Resolution Seeks Performance Audit of Marred County Housing Agency

An expanding corruption scandal involving a former county housing specialist and his co-conspirators has made headlines during the past two weeks and put a focus on the county’s use of affordable housing credits.

North Kona Councilman Holeka Inaba wants a deeper look.

Resolution 467, introduced by Inaba and to be heard Aug. 2 by the County Council’s Finance Committee, requests the county auditor to conduct a performance audit of the county’s Office of Housing and Community Development to make sure the office has the right plans in place to guarantee the lawful and efficient issuance and use of affordable housing credits.

RES 467 Draft 01 2020-2022 by Tiffany De Masters on Scribd

“Recent legal developments around affordable housing practices in (the Office of Housing and Community Development) means we need to take a solid look at what systems are in place and what improvements could be made within (the Office of Housing and Community Development) to ensure efficient and ethical issuance of affordable housing credits moving forward,” Inaba told Big Island Now.

Affordable housing credits can be issued to developers who agree to construct new affordable housing units over and above requirements imposed under county law. The credits also can be transferred to other developers.

According to a report Inaba received at the beginning of July from the housing office, there are 18 developments that have received affordable housing credits since at least 2000 that have a total of 1,042 credits yet to be used.

While not in direct response to the ongoing corruption case, Inaba said there have been numerous articles published by Environment Hawai‘i focusing on the issue and concerns about affordable housing development have been expressed for decades.

“With even more concern of corruption with these credits, now is the time to audit what has happened,” Inaba said.

Since taking office, he’s worked with Hāmākua Councilwoman Heather Kimball to look at Chapter 11 of county code, which deals with housing, and said they have found areas of concern.

“It is not abnormal for excess credits to remain available as was intended when Chapter 11 was designed; however, we need to take a hard look at these credits to ensure that requirements were in fact satisfied before any organization or individual received their affordable housing credits,” Inaba said.

He hopes an audit will uncover if there were any unethical or illegal actions taken by the housing office through the credit process. He’s very much interested in what it could find and what recommendations come from it.

Office of Housing Community Development Affordable Housing Excess Credit Balance Summary by Tiffany De Masters on Scribd

“The audit will provide the (Office of Housing and Community Development) with recommendations to improve both internal and external processes,” Inaba said, adding he thinks the council needs to take a harder look at Chapter 11 and is waiting on a study and report being prepared by an outside consultant to help guide any policy changes.

He said he’s wanted to take a deeper dive into the practices of the housing office for a while.

“However, it was the credit report I received from (the Office of Housing and Community Development) that confirmed our need for this resolution,” Inaba said.

He is introducing the resolution and seeking the audit with a bigger picture in mind.

“I’m introducing this resolution because our community is in dire need of affordable housing,” Inaba said.

He also plans to introduce legislation calling for scheduled reporting from the housing office so the council has better oversight of affordable housing development moving forward.

“I am aware of Resolution 467-22 and favor working transparently and collaboratively to ensure the lawful and efficient issuance and utilization of affordable housing credits islandwide,” Susan Kunz, the county’s housing administrator, told Big Island Now. “I have been in conversation with Mayor (Mitch) Roth and the county auditor in regards to this issue, and look forward to continued collaboration with the council to continue building public trust throughout our county.”

Alan Rudo, a former housing specialist with the Office of Housing and Community Development, was indicted on fraud charges for his role in a multi-million-dollar conspiracy involving affordable housing credits being approved but such housing never being developed. Rudo, who took roughly $2 million in kickbacks as part of a six-year ploy with three other co-conspirators, pleaded guilty July 18 and now faces up to 20 years in prison.

Two of the other co-conspirators, Paul Sulla Jr. and Gary Zamber, were indicted last week on six counts of honest services wire fraud and one count of conspiracy. Sulla was also charged with one count of money laundering. Sulla and Zamber are both Big Island attorneys.

The third co-conspirator, Rajesh Budhabhatti, who is a private businessman on the Big Island, was charged separately with conspiracy to commit honest services wire fraud.

Rudo was the only former county employee charged in the case. He left his county position in 2018. The four men knew each other socially before they contrived the conspiracy.

Roth as well as the U.S. Attorney’s Office in Honolulu have both told Big Island Now that the county has been cooperative with the federal investigation the entire time its been underway.