Governor
proposes big breaks
for high-tech firms

He'd offer lease deals
and a 5-year tax holiday to
attract industries to a
Kakaako tech park

By Richard Borreca
Star-Bulletin

Hoping to lure new high-technology companies to Hawaii, Gov. Ben Cayetano yesterday proposed giving interested firms inexpensive leases and a five-year state tax holiday if they relocate here.

Cayetano was speaking at a conference he sponsored to draw attention to the state's interest in attracting high-tech industries to Hawaii.

"I propose a Kakaako high-tech park," Cayetano said.

The park would be on state land, leased to firms doing business in high technology in the state.

"You would negotiate lease rents for state lands in Kakaako in accordance with the size of the investment," Cayetano said.

"You want to invest a good deal in this state, you would get it for free," he said to the applause of several hundred local business-people.

The state administration, however, is still working out details of the proposal and, as Cayetano told the audience, it was contingent on his re-election.

"During my second four years in office," Cayetano said, "I will go to the Legislature and propose reducing the corporate income tax and cutting the excise tax for professional services."

The biggest incentive would be the tax holiday, which Cayetano described as "five years of not paying the corporate income tax and the general excise tax."

There was no clear plan, however, as to what would qualify a company for the tax breaks.

"I guess IBM could move there if they are bringing in something new; it may be that we would have to limit it to software development. That part I haven't quite worked out yet," he said.

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Cayetano blamed in
library contract fight

By Mike Yuen
Star-Bulletin

While stopping short of accusing Democratic Gov. Ben Cayetano of any wrongdoing, Michael Liu, the unsuccessful Republican candidate for lieutenant governor, is blaming Cayetano for at least the appearance of "insider dealing" with a terminated state library contract that breached procurement laws.

Cayetano and his spokeswoman could not be reached for comment. But Ann Kobayashi, co-chairwoman of Cayetano's re-election, said last night that Cayetano never gets involved with procurement contracts.

Moreover, libraries are the responsibility of the Board of Education, not the governor, said Kobayashi, who questioned the timing of Liu's allegations. The Nov. 3 general election, in which Cayetano faces GOP challenger and Maui Mayor Linda Lingle, is less than a month away.

Liu insisted that he was not acting as Lingle's attack dog when he summoned reporters to a hastily called late-afternoon news conference.

The questions that Liu raised stem from a lawsuit filed by CARL Corp., the company that lost the bid to operate the state library's computer system to Ameritech Inc. Last month, the state's new head librarian, Virginia Lowell, terminated the contract, saying it violated state procurement laws. CARL claims it lost the bid because Bart Kane, Lowell's predecessor who was ousted, bargained in bad faith because Ameritech had been pre-selected.

Liu pointed to the claims made by CARL Corp. attorneys as early as last month, in which they alleged that Cayetano knew about the skirting of procurement laws and even approved it.

The Associated Press quoted Cayetano back then as saying the accusations were irresponsible and that he never got involved in any library negotiations.

Liu also pointed to court filings in which Ameritech officials noted that Cayetano attended a meeting with them on Oct. 19, 1995.

The meeting occurred after the request went out for proposals for the $3.4 million contract.

"If I were governor or lieutenant governor, I think the appearance of propriety or impropriety has a lot to say as to how we do business in this state of Hawaii," Liu said. "This was not a case where the governor was just meeting a prospective business which had no specific interest or no specific contract on its mind."

Liu said he is galled that Cayetano is trumpeting his first term as scandal-free.

"It is more than ironic that the governor uses Ameritech in a campaign ad as evidence of how he has brought competition into the communications marketplace, when in fact just the opposite is the case -- Ameritech got into Hawaii at the expense of competition," Liu said.