Tag: OHA Headquarters

Many positive things happening at OHA

`Ano`ai kakou…  As we start the New Year off, I feel it is important to highlight all of the positive things that have been happening at OHA.

A POSITIVE WORK ENVIRONMENT

OHA Chairman Robert Lindsey is working hard to make sure that everyone at OHA has a voice and that their concerns are heard.

Chair Lindsey has supported me every step of the way as I take over as the new Chairperson of the Asset & Resource Management (ARM) Committee.  It is refreshing to finally work with a Chair that doesn’t let his personal feelings get in the way of doing what is right for OHA and its beneficiaries.

GRANTS

In March, Trustees will review grant applications that will make $8.9 million in OHA grant funds available to community-based nonprofits that can help address key priorities for bettering the conditions of Native Hawaiians.  Trustees will need to approve between 30 and 35 grants for a two-year period between July 1, 2015 and June 30, 2017.

LEGISLATURE

OHA will request $7.4 million in state funds during the upcoming 2015 Hawai‘i legislative session.  If approved, the biggest impact will be felt in social services, where an estimated 7,250 Native Hawaiians are targeted to receive the support they need to help prevent debilitating debt, unemployment, and homelessness.

CHARTER SCHOOLS

In 2014, Trustees awarded 17 Hawaiian-focused charter schools a $1.5 million grant for the 2013-2014 school year.  The grant is helping Native Hawaiian charter schools keep pace with growing enrollment, which had increased to 4,224 from 4,033 the year before.

SCHOLARSHIPS

In 2014, Trustees approved a combined total of $870,000 in scholarship money to help Native Hawaiian students pay for college in a time of rising tuition costs.  The average awarded to 354 Native Hawaiian students last year was $2,458.  The total amount of college scholarships that OHA has given out over the past five years totals to about $3.5 million.

FACILITATING NATION BUILDING

Trustees are committed this year to facilitate the next steps in a process that empowers Native Hawaiians to participate in building a governing entity.  The effort has drawn broad-based support from Hawaiian leaders who are prepared to help shape the process and outcome, with OHA serving as a facilitator and supporter.

REVENUE FROM RENTALS

More than a year after the BOT approved the acquisition of OHA’s headquarters on Nimitz, the building has finally achieved a 90 percent occupancy rate.  By comparison, the occupancy rate was only 65 percent in November 2013 when we moved in.

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.

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.