Bj Sabate does not have fond memories of having to relocate his once-successful apparel business, ButiGroove, to make way for Honolulu’s future rail transit line.
“There were no programs. There was no help. There was one point of contact and that’s it,” Sabate recalled of the store’s 2013 move from the corner of Kona and Piikoi streets to a less visible space nearby. “You need to be out of here in two months. Good luck. We’ll give you thirty grand so you can move all of your shit. No transitional help, nothing.”
Faced with triple the rent and far less foot traffic, the ButiGroove store eventually shuttered, Sabate said. He’s been working to make up the business he lost ever since as vice president of his family’s Kalihi-based silk-screening business, Maui Bay Shirt Company.
Six years later, “we’re just trying to dig ourselves out of this,” Sabate said last week.
Sabate was one of more than 100 property owners, businesses and residents along the rail route forced to relocate. It’s difficult to verify just how well or how poorly the Honolulu Authority for Rapid Transportation handled it.
Ever since the local rail agency self-reported widespread problems with that program last year, it has denied requests to publicly provide the relocation case files, saying they’re protected as confidential under federal law.
But what’s clear from a jarring Federal Transit Administration report released this month is that nearly half of those displaced were “likely harmed” by HART and its real estate consultants’ mismanagement and faulty record-keeping. It flagged probable overpayments and underpayments, and the void of missing records leaves a mystery of whether all of those eligible received advisory services and were offered the proper benefits.
Now, an agency already besieged with the challenges of building rail faces another daunting task: Track down most of the 108 owners and tenants it has relocated for the project, revisit the steps that former staff and consultants took as best it can and make things right where necessary — all in less than a year.
“It’s going to be a lot of work,” said Dylan Jones, HART’s new director of transit property and acquisition.
The agency lacks staff with the needed expertise — part of what got it in trouble in the first place, according to the FTA report. It’s also finding it hard to recruit those coveted personnel from the mainland, Jones said.
Still, HART Executive Director Andrew Robbins said the agency is determined to resolve the relocation mess left by his predecessors. “We want to make good,” said Robbins, who came aboard in 2017. “This is the right thing to do.”
All of those overseeing the faulty rail relocations have since left, he said. As far as Robbins understands, those responsible were “a mix” of staff from HART and its real estate consultant at the time, Cypress, Calif.-based Paragon Partners.
HART now must have its plan to fix things ready by the end of this month, per the FTA’s instructions.
As it forges ahead, HART still hasn’t identified the employees and consultant staff directly responsible. Without the case files, it’s difficult to pinpoint who they are.
Paragon Partners had $6.3 million in contracts with HART going back to 2012, according to the agency’s online records. Paragon President and CEO Neilia LaValle did not respond to a request for comment this week.
Two longtime officials who oversaw HART’s real estate division when many of the relocations took place — former director of planning, permitting and right-of-way Elizabeth Scanlon and former deputy director for right-of-way Morris Atta — did not respond to requests for comment, either.
On his LinkedIn profile, Atta includes “oversee the relocation of displaced parties” among his duties during four and a half years at HART. He left the agency in 2017 and now serves as deputy director for the state Department of Agriculture.
Jesse Souki replaced Scanlon for about a year as right-of-way director, after much of the scrutinized relocation was done, and he left in November 2016.
Last year, after HART self-reported, Souki said that he didn’t see problems with Paragon’s relocation payments. He added, however, that one of the last things he did at HART was bring on Colliers and its subcontractor, W.D. Schock, to replace Paragon when they submitted a stronger bid.
On Tuesday, Souki added via text that “relocation was mostly Paragon when I was at HART.”
W.D. Schock first uncovered “irregularities” with rail’s relocation files in February 2017, according to the agency.
HART board members discussed the matter for the first time publicly earlier this month.
“It occurs to me that if there were overpayments, and if the files lack support to justify those overpayments, you know, I would imagine that’s something that the state investigators are looking at as part of their criminal investigation,” board Vice Chairman Terrence Lee said at the Oct. 3 meeting.
“Because, how come? Why are the files missing all that information?”
One of the three federal Grand Jury subpoenas that HART received in February specifically requested records for the “18 relocation files” that the agency first examined, including their title work, appraisals, offers to owners, and negotiation records.
The HART board has been briefed on the subpoenas several times behind closed doors.
Lee’s public comments acknowledged that state authorities are investigating Honolulu’s rail project alongside the feds. Asked about his comments after the meeting, Lee said that the state investigators are focusing on potential kickbacks and corruption.
Jones estimated that the total cost of the 100 relocations under scrutiny was approximately $14 million.
The agency hasn’t yet provided an estimate for how much its year-long redo of the relocation program will cost.
HART has already spent the past five months or so seeking to hire two qualified property relocation experts to help make things right in the year ahead. Jones and Robbins say it’s been tough landing good candidates willing to relocate to Hawaii.
“It’s been very difficult to attract somebody from the mainland, especially with the salaries that we’re able to offer through the city system,” Jones told the board this month. “It’s such a specialized area and there’s demand throughout the U.S. for experts of this type.”
The agency officials say they’ve relied entirely on W.D. Schock to handle relocations ever since the consultant discovered the irregularities. It’s completed eight relocations since then, HART reports. Another 25 are underway, and an unspecified amount are yet to come. Still, the FTA wants to see HART hire its own internal experts to oversee the work.
“We want to make sure that we’re not solely relying on our consultant,” Jones said.
A state audit earlier this year flagged HART’s heavy reliance on consultants as troubling, but the agency says it’s often forced to hire them due to the lack of local expertise.
Internally, HART has long struggled with turnover — and that’s been especially severe in the real estate division. Jones, for example, joined HART earlier this year, making him the fifth person to head property acquisition. Some property owners in the route’s path have complained that the revolving door of rail officials has made negotiations with the city difficult, to say the least.
Six years after ButiGroove and two other tenants were relocated, the building at 1246 Kona Street has been demolished and fenced off by the city.
Sabate, however, is bracing for another round of disruption from the project. Maui Bay’s building is on Kalani Street just off Nimitz Highway — where the rail line is slated to be built.
He said he hopes the city’s plans to keep construction from hurting the surrounding businesses, such as his family’s, will actually work. The long-anticipated heavy construction along Dillingham Boulevard, about a mile ewa of the building, is slated to ramp up next month — with utility relocations.
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