Report 26-11 Audit of the Statewide Office on Homelessness and Housing Solutions’ Administration of the Kauhale Initiative

Governor Josh Green launched the kauhale initiative in 2023 to rapidly expand deeply affordable housing for people experiencing, or at risk of, homelessness.  Through emergency proclamations, the Governor suspended procurement and other requirements that ordinarily govern State public works projects.  Those proclamations allowed the State to move faster, but they did not suspend accountability for public funds.

The Statewide Office on Homelessness and Housing Solutions (SOHHS), an office established to coordinate homelessness policy, became responsible for planning and administering the initiative’s public works projects.  Lacking the staff, expertise, procedures, and controls needed to perform that work, SOHHS relied extensively on HomeAid Hawaiʻi to help plan, price, and develop projects that HomeAid was later contracted to build.

Report No. 26-11, Audit of the Statewide Office on Homelessness and Housing Solutions’ Administration of the Kauhale Initiative, examines whether SOHHS properly planned, contracted for, and oversaw the development of kauhale and safeguarded the millions of dollars entrusted to it.

Learn how:

• SOHHS treated contracts, amendments, approvals, and payment records as after-the-fact paperwork rather than controls governing what work could be performed and what the State would pay.
• SOHHS used cost-reimbursement contracts that shifted significant financial risk from HomeAid to the State without documenting why the State, rather than the contractor, needed to bear that risk.
• SOHHS approved every HomeAid payment request we reviewed without adequately determining whether the claimed costs were authorized, supported, properly allocated, reasonable, or otherwise reimbursable.
• Our review identified more than $13.7 million in unauthorized, unsupported, or questionable payments – including a $2.5 million advance paid on one project.

Read the full report here:
https://files.hawaii.gov/auditor/Reports/2026/26-11.pdf

Report summary:
https://files.hawaii.gov/auditor/Overviews/2026/26-11AuditorSummary.pdf

Thanks for listening.  You can find this and other reports at: auditor.hawaii.gov

Transcript

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Host: 0:00

Welcome to the Audible Audit, an AI-generated podcast summarizing the Hawaii Office of the Auditor's Report number 26-11, Audit of the Statewide Office on Homelessness and Housing Solutions' Administration of the Kauhale Initiative. While AI may slightly mispronounce some words, the Office of The Auditor has reviewed the content for consistency with the report. This podcast is for informational and educational purposes. Please consult the full report for detailed and authoritative information. The Kauhale Initiative began with an urgent mission: Move quickly to provide deeply affordable housing for people experiencing or at risk of homelessness. But as the initiative grew, so did the State's role. It was no longer simply supporting community-led villages. It was planning projects, managing contracts, overseeing construction, and paying the bills. The goal was speed. Too often, the approach was, build first, document later. Joining me is an AI-generated guest familiar with the report.

Guest: 1:12

Thanks for having me. The central problem is straightforward. The Office on Homelessness and Housing Solutions, or SOHHS, was managing a major public works effort without the staff, expertise, procedures, or financial controls that work required.

Host: 1:28

But homelessness was an emergency. Didn't the Governor's emergency proclamations relax some requirements?

Guest: 1:35

They did. The proclamation suspended procurement and other requirements so projects could move faster. But they did not suspend accountability. SOHHS still needed to define the work, execute contracts, review costs, and protect public money. Instead, work frequently moved ahead first. Contracts and controls came later, if they came at all. Six of the nine HomeAid contracts we reviewed were signed after their stated effective dates. One was signed after its entire period of performance had already ended.

Host: 2:09

Give us an example.

Guest: 2:11

Cedar Church. The State placed 20 tiny homes on church property in Kalihi Valley without an agreement defining responsibilities, costs, ownership, or liability. A former coordinator described the approach plainly."Deliver the homes, move people in. and finish the contract later." Except "later" never came. There was no contract. In the end, the State spent about $716,000 on the project, then sold all 20 homes to the church in 2025 for $1. And today, the State doesn't consider Cedar Church to be part of the initiative.

Host: 2:48

So Cedar Church captures the problem. SOHHS acted first and treated the contract as paperwork to catch up later, after the project is finished and the State's money is gone.

Guest: 3:01

Exactly. The same pattern appeared in the State's agreements with HomeAid Hawaii, its principal planning and development contractor. SOHHS also awarded development contracts before receiving the planning information needed to define project scope, schedule, and cost. And when projects became smaller, it did not reduce the contract amounts.

Host: 3:23

Now let's get to the number that jumps off the page. $13.7 million. What does that represent?

Guest: 3:31

It represents costs that SOHHS paid without first adequately establishing that they were reimbursable based on the Auditor's review of a sample of HomeAid's payment requests. That does not mean every dollar was improper or must be repaid. Some costs may ultimately be supported by additional documentation. But that misses the point. The State should answer those questions before it pays, not afterward. More than $7.7 million was unauthorized under the contracts. Nearly $1 million involved HomeAid's personnel costs that were paid without information describing the work employees performed or the time they spent performing the work. and nearly $5 million involved costs that records did not adequately connect to the contracts charged. Examples ranged from rent for an ocean-view condo on Maui to alcohol and office supplies. SOHHS made an unauthorized $2.5 million advance after the contract was signed. It also reimbursed more than $2.5 million in costs above approved budget limits without documented revisions. Other charges included nearly $1 million for HomeAid's general operating expenses, including cyber insurance, office rent, a staff retreat, computers, monitors, docking stations, business cards, and envelopes. Smaller charges included alcohol, a $1,300 upgrade to first class, $1,878.10 in questionable rideshare charges, an$890 truck bed cover, and nearly $5,800 to film and edit videos of a HomeAid corporate retreat, even though the agreement provided no funding for those types of expenses. SOHHS paid the bills. It just could not always show that the bills were the State's responsibility to pay.

Host: 5:26

SOHHS was supposed to oversee HomeAid, yet it was so dependent on its contractor?

Guest: 5:33

SOHHS lacked the development and construction expertise needed internally to monitor and assess HomeAid's activities. But State records also did not show that officials adequately evaluated HomeAid's capacity for its rapidly expanding role. Nor did the records clearly establish who selected HomeAid as the State's principal planner and developer, or why. In effect, SOHHS depended on HomeAid not only to perform the work, but also to help define the projects, costs, and expectations that SOHHS was supposed to independently evaluate.

Host: 6:10

So what needs to change?

Guest: 6:13

SOHHS must either develop the expertise required to manage public works projects or obtain it independently. It also must complete planning before awarding contracts, execute contracts before work begins, document major decisions, and verify costs before paying them. For every charge, the State should be able to answer four basic questions. Was it authorized? Is it supported? Does it belong to this contract? And is the amount reasonable? If SOHHS cannot answer those questions, it should not pay the bill.

Host: 6:49

Homelessness demands urgency, but urgency does not create expertise or excuse the lack of it. When government takes on work, it is not equipped to perform, it must obtain qualified, independent oversight before committing public money. Not after questions arise. Contracts, budgets, approvals and payment reviews are not paperwork for later. They are how the State holds contractors accountable, prevents waste and knows what taxpayers are paying for. Without those controls, the State is not managing risk. It is accepting it. Thank you for listening. Read Report Number 26-11 and other reports from the State of Hawai'i Office of the Auditor at auditor.hawaii.gov.