Wednesday, March 17, 1999

City & County of Honolulu

Council criticizes
handling of
housing projects

By Gordon Y.K. Pang


City Council leaders say they're worried about the administration's lack of oversight of the Ewa Villages housing program in which the city lost $5 million.

City Council Chairman Mufi Hannemann yesterday complained about "the lack of progress that they've (the administration officials) made on Ewa Villages ... Oversight and responsibility is just sorely lacking."

The administration of Mayor Jeremy Harris' delayed giving information on Ewa Villages and related housing projects to independent auditor KPMG Peat Marwick LLP, causing the $170,000 cost of the city's annual audit to jump by $19,375.

Council leaders say that's just one in a series of bad administrative moves involving Ewa Villages and other projects tied to the Housing Development Special Fund.

A number of former employees and others are awaiting trial for a scam that siphoned city funds for phony or inflated relocation of businesses.

Peat Marwick asked for the additional payment last month because of delays in obtaining information from the administration, said Ivan Kaisan, who heads auditing functions for the Office of Council Services.

Information related to the Housing Development Special Fund, once the responsibility of the now-defunct Department of Housing and Community Development, was not turned over to the Department of Budget and Fiscal Services and Peat Marwick until six months after the end of fiscal year 1998, Kaisan said.

The delay caused Peat Marwick to submit its financial audit report more than a month late.

The administration also failed to submit monthly status reports on the Housing Development Special Fund despite repeated requests from Budget Chairman John Henry Felix, Kaisan said.

Council Chairman Mufi Hannemann said it shouldn't take a special joint meeting of the Budget and Executive Matters committees for members to get an update on the financial situation involving Ewa Villages.

Managing Director Ben Lee said he was not made aware of the required monthly reports until he was notified by Hannemann last month.

"Every time we have a change in managing director or in other administrative positions, everything seems to fall between the cracks," Felix said.

He called on the administration to "put in place administrative practices and procedures that would ensure that these types ... of projects are appropriately monitored."

As for the delay in disseminating information to KPMG, Lee acknowledged that transfer of functions following the folding of the Housing Department may have played a role.

Lee promised to devote whatever resources are necessary to ensure the loans associated with Ewa Villages are dealt with, and that the Council is kept updated on the situation.

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