City offers to pay HUD $1.88M

HONOLULU (HawaiiNewsNow) - The city is offering to return $1.88 million to U.S. Department of Housing and Urban Development to revolve charges that it mismanaged federal grant money.

In June, HUD blasted the city's handling of nearly $8 million that it gave to a Wahiawa nonprofit called ORI Inc.

A large chunk of  that money came in the form of a loan that was later forgiven by the city.

"There are many reasons why the oversight of this project was not successful. As a result we have a very lengthy and comprehensive correction plan," city Managing Director Ember Shinn said in a news conference today.

ORI provides services for the elderly and disabled at Wahiawa facilities known as Camp Pineapple 808 and the Aloha Gardens Wellness Center.

During today's news conference, city officials said they conducted a site visit in April and didn't like what they saw.

"It was clean, well maintained -- beautiful gardens -- and virtually empty. It was totally underutilized," said Shinn.

"In fact, Camp Pineapple which was the subject of the HUD complaint, was totally empty for the past three months. They hadn't served anyone."

Shinn said the facility included bunk beds, which can't be used by the elderly.

ORI referred questions to its lawyer Mark Bennett, who did not return calls.

The city said its own investigation is pending. It has paid local private investigator Steve Goodenow $80,000 to look into HUD's concerns.

According to the city, the decision to forgive loans to ORI was made in 2010 by former Mayor Mufi Hannemann, citing a handwritten post-it note by former Deputy Managing Director Trudy Saito. The note, found in the files of former city official Rix Maurer, read: "Generally speaking, the mayor wants this."

Hannemann said the decision to forgive the loan wasn't his but was made by subsequent mayors. But he thinks the loan should have been a grant in the first place.

"I didn't have a problem with the forgiveness of the non-performing loans as long as it was made available to everyone in a similar predicament," Hannemann said.

Meanwhile, ORI's supporters defended the company, saying it provides a much needed service in the community.

"Where else will you find a place where those who are disabled and mentally challenged have a place to be," said City Councilwoman Ann Kobayashi.

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