A long-awaited independent audit examining the city’s use of revenues from the Hanauma Bay Nature Preserve found a $2 million discrepancy, according to a nonprofit group that advocates for the premiere snorkeling site. 

The discrepancy includes the alleged misuse of the funds by diverting them to help other parks, including paying for employee salaries and two lifeguard trucks that were mostly used elsewhere, according to Friends of Hanauma Bay President Lisa Bishop. 

The findings are preliminary, the group said, adding that more details will be released after the city provides a response to the auditor. The audit was conducted by local accounting firm N&K CPAs Inc., which was tasked with examining Hanauma Bay’s finances from 2010 to 2019.

Hanauma Bay State Park visitors stand in line to pay their admission fees.
Nonresidents pay an admission fee of $25 to enter the premiere snorkeling site, plus $3 parking. Cory Lum/Civil Beat/2021

The Hanauma Bay Nature Preserve Fund is composed of admission fees paid by nonresident visitors — currently $25 per person — as well as proceeds from parking and snorkeling equipment rentals. Residents get in for free.

The fund was created by a 1996 city ordinance and is governed by a 2002 federal court order, which allows the funds to be spent on the bay’s operation and maintenance, an education program and scientific studies. Leftover funds may go toward two parks, Koko Head Botanical Garden and Koko Head Rifle Range. 

The nonprofit group says the audit found that some of the funds went to other nearby parks, such as Sandy Beach Park and Maunalua Bay Beach Park.

The city’s 2022 operating budget of the bay for the fiscal year that started on July 1 showed that Hanauma Bay has more than $8.6 million, minus an interfund transfer of $1.5 million.

There have been concerns over the use of the money for years. Honolulu’s administration under former Mayor Kirk Caldwell agreed to have an independent audit done at the request of Friends of Hanauma Bay in 2016, but it took about two years to launch the probe.

“After almost eight years of engagement with two city administrations on this important issue of public trust, we are simply looking for a final resolution of the audit, repayment to the Hanauma Bay special fund, and adoption of a process that will ensure that expenditures from the fund will comply with the federal court order from now on,” Bishop said in a letter to Honolulu Mayor Rick Blangiardi.

The audit was submitted to Blangiardi’s office in June and he responded about five months later. The mayor said the Department of Budget and Fiscal Services has almost completed its review. The deadline to respond is near the end of the year, or 30 days after the group submitted its letter to the mayor on Nov. 21.

“BFS has identified certain discrepancies in the figures reported and also has a number of questions regarding the presumptions and resulting methodology utilized by N&K CPAs, Inc.,” Blangiardi said in a November letter acknowledging receipt of the audit. “The city also needs to confirm when the operations in question were addressed and how this impacts the special audit.”

“Our next steps will be to work with N&K to resolve our issues for the purpose of finalizing the Special Audit. This process will include determining the finality of the $2 million discrepancy,” he continued. “We hope to have a completed report within the requested deadline, but ask for your continued patience as we work to resolve an inherited problem we are committed to resolve.”

Hanauma Bay, which was formed within a volcanic cone, was declared a protected marine life conservation area in 1967. Before the Covid-19 pandemic, the site attracted about 3,000 visitors a day to explore its unique marine ecosystem.

Due to the pandemic, Hanauma Bay has implemented an online reservation system requiring visitors to book two days in advance in order to limit the number of daily visitors.

Hanauma Bay Park visitors swim and enjoy the water.
Hanauma Bay Park visitors swim and enjoy the marine life. Cory Lum/Civil Beat/2021

In 2002, a judge found that money from the Hanauma Bay fund had been misused and ordered the city to reimburse $3.2 million of inappropriate expenditures.

In 2004, the Friends of Hanauma Bay noticed a delay in maintenance of the bay and advocated for repairs. Vice President Sid McWhirter said there was a long list of issues at that time, including air conditioning problems, leaky roofs on the restrooms, broken water faucets and more.

The roofs didn’t get fixed until 2015, while the remaining maintenance issues lingered into 2017, according to the Friends of Hanauma Bay.

The group didn’t start tracking the funds until 2013, when it began looking at the city’s budget documents. 

The group says its ultimate goal is for the city to provide financial transparency for the public. The group says it’s optimistic that Blangiardi’s administration will do so.

“They’ll walk away as heroes,” Bishop said. “They weren’t responsible for the last 14 years.”

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