Report outlines improvements to affordable housing credit program
Hawaii County Auditor Clare McAdam on Monday released a follow-up review of the county’s affordable housing credit program, stating that six of the seven recommendations made from a 2023 audit have been fully implemented, with only one remaining in progress.
Hawaii County Auditor Clare McAdam on Monday released a follow-up review of the county’s affordable housing credit program, stating that six of the seven recommendations made from a 2023 audit have been fully implemented, with only one remaining in progress.
The original performance audit — issued in February 2023 by previous county auditor Tyler Benner — evaluated the administration, oversight and internal controls related to the Office of Housing and Community Development’s affordable housing credit program and identified areas needing improvement.
“(OHCD) has strengthened internal controls, enhanced oversight and compliance monitoring, improved documentation and review procedures, expanded staff training, and implemented additional safeguards to support greater accountability, transparency, and long-term program integrity,” county Housing Administrator Kehaulani Costa recently told the Tribune-Herald.
Costa added that she appreciates the auditor’s “partnership in identifying areas for improvement and recognizing reforms” she said “have strengthened the program’s oversight, transparency and administration.”
The County Council ordered the audit after a former OHCD employee, Alan Scott Rudo, pleaded guilty in August 2022 to conspiracy to commit honest services wire fraud and admitted he acceped about $1.9 million in bribes from Hilo attorneys Paul Sulla Jr. and Gary Zamber and former Big Island businessman Rajesh Budhabhatti to ensure the county approved three affordable housing agreements (AHAs) benefiting the defendants’ development companies.
Through those AHAs, the development companies fraudulently raked in more than $11 million worth of land and excess affordable housing credits (AHCs), although no homes were built.
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All four have been sentenced to federal prison terms.
The audit found OHCD had “inadequate internal controls” over its affordable housing credits program, and the auditor was unable to say exactly how many credits were in circulation.
According to the 30-page follow-up report, actions recommended and already instituted include: formalizing written policies and procedures for administering affordable housing requirements in Chapter 11 of the Hawaii County Code; increasing monitoring and compliance oversight of affordable housing agreements and AHCs; implementing technology and data tools to improve management and tracking of affordable housing projects and credits; strengthening segregation of duties and internal review processes; providing ongoing staff training related to affordable housing administration and internal controls; and expanding transparency and reporting measures, including quarterly reporting requirements and enhanced documentation standards.
The recommendation that remains a work in progress is updating Chapter 11 to support the future adoption of administrative rules governing the affordable housing programs. Formal adoption of administrative rules will follow completion of the Chapter 11 revisions by the County Council, according to the report.
“The follow-up report reflects the dedication of our OHCD staff to strengthen oversight and to deliver affordable housing to our community with integrity,” said Mayor Kimo Alameda.
The report also highlights the development of OHCD’s Affordable Housing Dashboard, an interactive mapping and data tool that tracks affordable housing projects throughout the county.
In addition, OHCD has implemented updated procedures requiring certification, authentication and verification processes prior to the award, transfer or redemption of AHCs. Additional safeguards now include expanded supervisory review, standardized templates and checklists, ongoing compliance monitoring, and quarterly reporting to County Council.
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The follow-up report is available at tinyurl.com/OHCDFollowUp.
Email John Burnett at [email protected].
