OHA Trustee Rowena Akana: Sorry, But no June Column

Dear Readers,         June, 2013 Edition of Ka Wai Ola

‘Ano‘ai kakou … Sorry to disappoint you this month, but I will not be able to provide all of you with something interesting to read.

OHA’s CEO has decided that my June, 2013 Ka Wai Ola column on OHA’s move to the Gentry Pacific Design Center will not be printed because he feels it violates OHA’s confidentiality policy.

The CEO has not specified to me what he feels is “confidential” nor has he given me the opportunity to edit my column to provide something he feels is “suitable” for the public.

I find it completely unfair that while I submitted my column for printing well before the deadline on May 13, the CEO only informed me on May 22 that he wasn’t printing my column, which was too late for me to write about another issue.

Aloha Ke Akua.

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Trustees misled on loan to purchase Gentry Building

`Ano`ai kakou…  On April 15, 2010, OHA established the “Hawaii Direct Investment Policy” (HDIP).  This allows OHA to spend the lesser of $25 million or 10% of the current value of the Trust Fund for investments in Hawaii.

This policy was created to allow OHA to purchase an office building that would serve as our corporate headquarters.  The policy also allows OHA to: 

(1) Make equity investments in Hawaii-based companies,

(2) Invest in lending programs for Native Hawaiians, and

(3) Invest in other Hawaii real estate.

On April 12, 2013, OHA Trustees were surprised to learn that the loan we got from Bank of Hawaii was not a secured loan and that it had to be backed by Trust dollars.  OHA’s Hawaii Direct Investment Policy requires that any “recourse” in connection with a loan be counted towards the $25 million maximum allocation.  As a result, we can’t make any more investments in Hawaii until the acquisition of OHA’s corporate headquarters is complete.

Under the current financing terms with Bank of Hawaii, OHA has to put up the following collateral:

(1) GENTRY MORTGAGE – 100% liability against the Native Hawaiian Trust Fund assets for a total of $21,370,000 required collateral; and

(2) GENTRY RETROFIT LOAN – An additional $6,758,000 loan to retrofit Gentry into an office building at a “75% rate.”  Calculation: $6,758,000 loan / 75% = $9,010,667 required collateral.

Therefore, the combined collateral required for the Gentry Mortgage ($21,370,000) and the Retrofit Loan ($9,010,667) is $30,380,667.  This is -$5,380,667 over our $25 million Hawaii Direct Investment Policy limit.  After doing the math, you have to ask the question, “Who is going to benefit from this sweet deal?”  Certainly not OHA!

The Trustees were misled by OHA’s financial department officers when they repeatedly emphasized that the loan was the best deal we could hope to get.  If it was such a great deal, why do we have to back the loan with our own Trust dollars?  It would have been better to have bought the building in cash.  Why did we even need Bank of Hawaii?

SQUARE PEG IN A ROUND HOLE

It never made sense for OHA to spend $21,370,000 to purchase the 80-year-old Design Center, with some existing tenants, and spend an additional $6,758,000 to convert parts of it into a temporary office spaces to house OHA’s headquarters.  Oh, and did I mention that the number of building vacancies are a clear indication that it is even wrong for businesses to move into?

Now add to that the fact that:

(1) OHA’s can’t make any more investments using the Hawaii Direct Investment Policy unless we can renegotiate our loan terms with Bank of Hawaii and completed the relocation of our offices to Gentry; and

(2) OHA has until February 2014, when our current lease expires, to move into a “design center” that wasn’t meant to be an office building. 

What a complete boondoggle!

We could have saved ourselves all of this aggravation and move our headquarters to the AAFES building that OHA now owns in Kakaako, paying no rent, and spending this time drawing up plans for our new property instead of spending trust money trying to make an old building fit OHA’s needs. 

Aloha Ke Akua.

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Power corrupts; absolute power corrupts absolutely

`Ano`ai kakou…  As a senior Trustee, I have managed to live through some very difficult times within the walls of OHA over the past 23-and-a-half years.  As Trustee and staff members come and go, it never fails to amaze me about how they both come into our institution thinking that OHA began with them and they try to re-invent the wheel.  They didn’t bother to learn OHA’s history and the difficult ground we had to cover over the past 30-years to be where we are today.

SCHEMES TO STIFLE TRUSTEES

Like other political offices, when some Trustees take over the power structure here, they manage to bring their “own” people into the organization and place them in strategic places throughout our offices, like the fiscal department, the legal office, and so on.  Consequently, even when they are no longer in the “driver’s seat,” they can still control the board through these staff.  This has become a debilitating factor for OHA Trustees who want to do their best to manage the Trust since these staff members who are loyal to just a few Trustees can put up stiff opposition almost at every turn.

Now, we can’t write anything specific about what goes on within the offices of OHA.  A Trustee is prevented from printing their columns in our newspaper because OHA’s “legal eager beavers,” who want to please those who keep them employed here, will find every excuse to stifle a Trustee and prevent them from talking about things that go on here.

OHA’s leadership will also go so far as to pass a specific policy to stop certain Trustees from calling attention to something they don’t want the public to know.  The kicker is, in my opinion, those rules are made up by lawyers who work for us, but are loyal to only a few Trustees.  This strategy works against Trustees in the minority who usually do not agree with the power structure.

Another trick is to put items on the agenda in an executive session instead of open session, thereby excluding the general public from listening to the discussion.  If this isn’t enough, they further silence the Trustees by telling them that they can’t speak about what was discussed, and then they lock-up the minutes, so that even the Trustees do not have ready access to them.

Even when a super majority of six Trustees vote and approve a money appropriation, the staff members are prevented from acting on the action because they are being instructed to throw up road blocks and make excuses to slow the process or prevent it from happening at all.

For a very long time now, OHA has not been able to really function as a Trust.  It has become a political entity, where power is more important than fulfilling our mission to better the conditions of OHA beneficiaries.  You might say OHA looks more and more like the dysfunctional Congress.

Until the public elects people to the board who truly want to serve OHA’s mission and who have the best interests of the Trust and our beneficiaries in their heart, OHA will continue to function at half-speed instead of full-speed ahead.

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Background Links:

• OHA interoffice memorandum to Rowena Akana from Colette Machado, Aug. 22, 2012.
• Rowena Akana's complaint about Haunani Apoliona to Ethics Commission, July 12, 2012; and Akana December 2012 Kai Wai Ola columns, pre- and post-edit.