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FOHB Requests That Mayor Caldwell Immediately Audit The Hanauma Bay Fund From 2004 – Present

Aloha Friends of Hanauma Bay,

Since the opening of the $13 million dollar Hanauma Bay Nature Preserve Visitor Center in 2002 which many of you were instrumental in facilitating, the Friends of Hanauma Bay (FOHB) have observed and documented the deterioration of the facility. Repeated requests to the City by FOHB to make repairs were ignored despite the existence of the Hanauma Bay Fund, a special fund established by City Ordinance 96-19 to be used specifically as follows:

First, for the operations, maintenance and improvement of the Hanauma Bay Nature Preserve;
Second, for educational and orientation programs for visitors to the preserve;
Third, for carrying capacity study and for other studies relating to the environmental condition of the preserve;
Fourth, if funds are available, for the operation, maintenance and improvement of the following park facilities: Koko Head District Park, Maunalua Bay Beach Park, Koko Head Rifle Range, and the Koko Crater Botanical Garden.

While investigating the City’s use of the Hanauma Bay Fund, FOHB discovered that in November 2002, the United States District Court for the District of Hawaii determined that Clause 4 should be stricken from Ordinance 96-19, any surplus funds for a particular year should remain in the Hanauma Bay Fund to offset deficits in future years, and that the appropriate remedy for the City’s past misuse of the Hanauma Bay Fund would be to refund $3,166,588.04 to the Hanauma Bay Fund for the future operation, maintenance, and preservation of Hanauma Bay.

Further, the United States Court of Appeals for the Ninth Circuit affirmed the 2002 District Court decision in October 2004.

Despite these two Federal Court rulings, and using the City’s own financial records, FOHB has found that the City has continued to misuse the Hanauma Bay Fund. For example, the City still compensates employees who work full-time at adjacent parks out of the Hanauma Bay Fund; it still pays for the upkeep, maintenance and supplies for comfort stations at adjacent parks out of the Hanauma Bay Fund; and it has purchased vehicles for full-time use at adjacent parks out of the Hanauma Bay Fund.

FOHB has also found that the City has overcharged principal and interest on General Obligation Bonds apportioned to the Hanauma Bay Fund by $1,087,000; the City has diverted interest accrued by the Hanauma Bay Fund into the City’s General Fund since 1996; and the City’s financial records show further irregularities in FICA, Central Administrative Services Expenses (CASE), and other expenditures for many years.

FOHB estimates that over the years, the City has mismanaged the Hanauma Bay Fund by several million dollars.

Yet the City refuses to audit the Fund for compliance with the two Federal Court Orders, repay the Fund with interest for all illegal expenditures, or to stop the illegal use of the fund.

Meanwhile, during these same years of fiscal mismanagement of the Hanauma Bay Fund, you all know that the City has chronically underfunded and delayed critical infrastructure repair and maintenance at Hanauma Bay. Additionally, the City has ignored a 2001 Department of Land and Natural Resources (DLNR) Conservation District Use Permit (CDUP) requirement to continue annual updates of the baseline Carrying Capacity Study of Hanauma Bay to determine the impact almost a million visitors a year have on the Nature Preserve.

Through diligent outreach to City and elected officials over the last few years, FOHB has met with some success in convincing the City to stop some of its mismanagement of the Hanauma Bay Fund and to make much needed repairs to the facilities. However, the numerous examples of the misuse of the Hanauma Bay Fund for 12 years in violation of two Federal Court Orders; the chronic underfunding and delay of critical infrastructure repair and maintenance of the facilities for most of that same time despite the existence of a Fund earmarked to operate, maintain and improve the Nature Preserve; and the City’s long-term non-compliance with a State CDUP requirement indicate the existence of an underlying culture of fiscal mismanagement and neglect of the Hanauma Bay.

Therefore, the Board of FOHB has determined that the only way to start resolving all of the financial irregularities in the City’s use of the Hanauma Bay Fund is to request Mayor Caldwell to immediately audit the Fund from 2004 – present, to include compliance with the uses proscribed by the two Federal Court Orders; repay any and all misused funds to the Hanauma Bay Fund with interest; and agree to an independent audit of the Hanauma Bay Fund for the next 10 years to ensure compliance with the Courts’ Orders.

We also want the City to comply with DLNR’s 2001 requirement for annual updates to the 2000 baseline carrying capacity study that will inform conservation and preservation protocols at Hanauma Bay.

Most of you have advocated long and hard for almost twenty years to get the City to maintain and repair Hanauma Bay. The fact FOHB have also had to struggle over the last four years to convince the City to obey the law in its management of the Hanauma Bay Fund has been an additional frustration.

Enough is enough.

If the City will not comply with these demands, FOHB will take the issue back to the Federal District Court and ask for an enforcement of the 2002 Order.

We have had excellent support from local media in coverage of our concerns over the last almost twenty years, and that support continues today.

I greatly appreciate all of your support in this endeavor.

Following is the letter our attorneys have sent to the City outlining our complaints. I will keep you informed of our progress.

Mahalo for your many years of commitment to Hanauma Bay!

Lisa Bishop
Friends of Hanauma Bay