Return of housing money sought
By Jim Dooley
Advertiser Staff Writer
Federal officials are again demanding that Hawai'i's public housing agency repay $771,000 of money that was allegedly misspent.
The newly elected executive director of the Housing and Community Development Corp. of Hawai'i, Stephanie Aveiro, received a letter requesting the money last week from Michael Flores, a Honolulu-based official of the U.S. Department of Housing and Urban Development.
Michael Liu, assistant secretary for housing with HUD in Washington, D.C., sent a copy of Flores' letter to HCDCH board chairman Chuck Sted with a note that said the repayment demand "was done with full knowledge and support of my office."
It's the second about-face HUD has made on the $771,000 since Nov. 2, 2002, when Liu, a Republican former Hawai'i state senator, demanded return of the money within two weeks.
Then-Gov. Ben Cayetano, a Democrat, complained that Liu's action, which came on the eve of the gubernatorial election and included a demand that all nine members of the HCDCH board of directors resign for mismanaging federal money, was timed to help the campaign of Republican gubernatorial candidate Linda Lingle.
Liu and Lingle denied those charges. After Lingle won the election, she said she and aide Randall Roth had agreed with Liu that HCDCH would work with the state attorney general to recover the $771,000 from the contractor that received it and then forward the money to HUD.
The money was paid to Punalu'u Builders, a local construction firm, for repair of termite damage at Kau'iokalani Homes, a Wai'anae housing project. Liu said that non-bid contract, awarded in 2000 by HCDCH executive director Sharyn Miyashiro, violated federal conflict-of-interest regulations because Punalu'u Builders was partly owned by Miyashiro's ex-husband, Dennis Mitsunaga, a political fund-raiser for Democratic Party politicians, including Cayetano.
Dexter Sato, head of Punalu'u Builders, said this week no one from HCDCH or HUD has talked to him about the Kau'iokalani Homes work "since before the election last year."
HCDCH has not asked him to return any of the money his company was paid and he said he would fight any such request because the contract his company received was legally binding and because all the work was performed satisfactorily.
Sato said the work had been monitored by the attorney general's office because it was to repair widespread termite damage in the three-year-old project, built by another contractor.
The state was considering legal action against the original contractor and kept extensive files on the repair work, including numerous photographs, Sato said. Sato pointed out that his company "is still in good standing" with HCDCH because "they just gave us a new contract last month" for work on a Moloka'i public housing project.
That contract, for $188,000, was awarded on the basis of competitive bids, Sato said.
HUD's Flores said his office "looked into" HCDCH's new Moloka'i contract with Punalu'u Builders.
"It has nothing to do with us because it's all state money," Flores said.
The new HCDCH board, appointed by Lingle in January, was instructed by Liu to conduct a nationwide search for a new executive director after Miyashiro retired late last year. One candidate turned down the job and another was rejected by Liu as unsuitable.
The board called off the search last month and named one of its own members, Aveiro, to the $77,966-a-year post. Aveiro was only eligible for the job because Liu waived a federal regulation prohibiting board members of a public housing agency from taking an executive position in the same agency within a one-year period.
Aveiro is a longtime Lingle aide who ran the Maui County Department of Housing and Human Concerns when Lingle was Maui mayor. After Lingle was elected governor, she hired Aveiro as an aide in charge of managing the governor's residence and the Washington Place ceremonial home.
The HCDCH board picked another longtime Lingle aide, Pamela Dodson, to serve as Aveiro's executive assistant. That job pays $70,169 per year.
The agency receives about $25 million per year in federal money.
Aveiro directed questions about the HUD demand letters to Lingle spokesman Russell Pang, who said, "They (HCDCH) are going to repay the $771,000."
Pang said the money will come "from an HCDCH administrative fund that has been built up over the years."
The loss of the money will be painful to the agency but "will not affect its operations," Pang said.
Richard Bissen, first deputy attorney general, is still reviewing whether the state will attempt to collect the money from Punalu'u Builders, Pang said.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
