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

FY 2021
ANNUAL & FINANCIAL REPORTS
TO THE 31st LEGISLATURE
Pursuant to Section 201-10, Hawaii Revised Statutes
and Section 201D-14, Hawaii Revised Statutes

CBED Program Annual Report 2021

1. Program Summary
The Legislature created a Community-Based Economic Development (CBED) Programin 1991 in the Department of Business, Economic Development and 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. (Note: for clarity in this report we will use the term CBED Special Fund for the
CBED program funding. The state legislature has also proposed this nomenclature in thelast legislative session. The CBED Revolving Loan Fund will refer just to the loan
component of the CBED Program).
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 theirisland in liaison with community-based organizations.
The Hawaii Community-Based Economic Development Special Fund (CBED Special
Fund) was established to provide training and capacity-building opportunities and invest
in community economic development projects that result in measurable economic impact.
Specifically, the CBED Special Fund can be used for grants, loans and technicalassistance. Sources of revenue for the fund include repayments of loan principal, loaninterest, any program activity where DBEDT charges for participation and interest fromthe department’s participation in the state’s investment pool. As of June 30, 2021, the
CBED Special Fund had a balance of $581,504 with an additional $1 million available
specifically for small business loans from the Economic Development Administration(EDA) with a state match of $250,000. This small business loan program is called the
CBED Revolving Loan Fund (CBED RLF).
1.1 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 in
CBED Program Annual Report 2021
-1-

measurable economic impact.
1.2 What we do
1.2.1 Loans to help businesses
CBED offers loans usually from $50,000 to $125,000 to eligible small businesses that
support economic development in their communities. The CBED Program strives to help
small businesses to develop viable, sustainable ventures that serve local needs and arecompatible with the vision, character and cultural values of their communities. The
CBED revolving loan program, (CBED RLF) supports a broad range of businessexpansions but focuses primarily on agricultural and value-added agricultural production,
wholesaling and manufacturing businesses. In order to leverage resources CBEDprioritizes co-lending opportunities with resource partners. Currently, through co-lending
arrangements CBED works with the Hawaii Dept. of Agriculture (HDOA), Feed the
Hunger Foundation (FTHF), and the Hawaii Community Reinvestment Corporation(HCRC) to execute and service loans.
1.2.2 Offer technical assistance & business resource information
CBED targets “hard to reach” sectors of Hawaii’s business community to present
information on business resources and educate community-based organizations on how tostrengthen their economic development capabilities or further sustain their revenue
generation initiatives. Currently CBED works with several resource partners on technicalassistance and anticipates negotiating and working with CDFIs in Hawaii to support our
mission throughout rural and hard-to-reach areas of the State.
1.3 How we do our work
The CBED Program is guided by an Advisory Council
https://invest.hawaii.gov/business/cbed/advisory-council-members/ comprised ofcommunity leaders from around the State. Periodic meetings are held to makerecommendations on loans and grants and usually an annual meeting is held to discuss
results, decide on current activities and to adjust strategy as needed.

CBED Program Annual Report 2021
-2-

1.4 Current Loans Summary, FY 2021
Due to the restrictions enacted via the Governor’s emergency proclamations regarding
COVID-19, no new loans were made as visiting with potential loan applicants at theirbusiness sites and one-on-one interviews were halted or restricted. However, in FY 2021,
two (2) of the five (5) remaining CBED loan accounts completed their loan terms andclosed their accounts as “Paid-In-Full.”
The total number of community-based organizations (CBO’s), cooperatives, and small
businesses assisted in FY 2021 numbered more than twenty-five (25) and mainly
consisted of collaborative virtual (Zoom) outreach efforts between the CBED Program
staff and various Federal and local agencies and local nonprofit organizations. CBO’s
received information regarding small business resources through virtual workshops
supported by agencies and organizations such as the U.S. Small Business Administration(SBA), Waianae Economic Development Council (WEDC), Hawaii Technology
Corporation (HTDC), and the Hawaii Small Business Development Centers (HSBDC).
The CBED RLF, 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.
2. Community-Based Economic Development
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, not only
have community-backing, but usually have some form of community control. The CBEDCBED Program Annual Report 2021
-3-

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
restructuring of Hawaii’s economy. As the old economic engines become obsolete, thestate must look for new alternatives. CBED is a key strategy for not leaving behind thelower income urban and rural communities in the State of Hawaii.
3. CBED Special Fund Account FY 2021
The Hawaii CBED Special Fund was established to provide training and capacitybuilding 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 from other closed DBEDT
loan programs (i.e., Capital Loan Program, Small & Large Fishing Vessel Loan
Programs), and fees from community conferences and other events sponsored through the
CBED Program.
CBED Special Fund AccountBeginning balance as of July 1, 2020

$628,819

Revenues for fiscal year:
Loan Interest Payments$ 2,247.06

Loan Principal Payments$15,557.46

Investment Pool Earnings
Transfers
Expenditures for fiscal year($31,388)

Encumbrances($30,007)

Balance as of June 30, 2020

$581,504

CBED Program Annual Report 2021
-4-

The CBED Special 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 theirfunding 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.
4. CBED Awarded $1,000,000 EDA Grant for Small Business Loans
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 dollar 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
a more sustainable economy by: (1) supporting certain types of business activities as
outlined in 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
can be used for: start-up costs and working capital; construction or improvement offacilities; purchase of equipment; payment of production and marketing expenses,
including materials, labor and services.
5. CBED: Technical Assistance Activities
5.1 Grant Writing Technical AssistanceIn response to the COVID-19 pandemic, the Federal government has made available grantfunding through the majority of Federal agencies.
CBED Program Annual Report 2021
-5-

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.
In FY 2021, CBED approved eleven (11) applications from community nonprofit
organizations for grants up to $5,000 for grant writing technical assistance.
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)
5.1.1 Success Profile of Grant Writing Applicant
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 Waianae Economic
Development Council (WEDC), led by President Joseph Lapilio and representative
community leaders from the Waianae Coast – Makaha,Waianae, Maili, and Nanakuli,
was awarded a 3-Year grant totaling $1,118,550.00 from the Federal Department of
Health and Human Services, Administration for Children and Families. Matching funds
and in-kind contributions include an additional $97,764.00 for a total of $1,216,314.00
for small business development and financial literacy training on the Waianae Coast. The
Waianae Economic Development Council (WEDC) project will put $1,216,314.00 into
the Waianae Coast economy over next three (3) years with the development of an
emerging Native Hawaiian Community Development Financial Institution (CDFI)
CBED Program Annual Report 2021
-6-

targeting the Waianae Coast and small business development. This CDFI will provide
community members with the tools and knowledge to create employment opportunities
for themselves and others, consequently increasing income of Native Hawaiian
households. The CDFI will offer all community members financial literacy andentrepreneurial courses as well as assist them in accessing capital for business start-up
and expansion.
The development of a CDFI – a micro-loan program - providing financial assistance tosmall businesses wanting to expand, financial literacy and entrepreneurial educationalcourses to Waianae Coast entrepreneurs and residents in need of business assistance –addresses the Governor’s priorities in the areas of (1) Economic Development &Diversification and (2) business assistance to Native Hawaiian & Other Cultures. Overthe next two to three years, CBED will work closely with WEDC to support thesustainability of their “emerging CDFI.”
6. 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
for more 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 thatdiffers from 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 of life for its residents over the long term, while Community-Based
Organizations (CBOs) provide social services and ecosystem services that make alocality attractive to new, appropriate investment and economic development. In thespirit of creating “Public-Private Partnerships,” the CBED Program has focused on
partnering with other state, federal and private agencies to help build the capacity of
CBED Program Annual Report 2021
-7-

small businesses, entrepreneurs, and CBOs through training workshops, conferences,conventions, and other events.
7. CBED Advisory Council
The CBED Advisory Council consists of 10 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 seven members, representing all counties plus one member who has
specific commercial finance experience.
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
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 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.
During strategic planning sessions, the Council has voiced its agreement andunderstanding of the importance of partnerships and emphasized the need to leverage andobtain 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:
CBED Program Annual Report 2021
-8-

Create jobs & 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 CBED program with EZ 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.
8. Current CBED Advisory Council Members

Mr. Matthew K. Loke, Representative for Chair Phyllis Shimabukuro-Geiser
Department of Agriculture (DOA)

CBED Program Annual Report 2021
-9-

Mr. Casey K. Brown, Representative for Chair Carmen Hulu Lindsey
Office of Hawaiian Affairs (OHA)

Mr. Dennis T. Ling, Representative for Director Mike McCartney
Deprtment of Business, Economic Development & Tourism (DBEDT)

Ms. Rachel James, Chair - CBED Advisory Council (Oahu)

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

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

CBED Program Annual Report 2021
-10-

Ms. Teena Rasmussen, CBED Advisory Council Member (Maui)

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

Mr. Ernest Matsumura, CBED Advisory Council Member (Hawaii Island)

VACANT, CBED Advisory Council Member

VACANT, CBED Advisory Council Member (Kauai)

CBED Program Annual Report 2021
-11-

Mr. Mark J. Ritchie, DBEDT
Branch Chief – Business Support Branch
CBED Staff

Mr. Wayne Thom, DBEDT
Community Economic Development (CED) Manager
CBED Staff

9. 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:
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; Hawaii County;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, e.g. $500,000 budget
would allocate $50,000 to grants.

Loans:
CBED Program Annual Report 2021
-12-



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, social enterprises andcooperatives that produce and/or utilize community
resources/products;

Consideration towards partnerships to leverage CBED funds:- Department of Agriculture- Small Business Administration (SBA)- Maui Economic Opportunity (MEO)- Pacific Gateway- Office of Hawaiian Affairs (OHA)- Contact counties to identify other organizations providing microloans;Council agreed that loans should on average be $25,000 but can goas high as $100,000 or more depending on the project andpartner(s).

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.
CBED Program Annual Report 2021
-13-

10. 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

11. 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. CBED is a positive
program that empowers the community, strengthens the knowledge base and provides
access to the resources to expand economic and social development. CBED supplies theinfrastructure for long-term self-sufficiency, entrepreneurial opportunities, jobs, andrevenue for Hawaii’s local communities. CBED is a bottom-up approach and plays animportant role in the State’s overall economic development strategy. An expanded fundcommitment to the Statewide CBED Program serves to make Hawaii stronger byempowering communities and increasing self-sufficiency and economic diversification.
For more information on DBEDT’s CBED Program go to:https://invest.hawaii.gov/business/cbed/ .

CBED Program Annual Report 2021
-14-