ORI Anuenue Hale Inc., an elderly care facility next to Helemano Plantation built with the help of $7.9 million in federal funds, continues to be underutilized and the city must do more to clearly define how it plans to ensure that operators meet target goals for client use, a federal housing agency says.

Officials from the U.S. Department of Housing and Urban Development met with city administrators last week to discuss issues raised in a June 27 memorandum of understanding in which the city and ORI Anuenue Hale agreed to do more to comply with federal grant requirements or repay the money.

City Budget Director Mike Hansen said he appreciated the opportunity to meet with HUD officials to clarify the terms of the agreement. ORI Anuenue Hale had provided its draft compliance proposal to the city, which presented it to HUD, but ORI did not participate in last week’s meeting.

The federal agency verbally presented its concerns to the city at the meeting and later this month plans to issue a formal letter outlining issues that still must be corrected, HUD spokeswoman Gene Gibson said in an email. When that letter is received, Hansen said the city will then meet again with ORI Anuenue Hale officials to further craft its compliance plan.

"There’s a lot of work that will need to be done," Hansen said. "I think everybody’s working toward the same goal of increasing utilization out there — both ORI and us, as well as HUD — and that’s in all of our best interest."

According to HUD, ORI Anuenue Hale received more Community Development Block Grant money than any other organization in Honolulu, and its 16,500-square-foot Wellness Center, which opened in April 2010, was supposed to serve at least 50 clients a day.

On a monitoring visit in April, HUD staff found only five participants in the Adult Day Care program and said further efforts to monitor projects were hampered because staff was uncooperative and unwilling to produce documents, leading to the order that ORI and the city either get into compliance or repay the $7.9 million spent on the center.

ORI Anuenue Hale officials said they believed they were following all regulations and were shocked by the proposed sanctions. They noted that HUD’s report was based on a single visit and that staff were reluctant to provide health records and other information on the spot, citing client privacy rights.

Although the city and ORI made strides, Gibson said the agency still had concerns.

"HUD informed the city that it would be necessary for the city and ORI to refine their goals into specific tasks," she said. "It would be important to pin down the tasks with individual steps so that progress and successful completion could be tracked and measured."

The city and ORI also must "define client usage," and ensure that the ORI program meets national requirements and goals.

"HUD maintains that the program site is underutilized and is currently not fully satisfying the CDBG program national requirements," Gibson said. "HUD’s corrective actions process is intended to give the city and ORI an opportunity to develop steps that will ensure that ORI program meets the national objective requirements of benefiting Hawaii’s low income."

At a recent hearing before the City Council Budget Committee, ORI officials again said they felt they were in compliance all along, adding that the number of clients using the center varies on a daily basis and is expected to grow over time. Officials also said HUD regulations were not clear on how many clients needed to be serviced and what services needed to be provided.

"They never gave us any number as far as what they considered for adequate utilization," said Ann Higa, ORI’s chief operating officer.

Hansen said the city plans to work with ORI Anuenue Hale to take whatever corrective steps are needed.

"If there are things we need to clarify further, we’ll certainly want to do that," Hansen said. "In the end, we want to make sure all the parties are really clear about where we need to go so we can actually get to the point where we do satisfy HUD."