Hawai'i housing agency told to fix problems

By Jim Dooley
Advertiser Staff Writer

The U.S. Department of Housing and Urban Development has ordered Hawai'i's state housing agency to spend $2 million of its own money to rectify serious management problems that have included the lack of rent collections and failure to maintain and refurbish empty housing units costing the agency millions of dollars a year.

The Housing and Community Development Corporation of Hawai'i, which oversees more than 10,000 state and federally-subsidized housing and rental units, also was criticized in a recent HUD report for failing to certify that lead had been removed from 32 of 35 Hawai'i housing units where children under age six live.

In a letter last month, Michael Liu, a former Hawai'i legislator and now assistant secretary of the U.S. Department of Housing and Urban Development, informed Sharyn Miyashiro, executive director of the local housing agency, that federal housing officials would be taking a direct hand in running the Hawai'i agency, including final approval of contract awards.

"I hope that such an effort will materially improve your agency's ability to deliver housing and related services to its residents," Liu wrote.

Liu noted that HUD money allocated for "management operations" has been used elsewhere and that the Hawai'i agency's 2001 audited financial statement "contains internal control and regulatory compliance issues."

Miyashiro's agency runs the risk of "being declared troubled and/or in substantial default" of federal regulatory requirements, Liu wrote. He ordered Miyashiro to spend $2 million of fiscal year 2000 federal grant money to hire a private firm to help with "technical assistance in all areas of management."

Liu and Miyashiro did not return calls for comment.

Ronald Lim, a board member of the Housing and Community Development Corporation of Hawai'i and Gov. Ben Cayetano's special assistant for housing, acknowledged that the agency has been troubled but said it is trying hard to improve, through setting up a task force and working with HUD to find a consultant to assist it.

"We've got problems, I'm not going to deny it," Lim said. "We're working on them, we're going to clean things up."

Wesley Segawa, the agency's board chairman, told Liu in a letter this month that the Hawai'i agency "is seriously working toward immediate resolution" of the problems and deficiencies cited in Liu's letter and had developed a preliminary plan it hoped to launch immediately.

"We have started to take action," Segawa wrote. "The Governor's Office is providing its full support by assigning the Director of the state Department of Human Resources Development to assist the board in this matter."

But Lim said the agency's biggest problem is money.

"We have mounting capital costs while revenues have stayed the same," he said.

Liu's letter suggests the agency's problem go far beyond money woes.

He noted that for the past three years, HUD staff from California reviewed the agency's operations and found serious deficiencies. In the past two reviews, HUD officials concluded: "We suspect that poor communications due to a burdensome organization structure may be a significant part of the problem."

Liu noted that the agency has shown some improvement in the past few years, but stressed that the reviews "show a pattern of weakness in the (the state agency's) administration of the program."

For example, he said, the Hawai'i agency has had problems spending all the federal grant money received annually since 1995 for building or improving public housing and consistently has had to ask for extensions of spending deadlines.

Only in the past two months did the agency commit to spending $17 million of capital grant money received from HUD in 1999, according to Liu's letter.

Lim said the Bush administration has taken a harder "use it or lose it" attitude toward federal grant money than the Clinton administration.

Liu is a longtime Hawai'i Republican who ran unsuccessfully for lieutenant governor in 1998, losing in the Republican primary election to Stan Koki. However, Lim downplayed any suggestion that Liu's letter could be politically motivated.

"There may be some implication that (the letter) is politically timed because it's a gubernatorial election year here," he said. But "I've known Mike a long time. He's an honorable man. He definitely wouldn't do that."

Much of the basis for Liu's letter comes from HUD reviews conducted before the Bush administration took office.

Yearly HUD reviews of the state agency have noted since 1999 that procurement of architecture and engineering services was out of compliance with federal requirements and that the local agency was told repeatedly to fix the problem.

The 2000 HUD inspection was especially severe, revealing:

• Chronic staff vacancies. Inspectors were told, for example, that there were 50 vacant maintenance positions and some had been unfilled for more than a year. That meant that empty housing units couldn't be refurbished and put on the market, costing the Hawai'i agency $1.5 million in income a year.
• Failure to collect rent. The state agency "is losing approximately $1 million in rents every year due to problems with collecting," the report noted.
• Dwindling cash reserves. In 1997, operating reserves were $9 million. By the end of 2000, the reserves were down to $5.2 million. "These issues have put the (agency) in serious financial jeopardy," the federal review said.
• Delayed evictions. It can take six months to a year to evict a tenant who's not paying rent. "In the meantime, the resident in this dispute continues to live in the unit without paying rent or even attempting to make partial payments," federal regulators said.
• Potential poisoning from lead-based paint. "The presence of lead-based paint in residential units constructed prior to 1978 is a serious, ongoing concern, especially in units where children under six years old reside," the review said. "At least 32 of the 35 (agency) developments constructed prior to 1978 with the possibility of young children as residents have no certification that lead has been removed."

The Housing and Community Development Corporation of Hawai'i has assets valued at more than $1.5 billion. According to 2000 figures, it administers more than 5,000 units of federally-subsidized housing and 1,170 state public housing units as well as 4,363 units of federally-subsidized rental units.

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