventions, and other events.
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 initiativethat can supplement more centralized or top-down approaches. This bottom-up approach
begins by sourcing economic development opportunities from local communities
themselves, which can be “demographic communities” or “communities of interest.”
These opportunities, which usually become projects, not only have community-backing,but usually have some form of community control. The CBED 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.

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