Housing contracts may be in violation

By Jim Dooley
Advertiser Staff Writer

The state ethics code and procurement law may need tightening in wake of alleged mismanagement and contract award improprieties at the agency that oversees all public housing in Hawai'i, a state senator said yesterday.

Sen. Ron Menor said former HCDCH executive director Sharyn Miyashiro violated federal prohibitions in awarding a federally financed HCDCH contract. Advertiser library photos

Menor said that based on information available to the committee, it appeared that Sharyn Miyashiro, who stepped down as HCDCH executive director earlier this month, violated federal prohibitions against the "appearance of impropriety" in the award of a $771,000, federally financed HCDCH contract two years ago. Miyashiro awarded a nonbid contract to Punaluu Builders, a company founded and partly owned by her ex-husband.

Miyashiro did not attend the hearing, but the committee released a Nov. 29 letter she wrote to a federal official defending the contract award and sharply criticizing the quality of a federal audit of the contract.

Federal officials have demanded a refund of the money and have threatened to cut off housing subsidies here — now running at about $25 million per year — if the state refuses to give back the money.

Menor said he is considering recommending several changes to state ethics and purchasing laws in the upcoming legislative session, among them one that would adopt federal language banning an appearance of impropriety in contract awards. Another change would prohibit a state employee from involvement in the award of a contract to a company or individual with whom the employee has personal financial dealings, Menor said. The state ethics code now bans state employees from awarding a contract to a company in which the employee holds a financial interest.

Dan Mollway, executive director of the state Ethics Commission, welcomed Menor's suggestions but said the commission's track record has been "abysmal" over the past three years in trying to convince the Legislature to tighten the ethics code.

"His ideas are certainly worthy of consideration by the Legislature," Mollway said.

The senator also said he may sponsor legislation that would make appointed members of state boards and commissions personally liable for financial losses caused by "gross negligence."

Robert Hall, the new executive director of the Housing and Community Development Corp. of Hawai'i, told the committee that if the agency agrees to refund the $771,000 to the U.S. Department of Housing and Urban Development, the money might have to be drawn from state money.

The HCDCH board of directors will meet Thursday and Friday to finalize a response to the federal refund demand, made last month by HUD Assistant Secretary Michael Liu. Menor expressed "serious concerns" in yesterday's hearing about the HCDCH board taking any action that might cut off the flow of federal housing money to Hawai'i.

Miyashiro has repeatedly refused to discuss the matter but insisted that there was no conflict-of-interest violation under state procurement laws.

In her letter to Liu made public at yesterday's hearing, Miyashiro defended the Punaluu Builders contract and said a HUD audit of the contract "contains numerous inaccuracies... lacks specificity and made conclusions based on (a) hasty investigation."

She did not say how or why Punaluu Builders was selected for the job but said the contract award was legal and the price paid reasonable.

Miyashiro told Liu that before making any decision on the demand for a refund of the $771,000 contract price, HCDCH is conducting a separate cost analysis of the work performed.

Board members were invited to yesterday's hearing, but none attended. Hall said he believed scheduling conflicts prevented any board members from testifying yesterday.