Category Archives: Business

Throwback Thursday: Powell’s Books c.1985

Powell’s Books in Portland has been one of our favorite places for what seems like forever. The store opened back in 1971, and we started dropping in soon afterwards whenever we visited Portland, where Meda’s mother lived. We would see Mr. Powell at work, buying and selling, always willing to stop and talk to strangers. The place was political. Like Kepler’s bookstore in Menlo Park, Powell’s drew activists as well as intellectuals. Books and people were stacked everywhere.

In the early 1980s, Powell sold the store to his son, Michael, but the senior Powell could still be spotted at the store. He died in 1985, just about the time this photo was taken.

Powell’s has kept growing, kept getting better, and has defied the odds by surviving as so many independent booksellers have joined the many newspapers that have gone out of business.

See:

The Life and Tomes of Michael Powell,” University of Chicago Magazine.

Powell’s Books, Wikipedia.

The history of Powell’s Books,” from the company website.

c.1985

Visitors still being arrested for enjoying moonlight on Waikiki Beach

Back on May 30, 2015, I commented on the stupidity of arresting tourists for being on Waikiki Beach at night (“Here we go again with the unintended consequences“).

That post, in turn, quoted from a Hawaii News Now story:

The city’s crackdown on homelessness in Waikiki — meant to make things nicer for tourists, is causing some visitors big legal problems.

In order to keep the homeless from settling in overnight, the city began closing popular beachfront parks in Waikiki at midnight. A violation brings a criminal citation.

According to the City Prosecutors Office 20 percent of those citations, one in five, is going to visitors, for whom the criminal charge and its mandatory court appearance can be more than just an inconvenience.

Apparently the arrests of tourists trying to enjoy the beach they have paid so much to vacation on, the same beach that our visitor industry packages and sells with such effectiveness, have not ended.

I received an email this week from a woman who vacationed here in December. I think she and her husband are from Canada.

I came across an article you wrote on May 30th about Tourists being slammed with criminal accusations for sitting in certain sections of the beach in Waikiki. On December 15th, my husband and I became 2 of those Tourists.

Not only is this of the most insulting nature, it sounds like it will make us criminals. We cannot attend our court date, as we had to return to Canada. To work. And feed our 3 children.

I was curious to see if, as a Resident of Hawai, you had heard more on the subject and whether there may be a class-action lawsuit going on. It sounds like we are far from the only ones who got trapped in this net. The legal fees will set us back quite a bit to *try* and get the charges dropped.

I was wondering also if you may have resources for us to refer to. I have been unable to reach anyone at the court house to rearrange our court date.

This is beyond silly!

I can’t agree more.

Is there a terrible threat to public order when visitors stroll out of their hotels into the moonlight to enjoy a balmy evening on Waikiki Beach!

Of course not.

As far as I know, the city’s policy remains unchanged, and the various visitor industry associations haven’t provided a “fix” so that tourists can avoid suddenly having criminal records. Their crime: Enjoying their Hawaii vacations!

So I don’t have anything encouraging to report back to this couple.

What should I tell them?

City’s explanation of discrepancies in real property tax assessments don’t satisfy

Thanks to Star-Advertiser business writer, Andrew Gomes, for his story on Sunday about the discrepancies between the selling prices of high-value Oahu homes and their often much lower appraisals for property tax purposes (“Home price, taxable value can diverge“).

Here’s the basic thrust of the story:

…in the upper reaches of the island’s housing market where trophy properties shine, it’s not uncommon for city appraisers to value a home well below what a new owner paid.

Sometimes city appraisers can’t justify purchase prices as a “real” value. As a result, an owner’s property tax obligation can be based on land and building values far below what they sold for, resulting in less revenue for the city.

“Sales price and cost is not equal to value,” said Gary Kurokawa, the city’s deputy director of budget and fiscal services.

The difference for a multimillion-dollar home can amount to tens of thousands of dollars not flowing to the city.

Some of the examples are eye-popping.

Gomes cites the example of a Black Point mansion that sold a few years ago for $16.5 million, and then got a $1 million facelift. It was assessed for tax purposes at $9.5 million in 2015, but dropped for 2016 to $8.4 million, a 50% discount off its selling price two years ago.

Gomes reported:

“Sales price and cost is not equal to value,” said Gary Kurokawa, the city’s deputy director of budget and fiscal services.

I admit that I’m confused. Here’s an excerpt from the applicable city ordinance.

Sec. 8-7.1 Valuation–Considerations in fixing.
(a) The director of budget and fiscal services shall cause the fair market value of all taxable real property to be determined and annually assessed by the market data and cost approaches to value using appropriate systematic methods suitable for mass valuation of real property for ad valorem taxation purposes, so selected and applied to obtain, as far as possible, uniform and equalized assessments throughout the county.

It seems pretty obvious to me that the best “estimate” of a property’s actual market value is the price someone has just paid in an open market transaction.

You don’t have to look far to find agreement with this proposition.

“The only real measure of market value is what a particular house sells for. Period,” according to the website CREonline.com.

Could something be amiss with the city’s standard methodology? Under what circumstances do appraisers walk past an actual sales price to assign a dramatically lower (or higher) assessed value, which by law is supposed to approximate the market price?

Perhaps there needs to be a better explanation from the city’s end of just how they actually made the assessments that Gomes cites in his story.

Investors’ claim triggered Hoana Medical bankruptcy

A Star-Advertiser story this past week reported the bankruptcy filing by Hoana Medical, Inc. (“Hoana Medical looks to future even as it files for bankruptcy“).

It caught my eye because Hoana Medical has been one of the stars of Hawaii’s tech start-up world. The company was spun off from Oceanit, one of Hawaii’s largest engineering and technology firms, in 2002. It has been marketing its LifeBed™ system, a hospital bed filled with sensors to read vital signs, since 2006. According to Oceanit’s website, Hoana “has raised approximately $45 million in private equity from U.S. and Asian venture firms in four rounds of venture financing.”

Hoana has also been one of the companies that have taken advantage of Hawaii’s high tech investment tax credits, according to published reports.

The Star-Advertiser article was light on details of the bankruptcy, citing “financial setbacks stemming from the market crash of 2008” and specifically mentioning $30 million in financing that reportedly failed to materialize. The article mainly reported the comments by the company’s president and CEO about the bankruptcy.

So I decided to check the bankruptcy filing itself which, as it often turns out, tells much more of the story than was reported by the Star-Advertiser.

The bankruptcy filing was done in order to block two investors from collecting an arbitration award, according to court records. Attorneys representing the investors were due in state court to confirm the arbitration award on December 9. Hoana filed for bankruptcy on December 8.

According to the petition:

The filing of the bankruptcy petition was precipitated by an arbitration award in favor of CMT Investments, LLC and Richard Erickson and against the Debtor, issued by the American Arbitration Association, Commercial Arbitration Tribunal, Case No.: 01-14-0001-8610, dated October 16, 2015. On November 18, 2015, CMT Investments, LLC and Richard Erickson filed Petitioners’ Motion to Confirm Arbitration Award in the Circuit Court of the First Circuit State of Hawaii, S.P. No. 15-1-0488 GWBC the hearing is scheduled for December 9, 2015…

The confirmation and the recordation of the judgment confirming the arbitration award could result in collection actions by the judgment creditor which could disrupt and/or permanently affect the Debtor’s medical device business, or the Debtor’s licensing contracts.

According to Hoana’s list of outstanding debts, the Chicago-based CMT Investments and Erickson, a California resident, are each owed $763,590, making them the company’s largest creditors.

Both Erickson and CMT had purchased stakes in Hoana in 2005 and 2006, respectively.

Then in 2009, Pat Sullivan, then CEO and president of Hoana, approached them for a short-term loan “in order to satisfy the company’s near-term cash flow needs until addition, then pending equity investments were finalized,” according to court documents in a lawsuit brought by the two investors.

CMT and Erickson each purchased $500,000 Hoana “convertible debentures” in mid-2009, and after balking at the original terms, were provided letters by the company providing them the right to demand full repayment of the original investment plus company shares valued at $500,000 after one year.

On the one year anniversary, they notified the company that they were demanding the payment and stock distribution.

Hoana failed to deliver, despite their repeated efforts to collect.

Ericsson and TMT sued Hoana in 2011, but the case was dismissed when Hoana produced the investment contracts, which provided for mandatory arbitration in the event of a dispute.

It is the outcome of that arbitration that triggered the bankruptcy filing.

Hoana’s reference to a $30 million investment that has so far failed to materialize could refer to its licensing of sensor technology to auto parts supplier Faurecia, which reportedly has obtained exclusive rights to use Hoana’s sensors in its new “Active Wellness” car seat.

The bankruptcy filing hints that the arbitration award to CMT and Erickson could disrupt this licensing deal.

Others who made loans to the company by buying convertible notes, and are now on the list of large creditors, include Norman Gentry ($437,517), Michigan-based Seamless Accelerator ($100,000), Yukimura’s Inc in Lihue ($137,651), and Makiko Bunn, Akiko Yazawa, and Kiyotake Albert Yazawa ($14,548 each).

The Research Corporation of the University of Hawaii is also among the remaining creditors. It is owed $54,470.

Sanmina-SCI, a San Jose-based electronics manufacturer, is listed as being owed $550,000, but the amount is in dispute.

Other major creditors listed by Hoana include the Mcconiston Miller Mukal MacKinnon law firm ($86,754), Collins & Co. of Arlington, VA ($43,000), Los Angeles intellectual property law firm Fulwider Patton ($327,066), and Carroll Takahashi ($132,082 in deferred wages).

On June 15, 2015, Patrick K. Sullivan, who controls Oceanit and had been CEO of Hoana since it was formed, stepped down from those positions and was replaced by Edward Chen, according to state business registration records. Sullivan remains as Secretary/Treasurer, and will continue to serve as a director. At the same time, investor Barry Weinman was removed as a director of the company.

Hoana Medical says it currently has five full or part-time employees.

A reader says: I won’t pay for news.

I received an interesting email this week from a regular reader who also takes the time to write long, detailed essays on a number of issue which are submitted as comments on my blog posts.

The mail comments on Civil Beat’s paywall, and takes the simple position that “people don’t pay for content anymore.”

I’ll let the email speak for itself.

Recently, CB has been enforcing its paywall. I just cannot read it unless I subscribe.

Well, the reality is that I am very probably not going to take up a CB subscription. This is because I do not pay for anything, and never have. I can get around the paywalls for the WSJ and the NYT quite easily. I’ve taken up a mild interest in renewable energy, and can read daily journalism on that for free. But the idea of paying for the news is alien to me. So I am not going to read any local journalism, it seems. At all. And that’s a shame, among other reasons because it will affect the quality and substance of my comments on your blog. It will also affect what I read on your blog, which is probably much less because I won’t know what you are talking about (e.g., the TMT controversy, etc.).

I’m not sure how to respond to this kind of approach to the economics of information.

“I do not pay for anything, and never have,” the writer says.

Well, I’m sure the writer is paying for food, water, housing, transportation, clothing, and similar expenses. They’re paying for communicating, a computer or smartphone, broadband service, etc. Probably cable tv service.

Good journalism doesn’t grow on trees. And it’s as essential a service–or perhaps more essential–than some of the things that we all routinely spend money on without thinking.

So refusing to pay for it is a matter personal priorities.

I’m recalling the term that used to come up in such discussions. Freeloader. I shouldn’t be so blunt, but that’s how it looks.

None of us has the answer to how we’re going to fund journalism going forward. There are lots of different models being test flown. Civil Beat’s is one of them. None produce news without cost. And, yes, there are back door ways to defeat the need to pay your share. I’m of the view that we should be paying what we can, and when push comes to shove, prioritize which news sources we will pay for first, until budget limits are reached. But that’s a different calculus from a blanket, “I do not pay for anything.”

As far as simply not reading any local journalism if any of it requires payment, that’s really a choice to be satisfied with being a second-class citizen, uninformed about local issues.

Anyway, I thought I would see how others feel about this. The writer is not alone, obviously. But I have the feeling that popular views are shifting to see that good journalism costs and has value. People used to say they wouldn’t pay to listen to music, but that’s no longer the case. Hopefully someone will come up with a news subscription service that accomplishes a similar change of attitude towards journalism.

But let us know what you think.