A recent lawsuit filed by several rental housing companies accuses a local property management company of accepting money in exchange for quicker placement and other mismanagement at taxpayer-subsidized low-income housing projects.

Management Specialists Co. — also known as Century 21 Realty Specialists or Realty Specialists Corp. — oversaw nine rental housing complexes on Oahu and Lanai with more than 550 units.

The allegations include company employees giving preference to their friends and family; accepting money to allow applicants to jump the wait list; encouraging people to lie on their applications; allowing people who don’t meet the income requirements to live in the units; and destroying records.

At a senior housing complex in Iwilei, one property manager allegedly accepted $2,000 to bump an applicant to the top of the list, according to the complaint filed last month in state court.

Clarification: While the complaint refers to “cash payments” it references only the Iwilei incident and company executives said Wednesday that was an isolated incident.

The lawsuit comes as Hawaii is struggling with an affordable housing crisis. Government-subsidized rental housing complexes are a refuge for working-class and retired people who are struggling to afford high rents on low salaries.

The Courtyards at Mililani Mauka.

The Courtyards at Mililani Mauka is one of several properties where Management Specialists used to be the property manager.

Cory Lum/Civil Beat

Executives at Management Specialists dispute all the allegations.

“These are allegations that are completely unfounded,” Scott Chai, vice president at Management Specialists, said in an interview at the company’s office on South Beretania Street. “It just upsets me.”

The lawsuit says when a new property management firm recently took over management of the Courtyards at Mililani Mauka it discovered two separate wait lists — one for “family and friends” and another for “non-family and friends.”

Chai calls that claim “far-fetched.”

“We know there’s only one wait list,” Chai said. “We know that everyone should have an equal opportunity for a unit.”

But resident Kaleolani Parker says he’s seen otherwise. He lives in a one-bedroom unit at the Courtyards at Mililani Mauka with his girlfriend and two children and says he’s been waiting for a larger unit for years. He said he noticed a unit going to the sister of the former property manager.

Angela Akiona of Management Specialists said the sister of a former property manager does live at the Courtyards at Mililani Mauka but that’s because she is in a relationship with an existing tenant and was added to the lease.

Parker takes his situation in stride though. He said he lived in the Institute for Human Services homeless shelter as a sixth-grader and even did a stint “in Halawa when my mom and dad were fighting.”

He’s not about to complain about living in a one-bedroom unit with reduced rent, even if he’s one of four. The low rent — less than $900 per month — is nearly half of the fair market rent of $1,750 in Mililani for a one-bedroom.

“I’m just grateful to even have a house,” Parker said.

‘Questionable Activities’

Akiona said there are a lot of reasons why a tenant may not be able to move up on the wait list — they might be behind on their rent, violated too many rules or have caused damage to an existing apartment.

She also said that the appearance of family and friends getting units may occur because word-of-mouth is how people know to apply and the company gets to know people intimately through the application process.

Bad record-keeping was another major problem at Management Specialists, the lawsuit says. The company allegedly kept boxes of confidential documents in an open carport where anyone on the street could walk up, rifle through them or take them.

A computer at the Senior Residences in Kaneohe was “wiped clean of all project-related information and files,” the lawsuit says.

Financial statements from the first half of 2017 are missing for Villas at Malu’ohai, Kaneohe Elderly Housing Project and Senior Residence at Iwilei, the complaint says.

Akiona said the company has been cooperating with the transition of property management and the allegations lack context. For example, she said the open carport was a temporary holding place for records that couldn’t fit in the South Beretania office and a staff member was always present to ensure the documents were safe.

The Courtyards at Mililani Mauka with right, Management Specialists Company mailbox outside managers office.

The office at the Courtyards at Mililani Mauka still has Management Specialists’ name on the mailbox even though the new property manager is Locations.

Cory Lum/Civil Beat

Management Specialists was required to maintain records as part of its property management contracts with Pacific Housing Assistance Corp. for nine developments: Senior Residence at Kaneohe A; Senior Residence at Kaneohe B; The Courts; The Courtyards at Mililani; The Villas at Aeloa; The Villas at Malu’ohai; Senior Residence at Kapolei; Senior Residence at Kapolei 2; and Senior Residence at Iwilei.

All are government-regulated and are supposed to provide housing to income-qualified residents at reduced rates.

Pacific Housing Assistance Corp., a nonprofit that executed the contracts on behalf of property owners, terminated agreements with Management Specialists at Senior Residence at Kapolei and Senior Residence at Kapolei 2 in 2015, citing poor management.

Two years later, the PHAC ended the rest of the contracts and has since discovered “copious amounts of questionable activities,” the lawsuit says.

Bert Kobayashi, the attorney for the plaintiffs, declined to comment for this story.

Chai says that the case is heading to mediation. But both he and Akiona say damage has been done.

“We go to training every year,” Akiona said. “We know what we’re doing. We know what we’re not supposed to be doing.”

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