Audit: OHA is falling short on its development, investment promises

HONOLULU (HawaiiNewsNow) - The Office of Hawaiian Affairs isn’t sticking to its development and investment promises, according to a new critical state audit that suggests is missing out on revenue.

State Auditor Les Kondo said 15 years ago, OHA promised to develop a strategy, business plan, and investment policy for real estate activities.

But that strategic direction never happened, he said.

OHA currently owns four commercial properties.

In 2021, OHA paid $47 million for two properties: A shopping center along Nimitz Highway, plagued with homeless tents, and about 26% of the Iwilei Business Center.

If they were to redevelop Iwilei Business Center, they need 75% percent of the ownership to agree.

In addition, they would have to consider remediating the area considering the possibility of soil contamination.

Kondo said these purchases were made without a clear plan to re-develop them.

“It adds to the risk that there may be misspending, for instance, and other risks that are important for the trustees to minimize,” he said.

In 2012, OHA bought the Gentry Pacific Design Center, now its headquarters.

And last year, OHA asked the legislature to lift restrictions on residential development in Kaka’ako.

But after a decade, Kondo said OHA still doesn’t have a master plan.

“They’ve gone through three different consultants over the course of the 10 or 11 years, and they have a new one right now,” said Kondo.

“They spent over $6.5 million on these consultants, yet really nothing to show for it.”

The auditor said funding from these investments is supposed to support OHA’S legacy lands and that cultural properties like the Kukaniloko Birthing Stones in Wahiawa lack oversight.

“We found that the OHA did not enforce the terms of those agreements; stewards didn’t have the required insurance,” said Kondo. “In fact, in one instance, when the audit team went to visit Kukaniloko, the stewards had refused to allow not only the audit team but also OHA to access its own property.”

In response to the audit, OHA did not dispute the findings.

The audit stated, “Corporate Counsel has since incorporated all EPM impacted policy changes into one new EPM document published at the end of January 2023, with administration distributing it to the Board shortly thereafter.”

OHA released the following statement on Tuesday.

OHA is extremely disappointed that the report does not acknowledge that during the Audit Period, the Board approved its Governance (2019) and Policy (2021) Frameworks, providing a basis for updating, consolidating and aligning all policies going forward. The report also does not acknowledge the work of the organization during and post the Audit Period, regarding policies, advocacy, legacy land and commercial property planning and activation.

The state auditor said he’d assess whether OHA has made changes in a couple of years.

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