POSTED: 1:30 a.m. HST, Dec 23, 2012
LAST UPDATED: 6:02 a.m. HST, Dec 23, 2012
About 1 in 5 vehicles picked up by the city's exclusive vendor for police-initiated tows were not taken to the company's closest storage lots, inflating the mileage fees charged to the owners, sometimes by more than two or three times, according to a Star-Advertiser review of more than 100 invoices over the past month and a half.
Most of the inflated bills from Leeward Auto Wreckers involved vehicles that were picked up near the company's Pearl City lot but were towed to a Kapolei lot instead, adding an extra eight to 10 miles roughly to the tab, the newspaper found.
At the $7.50-per-mile rate that the company charged until recently, that added an extra $60 to $75 to the bill.
The inflated mileage is the latest revelation by the newspaper showing the various ways the city's new vendor, which had no prior experience overseeing police-initiated tows, boosted charges to motorists beyond what the agreement allows. The company blamed misinterpretations of the contract.
The Star-Advertiser previously reported that Leeward Auto overbilled roughly 2,000 motorists whose cars were towed during the first month and a half under the five-year contract because it charged hookup and mileage fees higher than permitted.
The company said it immediately lowered the fees once it became aware of the problem and promised to refund the overcharges.
Similarly, Leeward Auto indicated that it will offer a "cost adjustment" to motorists who were charged more than they should have been had their vehicles been towed to Pearl City, according to city spokesman Johnny Brannon.
The newspaper also found several invoices in which the vendor charged "difficult tow" fees — ranging from about $10 to more than $70 — for cases in which the hookups were more time-consuming than normal. Yet the city said such fees are not allowed by the contract.
Prompted by the newspaper's findings, the city is demanding that Leeward Auto produce an accounting of all charges for police-initiated tows and a plan showing how the company intends to refund any overcharges and ensure compliance with the contract.
Some Oahu residents believe the city should respond more forcefully to Leeward Auto's overcharging practices and impose sanctions.
"If somebody is abusing taxpayers, the city is obligated to do something," said Lanikai resident Alan Lloyd. "You cannot flaunt contractual terms intentionally and get away with it."
Brannon did not address questions about sanctions.
He said the city did a spot check and found one difficult tow charge on Dec. 16 for $11.62. The city directed Leeward Auto to remove the charge from the invoice.
"We will take similar action regarding any additional charges not specifically authorized by contract," Brannon said in a statement. "The city will continue working with (Leeward Auto) to ensure correct contract interpretation and compliance."
Leeward Auto would not address questions about the mileage issue, the Pearl City lot and difficult tow charges but instead issued a general statement:
"Leeward Auto Wreckers is pleased to be engaged with the city in providing cost-effective towing services. (The company) is cooperating with the city to ensure absolute compliance with its contract and is taking steps to correct recent misinterpretations of the contract. Leeward Auto Wreckers is committed to protecting the integrity of the city's contract."
The city awarded the company the exclusive right to perform all police-initiated tows on Oahu beginning Nov. 1, partly based on Leeward Auto's plan to use five storage lots around the island. One each was in Kapolei, Kalihi, Kailua, Wahiawa and Pearl City, according to city documents.
Vehicle owners benefit when a company has multiple lots spaced around Oahu because the tow truck can go to the closest one, minimizing the mileage fee charged to the car's owner.
But over the first month and a half of the contract, Leeward Auto, unbeknownst to the city, did not use the Pearl City lot, even though it was listed in the company's bid documents as one of the five, according to a company official, Brannon and the contract documents.
That meant cars picked up in the surrounding communities had to be towed to farther lots.
In one example from Dec. 19, Leeward Auto picked up a Lexus about five miles from the Pearl City lot and towed it to Kapolei, charging the owner for a 15-mile tow, not a five-mile one, the invoice shows. The longer distance cost the owner an extra $70, according to the Star-Advertiser review.
The city contract requires Leeward Auto to take vehicles to the closest lots, Brannon said.
By pulling Pearl City out of the loop, Leeward Auto was not complying with the contract, and to fix that, the city is requiring the company to commit to a date for making the lot operational, according to Brannon.
This is the first time the city has turned to one company to handle police-initiated tows for the entire island for vehicle accidents, parking infractions, expired tags and recovered stolen vehicles. Leeward Auto pays the city $60,000 monthly for the exclusive rights.
The city previously divided Oahu into 13 zones and sought competitive bids for each one, resulting in multiple companies getting the business. But the city switched to the new system hoping to gain more efficiencies and better, more consistent service for motorists.
Brian Kunishige, owner of Kuni's Automotive & Towing, which teamed with other companies to submit one of the four unsuccessful bids for the city contract, said lax oversight explains why the city was unaware of the initial contract violations until the newspaper intervened.
"What you have here is (regulators) who just lack the experience and knowledge of the towing industry," Kunishige said. "This is what happens."
Brannon previously told the Star-Advertiser that the city had not received any complaints of alleged overbilling and therefore had not conducted an in-depth audit of the new contract.
In a recent interview, Hans Tandal, Leeward Auto's operations manager, told the newspaper that the contract did not require the company to tow cars to the nearest lot.
That directly contradicted what Brannon subsequently told the newspaper. Tandal did not respond to a phone message asking about the contradiction.
In the earlier interview, Tandal said the company adopted a $165 cap on combined hookup and mileage charges — storage fees are not covered — to ensure that motorists were charged for no more than 12 miles regardless of the distance of the tow.
He also said the company decided not to use the Pearl City lot primarily because of concerns about safety. At night, conditions in the area surrounding the lot are not conducive for women and families picking up their vehicles, Tandal said.
Two secondary factors contributed to the decision, he added.
The company lost a chunk of the leased Pearl City land because of a property infringement issue, and Leeward Auto had concerns about providing adequate security for stored vehicles, according to Tandal.
At the time, he said the company was searching for an alternative site.