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.

Akana selected as Pacific Representative for AIANTA

`Ano`ai kakou…  On February 12, 2013, the Board of Directors for the American Indian Alaska Native Tourism Association (AIANTA) approved my nomination as one of two Pacific Representatives.  This is a great opportunity for all Native Hawaiians to network with American Indians and Alaska Natives to develop and implement programs that will help our communities build for the future while sustaining and strengthening our cultural legacy.

AIANTA is a 501 (c)(3) nonprofit association of Native communities and businesses that were organized in 1999 to advance tourism in territories under the controlled of Native peoples.  The association is made up of member tribes from six regions: Eastern, Plains, Midwest, Southwest, Pacific and Alaska.

AIANTA’s Mission is to define, introduce, grow and sustain American Indian and Alaska Native tourism that honors and sustains tribal traditions and values.  AIANTA serves as voice and resource for its constituents in advancing tourism, assist tribes in creating infrastructure and capacity, provide technical assistance, training and educational resources to tribes, tribal organizations and tribal members.  AIANTA also serves as the liaison between Indian Country and governmental and private entities for the development, growth, and sustenance of Indian Country tourism.

International Outreach

According to the U.S. Department of Commerce, international visitors spent a record $14.3 billion in August 2012.  Each March, AIANTA sponsors an expansive American Indian Pavilion at ITB Berlin, the world’s leading travel and trade show.  This provides Tribal tourism departments the opportunity to showcase their programs and tour packages to the European tourism industry.

AIANTA booth participants have made invaluable contacts with international travel organizations, media and tour operators.  They were featured in the Brand USA Discover America Pavilion, attracting large crowds of participants and hundreds of international travel media representatives.  More than 172,032 trade professionals and consumers participated in ITB 2012.

Public Lands Outreach

Every major national park or monument in the American west has a relationship to a significant Native sacred site.  The upcoming National Parks Service centennial anniversary in 2016 affords Native peoples the opportunity to raise public consciousness on issues such as cultural resource protections, ancestral use of park lands, and participate in the benefits arising from increased visitation to the national parks during the centennial.

In 2011, AIANTA entered into a partnership with the National Park Service and the Bureau of Indian Affairs to insure full, uncensored tribal participation in NPS centennial interpretations, education, tourism and other programming efforts.

Annual conference

The annual American Indian Tourism Conference, co-hosted by various Native American tribes in their homelands, is designed to share knowledge, experience and best practices from both tribal and non-tribal tourism programs around the United States.  Each conference features mobile workshops, networking events and presentations from experts in the travel & tourism industry.

I see many similarities in the missions of both OHA and AIANTA.  We both serve as the voice and as a resource for our Native constituents.  We also serve as a much needed liaison between our respective Native Communities and governmental and private entities for the promotion, growth and development of economic opportunities and programs.

I look forward to working closely with AIANTA over the next few years to help our beneficiaries build for their future while sustaining and strengthening our cultural legacy.  Aloha Ke Akua.

HCDA’s plan could end up privatizing the Kewalo Basin

HCDA needs to consider all of the Stakeholders involved before signing a 50-year lease with a mainland company!

`Ano`ai kakou…  On April 11, 2012, Governor Neil Abercrombie signed the historic $200 million settlement between the State and OHA.  After many years of negotiations, OHA finally resolved all claims that were raised with the State relating to its portion of income from the public land trust from November 7, 1978 to June 30, 2012.  The State fulfilled its constitutional obligations to Native Hawaiians by providing OHA with fee simple title to lands in Kakaako makai.

However, to our surprise, on June 7, 2012, the Honolulu Star-Advertiser reported that the Hawaii Community Development Authority, which has jurisdiction over Kewalo Basin, had agreed to lease the 143-slip harbor in Kakaako for 50 years to California-based marina operator Almar Management Inc. and a partner doing business as KB Marina LP.

The Almar partnership would finance $22 million in repair work to replace all piers and docks and would increase boats slips from 143 to 243.  Almar anticipates the upgrades taking five years to complete and would pay HCDA about $45 million in rent over 50 years.

OHA owns the property along the Ewa side of the harbor including the former Fisherman’s Wharf Restaurant area.  Late last year, OHA asked HCDA’s board to delay a final decision on the renovation and expansion plans so that we could better understand how the harbor changes would affect our property.

Now OHA is feeling heavy pressure from both the HCDA and the Governor’s office to accept the harbor improvements, which include two “finger” piers that will extend from OHA’s Fisherman’s Wharf site.  It is important to note that OHA was not aware of the HCDA’s commitment to the two finger piers prior to our signing the settlement agreement with the State.  We did not know that there were “strings attached” to the properties.

OHA is counting on the Kakaako lands to someday generate the revenue needed to support our many Native Hawaiian programs.  The properties are crucial to OHA and our future nation becoming completely self-sufficient.

The “Save Kakaako Ohana” is counting on OHA to develop our properties in a responsible and culturally sensitive way while preserving community access to the ocean.

If HCDA gets their way, OHA’s land will surely be devalued.  We need our ocean front not only for its beauty and view, but also to be able to master plan our area as a whole.  The last thing we need is a large cruise ship docked in front of our property.  It is also ridiculous that the State believes $45 million is a lot of money over 50 yearsIn 50-years, the property will be worth a hundred times that amount!

Help us stop this insane plan by showing your support for OHA to retain its rights to its waterfront.  Make your opinions known to the HCDA, your state legislators, and the governor’s office.

Legislative Update

There are several bills introduced in the 2013 legislature that are threatening to cause deep divisions within the Native Hawaiian community.  For example, HB 252 seeks to prevent Native Hawaiians who are not residents and/or Hawaii registered voters from participating in the Native Hawaiian Roll Commission’s enrollment process.  The legislature should refrain from joining the contentious debate about who is a Native Hawaiian.  That decision should be made by Native Hawaiians themselves.  Aloha Ke Akua.

Aloha, Senators Inouye and Akaka

`Ano`ai kakou…  My family and I were deeply saddened to learn of the passing of Senator Daniel K. Inouye.  There are no adequate words to express this loss.  Our hearts and thoughts are with Sen. Inouye’s family, his countless friends, and his dedicated staff members during this difficult time.  We will always be grateful and remember Senator Inouye for his 50 years of public service as a U.S. Senator.

I am also so very grateful for Senator Daniel Akaka’s 36-years of service in Congress.  Senator Akaka’s many years of service and dedication to all the people of Hawaii is an ideal example that all future leaders should strive toward.  Mahalo nui loa for all of your hard work over the past 12-years to establish a solid foundation for all Native Hawaiians to utilize as we finally restore our native sovereignty.

Legislative Leadership Changes

Congratulations to new House Speaker Joe Souki.  A change in the Speakership is long overdue and a welcome turn of events.  I wish him and his new leadership team well in this legislative session.

The sudden passing of Senator Inouye brought about many changes in local politics, especially in the leadership of the State Senate.  Senate Vice-President Donna Mercado Kim will replace former Senate President Shan Tsutsui, who became Lt. Governor.  Newly appointed Senator Gilbert Keith-Agaran has filled the void left by Lt. Governor Tsutsui.

Kewalo Basin

A great concern for OHA this year are the proposed “finger piers” that will front our property at Kewalo Basin.  After OHA signed the agreement with the State to receive the Kakaako Makai lands at Kewalo, the Hawaii Community Development Authority (HCDA) informed OHA about the finger piers that had been promised to an earlier developer who had already spent a great deal of cash on the development of the harbor.

This poses a huge problem for OHA.  Placing piers in front of our Fisherman’s Wharf property and the adjacent waterways will seriously reduces the value of our land and takes away our rights to develop our own piers.  I will keep you posted on this issue.

Kuleana Lands

Recognizing Kuleana Lands as historical lands is one of my priorities for the 2013 legislative session.  Last year, the Senate passed out a resolution protecting Kuleana Lands, but the former House Speaker killed the House version.  Not sure why.

Public Land Development Corporation

The Public Land Development Corporation (PLDC) is a state entity created by the Legislature in 2011 to develop state lands and generate revenues for the Department of Land and Natural Resources. The PLDC became a highly controversial issue in the past legislative session, but the good news is that all parties now agree the PLDC needs to be repealed or it has to be significantly amended to incorporate the changes that the public has been demanding.  Aloha Ke Akua.

My continuing hope for change at OHA

`Ano`ai kakou…  Happy Year of the Snake!  Now that the elections are over and our new Board of Trustees is in place I continue to hope that there will be changes at OHA to make things better here for everyone.

GET MORE TRUSTEES INVOLVED

I believe that being a trustee is not about simply showing up at a few monthly meetings.  OHA cannot afford to maintain a system which encourages passive trustees, as we have experienced in the past.

Currently, there are only two subject-matter committees under the Board of Trustees: (1) The Asset & Resource Management Committee which oversees all of OHA’s fiscal, policy, economic development, and administrative matters, and (2) The Beneficiary Advocacy and Empowerment Committee, which has responsibility over all federal and state legislation, on-going programs in health, housing, education, land, and the Native Hawaiian Revolving Loan Fund.

The problem is that each committee is too broad in scope and can easily become overwhelmed.  I’m hopeful that the two committees will form “Ad Hoc” sub-committees to allow other Trustees to concentrate on more specific issues such as land, policy & planning, program management, legislative & government affairs, and budget & finance.  Creating sub-committees will get more Trustees actively involved and ensure less things “fall through the cracks.”

BRING BACK OHA-RUN PROGRAMS

Today, OHA mostly operates like a charitable foundation that hands out grants.  Most of the successful OHA-run programs, like Aha ‘Opio and Aha Kupuna, which took years of hard work by past trustees to develop, have been contracted out or quietly discontinued.  While farming work out to nonprofits is appropriate in some cases, I believe OHA has gone too far.

I believe that OHA should do much more for our beneficiaries in terms of programs and services.  Grants are ineffective in solving long-term problems since grant monies eventually run out.  Even successful services end up getting cut if they can’t raise any money.  That’s why we need on-going OHA programs that are closely monitored by the trustees.

EMBRACE TRANSPARENCY

Despite many requests, OHA meetings are not televised like the City Council or the State Legislature.  Cost has always been an issue, but with today’s technology, it shouldn’t cost that much – Olelo and YouTube are free!  Broadcasting our meetings would make Trustees more accessible and keep us honest.

NEW LEGISLATIVE SESSION

Congratulations to State Senators Malama Solomon and Clayton Hee, two former OHA trustees, on their re-election.  OHA continues to have two legislators it can count on in the State Senate.  Let us hope that we can have another successful session and get more things done for our beneficiaries. Aloha Ke Akua.

Aloha, Trustee Donald Cataluna

It is with great trepidation that I bid a fond Aloha to my friend and fellow trustee Donald Cataluna, who has been a strong voice for his beneficiaries on the islands of Kauai and Niihau for many years.

Don is known for his passion for protecting native rights and his deep compassion for our beneficiaries in need.  He is credited with stopping NASA from constructing a massive building alongside their telescopes on sacred Mauna Kea and saving the Salt Ponds in Lihue as well as many other projects.

Don has been a true leader whose main focus has been to protect our trust assets while working tirelessly in our beneficiaries’ best interest.

I will miss him.

OHA Election

My congratulations go out to Dan Ahuna, our newly elected Trustee for the islands of Kauai and Niihau and to Maui Trustee Carmen “Hulu” Lindsey, Hawaii Island Trustee Robert K. Lindsey Jr., and Molokai & Lanai Trustee Colette Machado, on their re-election.  I look forward to working with all of them over the next two years to better the conditions of Native Hawaiians.

OHA’s “money pit” now at $28,128,000.00 and growing

When the Board of Trustees authorized the purchase of the Gentry Pacific Design Center this past summer for $21,370,000.00, I was one of several Trustees with serious concerns about the purchase.  There were just too many “unknowns” about the property and I personally felt very uncomfortable with the purchase.  For example:

  • The Gentry Pacific Design Center is 80-years-old and its electrical system is outdated;
  •  The enormous cost and resulting disruption of relocating OHA staff to the Design Center; and
  • The cost of changing the Design Center into an office building.

As I feared the costs associated with the Gentry Pacific Design Center, which is now referred to as the “Corporate Office Building” or “COB” are skyrocketing to nearly $30 million.

On November 1, 2012, the Board of Trustees authorized nearly $7,000,000 in expenditures:

(1) Up to $663,000.00 in essential costs relating to:

  • Tenant Improvement Allowances – $400,000/year for up to 20,000 of the leasable square footage which will be leased or renewed through June 30, 2013; and
  • Immediate Due Diligence Projects – $263,000, including the replacement of a 23-year-old fire alarm system ($100,000)

(2) Up to $6,095,000.00 in design and construction and non-OHA tenant relocation costs relating to OHA’s relocation to COB; and

(3) “Secondary Repairs” – It should be noted that OHA still has to pay for repairs totaling an estimated $404,000 beginning in year three, mainly to repaint the building exterior ($110,000) and to replace the single-ply roofing membrane ($250,000).

As I have said before, it makes absolutely no sense that OHA is spending a great deal of money to purchase and renovate an 80-year-old Design Center full of existing tenants instead of using the $28,128,000 to build a brand new state-of-the-art office building on land we already own.

My preferred location for a new OHA Headquarters is on the Kakaako Makai settlement properties that we recently received from the State.  The Kakaako waterfront is an excellent place for economic development and a permanent home for OHA’s headquarters.

Is anyone listening?  If you are interested in why OHA would spend all this money on an old building that was not for sale, please call (594-1857) or write to Trustee Oswald Stender.

Have a safe and Merry Christmas and a Happy New Year!

Wrapping-up a historic year for OHA

Congratulations to all of the public servants elected in 2012.  Campaigning can be a grueling process.  I look forward to working with all of you in the 2013 Legislative Session to better the conditions of Native Hawaiians.

New Maui Trustee and OHA CEO

OHA began the year by welcoming new Maui Trustee, Carmen “Hulu” Lindsey, who was appointed by Governor Neil Abercrombie.  Trustee Lindsey brought a much needed burst of new energy to the board with her knowledge, experience, and willingness to give her all for our beneficiaries.

OHA’s Administration underwent major changes with the appointment of Dr. Kamana’opono Crabbe as its new Ka Pouhana/CEO.  I have been impressed by his exemplary work over the past eight months and I look forward to the positive changes he will bring to OHA in the coming year.

Appointed BAE Vice-Chair & Served as a Legislative Liaison

I was honored to be appointed Vice-Chair of the Committee on Beneficiary Advocacy and Empowerment (BAE), one of only two subject-matter committees under the Board.  I worked closely with BAE Chair, Trustee John Waihe’e IV, on legislation and on-going programs.  I also continued to serve as one of two “Legislative Liaisons” appointed by Trustee Waihe’e for the 2012 legislative session.

Protecting Kuleana Land Property Tax Exemptions

On November 22, 2011, the Star-Advertiser reported that the Real Property Tax Advisory Commission recommended that the City & County of Honolulu eliminate property tax exemptions for about 150,000 Oahu homeowners, including Kuleana Land owners.

On January 23, 2012, I testified before, the City Council’s Budget Committee hearing on the Real Property Tax Advisory Commission’s Report.  I explained the heartbreaking history of Kuleana Lands and stressed to the Budget Committee Chair, Councilmember Ann Kobayashi, that OHA strongly opposed the proposal.  Thankfully, the matter was dropped (for now at least).  Upon Councilmember Kobayashi’s recommendation, I worked to get the State Legislature to pass a resolution supporting the protection and preservation of Kuleana Lands.

On April 10, 2012, the State Senate adopted Senate Resolution (SR) 33 which urged the counties to preserve property tax exemptions for Kuleana Lands.  I would like to offer my sincere thanks to Senator Malama Solomon who introduced SR 33, and Senators Brickwood Galuteria, Gilbert Kahele, Donovan Dela Cruz, and Michelle Kidani for signing onto the resolution.  I would like to give a big Mahalo to OHA staff members Breann Nu’uhiwa, Sterling Wong, Jim McMahon & Luci Meyer for all their efforts to get this resolution passed.

I would also like to send a special Mahalo to Representative Faye Hanohano for introducing the House versions of the resolutions, HCR 117 & HR 89.  However, Speaker Calvin Say killed both resolutions in the Finance Committee so we need to try again next year.

Settlement Bill Passes

On April 11, 2012, in an emotional ceremony at Washington Place, Governor Abercrombie signed the historic $200 million settlement between the State and OHA.  After many years of negotiations, OHA finally resolved all claims that were raised with the State relating to its portion of income from the public land trust from November 7, 1978 to June 30, 2012 on past due amounts owed.  The State has now fulfilled its constitutional obligations to Native Hawaiians by providing OHA with fee simple title to lands in Kakaako makai.  The proposal will not affect any other claims against the state.

Happy Thanksgiving

May each and every one of you have a safe and happy Thanksgiving full of wonderful food, family and friends.  Aloha Ke Akua.

Kakaako Makai properties sidelined by Gentry Pacific Design Center purchase

NOTE: This column that was censored from OHA’s August 2012 Ka Wai Ola Newspaper but later printed in the October 2012 issue.

`Ano`ai kakou…  As reported in the Pacific Business News (PBN) on July 11, 2012, the Gentry Pacific Design Center is being sold to the OHA.  The sale of the 185,787-square-foot center at 560 N. Nimitz Highway is scheduled to close in August.  The article did not disclose the sales price, but it reported that the building and its three parcels were assessed for about $28.8 million. [See “Office of Hawaiian Affairs to buy Gentry Pacific Design Center,” by Duane Shimogawa in the July 11, 2012 issue of Pacific Business News]

I am dismayed at the Trustees who authorized OHA to make this purchase.  Trustee Oswald Stender first brought the proposal before the board almost a year ago and it was quickly dropped because OHA had to move into the building for it to make financial sense.  None of the other Trustees wanted to move our headquarters there.  I thought the deal was dead, but it came back before the board on May 17, 2012.  The proposal failed again because Trustee Haunani Apoliona cited a conflict of interest because she was on the Board of Directors of the bank being considered to finance the purchase.  OHA’s Board Counsel agreed and recommended that she not vote.

Then, on June 7, 2012, the Board Counsel opined that Trustee Apoliona, miraculously, no longer had a conflict of interest because the Fiscal Committee Chairman took out any references to Trustee Apoliona’s bank within the proposal.  She was allowed to vote and together with Trustees Apo, Machado, Stender, and Waihee, authorized the CEO to make an offer to Gentry Pacific.

Trustees Hulu Lindsey, Robert Lindsey, and I voted against.  Trustee Cataluna abstained.  The four of us had serious concerns about the conditions under which OHA was required to make the purchase.  They include:

(1) The Trustees has less than one week to review the preliminary due diligence and never got to see the final due diligence report until after the purchase was made.

(2) The Gentry Center is 80-years-old and could have problematic lead paint and asbestos.

(3) There are several areas that need to be made ADA accessible.

(4) The electrical system needs to be updated.

(5) The cost and resulting disruption of relocating OHA to the Gentry Design Center.

(6) The cost of retrofitting the Gentry Design Center as an office building.

Given these unknowns, I personally felt very uncomfortable with the purchase.  During the community meetings regarding OHA’s Kakaako Makai settlement properties, we explained to the community that Kakaako would be a good place for economic development and a permanent home for OHA’s headquarters.

Now OHA is spending a great deal of money to renovate an 80-year-old building instead of using the same amount of money to build a brand new one.  It makes absolutely no sense.

Even though the purchase seems to be a done deal, at least four Trustees continue to have serious concerns about how the building was purchased.  I personally believe that purchasing the Gentry Design Center was not a fiscally prudent investment under trust law.

Fiscal issues Trustees need to discuss

`Ano`ai kakou…  Back in July (2012), I travelled to New Haven, Connecticut, to attend the Commonfund Endowment Institute, Level II, at the Yale School of Management.

The Institute provides in-depth courses on how nonprofit organizations such as OHA should invest their funds in the stock market and in other asset classes such as emerging markets, natural recourses, and commodities, etc., in order to secure funds in perpetuity for future generations.

In these very uncertain times, it is important for trustees of endowment funds and nonprofits to be well educated on the details of how money-mangers are investing their funds.

The following are my recommendations for OHA based on what I learned at the Institute:

(1) Trustee Training – OHA should invite organizations such as Grant Thornton to conduct educational workshops for the board, such as one on Governance.  My feeling is that if all trustees attended seminars, like those offered by Commonfund, we would have a more active and informed board who would be able to make good decisions for our beneficiaries.

(2) Split the Money Committee – OHA’s Asset & Resource Management (Money) Committee should be separated into two committees: (1) Budgeting; and (2) Investments.  Volunteers should be asked to serve on the investment Committee.  I have made this suggestion in the past, but the response has always been, “That ain’t gonna happen, Rowena.”

(3) Trustee Involvement – Trustee engagement must be improved.  Some Trustees are passive, nonfunctioning, or afraid of speaking up for fear of being called a “troublemaker,” “micro-manager,” or “hard to get along with.”  All Trustees should be allowed to have meaningful participation in planning and not just leave everything for the Administration to decide, as has been the practice for the last ten years until 2012.

(4) Low Risk Investments – OHA should look at investing in U.S. Treasuries, Commodities, and Natural Resources as they are considered low-risk.

(5) Money Manager Contracts – The Trustees should re-examine all contracts with money managers.

(6) Control Spending – The higher OHA’s operating expenses (commitments, salaries, etc.) the more we need to concentrate on how well we do with our investments.  The trust fund will suffer if we continue to spend at the rate we are spending now.  Intergenerational funds are needed to ensure perpetual funds for the future.

(7) Inflation Funds – These funds reduce the risk of losing your investments in a down market.

(8) Surplus Funds – We should set aside funds for long term, perpetual use.  Being a quasi-governmental trust allows us to be more creative in growing a perpetual fund.

(9) Spending Policy – OHA needs to revisit the spending policy and lower its spending rate to 4%.  OHA also needs to prioritize its spending and consider separate spending policy for different types of investments.  Not prioritizing allows Trustees to fund anything or anyone they favor.

SUMMARY

In summary, the Commonfund Endowment Institute provided me with an excellent investment education.  The information shared by Yale and Harvard professors, as well as top economists and other experienced investors and money managers, continues to be very valuable to me as a Trustee.  Aloha Ke Akua.

The need for fiscal responsibility

`Ano`ai kakou…  On May, 30, 2012, the Star Advertiser reported that the state Council on Revenues lowered the revenue projection for next fiscal year, which prompted Governor Abercrombie’s administration to cut back the state’s spending.

This is not surprising.  When revenues are down, everyone cuts back on spending.  Everyone except OHA.

Trustees Keep on Spending

Our new CEO, Ka Pouhana Kamana’opono Crabbe, has been working diligently to cut our budget wherever possible and to streamline operations to save money, but there are still Trustees who insist on spending more.

This extra spending puts enormous pressure on our dwindling resources at a time when OHA has already accepted major financial commitments such as Waimea Valley, ownership of the Kaka’ako Makai Settlement Properties, and other commitments such as the $3 million/per year for 30-years debt service for the Department of Hawaiian Home Lands and funding for organizations such as Alu Like, Inc. and the Native Hawaiian Legal Corporation that have made their way into our annual budget.  These are huge amounts of revenues being contracted to these entities.  Add to this the grants and annual operational expenses and we are maxed out.

A Constant Issue

Overspending has been a longstanding problem at OHA.  In April of 2004, our money committee chair asked for a legal opinion that would allow OHA to spend more of the Native Hawaiian Trust Fund.  He even questioned whether it’s even appropriate to build the Trust at all.

I have consistently argued against OHA’s 5% spending policy and strongly recommended that it be reduce instead to 4%, at least until the economy fully recovers again.  Even Kamehameha Schools operates at a lower spending rate than 5%.

Fiscal Restraint

In these tough economic times, there are nearly a hundred nonprofit organizations asking for OHA grants each year.  While giving the money away will make OHA very popular in the short-term, we should be focusing on the long-term health of the Native Hawaiian Trust Fund.

We have worked carefully for two decades to build the Trust to over $300 million.  I would hate to see this relatively modest amount shrink down to nothing in shortsighted spending sprees that forces us to realign our budget several times a year and draw more money from our corpus (trust).  What other organization does this?

Greater Transparency

State law (Hawaii Revised Statutes §10-14.5 on budget preparation and submission; auditing, Section b) requires that: “The (OHA) board shall provide opportunities for beneficiaries in every county to participate in the preparation of each biennial and supplemental budget of the office of Hawaiian affairs. These opportunities shall include an accounting by trustees of the funds expended and of the effectiveness of programs undertaken.”

I have recommended time and time again that OHA needs to take its proposed budget out to the community so that our beneficiaries can give us their input as well as tell us what their needs are.

This was the common practice of OHA in the past and I believe it helped OHA to develop a budget that was more in-sync with our beneficiaries’ concerns.

I will continue to press OHA’s money committee chair to take our next proposed budget out to the community, as required by law, including the neighbor islands.

So which path will OHA’s leadership take?

It has long been understood that OHA is a “temporary” organization that will someday be dissolved and its assets transferred over to the new Hawaiian Nation.

So the critical policy question is: “Will OHA continue to be a ‘temporary’ organization that will give the Hawaiian Nation the assets it needs to survive or will OHA continue to spend freely and shrink the Trust Fund?”

OHA desperately needs Trustees who will make the tough decision to focus on building towards a more permanent, long-term goal instead of taking the easy and popular path of short-sighted spending.

In this election year, OHA beneficiaries should look carefully at the candidates running for OHA Trustee and choose individuals who will take OHA in a more fiscally responsible direction.

What has been sorely lacking is for Trustees to prioritize our spending and focus on the things that our beneficiaries need and NOT use OHA’s “Strategic Plan,” which is at best a wish list of too many things and does not focus on the top priorities of our people.

NOT listing priorities leaves the door wide open for certain Trustees to continue to fund anything and everything while neglecting meaningful programs in healthcare and housing.

As long as trustees keep drawing money out of our corpus, or trust fund, we are taking money away from future generations of Hawaiians.  After all, what is a nation without assets?  Aloha Ke Akua.