Lingle wants investigation of public housing agency

By Jim Dooley
Advertiser Staff Writer

Gov. Linda Lingle said yesterday she would ask the attorney general to look into possible wrongdoing at the state public housing agency, despite an earlier investigation by former Gov. Ben Cayetano's administration that found no evidence of criminal acts at the agency.

Lingle's move comes as the Honolulu office of the FBI conducts its own investigation of the Housing and Community Development Corp. of Hawai'i.

FBI agents interviewed staff members two weeks ago, according to HCDCH public information officer Darrell Young. And an FBI agent interviewed members of a public housing residents' group who have called for an investigation, according to Gloria Lei Leong, a member of the Hawai'i Housing Coalition of Residents.

A spokesman for Daniel Dzwilewski, special agent-in-charge of the Honolulu FBI office, said the office "has received petitions regarding HCDCH. We can't make any further comment."

Auditors and officials of the federal Department of Housing and Urban Development, which oversees and funds HCDCH, have been highly critical of the state agency this year, accusing it of financial mismanagement and procurement improprieties.

Some of the most pointed criticism has been aimed at a federally funded $771,000 non-bid contract awarded 2 1/2 years ago by Sharyn Miyashiro, then executive director of the agency. The contract was given to Punaluu Builders Inc., a company founded and partly owned by her ex-husband, Dennis Mitsunaga.

The Advertiser first reported on the existence of the contract and the circumstances surrounding its award in July.

HUD Assistant Secretary Michael Liu, a former Republican state legislator in Hawai'i, has called the contract award improper, and demanded that HCDCH reimburse the money to HUD.

Cayetano said Liu's demand was politically motivated, as it was delivered just days before the November gubernatorial election — an accusation that Lingle denied yesterday.

"I think HUD has acted appropriately," Lingle said.

In mid-October, Cayetano did order an investigation into the awarding of the contract. Within a month, the attorney general's office reported finding no criminal wrongdoing.

Lingle said she and her senior adviser, Randall Roth, had been in close contact with HUD officials this week about the state housing agency, and she had asked the new attorney general, Mark Bennett, to review reported problems there after he takes office Jan. 2.

"If the governor feels that the previous investigation was not as thorough or complete as it might have been, perhaps another investigation is appropriate," said State Sen. Ron Menor, D-17th (Mililani-Waipi'o), chairman of the Senate Committee on Commerce, Consumer Protection and Housing.

Menor said earlier this week that his review of HCDCH materials had led him to conclude that Miyashiro, who stepped down Dec. 1, violated federal prohibitions against the "appearance of impropriety" in awarding the contract to Punaluu Builders.

Although Miyashiro and Mitsunaga were divorced more than 20 years ago, the terms of their divorce decree required him to pay her home mortgage, supply her with a car and pay her home repair bills until she remarried. Miyashiro has not remarried, but has refused to say whether Mitsunaga supported her financially.

Miyashiro has denied any conflict of interest in the contract award and said a HUD audit of the contract "contains numerous inaccuracies ... lacks specificity and made conclusions based on (a) hasty investigation."

Dexter Sato, president of Punaluu Builders, could not be reached for comment yesterday.

Lingle said she planned to have a "memo of understanding" hammered out with HUD officials by the end of year about how her administration would handle problems at HCDCH.

She said she planned to try to collect the $771,000 from Punaluu Builders and forward it to HUD.

Other terms of the agreement include:

• A nationwide search for a new executive director. The salary, set by the Legislature, is $73,000 a year. Menor said he did not know whether that was adequate to attract the most qualified candidates, and said he would be willing to discuss an increase if the administration seeks it.
• Approval from HUD officials before new members of the HCDCH board are appointed or new executive staff hired.
• Increased training in procurement laws and regulations for HCDCH personnel.
• Prohibition on awarding any more contracts to companies found to have "abused federal programs or misspent federal funds."

Liu has said federal money to HCDCH could be cut if the federal housing agency's demands for improvements are not met. Virtually all of the state public housing programs are financed with $25 million in federal money a year.

Lingle said she has made straightening out problems at HCDCH a priority "so that the people who benefit from these programs would not be hurt, and so we can be positioned to help more people in the coming years."

In a related development yesterday, outgoing members of the HCDCH board, who have said they would resign by the end of the year, were asked by HUD officials to award a new $1.2 million consulting contract for an exhaustive management study the agency required.

HUD said it had selected IBM Corp. as the consultant in a competitive procurement process handled by the Denver office. Federal officials told the HCDCH board the work would be performed by personnel from PriceWaterhouse-Coopers Consulting, a firm acquired by IBM in July.

HUD demanded earlier this year that HCDCH spend as much as $2 million on an independent outside consultant study to recommend structural changes and eliminate widespread management and financial problems.

The money will come from federal grants previously given to HCDCH. Acting HCDCH director Robert Hall told board members the money to pay IBM would be drawn from "rehabilitation and maintenance" projects that will have to be deferred.

The IBM contract, if approved by the HCDCH board of directors, would include a $401,000 management assessment and a $790,000 study of the physical condition of the public housing projects managed by HCDCH.

The $1.2 million contract will be followed by a "technical assistance" contract to be paid for from the $2 million originally set aside by HCDCH to meet HUD's demands for improvement.

Reach Jim Dooley at 535-2447 or jdooley@honoluluadvertiser.com.