Under pressure

Officials that operate Hawaii’s largest ocean science and technology park said they are taking steps to tackle a long list of deficiencies cited in a state audit that criticized the facility in Kona for failing to achieve its potential after nearly 40 years in existence.

State legislators requested the audit of the Natural Energy Laboratory of Hawaii Authority mainly because of their concerns about a lack of accountability in how NELHA charged tenants for deep-sea water pumped through the facility’s offshore pipes. What auditors found was an organization that "struggled with the basics of open government" and was "woefully inadequate" in a host of performance measures.

Among other problems, NELHA lacked an adequate master plan, financial plan, administrative rules and training program for board members, according to the 50-page audit released May 31. In addition, its policies and procedures manual, as well as website, were outdated, the audit continued. As a result, "NELHA has had difficulty convincing legislators, taxpayers and potential tenants of its worth and successes," according to the audit.

"Our findings reflect an agency which, after nearly 40 years, has yet to achieve its potential as an ocean-related research, education and commercial center," auditors wrote.

Launched in 1974 primarily as a research facility to develop ocean thermal energy conversion technology, the Kea­hole Point facility has grown into an 870-acre campus that is home to a variety of commercial, research and educational ventures overseen by NELHA. Among its commercial tenants are several deep-sea water-bottling companies.

NELHA is self-sufficient on an operational level, with more than 75 percent of its operating income generated from tenant lease rents and seawater pumping fees. The agency still relies on state funding for capital improvement proj­ects. In addition, NELHA receives federal funding. The Commerce Department last week awarded NELHA $3 million for alternative energy and biotechnology proj­ects.

The NELHA board of directors responded to the audit, pledging to address shortcomings cited in the report.

"I can assure you that there is a strong desire and will power among the board members and at the top of our agency to take corrective actions to implement your recommendations. We will also make it one of our top priorities," Board Chairman John DeLong wrote in a letter to state Auditor Marion Higa. "We recognize that there were problems in the past and we still have much work to do to achieve our mission and objectives," DeLong wrote.

The audit gave credit to NELHA for beginning to address some of its problems following the appointment of a new executive director last year. Greg Barbour, who previously headed up the state’s former Foreign Trade Zone, was named NELHA executive director in June 2011, replacing Ron Baird, who left the agency in February 2011.

"In the brief period since the previous executive director’s departure from NELHA in Feb. 2011, the authority has made significant prog­ress in a number of areas," according to the audit. "For example marketing and promotion have resumed after years of inactivity, tenant relations are improving, and the authority is actively pursuing alternative revenue streams in accordance with its statutory powers."

Despite the improvements made so far, NELHA must still work to bring in new tenants and reform its policy for deferring rent increases if it hopes to someday have enough income to pay for capital improvements as well as operational costs, according to the audit.

"The authority has the power to overcome these and other obstacles, and we look forward to learning that the many new plants it has sown of late have germinated to profitable and sustainable fruition in the next several years," according to the audit.