ORI Anuenue Hale Inc., an elderly care facility next to Helemano Plantation, has agreed to boost the number of clients it serves to justify the public money spent to build it and comply with other regulations to avoid having to repay nearly $8 million to the government.
"If you don’t play by the rules, then you have to pay the money back or pay the consequences," said Gene Gibson, regional public affairs officer for the U.S. Department of Housing and Urban Development.
On a monitoring visit in April, HUD staff found only five participants in the Adult Day Care program at Anuenue Hale’s Wellness Center, which opened in April 2010 amid Wahiawa’s pineapple fields. The 16,500-square-foot facility was supposed to serve at least 50 clients daily, according to Mark Chandler, director of HUD’s Office of Community Planning and Development in Honolulu.
"What we want is to reach the clients the program is supposed to reach," Chandler said. "We would anticipate between 50 and 100 because the building is very large."
ORI Anuenue Hale received more Community Development Block Grant money than any other organization in Honolulu, Chandler said. "HUD’s monitoring of ORI projects was significantly impaired due to ORI’s unwillingness to produce documents and cooperate," he said.
HUD demanded on May 27 that the city and ORI Anuenue Hale either repay more than $7.9 million in federal funds spent acquiring the land and building the facility, or immediately take corrective action to bring it into compliance. With that looming threat, the city and ORI signed an agreement last week that holds the nonprofit agency to strict deadlines for improvement.
ORI Anuenue Hale officials said they believe they were following all regulations, and were shocked by the proposed sanctions. The number of clients at the center varies and is expected to grow over time, said Yvonne de Luna, program director.
"Our major issue is that we did deliver," de Luna said. "The building is here. It’s very evident that the money went to something. We’re very proud of this facility and we feel the community would be proud of it. As the word gets out, we anticipate there will be more utilization."
In a written statement, ORI said: "While we believe that we are, and always have been, fully in compliance with HUD regulations, ORIāhas voluntarily submitted a formal ‘memorandum of understanding’ that outlines a timeline of action to satisfy HUD’s requirements, including inspection of client and financial files.
"ORI Anuenue Hale was very surprised by HUD’s concerns, especially since they were based on a single site visit in April during which clients’ medical and mental health records were requested verbally and on the spot. Obviously we were hesitant to release private records without the consent of our clients or their guardians. Our staff were working toward a solution to meet HUD’s requests when HUD canceled a follow-up meeting. Unfortunately, the next we heard from HUD and the first we were made aware of HUD’s concerns was by reading them in the news."
Chandler said recipients of such federal grants are expected to comply with monitors’ requests. "When we make the request, they’re supposed to produce the information," he said. "We don’t have to tell them in advance the records we want to look at."
HUD also faulted the city for failing to monitor the project despite longstanding "concerns and problems" with it. In his letter to the city threatening sanctions, Chandler said ORI’s chief executive officer had told the city and HUD to "forget the HUD rules" at an earlier meeting to resolve compliance issues.
"Although aware of ORI’s position regarding HUD regulations," Chandler wrote, "the city failed to monitor ORI’s project for compliance and allowed ORI to operate Aloha Gardens as ORI pleased."
ORI’s chief executive officer, Susanna Cheung, was not available for comment, but Ann Higa, chief operating officer, didn’t recall Cheung making any such statement. "It doesn’t make any sense to say that to a funder," Higa said.
Along with the Wellness Center, the 36-acre Anuenue Hale Aloha Gardens property includes cabins, dubbed "Camp Pineapple 808," that HUD said were intended for use of the elderly and disabled adults. But the camp was being rented out to ineligible users in some cases, producing income that should be remitted to the city, Chandler said. ORI Anuenue Hale said it believed Camp Pineapple was not subject to those usage requirements because both federal and private funds went into the project.
Under the agreement, the nonprofit must submit plans by July 15 to increase the number of clients using its Wellness Center and ensure that Camp Pineapple serves only the elderly and disabled adults, plans that are subject to approval by the city and federal government. ORI Anuenue Hale will also provide documentation regularly to the city, including financial statements and facility use agreements. The city will conduct quarterly on-site monitoring of Anuenue Hale and improve its monitoring of other projects built with federal grants.
"We take the findings seriously and recognize that improvements are necessary to strengthen city administrative procedures," Mayor Peter Carlisle wrote in a letter to HUD accompanying the corrective plan.
The city has suspended payments to ORI Anuenue Hale and reimbursed the federal government $66,861 that HUD said was used by ORI for ineligible purposes. The city also agreed to comply with federal conflict of interest guidelines in Community Development Block Grant projects after HUD identified problems in that area.
Cheung founded ORI Inc., formerly known as Opportunities for the Retarded, and opened Helemano Plantation in 1984 in Wahiawa as a residential community for the developmentally disabled. Its sister agency, ORI Anuenue Hale Inc., was created in 1993 to extend services to the elderly. On its 2009 tax return, ORI Anuenue Hale listed $16 million in net assets, most of it in land, buildings and equipment.
Last year, the city forgave nearly $1.2 million in two Community Development Block Grant loans to ORI Inc. dating to 1989 and 1995 for construction at Helemano Plantation. At the time, ORI Anuenue Hale Inc. was being sued by Kasan Construction Corp. for a "mechanic’s lien" or claim for payment. In agreements with ORI Anuenue Hale dated July 26 and Oct. 15, the city noted that it had leased the Helemano site to ORI Inc. for $1 a year, and concluded it would be "in its best interest" to grant the request to cancel the debts on condition the property was kept free of liens.