NAWILIWILI — The annual Kaua‘i Marathon has generated over $5 million to the local economy in its first two years, according to organizers. But the event has yet to make a profit, and organizers have come before the County Council
NAWILIWILI — The annual Kaua‘i Marathon has generated over $5 million to the local economy in its first two years, according to organizers. But the event has yet to make a profit, and organizers have come before the County Council asking for substantial subsidies to keep the marathon running.
The council’s Committee of the Whole on Tuesday approved $120,000 in subsidies to the 2012 Kaua‘i Marathon. On Wednesday, the council’s Economic Development Committee approved another $150,000, this time for the 2011 marathon, scheduled for Sept. 4.
“This is not what we do, we don’t fund multi-year expenditures,” Councilman Mel Rapozo said on Wednesday. “Why in the world would we start now?”
Rapozo does not belong to the Economic Development Committee, and therefore could not have a vote Wednesday on Bill 2404, which appropriates funds for the 2011 marathon. But his concerns were echoed by Committee member KipuKai Kuali‘i, who introduced an amendment to the bill, hoping to address the issue.
Kuali‘i’s amendment proposed to reduce the money bill to $30,000. He said organizers could add the amount to the $120,000 approved Tuesday for the 2012 marathon, and utilize the funds for this year’s marathon instead.
Kuali‘i said organizers could come back after the race is over in September, “do another money bill then, like they’re doing a money bill now,” and ask for funding for the 2012 marathon.
But Committee Chair Nadine Nakamura and committee members JoAnn Yukimura and Tim Bynum defeated Kuali‘i’s amendment on a 3-1 vote. Committee member Dickie Chang recused himself from voting because of a possible conflict of interest, since he works as the race’s master of ceremonies.
Bynum and Yukimura disagreed with Rapozo’s reasoning, by saying the council’s approval would not represent a multi-year funding.
“Multi-year means that when you pass a bill for one year it also applies to the next year and the next year,” Yukimura said. “This is not the case here.”
Bynum said the money approved Wednesday for the 2011 marathon would be appropriated from the county’s budget surplus in the current fiscal year, while the money approved Tuesday for the 2012 marathon is a line item in the budget of the county’s Fiscal Year 2012.
“We’re not allowed to do multi-year funding,” Bynum said. “If we have to figure out who’s right we can ask the county attorney. I just respectfully disagree (with Rapozo).”
The county’s fiscal year starts each July 1 and ends June 30.
The funds would be given to the county Office of Economic Development, which would administer the payment to the race organizers. OED Director George Costa said the $120,000 would be distributed during FY12, and the expenses would take place “probably” after the 2011 marathon is run in September.
The explanation did not satisfy Kuali‘i.
“It’s two events that we’re funding in the tune of $270,000,” said Kuali‘i, adding that the council should just fund one race for now, and see how much the organizers can raise from state agencies and private sectors for the following race, and then ask the council for funding for the 2012 marathon.
Take the money
and run
Race Director Bob Craver said on Wednesday that when he first met race founder Jeff Sachini in 2008, Sachini told him the race had to pay for itself in three years or else.
“If it’s not self-sustaining after that then I’m done,” Craver said Sachini told him.
Sachini took a $350,000 combined loss in the race’s first two years, according to Craver.
The race had a $192,000 deficit in 2009, Craver said. That same year the county gave $10,000 to the race to be spent on cultural performers, according to Costa.
Craver said that in 2010 the race lost $158,000. That year the Kaua‘i Visitors Bureau gave the race $26,000 in subsidies, which came from a visitor stimulus grant approved by the council, Costa said.
Additionally, Craver told the council that Sachini repeatedly made comments last year that they have to “make this thing work financially” or he’s going to “have to pull.”
In 2009, the race had 1,680 participants. In 2010 the numbers of participants dropped to 1,520.
Rapozo said that by looking at the race’s performance spreadsheet, the race won’t happen next year.
“He pulls out and guess what? He gets $120,000 in the bank from the County of Kaua‘i,” Rapozo said. “My point is, we are authorizing funds for 2012 for an entity that’s saying that if they can’t make it in three years they’re going to pull out.”
Nakamura asked if the money for the 2012 marathon could be released after this year’s marathon is completed, after there’s an assurance that the next marathon is scheduled and there’s a commitment from the organizers that it will happen.
“Absolutely,” Costa said.
‘Charitable perspective’
Sachini said in a 2010 video shot by Hawai‘i Stream that he founded the race for many reasons, “most notably from a charity perspective,” adding that he really wanted “to do good things on this island.”
Sachini said the Canadian Liver Foundation, A-T Children’s Project and the Leukemia and Lymphoma Society attended the marathon.
“I think collectively, all three of those organizations, have raised close to $1 million dollars,” he said.
The race’s official website, thekauaimarathon.com, puts that number substantially lower, at “over $500,000.”
Besides the “charitable perspective,” Sachini said another aspect of the race is economic development, saying that the island’s economy is not as great as it should be.
“To have folks come on island, spend a little bit of money, and be here and boost tourism industry is a really, really good thing,” he said.
The marathon’s website states that over $10,000 was donated to local non-profit groups that volunteered on the day of the race.
Costa agreed with Bynum that if the county released funds and the organizers “took the money and ran” it would be a criminal act.
“Stranger things have happened, but there’s lots of control mechanisms here,” Bynum said.
Financial impacts
Craver said the 2009 and 2010 marathons combined generated a direct economic benefit of $5.1 million to the local economy.
Rapozo suggested that the organizers ask for funding from the hotel, rental car and restaurant industry.
“They’re making the money,” he said. “Collectively they can pull $150,000.”
By using a required state-government formula, Craver said both events combined generated about 10,800 hotel-room nights.
Utilizing an average daily room-rate of $185.58, Craver said the events generated about $2 million just in room revenues alone in the last two years combined.
Based on those numbers, Council Chair Jay Furfaro said the hotel rooms would have generated approximately $180,000 in Transient Accommodation Tax revenues. On top of that, the state would have collected about $200,000 in General Excise taxes.
Kaua‘i receives 14.4 percent of the TAT revenue collected statewide, but contributes only 7.7 percent of actual accommodations, according to Furfaro.
Because of a lingering threat that the county could lose the TAT to cover state budget shortfalls, Furfaro said, “We have to demonstrate ways and events that we create that contribute not only to our allocation, but to (the state’s) income.”
Bill 2404 passed committee on a 3-1 vote. Kuali‘i was the sole member opposing the bill, stating a “strong no” during roll call. Bynum, Nakamura and Yukimura voted for the bill.
On Wednesday, the bill will reach the seven-member full council. But Rapozo said he won’t be able to attend the meeting, and with Chang’s recusal only Furfaro’s vote will be added to the final vote.
Go to www.kauai.gov for more information.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.
