Official’s nonprofit
ties cause concernCity Councilwoman Kobayashi
did not reveal links to groups
City Councilwoman Ann Kobayashi might have violated ethics laws by failing to disclose her ties to nonprofit organizations while approving funding for them, city Ethics Commission Executive Director Chuck Totto told the Star-Bulletin.
The Budget Committee, chaired by Kobayashi, inserted nearly $90,000 into the city capital improvements budget for two nonprofits on whose boards she sits. The funding comes from federal Community Development Block Grants for projects for the needy.
"It is a violation of the ethics law if all this panned out," Totto said in response to Star-Bulletin inquiries. "It might be a technical violation."
Kobayashi is an unpaid director on the boards of the Windward Spouse Abuse Shelter, which received $47,800 inserted by the Budget Committee; Moiliili Community Center, which received $42,000 put in by the committee; and Seagull Schools, which received $280,000 proposed by the city administration. The budget was passed by the Council in June.
"Whenever a councilmember has a conflict of interest, the member has to fully disclose that conflict in writing before voting on the matter that raises the conflict," Totto said. "If you're giving money -- CDBG funding -- to a nonprofit and you sit on the board of a nonprofit, that is a conflict of interest."
Kobayashi said she filed a disclosure with the city Ethics Commission pertaining to at least one nonprofit organization, but she acknowledged that she may not have filed all the disclosures that she should have.
"I did (file a disclosure) for Moiliili, but I don't think for Windward Spouse Abuse Shelter," Kobayashi said.
The City Charter requires that "any member of the Council who knows he or she has a personal or private interest, direct or indirect, in any proposal before the Council, shall disclose such interest in writing to the Council. Such disclosure shall be made a matter of public record prior to the taking of any vote on such proposal."
The disclosure of interest forms are supposed to be filed with the City Clerk's Office, and a copy of the form is sent to the Ethics Commission, Totto said.
"It will basically say, 'I sit on the board of such-and-such and they're asking for money through CDBG,'" Totto said of the form. "That clears them at that point from any breach."
Neither the city clerk nor the Ethics Commission had a record of Kobayashi making a disclosure in connection with her vote on the capital improvements budget.
Unlike other boards and committees, members of the City Council do not have to recuse themselves from voting if they have a conflict of interest -- all they have to do is disclose the conflict, Totto said.
"The Charter says that the councilmember has the right to vote on any matter at any time. That's a pretty absolute right," Totto said.
Totto said commission records show that Kobayashi lists her director's position with Windward Spouse Abuse Shelter and Moiliili Community Center on her annual financial disclosure reports, but that does not satisfy the requirement that she disclose a conflict of interest on a separate form and prior to voting on legislation related to the conflict.
"This doesn't work as disclosure for the conflict of interest," Totto said.
Totto also said Kobayashi filed a conflict-of-interest disclosure for the Seagull Schools director's position, but it was for a zoning application last year.
"What we're concerned about is that if you're the director of a board, you have a fiduciary interest to that organization, and at the same time she's got her fiduciary interest in doing her public duty to evaluate the budget," Totto said.
He said government is supposed to do its work in a way that the public can trust the system, the agencies and the people who carry out the public's work.
A request for an opinion would have to be made to the Ethics Commission for the panel to officially take up the matter, Totto said.
"The law operates such that if you fail to disclose in writing the conflict, then your vote is, I guess, nullified is the best way to put it," he said.
But he said in this case, a nullified vote might not have any practical impact on legislation like the capital improvement budget, which passed unanimously.
U.S. Housing and Urban Development Assistant Secretary and former Hawaii resident Mike Liu was in town recently to officially release the block-grant funding, which falls under HUD's jurisdiction.
"HUD basically defers to local jurisdictions in conflict-of-interest statutes. So if it's a violation of local conflicts-of-interest issues, then there's a problem and it becomes a HUD problem, too," Liu said.
Kobayashi said she sits on the boards of 11 nonprofits, and she believes that her ties to groups like the Windward Spouse Abuse Shelter hinders more than helps those organizations.
"Actually, they get less. I wish we could've given them more, but I feel like I can't do that because I sit on the board, which is unfair to them because they're such a small organization. I should get off that board because it gives them more of a chance actually," she said.
The same goes for the Moiliili Community Center, which will use the grant money for renovations, Kobayashi said.
"We're constantly fund-raising for them, and it's very difficult for me to give them money. The appearance of it is not good."
Avis Jervis, executive director of the Windward shelter, agreed that Kobayashi's position could hinder the organization's efforts to get funding.
"Sometimes when you know someone, they don't necessarily want to help you ... because they know you, they don't want to make any kind of special treatment," Jervis said.
The shelter provides emergency refuge for battered spouses and their children. Jervis said the federal grant will allow the organization to renovate facilities.
Jervis said her group went through the proper channels in applying for the federal grants, and she does not know if Kobayashi reviewed the organization's documents.
"We ask for no special treatment for anything from anybody," said Jervis, who added that her organization did not lobby the Council for any money. "(We) just submitted all the paperwork ... which was an inch thick."
City Budget Director Ivan Lui-Kwan said the administration and the Council had a difference of opinion on what community block grants should be used for in the current budget.
"There was approximately $3 million in programs that we had proposed be used for communities in need for capital projects, including sidewalk improvements, (Americans with Disabilities Act) improvements at parks, the Waianae city express bus, ADA improvements to buildings," Lui-Kwan said. "What I see is that there was at least $3 million of those kinds of projects that were eliminated from the budget by the City Council, and they applied those funds to not-for-profits."
But Kobayashi said that while sidewalks and ADA improvements do qualify for Community Development Block Grant funding, she believes nonprofits should get as much of the money as possible because they save money for taxpayers.
"I'm a big supporter of nonprofits," Kobayashi said. "I truly believe ... if we didn't have nonprofits doing a lot of these services, then government would have to do it."
The Council added funding for nearly two dozen additional nonprofits to the budget.
Lui-Kwan also said that some of the nonprofit projects added to the budget by the Council -- including the Moiliili Community Center -- were not yet eligible to receive Community Development Block Grant funds.
"We typically do that (eligibility process) prior to submission of the budget to the City Council, but because these did not go though the regular cycle of not-for-profits that were qualified, we had to do it after the budget was done," Lui-Kwan said.
