How Honolulu Will Spend $487 Million In Federal Funds
With nearly half a billion dollars in federal aid, Honolulu plans to spend much of it assisting individuals and businesses, supporting first responders and working to prevent and reduce homelessness, city officials told council members on Wednesday.
“Looking at the most vulnerable populations is top of mind for us,” said Gary Kurokawa, Mayor Kirk Caldwell’s chief of staff.
Honolulu will benefit from several pots of money. It has $387 million from the federal CARES Act. The largest chunk of that, $166 million, will be spent on grants for households, small businesses and child care.
Mayor Kirk Caldwell has already announced two $25 million programs, one for individuals and one for small businesses. The funding for each could be doubled for a total of $100 million if necessary, he said.
The next biggest allotment, $126 million, will go toward public safety including recruitment, personal protective gear, equipment, sanitation supplies and rapid response vehicles.
Ten percent of the CARES funds – or $38 million – is earmarked for homeless shelter overflow and quarantine. Homeless shelters on the island have been forced to reduce their capacities to allow for more social distancing. The Institute for Human Services alone reduced its occupancy limit by 20% to 25%, according to Executive Director Connie Mitchell.
Honolulu Housing Director Marc Alexander said the shelters have been successful in moving people more quickly into transitional and permanent housing. The city also offers quarantine locations for homeless people with symptoms at its Kaaahi Street facility and without symptoms in the POST program, a tent village managed by the police department.
Three allotments of $19 million will go toward recovery planning and processing, administrative costs and equipment and construction.
Separately, Honolulu has several grants from which it can disperse funds for specialized purposes. It has over $90 million for transportation, much of which will be spent to offset $72 million in budget cuts to TheBus and HandiVan. None will be used for rail.
The city has already spent about $10 million on personal protective equipment for employees and transportation sanitization, which federal dollars should reimburse, Kurokawa said.
No Council Approval Needed
Unlike in the regular city budget process, council members have no power to reject the city’s federal spending plan, according to Budget and Fiscal Services Director Nelson Koyanagi.
Kurokawa said city officials have already allocated – but not spent – all the money, although he said the decisions aren’t set in stone.
Koyanagi said at the April 15 council meeting that Gov. David Ige’s emergency proclamations waive the legal provision that requires the council’s OK. He said he issued a memo to the mayor to that effect.
Civil Beat has repeatedly requested a copy of that memo, but the mayor’s office has not provided it.
The mayor’s office has also rejected multiple requests to interview Kurokawa or Managing Director Roy Amemiya about the process by which the funds will be allocated and who is involved in the decision making.
During this emergency, the city may enter into no-bid contracts, according to mayoral spokesman Alexander Zannes.
Gov. David Ige’s emergency proclamation on March 4 suspended the formal bidding process “in order to react to COVID-19 as expeditiously as possible,” Zannes said.
“The City seeks quotes (competition) for the lowest price wherever practicable but because this is an emergency situation, we may rely instead on a best value determination based on a fair and reasonable pricing analysis, expeditious delivery, and whether the contractor is best qualified to perform the services, which are concepts also included in the Procurement Code,” he said by email.
“Council approval is not required because the Executive Branch has its own Chief Procurement Officer who has the authority under the Procurement Code to procure contracts.”
In other places, fast-moving procurement decisions have raised eyebrows. In California, officials spent over $3.7 billion on no-bid contracts, many with entities that had no track record with the state, the Los Angeles Times reported. That included a $139 million contract for ventilators to a medical supply company once raided by the FBI, according to the Sacramento Bee. Utah’s governor backed away from no-bid contracts after questionable agreements were made under what he called “the fog of war.”
To oversee the spending, Honolulu City Council members formed the Economic Assistance and Revitalization Committee which had its first meeting on Wednesday.
“We just wanted to be able to have some say in that,” said Councilwoman Ann Kobayashi.
Members were largely complimentary of city officials’ spending plans, although there were a few concerns.
Councilman Tommy Waters, the committee chair, said he was worried about the city’s new individual hardship program which will offer up to $1,000 per month to individuals for up to six months. It can cover costs like housing, utilities and child care.
“I think you can get a studio apartment for a month, but rents are upwards of $3,000 for a three-bedroom apartment,” Waters said. “People are hungry. They need help with their bills.”
Councilman Ron Menor also wondered if the city should be offering loans instead of grants so that the city could eventually recoup some funds when people get back on their feet. Community Services Director Pam Witty-Oakland said the city considered loans but decided against it because the logistics could’ve caused payment delays.
The CARES Act funds can only be used to cover necessary expenditures related to the health emergency that were incurred between March 1 and Dec. 30, and were not accounted for in the city’s budget as of March 27.
CARES ACT money must be spent by Dec. 30 or be returned to the U.S. Treasury. The other specialized funds, such as the emergency services grant, have later spending deadlines. The money cannot replace lost revenues, such as Honolulu’s transient accommodations tax money that usually totals about $45 million.
Honolulu will hire a third-party auditor to review the spending, Kurokawa said.
Businesses Asking For Help
In written testimony, organizations and members of the public pleaded for more assistance.
Jennifer Len, furloughed from Encore Saloon in Chinatown, wrote that the restaurant industry was among the first business types to be shut down and has been devastated – the businesses themselves and the individuals who work there.
A recent poll found that nearly a third of Hawaii businesses report their revenue has fallen to about zero, Hawaii News Now reported. And people have struggled to get the assistance they’re entitled to. As of Monday, only three members of Encore’s staff have received unemployment benefits.
“Whoever is responsible for this should be ashamed,” she said. “You have one job. Take care of the people who are experiencing a terrible, stressful, and even humiliating situation. You have utterly failed.”
Before Caldwell announced his small business assistance program, several council members were advocating for a $100 million Occupancy Relief Program championed by Ryan Tanaka, co-owner of the sports bar and pizzeria Giovanni Pastrami.
Now that Caldwell has unveiled his plan, Kobayashi says advocates are taking a wait and see approach. But the concept got the backing of groups like the Commercial Real Estate Development Association, the Hawaii Restaurant Association and Hawaii Lodging & Tourism Association.
Troy Terorotua, who owns BREW’d craft pub on Waialae Avenue and REAL gastropub/Bent Tail Brewing Co. on Keawe Street, also supported the idea.
“One of our landlords is not providing rent abatement and instead sent an invoice for rent,” he wrote. “The other landlord is also expecting back rent even if we have not been opened.”