A federal housing agency backed off an order for the city to give back $2.9 million and now will allow Honolulu to use the grant money awarded the Wahiawa nonprofit ORI Anuenue Hale for other projects.
City Managing Director Ember Shinn, at a news conference Friday, said the U.S. Department of Housing and Urban Development money would be used to fund several other high-profile city projects, under an administrative order by HUD.
They are: purchasing of land, designing and planning for a new Hauula fire station ($1.4 million); paying for staffing for a new affordable-housing office ($576,000); and creating a public shower and other services for homeless out of the city’s Pauahi Hale affordable-housing project in Chinatown ($930,000).
Any leftover funds could be used to pay for rehabilitation of several city affordable-housing projects, namely Pauahi Hale, Kanoa Apartments in Kalihi and the Bachelors Quarters in Ewa Villages, or Housing First land purchases or public services, Shinn said.
At the heart of the dispute is HUD’s accusation that $8 million was used to develop two ORI projects, the Aloha Gardens Wellness Center and Camp Pineapple 808, which were both operated improperly and failed to comply with eligibility requirements of the grant. The $2.9 million is a compromise settlement.
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AT ISSUE
At the heart of the dispute is HUD’s accusation that $8 million was used to develop two ORI projects, the Aloha Gardens Wellness Center and Camp Pineapple 808, which were both operated improperly and failed to comply with eligibility requirements of the grant. The $2.9 million is a compromise settlement. HUD officials worked with the city staff on how the $2.9 million would be spent.
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HUD also was critical of the city’s failure to monitor how the money was used and to correct the deficiencies despite the agency’s warnings. A HUD report also questioned the relationship among ORI, its founder Susanna Cheung and city officials who received campaign contributions. An internal investigation into the matter found no evidence of wrongdoing, although an Ethics Commission probe is believed to still be open.
"The good news is $2.9 million is a lot less than $8 million, and we’ve very grateful that HUD was appreciative of the city’s really good-faith action to implement all the corrective action and to bring its program into a better fiscal as well as administrative compliance plan," Shinn said.
The city is also pleased that HUD officials worked with her and her staff on how the $2.9 million would be spent, she said. "That is the best news."
Shinn said her staff will work with ORI and Cheung to help pay back at least part of the money. The city is not inclined to pursue more drastic action. "We do have the ability to take action against them (under ORI’s initial subrecipient agreement), and that would certainly be something we would look at as a very, very last resort. I don’t think that litigation or adversarial type of action serves the community’s interest."
One of the conditions of the order is that ORI will be able to use Camp Pineapple 808, built as a retreat center for seniors and so required to be used in a limited fashion, for other purposes. "We’re still hopeful that now that the Pineapple camp can be operated without any Community Development Block Grant restrictions, that it can be revenue-generating and that they would look favorably on some kind of reimbursement to the city."
Shinn, acknowledged, however, that talks with ORI officials have been "nonexistent" although ORI attorneys have been amenable to talks in the past. Discussions "just have not been scheduled yet," she said.
An attorney who has worked with ORI also said Friday that he has not spoken to Cheung or ORI officials lately.
ORI spokeswoman Yvonne DeLuna, reached by phone, said ORI officials were not aware of the administrative order and would not be able to comment until they had a chance to review it.
ORI representatives previously spoke of the difficulty in renting out the cabins at Camp Pineapple given the restrictions placed by CDBG, and that they were not given clear direction from the city about those restrictions initially, when it began marketing them for other types of camping enthusiasts.
Details of the complicated plan are spelled out in an administrative order signed by Shinn and Mark Chandler, director of the Office of Community Planning and Development for HUD’s Honolulu field office.
The order was signed Aug. 11. City officials said they could not release the information until it reached an agreement with Choon James, owner of the parcel long eyed by the city as part of the new Hauula fire station.
But James said she was pressured by a city-hired attorney and her own lawyer into signing an initial agreement Oct. 31 accepting $400,000 more than the $521,000 that the city had prepared to pay as fair market value.
James told the Honolulu Star-Advertiser she’s prepared to oppose the settlement when it goes to court, insisting that she would not take $2 million to sell the property. City officials also misrepresented the situation and failed to tell her that the CDBG money that would be used to pay her needs to go through public scrutiny, she said.
If the deal with James cannot be reached, money targeted for the Hauula fire station would instead be used for Pauahi Hale, Kanoa Apartments, the Bachelors Quarters or other Housing First purposes, according to the language in the administrative order.
Council Chairman Ernie Martin and Budget Chairwoman Ann Kobayashi were briefed by Shinn about the administrative order before Friday’s press conference.
Martin said he’s pleased the money would be used for projects in his district, including the long-awaited Hauula fire station. He commended Shinn, her staff and HUD officials for coming to a resolution. "I think it’s in the best interest of all parties involved, including the city, HUD as well as ORI."
