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    TrumpTax, Part 2

    One of the new, key components of Trump Tax is a provision important to the vast majority of small businesses.  Practitioners may know it as the Section 199A deduction.

    Under Trump Tax, corporations that used to see a maximum tax rate of 35% got that rate slashed to 21%.  About 75% of businesses, however, are not taxed at the corporate rate.  Instead, individuals who own them are taxed on the business profit at individual rates, which can go up to 37% (down from 2017’s maximum of 39.6%, but not much).  We need to remember that corporations are double taxed, in that they are taxed and then pay dividends which are then taxed to the recipients.  But even allowing for double taxation, the corporations seem to get a big break here.

    Trump Tax’s answer to this anomaly is Section 199A, which tries to measure how much income has come from business operations and then gives the recipient a 20% deduction for it, which would give those earnings a benefit economically similar to a lower tax rate.

    The individual tax rates were designed for most people who are wage earners.  They earn money by providing their services to a business.  Businesses that are service oriented, like law firms, accounting firms, or brokerage houses make their money the same way, and for that reason are not allowed the deduction—at least they aren’t allowed it if they make enough money.  The law provides thresholds and phase-in treatment so that those making smaller amounts of money can take the deduction as well, but those earning too much are out of luck.

    Here’s an example.  Kenny, who owns a plumbing business, is married.  His taxable income is $335,000, $300,000 of which is ordinary income that comes from the business after it pays wages of $150,000.  Kenny might deduct 20% of the $300,000, or $60,000.

    If Kenny instead owned an accounting firm, his taxable income is 20% of the way through the phaseout range, which for couples is $315,000 to $415,000.  So, only 80% of his business income, or $240,000, is considered.  He may be able to deduct 20% of the $240,000, or $48,000.

    (Note that the actual law is quite a bit more complicated.  There are limitations based on W-2 wages that the business paid, for instance, and others that are designed to take account of income already taxed at a lower rate such as capital gains.  Those limitations don’t kick in with the numbers in this example.)

    Here in Hawaii, our focus over the years seems to have been to soak the individuals.  Our top individual tax rate is 11%, second highest in the country, while our top corporate tax rate is 6.4%, which is much more on par with what other states are charging corporations.

    In the upcoming legislative session, our lawmakers will be asked to conform our Hawaii income tax law to the federal changes that have taken place in 2017.  One decision that they need to make is whether to conform to this provision, section 199A.  Right now, our individual income tax law doesn’t even attempt to distinguish between income that comes from a business and income that comes from wages.  Because we have chosen to tax business income at a much lower rate if the income is earned in a corporation, we should seriously consider adopting section 199A here in Hawaii to give some relief to the 75% of businesses that are not in corporate form, especially the small businesses.

    ThinkTech: Preparing High School Students for Sucess

    Business in Hawaii with Reg Baker Broadcast.

    Preparing our high school students for successful careers is critical. And Shayne Greenland at Campbell High School is doing this very well and the kids love it!!

    This is the type of practical education that needs to be in all out schools.  Of course we need the basics, but our keiki need to learn how to apply what they are learning.  And be prepared for moving on to either a job, career or higher education.  Campbell High School gets it!

    Postscript on Hawaii’s brush with Armageddon

     

    Editor’s Note: We received this letter from New York reader, Anthony Donovan, and thought it would appropriate to publish. Thank you Mr. Donovan for the thoughtful missive.

    Hawaii, from NYC, we are humbled by your experience and know we would have reacted the very same, not know what to do, nor how to prepare our last few minutes. What a significant opportunity this is. Will you take it and with such direct, real experience help the rest of the country?

    The clear reality, truth you witnessed: There is NO protection from a nuclear device. Never has been. Einstein, until the day he died tried to warn us of these weapons being very dangerous false security. There is no shelter. No preparation that would make a difference. Remember, the larger bomb of Nagasaki was 20 kilotons. One nuclear missile on one of our submarines is 3,800 kilotons. Many devices are much more powerful, but on average, 20 vs 3,800! The devastation is beyond any possible understanding or human reason. The many billions spent on warning systems and missile defense will also not help us one bit, except allow us a few minutes of goodbyes.

    Living undeterred in our republic, we have a largely clandestine industry that remains outside any democratic process. 100 US Senators don’t mention it in public, a media that never questions beyond the surface, rather all prefer to cast a shadow on a nation that is very clearly using our very own logic of deterrence, North Korea. A logic, many retired military officials, even former heads of Strategic Command say is false, extremely unsafe and long outmoded. Yet we have trillions of invaluable tax money on automatic, going to this industry in the name of patriotism and safety.

    With many brave and outstanding young men and women in service, our Strategic Command has a long history of protecting this industry, misleading with mistruths, with thousands of accidents, and close call miscalculations the public has never heard of. As a citizen, never use even one nuclear missile of our many thousands in my name, or my country’s name. One accidental or purposeful detonation needs to be called what it is: murder of many millions. Just one will be an irretrievable set back to Climate and as well a poisoning of precious environment for generations. Accidents happen. Human error is a given.

    We’re been extremely fortunate, and Hawaii is a real wake up call. We can listen to Pope Francis’s urgent conference and plea to the world. Listen to the 2017 Nobel Peace Prize awards. Read the the Treaty for the Prohibition of of Nuclear Weapons adopted by 122 nations on July 7th, that this country ignored. Divest. Stand up. Let’s prevent an unnecessary horror on earth. With extremely deep bunkers, our full arsenal can do little to Kim, while innocent humanity are murdered, and resultant deadly radiation spreads again around the world back to us all.

    Such an example for others? Want to be a strong, wise leader? Honor 72 years of our greatest Americans and start down the path to abolish them now. As JFK said, we can, and we must. The young generations deserve a life free from our costly burden, our most grave insanity. Hawaii, please, reach out and teach America what you learned in a most invaluable, profound half hour.

    (Advise all to read Eric Schlosser’s Command and Control, and Timmon Wallis’s Disarming the Nuclear Argument, or watch the recent documentary Atomic Homefront, about St. Louis residents trying to deal with it’s nuclear weapon waste, and the documentary covering much invaluable history; “Good Thinking, Those Who’ve Tried to Halt Nuclear Weapons, which among other awards won Best Documentary in Montreal last year)

    (Photos courtesy of Wikipedia).

    Sipping Wine in Marlborough Country

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    Editor’s Note: This the last in a series of three articles on wine tasting in New Zealand. It’s by no means a definitive work but we think it will at least provide anyone interested in the subject a primer–someplace to start. A big mahalo to the Kiwis we met, all of whom were friendly, gracious and generous. We look forward to returning.

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    Any New Zealand wine aficionado must make a pilgrimage to Marlborough, located on the northeastern corner of New Zealand’s South Island. It’s not just that this part of Aotearoa is drop-dead beautiful, but compared to California’s vaunted Napa/Sonoma/Mendocino Counties, it’s a sheer pleasure to visit.

    Why do I say that?

    My last trip to northern California’s “wine country” felt more like a trip to a crowded, upscale mall. The roads were crowded with Mercedes and Porsches, and wine tastings were expensive—as were the wines. I suspect the folks working for the wineries have also become a bit jaded.

    Contrast that with New Zealand, where Mercedes are few and far between and parking lots at wineries, much less the roads to reach them, are rarely crowded. Wine tasting is also quite affordable—as are the wines.

    Wine making has become a big deal in this little country that heretofore was known for exporting dairy products and mutton.

    More importantly, Kiwis are becoming great winemakers. New Zealand wine is equal to and in some cases, better than what you get in California.

    So back to Marlborough.

    Bounded by the Pacific Ocean to the east and mountains ranges to the north and south, most of the grape growing is done on an alluvial plain. Marlborough put New Zealand’s distinctive Sauvignon Blanc on the map—in fact 85.8% of Marlborough’s wine production is Sauvignon Blanc.

    Making the scene at Cloudy Bay, arguably the winery that put New Zealand’s Sauvignon Blanc on the map.

    Rod Malcolm of Vintage Wine Tours reckons the top wines of Marlborough he opined were Sauvignon Blanc, Pinot Gris, Pinot Noir, Gewurztraminer, Chardonnay and Riesling.

    In his opinion Central Otago (another wine growing region on the South Island) gets “too much favourable press for it’s Pinot Noirs.” In WineNZ (the country’s top wine magazine) annual tasting report of 2017 rated seven of the top ten Pinot Noirs, rated by WineNZ as coming from Marlborough.

    On a recent trip we explored a clutch of wineries on Marlborough’s Golden Mile, a 6 km or so stretch of pavement through the heart of wine country. Constructed for bicyclists, this also happens to be the focal point for some great wine tasting.

    The first winery that we visited was Cloudy Bay, which has become as popular as any winery in Napa or Bordeaux. On any given day, busloads of fans crowd the premises. It’s the most famous winery in New Zealand and arguably put the Kiwi wine industry on the international map.

    We went there because we had to. Not visiting Cloudy Bay would be like a trip to southern California without seeing Disneyland.

    For that very reason, some wine tour guides make a point of not going there. There are other wineries who produce wine equal to this iconic marque, but no local winery is as well known outside of New Zealand.

    Cloudy Bay offers tasting with a view.

    Hence the place is crowded. To many it’s an enological pilgrimage on the order of Lourdes.

    It’s a classy space with a long bar to accommodate guests and a fine restaurant on the premises.

    So what to sample while you’re there?

    If you haven’t tried their Sauvignon Blanc, give it a shot. After all, it’s the wine that made Marlborough famous. We tried the 2017 Sauvignon Blanc and it was splendid. Ditto with their Chardonnay Sec from 2015. We also sampled a couple of their Pelorus line of sparkling wines, which are the Kiwi version of Champagne.  (Of course it can’t be called Champagne because the grapes are not grown in the Champagne region. However, they are made in the same manner, known as méthode champenoise which requires a secondary fermentation in the bottle).

    Katrina, from Nautilus, discussed the company’s Opawa brand grown in the Opawa River region.

    Nautilus was the second stop on our list. I wanted to visit this winery for two reasons. Number One is that their reputation for excellence. (Like Cloudy Bay, you can get them in the U.S).

    The second reason is their environmental culture. They minimize the use of chemicals and compost their grape skins and other remnants of the wine making process back into their vineyards. Commensurate with looking after mother earth, they have linked up with Driftwood Eco Tours, an eco-tourism company dedicated to preserving the environment of the Opawa River basin and restoring New Zealand’s dwindling wetlands.

    It’s in the Opawa area that Nautilus produces a separate line of wine called, not surprisingly, Opawa which is grown in a vineyard that was once (before a major earthquake changed its course) the Opawa river bed. The Opawa region is not only rich in wildlife, it’s  archaeology harks back to the cradle of Maori civilization.

    French Journalist Philippe Guesdon inspects the oak barrels imported from France at the Nautilus Winery.

    Now, back to the wine. At the winery, try their Vintage Rose, which is based on a 100% Pinot Noir grape. A good rose is hard to find, and Nautilus has succeeded in making one. Equally wonderful was their Sauvignon Blanc (2017), their Pinot Gris (2016) and their Pinot Noir (2015).

    Rod Malcolm of Vintage Wine Tours had a slew of suggested wineries for us to visit, among them the Fromm winery, which has an unpretentious tasting room with picnic tables outside the door. Don’t let the modest digs fool you. The wines here were superb and they are exported to the US.

    According to Jamie Goode, a prominent UK wine blogger, Fromm is an important Marlborough winery because they were one of the first to promote single vineyards in the region. They are also unusual, says Goode, because in a white wine-dominated area, their focus is on reds.

    Goode says that Fromm “had to cave into export demand by making a Sauvignon that’s fairly typically Marlborough in style.”

    Stephan Walliser, a native of Switzerland, greeted us in three different languages. Fromm was founded by a Swiss family and their organically grown wine is first rate.

    One of the most notable distinctions about their wines is that they are all organically grown (certified by Biogro New Zealand’s organic verification org) and hand-picked.

    Fast forward to our visit to the property. What was significant about it was the almost austere setting. There were a few picnic tables for tasting and a modest public area. You get the feeling that management puts their resources into their product rather than throwing money at bling. Based on the quality of the wine that we tasted, I’d say that is exactly what happens at Fromm.

    We were met by the manager, Stephan Walliser, a charming native of Switzerland, fluent (as you would expect of a Swiss) in German, French and of course English. He poured a number of red and white wines, but our favorites were their Sauvignon Blanc (2016), Pinot Gris (2017) and Chardonnay (2016).

    Saint Clair was another Rod Malcolm recommendation.

    We sampled several their wines (which are exported to the US) including a wonderful sparkling wine that was 70% Chardonnay and 30% Pinot Noir. It was created for Dawn Ibbotson, the matriarch of the family, in honor of her 100th birthday. She is still alive and kicking at 103.

    How could you not be charmed by the enthusiasm of this Saint Clair barrista? 

    Her secret to longevity?

    According to the family, it’s a daily glass of wine and a glass of whisky. (I also suspect she is blessed with the “good” variant of the FOXO 3 “longevity gene”, discovered by my friend Bradley Willcox of the University of Hawaii).

    But I digress.

    In addition, we sampled some amazingly good Sauvignon Blanc (2016), Pinot Gris Reserve (2016) and Chardonnay (2016). You can sip this wine for a fee or if you purchase a meal at their restaurant (Vineyard Kitchen) the wine tasting is free.

    Clark Estate is a boutique winery which has a minuscule tasting room in a converted shipping container in Blenheim. We were welcomed by Peter Clark, a former British Army Officer (and product of Sandhurst) who happens to be the father of the winemaker, Simon Clark. Suffice it to say, this is a real family affair. The Clarks purchased the raw land in Awatere, which has become prime vineyard property, 20 years ago. They had good sense.

    Clark is a family owned, boutique winery that is beginning to get recognition. We were impressed with their Riesling.

    This alluvial acreage produces grapes equal to any in the Marlborough region including a very good Sauvignon Blanc. They produce a couple of noteworthy products including a sparkling Riesling, which I thoroughly enjoyed. Their “regular” Riesling was also a winner. Both have the distinction of having only 8% alcohol.

    So Many Wineries so Little Time

    There are a slew of other great wineries in the area if you have the time and stamina to visit. I asked local expert Rod Malcolm, for suggestions and he came up with these:

    Mahi is a highly rated Marlborough producer. Winemaker Brian Bicknell, makes two styles of Sauvignon Blanc and Pinot Gris, as well as having (usually) three Chardonnays and three Pinot Noirs. The cellar door is only open for private tastings (Monday through Friday) byappointment only. (Rod Malcolm will take visitors there for an extra charge).

    Greywacke, owned and operated by is Kevin Judd is also a good option. Previously Judd was the winemaker for Cloudy Bay’s first 25 vintages. All of his wines are reportedly excellent. He loves to have his grapes ferment with the natural wild yeast (as opposed to a commercial variety). Even his standard Sauvignon Blanc has 20% wild yeast. Any tastings must be arranged with Vintage Wine Tours because the winery has no “cellar door”.

    Te Whare Ra uses flowering plants such as buckwheat and Phacelia between vine rows to provide nutrients and habitats for beneficial native insects that work to deter harmful pests rather than chemicals.

    Te Whare Ra was founded in 1979, so it has possibly Marlborough’s oldest Riesling, Gewurztraminer and Chardonnay vines. All wines produced by winemakers husband and wife, Jason and Anna Flowerday, are certified organic. Their Gewurztraminer has always been their most famous wine. They also have a following for their ‘Toru’ which is a blend of Riesling, Gewurztraminer and Pinot Gris.

    They get rave reviews for their Pinot Noirs and Syrah.

    Both Spy Valley and Lawsons Dry Hills have consistent quality for all their products. Both excel with Sauvignon Blanc and Gewurztraminer. Their premium Envoy (Spy) and Pioneer (LDH) lines are outstanding.

    Seresin is both organic and biodynamic. Best wines are Sauvignon Blanc, Chardonnay and Pinot Noir. They produce 9 or 10 Pinot Noirs at a wide range of price points.
    Lawsons Dry Hills have consistent quality, according to local wine expert Rod Malcolm.

    Villa Maria, owned by Sir George Fistonich, is a large and highly internationally respected grower. At their Marlborough cellar door, the only wines they have open for tasting are from the premium ‘Reserve’ and ‘Single Vineyard’ ranges. You won’t go wrong with either.

    Conclusion

    What impressed me the most about my visit to Kiwi wine country was the excitement in the air. It’s palpable. The local wine industry, which has only really kicked into high gear the last few decades, is still growing.

    It’s young, muscular and not afraid to break new ground.

    From what I could ascertain, a great deal of the outside investment in this industry is coming from France. When it comes to wine, that’s smart money. Think Louis Vuitton and their purchase of Cloudy Bay as one example.

    That should speak volumes about where the industry is going.

    In short New Zealand is a destination that won’t disappoint the wine lover. Bucolic countryside, friendly people and great wine. You can’t ask for too much more.

    (Photos courtesy of NZ Wine, Robert Kay and Philippe Guesdon).

    Rob Kay, the author of two titles (Fiji and Tahiti) for the Lonely Planet series, writes for the business and health sections of the Honolulu Star-Advertiser and is the editor of Fiji Guide, an online travel guide to the Fiji Islands.

    TrumpTax, Part 1

    As we nervously await the opening of the 2018 Legislature, we wonder how our state will approach tax conformity now that the Tax Cuts and Jobs Act, or “Trump Tax,” is now law.

    Most states, including ours, conform to federal tax law.  That means we generally adopt the federal law provisions that tell us what is income and what we can deduct, so that most of us don’t have to figure out our taxable income many different ways.  In fact, our most frequently filed income tax form, the Hawaii N-11, starts off with amounts reported on the federal return, and then adds and subtracts a few things to get Hawaii taxable income.

    Every year, our legislature is required to consider a bill to make our state income tax law conform to the federal changes made in the previous year.  The legislature will have its work cut out for it this year, because Trump Tax made sweeping changes to the federal law.

    In a nutshell, Trump Tax did two major things regarding taxation of individuals:  it dropped the tax rate for most people, but it limited or wiped out many deductions, making the tax base higher.  The tax you need to pay to the federal government is figured by multiplying the two, and the net effect is what you see here, according to data put out by the national Tax Foundation:

    On this chart, Hawaii middle-income families take home more money on average.  Hawaii families also appear to be doing well against their counterparts in other states.

    When our state legislature conforms to federal tax changes, we typically adopt the federal provisions regarding what’s taxed and what’s deductible, but typically do not change the tax rates.  If our lawmakers stick to that script this year, they will be hurting taxpayers, who will pay tax on a larger tax base but with the same rate as before.

    You might remember that the Tax Reform Act of 1986 also dropped rates and broadened the tax base to accomplish tax reform.  Our legislators reacted by enacting Act 239 of 1987, which dropped our tax rates to offer relief from the base broadening.

    This time, our legislature should consider doing something similar.  If they don’t, it will be functionally the same as raising taxes.  If you don’t want this to happen to you, please let your legislators know that you won’t be fooled if they simply pick up the federal base broadening without doing anything to the state tax rate.  It’s an election year, after all, and legislators need to know that taxpayers are watching!

    ThinkTech: Business in Hawaii – State of Hawaii CIO Update

    Reg Baker and State of Hawaii CIO Todd Nacapuy discuss technology upgrades and Hawaii’s Department of Taxation tax systems. What a challenge he has!!  And then add a massive tax reform package!

    An afternoon in Nelson, New Zealand wine country

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    The New Zealand Wine website (the trade group for nation’s winegrowers) describes the Nelson/Tasman region, where some of the country’s best wine is produced, as “slightly off the beaten track“.

    I would beg to differ. At the end of an afternoon with Vintage Wine Tours, a company that specializes in wine tasting, I’d have to say that Nelson is at the very epicenter of the action.

    Located on the Northern tip of the South Island, this region is blessed with high sunshine hours, a sheltered, moderating coastal climate and free-draining, semi-fertile soil. (Yes, semi-fertile, even gravelly soil is what you want to produce great grapes).

    The Nelson area produces outstanding Pinot Noir, Pinot Gris, Chardonnay, Sauvignon Blanc and a mix of emerging varieties. These include Albariño, Reisling, Viogier and others.

    There’s a century and a half of viticulture in this neighborhood–German settlers first grew grapes here in the mid-19th century. It’s also been a center of production for tobacco, hops and apples ever since. The latter two are still cultivated here.

    Vintage Wine Tours, run by Rod Malcolm (pictured at right), will literally drop you in the midst of a vineyard to taste wine. Highly recommended.

    According to Rod Malcolm, founder of Vintage Wine Tours (who deftly guided us around), the top three wines in the area are Pinot Noir, Pinot Gris and Chardonnay.

    “Both Marlborough and Nelson grow the same grapes,” says Malcolm. “In both places, the cooler temperature is more suited for white wine so other than Pinot Noir, you’re generally not going to find people growing grapes for reds.”

    A Vintage Tour

    After a brief stop at the Aronui vineyard, which is the only Maori-owned wine-maker in the country, we stopped at Kina Beach Vineyards, a boutique vineyard owned by a Swiss family. It has some amazing views of the Tasman Sea and some nifty couples-only accommodations on the property for at NZ$250 per night in a cottage and NZ$400 in a former 1930s era schoolhouse.

    You can enjoy spectacular views and wine at Kina Cliffs

    We sampled three white wines– Chardonnay, Sauvignon Blanc and a Reserve Pinot Noir. Of the three we liked the Chardonnay the best. Winestate magazine, a local trade publication, awarded Kina Beach Reserve Chardonnay 2010 five stars.

    Kina Cliffs, our third stop, is an 8-acre family owned boutique vineyard. It’s situated near Kina Peninsula cliffs, with great vistas of Tasman Bay and across to the Western Ranges. Both owners, Julie and Alistair Ashcroft, grew up on farms so hard work and getting their hands dirty, were not foreign concepts.

    According to the Ashcrofts, the location is a salubrious factor, both for the health of the vineyard and flavor of the wine. The nearby Kina cliff face exposes the Moutere clay gravel subsoil that also lies beneath the vineyard. The sea breeze promotes air-flow around the vines and minimizes frost damage in the winter.

    We sampled four of their wines and liked the Pinot Gris and Sauvignon Blanc the best.

    Rimu Grove, like so many vineyards in the Nelson area, is family owned and operated. (Photo courtesy of Rimu Grove)

    Rimu Grove, owned and operated by Patrick Stowe, a native of Napa Valley, was stop number 4. The Vineyard was planted in 1995 and consists of a little over 17 acres of Pinot Noir, Chardonnay and Pinot Gris vines. It’s easy to like the location, where you can quaff great wine at a picnic table on the north facing slope of the Bronte Peninsula overlooking the Waimea Inlet. The wines produced by this vineyard are yet another product of the ancient glacial gravels of the Moutere Clays.

    Simon Thomas, who poured our wine, clearly had an Epicurean side. He discussed each wine’s nuances and how to pair it with food. For example, Gewurtztraminer works well with spicy food and Riesling with fish. “The oak from Chardonnay,” he explained, “should never dominate the taste of the wine.”

    Rimu Gove produces a variety of reds and whites. Our favorites were the Riesling, Chardonnay, and, the Gewurtztraminer. It was the only outstanding Gewurtztraminer we had on our visit to New Zealand.

    Quaffing Waimea Estates wines at the Cellar Door restaurant.

    Our final stop on the afternoon of epic wine tasting was at a restaurant called Cellar Door which served us wines from Waimea Estates. The restaurant is also an indoor/outdoor environment shaded by trees in one section and a canopy in the other. In true New Zealand style, it was unpretentious and friendly.

    We sampled a number of white wines including Chardonnay, Sauvignon Blanc and the most memorable, an unusual offering, Sauvignon Gris (2015). The winery describes it as a “cousin” of Sauvignon Blanc, with a “roundness and intensity of fruit that projects it into a more tropical clime”. Think of it as a New Zealand style Sauvignon Blanc on fruity, tropical steroids. I liked it.

    True to its Kiwi conservationist roots the winery also contributes funds to help sustain New Zealand’s Tuatara which is often referred to as a living fossil and is the world’s only remaining living link to the dinosaur.

    They have done this by establishing a separate line of Spinyback wines.

    Every purchase of a Spinyback bottle provides funding to further education and conservation of the creature. Waimea Estates assists both the New Zealand Department of Conservation and Ngati Koata (pronounced “Narti Ko Arta”, Nelson’s local Maori Tribe) in their efforts to protect this species.

    Feeding the eels at Jester House Cafe, a local restaurant. (You’ll need to use the food supplied by the restaurant).

    Part and parcel of the tour is a visit to a restaurant. On this day, Rod took us to an informal eatery called Jester House Café. It was packed with customers of every demographic. An indoor/outdoor affair, it also has a playground for youngsters adjacent to the restaurant. A small creek with “pet” eels winds below the restaurant. Entrees are reasonably priced in the NZ $25 range. We had a pan-fried Gurnard, a local delicacy with delicate white flesh. (No, they don’t serve eel).

    Conclusion

    Our host Rod Malcolm provided a tour de force of Nelson-area wines ranging from large operations, where product is exported overseas to niche boutique wineries that are only distributed domestically.

    Not only did we get a cross-section of fine wines from a variety of micro climates, but he offered a primer on local history and culture.

    On a practical note, Rod made it easy to appreciate a wine tasting both by providing information and transportation. There is no way an outsider could have navigated the highways and byways of Nelson wine country (whether sober or drunk). Having someone else transport and inform you, was a real blessing and worth every cent. Tariff for visiting five wineries plus lunch was US$133.

    (Top photo of Aronui vineyard courtesy of NZ Wine. All other photos by Robert Kay and Philippe Guesdon).

    Rob Kay, the author of two titles (Fiji and Tahiti) for the Lonely Planet series, writes for the business and health sections of the Honolulu Star-Advertiser and is the editor of Fiji Guide, an online travel guide to Fiji.

    GEMS Takes One On The Chin From The PUC

    Off and on, we have been discussing the Green Energy Market Securitization or GEMS program.  GEMS is a financing program that was supposed to provide loans at a low interest rate to finance alternative energy systems and other clean energy improvements for those, such as nonprofits and individuals with lower credit scores, who might not be able to get other kinds of financing.  Governor Abercrombie signed the program into law, after which a 2014 bond issue raised $150 million for the program.

    Recently, in Order No.  34930, the Hawaii Public Utilities Commission (PUC) focused on how the GEMS program was coexisting with another ratepayer-funded program, which you may know as Hawaii Energy.  That’s the same Hawaii Energy that sends you a little chart every month showing how your energy use compares against that of (1) your neighbors, and (2) your energy efficient neighbors.

    Back in 2014, the PUC was asked to, and did, approve a Green Infrastructure Fee that went on everyone’s utility bill.  For residents, it started at about $1.50 per month and is now down to $1.18 after periodic readjustments.  The $150 million, after all, needs to be paid back with interest.  The PUC noted that ratepayers were also paying a Public Benefits Fee of about $5 a month to fund Hawaii Energy and it didn’t want to whammy ratepayers again, so it directed that the PBF be reduced by the GIF…temporarily.  The PUC made it clear that it wanted the shortfall in the PBF to be paid back.  Quickly.  So as not to disrupt the energy efficiency programs that Hawaii Energy was carrying out.

    GEMS, however, wasn’t accomplishing the lofty goals that were set for it.  Of the $150 million borrowed on the bond market, a measly 3%, or $5 million, had been loaned out as of July 31, 2017.  The 2017 legislature made GEMS loan $46.4 million to the Department of Education to cool the schools, but that wasn’t helpful to GEMS because it also provided that the loan was to be at zero interest.  Since its inception, GEMS administrative and program costs were nearly $2.8 million, against revenues just shy of $1 million.  “If HGIA [the Hawaii Green Infrastructure Authority, which administers GEMS] does not collect loan repayments, with interest,” the PUC said, it “in the long term, will be unable to support itself.”

    The PUC noted that Hawaii Energy claimed to have saved consumers over $1 billion in energy bill savings to date, with every dollar of investment generating $9 in benefits.

    The PUC concluded that “HGIA has not demonstrated the ability to replenish the PBF,” and that the prospects for GEMS repaying the revenue that it borrowed from the PBF are dim unless the PUC acts now.  Therefore, it said, the dollars that GEMS gets from its loan repayments and such will be used to repay the PBF, starting now.  And, these payments will be made before funding GEMS program administrative costs.  Apparently, the GEMS staff had better get those green infrastructure loans deployed and get that interest coming in if they want to get paid.

    What does this mean?

    If you are a legislator, this is not just a wake-up call.  The GEMS program has been a disaster from its inception, and the PUC has basically said that it expects the program to crash and burn.  The program does not simply need polishing; it needs radical surgery if it is to survive.  And, given the other pressing needs that our government faces, it may be that the correct decision is to cut our losses and scrap the program before the fallout from its death throes takes out other programs and agencies.

    If you’re not a legislator but you’re a taxpayer and utility customer, remember that this is about your money.  Please consider letting your legislator know about these issues and your thoughts on them.

    ThinkTech: Workforce Training (Business in Hawaii with Reg Baker)

    Educating our youth for employment and careers has changed. Unfortunately our education system does not embrace this reality (some educators do try). Learn more on how you can help with the transformation.

    Hawke’s Bay Wine Tasting Odyssey

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    “In the early eighties,” said Brendan McDonald, our guide to the Hawke’s Bay region and a native son of the Napier area, “there were about eight wineries.” The local wine industry was a new phenomenon and McDonald said that most people thought it would be a passing fad.

    “I remember my father telling friends,” he said, “that the soil was so poor where they were planting grapes, nothing could possibly come of it. It wasn’t his best prediction.”

    Hawke’s Bay is now one of the most productive wine growing regions in New Zealand.

    Hawke’s Bay is one of the most productive wine growing regions in New Zealand (Courtesy NZ Wine)

    We got to see it first hand with Odyssey New Zealand Wine Tours.

    What makes Hawke’s Bay a great place to grow wine grapes?

    An important component in the equation is (not surprisingly) the weather, which is markedly drier than other parts of NZ. It’s also one of the warmer parts of the country and is blessed with a variety of different soils which enables the production of many varieties of grapes.

    McDonald says that the growing conditions in the region are like France’s Bordeaux and Rhone regions. This translates as a 50/50 split between red and white wines. However, he says if you were to narrow down what the premier wines produced in the area are, Chardonnay would be ranked very high.

    Brendan McDonald discusses the nuances of Hawke’s Bay wine with members his tour group.

    Tastes have evolved in the Chardonnay space. Unlike the old days when Chardonnay was often too “oaky” McDonald says that the better ones are balanced, so they don’t overwhelm you.

    In the red wine department McDonald reckons that Merlot is the one varietal that Hawke’s Bay’s reputation is built on. In the future he believes Syrah will be the future star of the region.

    Hawke’s Bay is also renown for wine produced in a sub-region called Gimblett Gravels, formerly a river bed with little topsoil. The area is hot and dry and when it does rain, the water drains quite rapidly. Once considered the worst soil in Hawke’s Bay, it’s now a stellar spot for grapes and acreage costs a small fortune.

    The Platter at Oak Estate was definitely a highlight of the day.

    What local growers have learned is that the best soil for growing good grapes isn’t necessarily the richest soil and Gimblett Gravels (see map above) is illustrative of this.

    Our tour made the rounds to four wineries—Moana Park, a boutique outfit with limited production; Te Awa, which exports its products; Ngatarawa (formerly one of the largest family owned wineries in NZ) and Oak Estate, another boutique winery.

    At Oak Estate we wrapped up the tour with an excellent platter that included pate, rillettes (a sort of fish spread), smoked chicken, dried apricots, nuts, marmalade, cheese, olives and sauerkraut.

    It was a first class offering that capped off the day perfectly.

    Philippe Guesdon, former correspondent for Le Monde in Tahiti, was very serious about wine tasting.

    In every winery we visited we sampled four to six varieties and got a discourse on the nuances of each. These included Chardonnay, Sauvignon Blanc, Pinot Noir, Pinot Gris, Syrah (Shiraz in Australia), Merlot, Riesling, Viognier, Sangiovese and several Spanish varietals.

    We liked much of what we sampled. In general, but not always, we preferred the whites.

    Moana Park: Merlot Rosé and Pinot Noir were the best.

    Te Awa: Albariño, a Spanish varietal (used to produce Vino Verde in Portugal) and a vintage called “Left Field Rosé” stood out. We also tried a Te Awa’s Syrah on our own and it turned out to be the best red we had on our trip.

    Ngatarawa:  Pinot Gris and Very Old Saddlers a port-like dessert wine were wonderful.

    Oak Estate:  Pinot Gris, Chardonnay and Merlot were memorable.

    Our group tasted in the neighborhood of 25 wines during the tour. Tough work but someone has to do it.

    What we liked about this tour:  You are not put into a position to drink and drive. (New Zealand is very strict about DUI). Brendan, or one of his colleagues, will pick you up at your hotel or Airbnb in a van and whisk you away. At the end of the day, no matter what condition you are in, you are deposited at your accommodation.

    No muss, no fuss.

    Thanks to the efforts of Brendan, we were able to cover a large swath of territory in every sense of the word. We saw both boutique wineries (that don’t export outside of the country) and larger operations that do. We enjoyed a cross-section of wines and were able to educate our palates.

    Although Hawke’s Bay is famous for its Sauvignon Blanc, you’ll be surprised by other varietals such as this Port-like vintage called Very Old Saddlers from Ngatarawa.

    With Brendan at the wheel we got the kind of local insights that would otherwise be impossible.

    At first blush his appearance seemed incongruous with what you might think someone who leads wine tours should look like. At well over 6’ and north of 250 pounds, he looked every inch the rugby player (that he formerly was).

    However, you would be wrong in assuming that someone akin to Duane “The Rock” Johnson would not be conversant with the wine space. Affable and charming, he had an encyclopedic knowledge of the region.

    For those who might be insecure about wine tasting he offered a primer on the basics such how to hold your glass and what to look for (color, viscosity, smell, etc).

    He also reiterated one of the noble truths of wine tasting that everyone needs to hear: Don’t be concerned about what the experts think.

    Odyssey NZ does a great job of shuttling you around wine country. Much better to let them do the driving while you do the tasting.

    Your own opinion of the wine is what’s most important.

    The tour we took is called the “Wine & Gourmet Odyssey” which goes for NZ$149 per person. There are others available from Odyssey Tours NZ.

    It’s money well spent.

    (Top photo of Paritua Vineyards is courtesy of Wine NZ).