Honokowai Kauhale
Honokowai Kauhale

BY JIM DOOLEY – The state will pay considerably more for property management services at a troubled Maui affordable housing project under a six-month non-bid contract that took effect last week, according to procurement records.

The Hawaii Housing Finance and Development Corp. will pay Hawaii Affordable Properties, Inc. $375,000 to oversee the 184-unit Honokowai Kauhale complex, according to a procurement form. The state would have paid some $247,000 for the same work under an earlier contract held by a competing firm, Realty Laua LLC.

HHFDC terminated Realty Laua October 17, informing the company that it was “not in compliance” with the terms of its contract, according to state records.

The new contract award to Hawaii Affordable Properties means the company is now managing eight of nine housing projects owned by HHFDC around the state. Realty Laua manages the ninth.

News stories published by Hawaii Reporter since August 22 revealed chronic vacancy and maintenance problems at Honokowai Kauhale, an affordable rental housing complex in the Kaanapali area of West Maui.

Nearly 40 per cent of the apartments at the complex have been vacant for lengthy periods of time – five years in some cases – and some residents reported that they felt intimidated by property manager Lisa Faleafine and her live-in boyfriend, state parolee Iokepa Auwae. Other residents later wrote letters of support for Faleafine and Auwae.

HHFDC said it was not aware of the problems at the project until Hawaii Reporter inquired about them.

In justifying the award of the sole-source contract to Hawaii Affordable Properties, HHFDC cited “a series of newspaper articles published from August 22, 2011 through October 4, 2011 (that) raised concerns from residents, former employees, and state legislators about the property management staff and site conditions” at Honokowai Kauhale.

After an audit was conducted at the housing project, HHFDC determined that Realty Laua “was not in compliance with its contract” and the company was given 10 days to cure deficiencies, according to the procurement notice.

Realty Laua “failed to provide a satisfactory cure” and its contract was cancelled October 17, said HHFDC.

Realty Laua president Robert Faleafine has not responded to repeated requests for comment. A message left with his office today was unreturned.

Karen Seddon

HHFDC executive director Karen Seddon has refused to release the compliance audit or the termination letter.

HHFDC said it intends to seek competitive bids for a Honokowai Kauhale property manager while the six-month interim contract to Hawaii Affordable Properties is in effect.

The award of the sole source contract was necessary because “management and maintenance staff need to be onsite daily at the housing complex to ensure proper care and maintenance of the project, and to ensure that vital services such as water, electricity, and sewage are not interrupted,” said HHFDC.

Staff turnover at HHFDC has complicated the procurement process, the agency said.

“One of two key staff members responsible for procuring and administering the property management contracts for all of HHFDC’s rental properties is no longer with the agency and the new Asset Manager now assuming the responsibility of procuring the new contract was only recently hired on September 1, 2011,” said HHFDC.

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Jim Dooley joined the Hawaii Reporter staff as an investigative reporter in October 2010. Before that, he has worked as a print and television reporter in Hawaii since 1973, beginning as a wire service reporter with United Press International. He joined Honolulu Advertiser in 1974, working as general assignment and City Hall reporter until 1978. In 1978, he moved to full-time investigative reporting in for The Advertiser; he joined KITV news in 1996 as investigative reporter. Jim returned to Advertiser 2001, working as investigative reporter and court reporter until 2010. Reach him at Jim@hawaiireporter.com