Committee Reviews Audits & Affordable Housing Report — July 7, 2026
Committee Reviews Audits & Affordable Housing Report — July 7, 2026
The Communication Reports and Council Oversight Committee met on July 7, 2026, at 12:43 PM in Hilo to review several key items, including a county auditor's quality control system peer review, a quarterly affordable housing report, a follow-up audit of affordable housing credits, and a nonprofit grants compliance review. The committee closed all four files with unanimous votes.
Consent Calendar
- Communication 943: Review of the County Auditor's Quality Control System for July 1, 2022, through June 30, 2025, from County Auditor Claire McAdam, dated June 17, 2026. Closed unanimously.
- Communication 35.7: Quarterly Affordable Housing Report for January 1, 2026, to March 31, 2026, from Housing Administrator Kehauani M. Costa, dated May 29, 2026. Closed unanimously.
Public Comments & Testimony
- No public testimony was offered for any agenda items.
Discussion Items
- Auditor's Quality Control Peer Review: Two peer reviewers (Paul Guy from Wisconsin and Stan Sewell from Chattanooga, Tennessee) presented the results of the ALGA peer review for the period July 1, 2022, through June 30, 2025. They issued a pass opinion with no management letter comment, indicating the office adhered to government auditing standards at the highest level. Reviewers praised the office's leadership, team, and hospitality.
- Quarterly Affordable Housing Report: Housing Administrator Costa reported that construction continues on the next large multifamily affordable housing project (Kuakini Heights, 100 units in Kailua-Kona at 60% AMI). Dolphin Bay (18 units, purchased for about $2 million) is in active lease-up. In response to questions, Costa clarified that the first year often requires subsidizing operational costs, with the goal of achieving operational sustainability within five years. Council member expressed desire to see more workforce housing (60% AMI level) and requested a detailed financial projection for Dolphin Bay's five-year cost recoupment.
- Follow-up Audit of Affordable Housing Credits (Report #26-01): Auditor McAdam reported that six of seven recommendations have been completed, with one still in progress (revising Chapter 11 of the county's affordable housing policy). Significant progress was noted, including updated administrative rules, strengthened internal controls, and a new public dashboard. Council members commended the department's improvements, emphasizing transparency and reliability.
- Nonprofit Grants Compliance Review (FY 2024–2025): Auditor McAdam and lead analyst Jasmine Santos presented findings from a review of 49 organizations administering 58 programs with $2,027,500. Key findings: two organizations proposed using funds for off-island travel (not allowed under current rules); eight organizations reported compensation to board members (potentially violating Hawaii County Code); two organizations served as fiscal sponsors and charged a 10% administrative fee without clear authorization. Three programs (5% of the population) did not respond to information requests. The review identified ongoing challenges in documenting public purpose, tracking outcomes, and verifying program results. The new grant management system (soft-launched that day) is expected to improve standardization and real-time tracking. Finance Director Diana Kagawa confirmed the system is live but still being refined. Council members discussed the need for clearer guidance on board member compensation and legislative clarifications.
Key Outcomes
- All four communications (943, 35.7, 941, and 942) were closed unanimously with nine votes in favor.
- Council members requested detailed financial information on the Dolphin Bay project's operational costs (to be provided by OHCD).
- The first recommendation of the affordable housing credit audit (Chapter 11 revisions) remains in progress, with the ad hoc committees' work expected to be finalized soon.
- The new grant management system is operational but in soft launch; full implementation is anticipated to address many compliance issues.
- Council members expressed interest in legislative clarifications regarding board member compensation for nonprofits receiving county funds.
- The committee ended the meeting and will reconvene the following morning.
Meeting Transcript
Aloha, welcome to the 21st session of the communication reports and council oversight committee. It is July 7th in Hilo at the Hawaii County Building. It is 1243 PM. Present our council members Kagiwata, Hustis, Inaba, Coneli Kleinfelder Kempel, and myself the chair of the committee. Excuse our council members. Mr. R. City. Do we have any testimonies? I'm getting the signal, but I'm also getting the feedback. Testing, testing. Okay. Really, whatever you did, I think we're good. Thank you. Um there are no testifiers right now for your committee, madam chair. Thank you so much. Could we begin with communication 943? Last chance if anyone would like to testify in communication 943, please speak up now. Hearing and seeing non-communication 943 review of the county auditors quality control system for the period of July 1, 2022 through June 30, 2025 from County Auditor Claire McAdam, dated June 17, 2026. No, to close file on commission 943. Um County Auditor, take it away. Oh no, thank you for having me here. Um Chad Limba. Um I sorry. Yes. Well, I I wanted to uh present. We have uh two peer reviewers who have agreed to zoom in kindly and just talk a little bit about the peer review process that happened earlier this year in March. Um so I'd just like to hand it over to them to them to speak a couple of words about the process and what they did and and the findings. Oh, sorry, I'll just introduce them again. This Paul Guy, who's from um Wisconsin and Stan Sewell um from City Chattanooga in Tennessee. Good afternoon after. Oh, hear me over me, oh, yeah, you're echoing quite a bit. Uh let's see. Try again. How is that? There we go. Perfect. Good afternoon, question, question, question, question. Uh really unreal understanding. I apologize. Oh, is that on? Is that understanding? Oh well. The echo is very, very bad. Um, I think so. I think we need to have a recess. Yeah, we'll go into recess. If you don't mind speakers, I think it's Paul and Stan. If you might have a mic on while you're trying to listen to the meeting and talk at the same time, we might be getting a little bit of feedback from year in. Paul, if you could just I sent you a notice to unmute.
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