$8M scandal involving ORI draws odd city response

It is all about the details.

Anyone who has ever walked a permit or a change of title or a license through any of the city’s many departments, knows you must fill out all the forms, precisely provide all the information as specified, and do it on time.

This is not the time when you color outside the lines.

Two years ago, when the city was told by the feds that it had screwed up its implementation and operation of the grants given to the ORI Anuenue Hale Inc., it would have been reasonable to assume that the city bureaucrats would listen to the federal bureaucrats and start complying.

The feds also wanted nearly $8 million back.

Honolulu Star-Advertiser reporter Susan Essoyan wrote in July 2011 that the city and ORI must "either repay more than $7.9 million in federal funds spend acquiring the land and building the facility, or immediately take corrective action to bring it into compliance."

The city and ORI, a nonprofit program designed to helped special needs adults and senior citizens at Helemano Plantation, was expanding and used the city to get federal Community Development Block Grant money for the new construction.

Now two years later, the feds are back at the door, telling the city and ORI to give the money back, saying neither the city nor ORI complied with the agreement to shape up.

What would you do if the feds were at your doorstep? You might think about getting a lawyer, or maybe a bank loan — but Honolulu Mayor Kirk Caldwell decided what the City & County of Honolulu needed was a private eye.

Caldwell told the news media last week that he wants an internal review of what happened.

So the city is hiring Goodenow Associates "to make sure it’s done in a more expeditious manner and to make sure we all get the information that we need," Caldwell said.

Back in 2011, ORI said it was and always had been in compliance with federal regulations and disputed that it had violated any regulations.

But Mark Chandler, the local director of the Housing and Urban Development’s office of Community Planning and Development, said in the 2011 report that the city "failed to monitor ORI’s project for compliance."

A year earlier, the city forgave $1.2 million in CDBG loans to ORI from 1989 and 1995 for construction at Helemano Plantation.

That year, Caldwell was acting mayor when one of the two loans was forgiven.

"I don’t think I signed any documents approving any forgiveness of a loan," said Caldwell in a news account written by Star-Advertiser reporter Gordon Pang last week.

The feds’ most recent demand for the city to pay up said "HUD found many questionable management decisions regarding oversight of ORI. It also noted that while the city was forgiving loans to ORI, ORI representatives were giving campaign donations to city officials (including former Mayor Mufi Hannemann, current City Council Chairman Ernie Martin and Caldwell).

"The financial relationship with ORI and city staff created a CDBG conflict of interest situation," last week’s report said.

It went on to give lots of directions to the city, including paying back the forgiven loans with interest, cleaning up its record system and listing all the money it funneled to ORI as a debt until it pays back the federal government.

Nowhere in the 15-page directive does it say the city should hire a private eye to find out what happened.