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Bill still brewing to fund Maui coffee growing expansion

Tax-exempt bond could raise as much as $13M to grow coffee on former sugar lands

A bill to authorize a special purpose revenue bond for as much as $13 million to help MauiGrown Coffee Inc.’s expansion to the lower slopes of Haleakala has cleared the state Senate Ways and Means Committee.

The bill now advances to third reading in the Senate.

On Tuesday, the committee voted 7-0 to recommend passage of the bill, with an amendment. Committee members adopted a change proposed by the state Department of Budget and Finance to change the bond authorization date from June 30, 2020, to June 30, 2022.

Department Director Wesley Machida said the amendment would make the bond bill consistent with state law, which does not permit bond authorizations for more than five years.

The bill’s effective date is July 1.

In written testimony, Machida advised lawmakers that if the bill were to become law, then approval of the special purpose revenue bonds and the loan generated by investors would require “further review of the financing proposal to ensure compliance with all federal, state and credit underwriting requirements.”

MauiGrown President James “Kimo” Falconer said he was pleased the bill has advanced.

“I think it’s going to happen,” he said Wednesday.

West Maui Rep. Angus McKelvey drafted and introduced the bill after a discussion about the closing of Alexander & Baldwin’s 36,000-acre sugar plantation late last year.

“I see it as a positive epilogue to the sad ending of the story of sugar on Maui,” McKelvey said. “There’s hope in agriculture.”

He said he’d like to see some of the jobs lost in the demise of sugar regained by the expansion of coffee growing.

“We can get some of these jobs back,” he said. “The state of Hawaii has to be a facilitator and bring together these types of win-win scenarios.”

State budget officials told Falconer it could take six months before details of the special revenue bond are “nailed down,” he said.

Going through the legislative process has been a “learning experience,” he said.

“It went right through the process fairly quickly,” he said. “There was a lot of testimony in support — basically no opposition.”

Meanwhile, Falconer said he remains in talks with A&B about coffee growing on the company’s former sugar cane lands. If lawmakers approve the bond bill, he said he intends to meet with A&B officials to discuss lease possibilities and assess the geographic boundaries for the coffee plantation on the company’s land.

Although as originally drafted the bill said coffee would be grown near Haliimaile, Falconer has said the plantation could be located in the vicinity of Pulehu and Omaopio roads.

A&B Government Relations Manager Paul Oshiro told lawmakers in written testimony that the bond authorization bill would provide valuable state assistance to enable MauiGrown to expand its operations and keep A&B’s former Central Maui sugar cane lands in active agricultural production.

“As a tax-exempt means of financing qualified projects in the interest of the general public, we understand that the special purpose revenue bonds authorized in this bill will provide important financial support to MauiGrown Coffee in their efforts to expand the present coffee farm,” Oshiro said.

A&B plans to convert its former sugar lands, farmed by subsidiary Hawaiian Commercial & Sugar Co., into “a comprehensive patchwork of compatible agricultural activities blanketing Central Maui – some farmed by HC&S, some by others,” Oshiro said.

MauiGrown already cultivates several varieties of Arabica coffee on more than 400 acres of former sugar land in West Maui. In 2014, MauiGrown took first place for its Maui Mokka coffee in a field of 77 entries in the Hawaii Coffee Association’s sixth Statewide Coffee Cupping Competition. An 8-ounce bag of Maui Mokka sells for $16.55, and a 5-pound bag costs $152.

According to written testimony submitted by Falconer, MauiGrown Coffee is the second largest coffee farm in the state and provides specialty coffee throughout Hawaii, the continental United States and foreign countries.

“In the coffee industry, there will be a worldwide shortage to keep up with the specialty coffee market growth due to emerging economies and their acquired tastes for good coffee,” he said.

In China, Starbucks has opened a new store daily, and it expects to have more than 2,600 stores there by 2020, Falconer said.

“There is no reason the Hawaiian coffee industry should not participate in this opportunity,” he said.

* Brian Perry can be reached at bperry@mauinews.com.