Council Postpones Resolution Seeking Performance Audit of County Housing Agency

A request by a West Hawai‘i council member to have the county auditor take a deeper look into the marred county Office of Housing and Community Development’s use of affordable housing credits was put on the backburner until later this month.

The County Council on Tuesday, Aug. 2, during a meeting of the Finance Committee postponed a decision on Resolution 467. The measure, which was introduced by Kona Councilman Holeka Inaba, seeks a performance audit of the housing agency to ensure is has adequate plans and processes in place for the lawful and efficient use of affordable housing credits.

While not in direct response to an ongoing corruption case involving a former employee of the housing agency and his co-conspirators, Inaba said last month that concerns about affordable housing development in the county have been expressed for decades. It was a report he received at the beginning of July outlining unused affordable housing credits, however, that he said confirmed the need for an audit.

Council members agreed Tuesday with the intent of Inaba’s resolution, but also thought it might be best to hold off on an audit after hearing from county Auditor Tyler Benner and Corporation Counsel Elizabeth Strance.

“Our office has had productive conversations with Corporation Counsel and the housing administrator,” Benner said. “We’ve developed some understanding of the issues. We need to note some factors that potentially could complicate us and prevent us from conducting an audit.”

One of those is in direct response to wording in the resolution.

“The purpose statement on the top front page of the resolution, and I’m paraphrasing, does seek to ensure that OHCD has adequate and fundamental strategic plans to guarantee the lawful and effective issuance and utilization of affordable housing credits,” Benner said. “We already know that OHCD does not have these strategic plans.”

An outside consultant was hired in response to a measure passed last year by the council urging the housing agency to conduct a study and develop plans for housing on the island. That report is due later this year.

The scope of the consultant’s services includes review of excess of affordable housing credits and how the existing system has worked to provide recommendations to improve effectiveness. The county is also working on a broader road map to expand affordable housing, on which the consultant is available to provide feedback.

“I would suggest that there’s significant overlap between what we’re being asked to look at and what’s already in progress,” Benner said.

He also said an audit now might interfere with current legal proceedings.

“Where council is concerned, the resolution appears well-intentioned,” Benner said. “Where the administration is concerned, we’ve read statements made pertaining to internal process improvements, which we’d be eager to validate. Where management is concerned, they have an appetite and expressed a willingness to openly participate in an evaluation of their system that might result in process improvements.”

So the central issues Benner anticipates are the outcomes of an audit and timing.

“Right now, I see an entanglement of the alleged activities and the credits,” he said. “The question then that we have to ask is can we separate and focus exclusively on the credits, mapping the work flow and testing controls surrounding the process steps while taking a position of non-interference with regard to the legal proceedings.”

If the office can, there might be a path forward. If not, the auditor would have to withdraw or defer. He recommended the council pause.

“While the most appropriate time for us to conduct this audit would be after the legal proceedings conclude, after discussion, if Council passes this resolution, I would agree to have members of our staff conduct preliminary survey work beginning in late September and we can provide Council with a communication to indicate whether or not we can move forward,” Benner said.

Strance said Benner expressed a mindfulness of the intent behind the resolution and the concerns the council and community would have based on the reports of a former county employee and others being indicted and that former county employee entering a plea.

She supports the auditor’s recommendations and wants to work with Inaba, her team and housing administrator Susan Kunz on a proposal that would provide the measure of information the council wants.

Strance said if the resolution is deferred for a short time, there are some amendments that could be made to narrow its scope. Council members agreed.

“I heard Mr. Benner give some real clear edits that would help him achieve what I know this body is after, but I’m also hearing what Judge Strance is saying as far as timing and allowing other processes to work,” Hilo Councilwoman Sue Lee Loy said. “I’m willing to kind of follow their lead and just hold up a little bit to refine it to a place where everybody will get what they need. I think everybody, everybody, the entire community, wants to get to the bottom of this one, and then some assurances that whatever safeguards we put in place kind of demonstrates back to the public that it is transparent and trustworthy.”

She added that the council can do better.

“We, as a council, have to acknowledge that some serious abuse of power and authority happened,” Puna Councilwoman Ashley Kierkiewicz said. “So we have to get to the bottom of this. We want answers.”

She appreciates Benner’s approach to narrowing a possible audit.

“Narrowing it down, I think, will help us to kind of achieve what we’re looking for, which is a lay of the land,” Kierkiewicz said. “We want to know how all of this is working, what sort of historical issues are present that kind of led to this so we’re not making the same mistakes again in the future.”

She said making further refinements to the resolution will make sure the end product really helps to make sure it is something the council can move forward with in confidence.

“I think we can just narrow this down just slightly more, specifically on that accounting of credits,” Hāmākua Councilwoman Heather Kimball said. “Again, they are a commodity and a very valuable one at that. … We want to make sure we’re doing it right.”

“I think also staring that survey work and aligning to when the consultant delivers their report some of your questions may be answered through that report,” Benner said. “But I would hate to take a complete hands-off approach and there leaves a number of questions asked after that consultant is done and gone and then we have to start from zero.”

Kunz said she is open to working with Benner.

“We had a really good conversation,” she said. “We kind of laid some groundwork, actually, of what we thought we might be able to start out with regard to a survey and help support what the consultant is actually doing.”

Inaba said he is more than willing to work with Benner to refine the resolution and made the motion to postpone. But not for long.

“If we can focus it in, as the auditor is recommending, we should be able to move forward and account for what’s out there. If not, we’re choosing as a council and as a county to prolong an issue or to continue an issue if we don’t get an accounting of what’s out there,” he said. “I’ll work with the auditor, fine-tune this and make sure there are clear boundaries and parameters not to get us in trouble. But we’re getting ourselves in trouble if we don’t move this forward after that.”

Inaba and Benner will meet before the Aug. 16 Finance Committee meeting to work on refining the resolution.