Housing agency gives
funds back to fedsRepayment of the $771,000
was first demanded by HUD
in November 2002
A state housing agency has returned $771,000 in federal money that went to a controversial nonbid contract with a company headed by a longtime fund-raiser for isle Democrats.
The state Housing and Community Development Corp. of Hawaii reimbursed the U.S. Department of Housing and Urban Development on Dec. 16 for a state contract with Punaluu Builders Inc.
Punaluu Builders is headed by longtime Democratic fund-raiser Dennis Mitsunaga, the ex-husband of former housing agency Executive Director Sharyn Miyashiro.
A review by HUD two years ago found that the state agency did not follow established procurement policies when it selected Punaluu Builders to repair termite damage on a Waianae public housing project.
A Punaluu Builders official could not be reached yesterday.
HUD, which provides millions of dollars in federal grants each year to the state housing agency, initially demanded that the state return the money in November 2002. It also forced eight of the state agency's nine-member board to step down in December 2002.
Last month, the federal agency reissued its demand for the funds. HUD said the money will be returned to the department's operating subsidy program.
Former Democratic Gov. Ben Cayetano criticized HUD's actions last year, saying the federal agency's demands were politically timed to help Republican gubernatorial candidate Linda Lingle win the 2002 election.
The state housing agency's Democratic-appointed board also defended the award of the Punaluu Builders contract, saying a review by the state attorney general's office found no evidence of criminal wrongdoing.
HUD Assistant Secretary Michael Liu, a former Republican state senator, has denied that politics played a part in HUD's actions.
"As stewards of public money, HUD must ensure federal funds are not wasted or abused, but assist the people they are intended to serve," Liu said. "The new team at HCDCH has responded favorably by reimbursing these funds without hesitation."