Honokowai Kauhale on Maui

BY JIM DOOLEY – An audit of the state-owned Honokowai Kauhale affordable housing project on Maui found residents living in “substandard conditions” and “an atmosphere of intimidation and fear,” according to state records released today.

Honokowai Kauhale on Maui

The audit was commissioned as a result of a series of Hawaii Reporter news stories about problems at the West Maui project, and verified the contents of those stories, the records show.

Among the findings of the audit:

  • “The overall physical condition of the project is clearly substandard.”
  • “Current Resident Manager has created an atmosphere of intimidation and fear of reprisals, as reported by tenants.”
  • Apparent discrimination against families with children through enforcement of “unwritten rules.”
  • Failure to actively market the availability of 40 vacant units ready for occupancy.
  • Inconsistent enforcement of house rules.
  • Favoritism in “steering” of selected tenants to certain vacant units.

The audit findings (which have been redacted by the state to remove the names of individuals) are here Audit Part One and here Audit Part Two.

Based on the findings of the audit, the Housing Finance and Development Corp., the state agency that owns the project, notified property manager Realty Laua LLC on Sept. 28 of its intent to cancel the management contract if deficiencies weren’t addressed within 10 days. (See the Sept. 28 Letter)

The primary requirement made of Realty Laua by the state was removal of resident manager Lisa Faleafine, a member of the family that owns Realty Laua.

Faleafine had previously been transferred from a similar job at another state-owned housing facility on the Big Island after residents there complained repeatedly about mismanagement and squalid living conditions.

On Oct. 17, the state cancelled Realty Laua’s contract, saying in a letter to company president Robert Faleafine that he had failed to remove Lisa Faleafine as Honokowai Kauhale manager. (See the Oct. 17 Letter)

Robert Faleafine had “verbally assured” the state that a new manager would be appointed, but later asked for “clarification” of the state’s position, the Oct. 17 letter said.

“HHFDC finds this response insufficient,” agency administrator Karen Seddon said in the letter.

“HHFDC required the immediate removal and replacement of (Faleafine) as Resident Manager of the Honokowai Kauhale rental project based on the various and serious allegations documented,” the letter said.

“Realty Laua has failed to act not only as required by HHFDC, but also notably in direct contrast to what Realty Laua LLC represented to be an action it was willing to take,” Seddon wrote.

Honokowai Kauhale

The three-year, $1.75 million management contract was awarded to Realty Laua last year. The contract was initially awarded to another firm, Hawaii Affordable Properties, but that award was overturned after Realty Laua formally protested HHFDC’s procurement procedures.

After Realty Laua’s contract was cancelled, HHFDC awarded a six-month, non-bid contract to Hawaii Affordable Properties to manage Honokowai Kauahale.

The state is paying Hawaii Affordable Properties $375,000 under the six-month contract — $128,000 more than it was paying Realty Laua for the same work.