Hawaiʻi audit questions review of more than $13.7M in payments

Hawaiʻi’s auditor found that the state office overseeing the Kauhale Initiative did not adequately determine whether more than $13.7 million in sampled payments were allowable under state contracts. The finding concerns oversight of public spending, not a determination that the full amount was lost or must be repaid.

The Office of the Auditor issued performance audit Report 26-11 on Oct. 7, 2026. It examined the Statewide Office on Homelessness and Housing Solutions’ administration of the statewide housing initiative. The auditor found that the office was not prepared to administer the program as a statewide public-works effort and did not provide oversight needed to protect public funds. The sampled payments to HomeAid Hawaiʻi were categorized as unauthorized, unsupported or questionable.

Audit identifies gaps in contracts and project oversight

The audit focused on development and construction contracts. It reviewed nine HomeAid agreements and excluded a separate $3 million agreement with the aio Foundation. The auditor did not audit service-provider contracts or their associated payment requests.

Across the initiative, the audit lists $42,803,530 in development-related contracts and $37,186,943 in service-provider contracts, for a combined listed total of $79,990,473. The auditor said the total may be higher because some contract amounts were unavailable.

At Alana Ola Pono, the contract called for 75 homes, but the audit reported that 45 were built. The contract’s not-to-exceed amount was $5,245,116. The auditor said the state did not revise the project scope or lower that amount after the unit count fell.

The audit also found a gap between planned and built units at Kīpūola: the contract called for 128, and 64 were built. The contract amount was $7,942,912. A separate HomeAid contract covered 273 tiny homes for $5,860,082; the auditor reported that some units were still in South Korea as of October 2025.

More broadly, the auditor described work proceeding before signed agreements, incomplete records, and inconsistent enforcement of requirements for project changes, subcontractor approval and contractor licensing. The findings put the state’s contract controls and verification of contractor costs and deliveries at issue. The audit did not determine that questioned payments caused a reduction in housing services or assess the initiative’s overall effectiveness in providing housing.

Administration disputes parts of findings

Gov. Josh Green’s office disputes parts of the audit’s payment characterization, including payments associated with Alana Ola Pono and a predevelopment agreement. It said the Statewide Office on Homelessness and Housing Solutions accepted all 11 recommendations.

The auditor recommended stronger oversight, qualified personnel or independent assistance with public-works contract administration, and review of costs that may be recoverable. The report cautioned that new procedures and additional reviews alone would not provide reasonable assurance that deficiencies are corrected without qualified expertise.

Green’s office also reported recovery efforts involving more than $16,000 in travel expenses, $300,000 in office and administrative expenses, and about $170,000 for subcontractor or consultant work it said was unrelated to the initiative. Those reported efforts concern separate categories from the audit’s sampled-payment total. The office has not specified an implementation timetable for the accepted recommendations.

HomeAid Hawaiʻi said the audit gave an incomplete picture, citing philanthropic and industry contributions, avoided costs and amounts it said were reconciled through contractual safeguards. Those are the organization’s responses to the audit’s findings.