Audit criticizes water agency's urban institute

Office renovations cost $1.1 million but brought little in return

In December 2000 former Mayor Jeremy Harris wanted to create an urban institute so Asian officials could come to Honolulu for technical expertise on municipal public-works projects.

At about the same time, the Board of Water Supply was considering setting up consulting contracts with countries in the Asia-Pacific region.

By April 2002, just in time for a conference, the two came together to create the Asia-Pacific Urban Institute.

The semiautonomous water agency spent $1.1 million to renovate an office on the first floor of Kapolei Hale. The expensive renovations included a 60-inch plasma screen TV and "displays relating to the Story of Water," according to a critical audit released yesterday by city Auditor Les Tanaka.

The $1.1 million investment, the auditor said, brought only $6,000 from consulting contracts to the water agency, one of the clearest attempts to enhance revenue at the expense of maintaining its water lines. In all, the audit tracked $78 million of costly business ventures.

"As we started to look at them, they seem to be kind of nonmoneymaking type of ventures -- maybe long term down the road, possibly -- but it just didn't seem like a good match for what the Board of Water Supply is basically supposed to be doing," Tanaka said.

Water agency officials have taken exception with the audit, saying some of its information is wrong in several areas.

"We're not defending what the previous administration did or didn't do. What we're doing is looking at the facts of the audit and whether they're accurate and whether their conclusion has merit," water agency spokeswoman Su Shin said. "Do you ding an agency for trying to do new things, for trying innovative things?"

Shin said the agency will be getting reimbursed for the $1.1 million spent on the urban institute renovation since the Board of Water Supply is not using the space anymore.

The audit covers the 1998-99 fiscal year through the 2004-05 fiscal year, a period when the Board of Water Supply had accumulated a large surplus of cash -- with a $75 million budget carryover -- and was looking to reinvent itself to operate more like a private business.

The audit also criticized the $48 million purchase of the Honouliuli Recycled Water Facility; the $18 million used to buy and rehabilitate the Ewa Water Shaft; and the $11 million to fund construction of a water cooling plant for air conditioning at the University of Hawaii medical school.

Tanaka said he could not find any direct corroboration that former Mayor Harris was behind the institute project or any other Board of Water Supply projects.

"But it seemed to be coincidentally close together that we kind of figured that it was probably part of fulfilling the desire of the mayor, too," Tanaka said.