Honolulu City Councilman Joey Manahan wants to bring a little clarity to who’s in charge of TheBus, and has introduced legislation to shine a brighter light on those who oversee its operations.
Oahu Transit Services is a private nonprofit organization that gets paid more than $220 million to provide more than 75 million bus rides a year, about 1 million of those to people with disabilities.
The agency has a seven-member board of directors and an executive staff that makes sure buses and Handi-Van shuttles show up on time and in good enough condition to get people where they’re going.
OTS has more than 1,800 employees, most of them drivers and members of the Teamsters union.
But unlike other entities that oversee city services — such as the City Council, Board of Water Supply and Honolulu Authority for Rapid Transportation — OTS officials don’t have to follow municipal ethics laws.
They’re not required to file financial disclosure statements with the Honolulu Ethics Commission or receive mandatory training that, among other things, teaches them how to avoid conflicts of interest and to not use public resources for personal gain.
Manahan introduced Bill 32 last week to bring OTS under the purview of the Ethics Commission, which is required of other city agencies. The purpose, he said, is to make OTS’s operations more transparent.
“I think this is a unique board,” Manahan said of the OTS Board of Directors. “It’s the only board in the City and County of Honolulu that doesn’t have to conform with our ethics or sunshine laws.”
OTS has been in the spotlight lately. In March, the Honolulu City Council questioned why the bus service contract doesn’t go out to bid, and even discussed a change in the law that would force competition.
The following month OTS held a joint meeting with HART to announce intentions to develop a transit plan that integrates the city’s $5.26 billion rail project with the bus system. This would include looking at consistent fare structures and other operational efficiencies.
Considering the potential impacts of these decisions and other policy-making implications, Manahan said he believes OTS and its employees now warrants more scrutiny. He also thinks the public should have a better idea of who runs OTS and whether they have any financial interests in its operations.
“We give them a ton of money, public money,” Manahan said. “We just need to figure out their role, and certainly their responsibility.”
OTS operates in the gray area between that of a traditional public entity and a private business. The company is a nonprofit agency that essentially operates as an independent contractor to run the city’s bus service.
But this doesn’t mean OTS can change the bus schedule or manipulate the routes. That responsibility ultimately belongs to Mayor Kirk Caldwell, the Department of Transportation Services and the Honolulu City Council.
OTS CEO Roger Morton admits there’s a lot of confusion over his agency, and even calls it a “hybrid company” that has “unusual features,” such as a board of directors to oversee the business.
“Our board of directors does not make any policy decisions on transit,” Morton said. “I think the most important decision the board makes is who is the CEO and who is the management team.”
The board also makes sure the taxpayer and bus fare dollars that are spent to operate TheBus and Handi-Van are used wisely.
“Their job is partially to make sure the finances are correct and there’s no hanky panky going on in the company,” Morton said. “This is a $225 million business. It’s public money and it’s important to have controls that people feel comfortable with.”
OTS doesn’t have a problem with considering being brought under the Honolulu Ethics Commission umbrella, he said. OTS already follows many of the same guidelines that city officials do, although there would likely be some new wrinkles like the mandatory ethics training.
“It would be a big difference,” he said, “but, frankly, I don’t think anyone has any real big issues with it.”
The OTS board of directors is largely made up of volunteers from the business community. They get paid $50 per meeting. There are four to five meetings per year.
Members include Morton, former vice chairman of First Hawaiian Bank, Anthony Guerrero, former head of the state Department of Transportation, Edward Hirata, and Alana Kobayashi Pakkala, who is a part owner of the large real estate development and investment firm Kobayashi Group.
Also on the board are Adam Wong, a partner at ACW Ventures, Earle Alexander III, a retired partner with the auditing firm KPMG, LLP, and Bennette Misalucha, CEO of Monarch Communications, LLC, which came under scrutiny last year over a public relations contract it had on the rail project. Misalucha was also a registered lobbyist for the Hawaii Carpenters Union group, the Pacific Resource Partnership, that was a major player in November 2012 mayoral race that centered on rail.
Like Morton, Misalucha said she welcomes the intent of Manahan’s bill to bring OTS under the city’s ethics rules.
“As you know there is a move to align the operations of OTS and HART for greater efficiency,” Misalucha said in an email. “(And) since the HART board falls under the city’s ethics guidelines, I think it stands to reason that the OTS board should be governed by the same rules. I have no problem with that.”
Honolulu Ethics Commission Executive Director Chuck Totto said there’s a lot to consider before the city can enforce its rules on OTS, particularly as it relates to reconciling whether the company is an independent contractor or a public agency. There can be a lot of “twists and turns” in making that determination, he said.
But, in general, Totto said he supports Manahan’s bill in that it aims to bring more oversight to an agency that gets a lot of public money.
In fact, he said the Ethics Commission gets an occasional complaint about OTS, but is unable to do anything more than forward it on to that agency or the Honolulu Department of Transportation Services.
“It’s not like OTS is immune from ethics issues, things come up,” Totto said. “Just like any other agency, we have to be careful about cronyism or lack of accountability or misuse of positions, and that holds true for OTS too.
“I think anybody that makes any important fiscal and policy decisions for the city that their members have responsibility under the ethics law.”
Here are the OTS board of directors and executive staff members along with brief biographies: