There’s nothing like shining a bright spotlight on an insular, dysfunctional operation to suddenly kickstart activity into overdrive.
Less than two weeks after a scathing state auditor’s report found a host of problems with the Natural Energy Laboratory of Hawaii Authority in Kona, a new report commissioned by NELHA is touting the economic virtues of the beleaguered operation. The 32 tenants at NELHA’s tech park spent $81 million in 2010, some $50 million of which stayed in Hawaii, said the University of Hawaii Economic Research Organization on Wednesday, and the ripple effect of that spending meant $4.5 million in tax revenue and 583 jobs.
Certainly, this positive spin offers some redeeming news for NELHA. But it cannot dispel the many troublesome aspects of an agency that, as state Auditor Marion Higa found, "struggled with the basics of open government" and was "woefully inadequate" in crucial areas. Among NELHA’s problems: lack of an adequate master plan, financial plan and administrative rules; as well as its seriously outdated policies and procedures manual.
Tenant rate-setting procedures were also questioned as possible violations of the state Ethics Code, as were inappropriate meetings in violation of the state Sunshine Law.
As a result, the audit found "an agency which, after nearly 40 years, has yet to achieve its potential as an ocean-related research, education and commercial center."
A galling lack of needed performance reporting permeated the organization: "To ensure accountability to lawmakers and taxpayers, agencies should identify measurable outcomes, current baselines, desired benchmarks, and objectively quantifiable measures." Much of that, the audit found, "is seriously lacking" at NELHA.
Examples of such laxness: NELHA has been repeating the same economic impact numbers since its year 2000 Private Tenant Impact report was published. It has not consistently reported key performance indicators in its annual reports, and failed even to produce an annual report for fiscal 2010.
NELHA began in 1974 amid much promise as a research facility to develop renewable natural energy and ocean thermal energy conversion technology; it now oversees an 870-acre campus with a variety of commercial, research and educational ventures. More than 75 percent of its operating income comes from seawater pumping fees and tenant lease rents, including several desalination water-bottling companies.
Lack of oversight, though, has resulted in "sloppy" leases and erratic lease rents, a problem noted as far back as 2006, when NELHA adopted a policy to set uniform standards for subleases. Subleases were granted on "a case-by-case basis with varying terms, rents, performance requirements and provisions," the audit found. "There has been no consistent basis on which the authority based its rental rates."
By now, with government support and reliable infusion of funds over four decades, NELHA should be an undisputed leader and model of operation in renewable energy initiatives. Instead, in many basic ways, it’s struggling to regroup under a new executive director — who, fortunately, seems acutely aware of what’s needed to correct deficiencies.
UHERO’s report will be used to guide future growth at the tech park, which will include a cohesive game plan of targeted marketing, mining of new revenue streams, increasing efficiency of operations and improving transparency, said NELHA executive director Gregory Barbour. NELHA’s financial health, he said, "will only get better over time."
Let’s hope so. And if it means that NELHA is finally getting its operational act together after 40 years, the public spotlight must remain bright to ensure it realizes its full potential.
