WAILUKU - County officials say they are unable to account for how a longtime grant recipient is spending hundreds of thousands of taxpayer dollars.
County Planning Director Will Spence said reports filed by Wailuku Main Street Association give only a vague description of the group's activities - such as listing board meetings as performance benchmarks, and providing a count of current projects without saying what the projects actually are. But Spence said repeated requests for more details have been refused.
"Right now I cannot tell you where the money has been spent," he said.
Wailuku Main Street received a $243,000 grant from the Planning Department this year.
The nonprofit applied for an 11 percent increase next year, Spence noted, in spite of the fact that its most recent tax return shows that it holds more than $354,000 in unspent revenue from prior grants.
Former members of Wailuku Main Street's board of directors say they also have no idea where the money is going.
Sam Clark and Bryan Sarasin, who previously served as the chairman and vice chairman of the board, respectively, said that Executive Director Jocelyn Perreira restricted their access to information about the organization's operations and finances, telling them it was "confidential."
"The board cannot account for county monies," Sarasin wrote in a letter to Mayor Alan Arakawa before he resigned. "We do not know where the funds are being spent or what 'projects' are currently being worked on. Almost no information is provided to the board."
He said the board was "dysfunctional" and unable to control either Perreira or the organization.
In response to a complaint by Sarasin, Deputy Attorney General Hugh Jones wrote to Perreira and the board in January asking for an explanation of why the information had been withheld, and saying the right of a board member to inspect corporation records was "absolute."
At least five board members have resigned in the past several months.
But Tom Cannon, the current chairman of Wailuku Main Street's board, denied all allegations against Perreira and the organization.
He said Clark and Sarasin were retaliating against Wailuku Main Street after a failed attempt to "take over the organization for their own purposes."
He said board members were provided with information and records, and he cited a response to Jones by Board Member Madelyn D'Enbeau, which stated that Sarasin "was not denied access but was encouraged to follow proper procedure, which he declined to do."
Cannon said Sarasin stepped down in the face of a resolution calling for his removal, and that some others who resigned recently "were influenced by Clark's web of deceit and were unwittingly caught up in the coup or had obvious conflicts of interest."
Cannon also said the county's claims that Wailuku Main Street had not provided adequate reporting was "totally false."
"The quarterly grant report has extensive data including benchmark progress in a narrative with an attached financial report that notes to the penny where the funding has been spent," he said.
He said the organization had received independent audits for the past 25 years, with a "clean track record."
Cannon also noted that the county had accepted Wailuku Main Street's quarterly reports as-is for years.
"It appears the (Planning) Department is trying to change the rules midstream to enable some hidden agenda," he said.
In response to multiple requests for comment, Perreira referred questions to Cannon.
The county's grant to Wailuku Main Street is meant to cover "program development and planning assistance" for small towns including Wailuku, Paia and Makawao, as well as "community business assistance and recruitment" programs.
Spence, who took over as planning director a year ago under the Arakawa administration, said he was willing to honor the terms of the previous grant agreement but thought that the contract issued under his authority needed greater scrutiny.
Arakawa and members of the Maui County Council also gave him specific instructions to ensure that county funds given to the organization were being accounted for, Spence added.
Once he reviewed the grant file, "the questions presented themselves," Spence said.
For example, a recent quarterly report cited 16 "design and project reviews" in Makawao as an accomplishment. But Spence said the Planning Department could not find records showing that many projects in the town.
Spence said he asked Wailuku Main Street to provide a brief description of each project but was told the information was "confidential."
"They won't tell me what they're doing," he said. "I can't say if it's benefited my office or the county or the taxpayers."
The report stated that the organization had expended exactly 25 percent of its budget in the first quarter, "to the penny," Spence added. And while expenditures are listed for contracts and consultants, Wailuku Main Street has refused to identify its consultants or specify what the expenses were for, or to provide invoices, receipts or supporting documentation.
"The quarterly report basically doesn't say anything," Spence said. "There's a lack of information, considering public funds are being used."
In a Jan. 24 letter, Spence warned Perreira that the county would not release more funds until the information was provided.
But Cannon maintained that Wailuku Main Street had fulfilled its reporting requirements and said Spence's requests for additional information were unreasonable.
The report being presented by the organization follows a format that has been accepted by the county for years, he noted.
"Now we see attempts were being made by the department to require substantial additional work and information well beyond the usual grant requirements, especially information related to nongrant confidential consultations, personal resource names and fiscal transactions not related to grant funds," he said.
In a Jan. 30 response to Spence, Cannon wrote that there was "no good or valid reason" to withhold grant money due Wailuku Main Street.
"Just as you and your staff are remunerated for the work you do (without micro-managed public scrutiny), our organization and its staff deserve no less," he said.
As chairman last year, Clark said he tried to tighten the board's oversight of Perreira and the organization after being warned by county officials that Wailuku Main Street could lose its grant if it wasn't brought under control.
He said he requested documents including the articles of incorporation, bylaws and 990 tax returns but was told they were "confidential." Noting that they were public records, Clark said he eventually got copies from the Planning Department.
He said he initiated efforts to fire Perreira last year but did not receive support from other board members who thought that they should follow a more careful process to terminate her. Clark said he resigned in frustration.
In his Dec. 26 letter to Arakawa, Sarasin said the only financial information provided to board members is a profit/loss statement.
At a meeting where the board approved Wailuku Main Street's IRS filing, board members were given less than 10 minutes to review the document before voting, he added.
"Even the Financial Committee is not provided with any additional receipts, canceled checks or check register data," he wrote. "We do not know how many bank accounts we have."
He asked Arakawa to initiate an audit of the county's grant.
Cannon called the former board members' claims "unfounded."
"Detailed financial information is provided to all board members via a treasurer's report at monthly board meetings, with opportunities to ask questions and receive answers," he said.
He said bank statements are reviewed by the board's treasurer, and public records like 990 forms, articles of incorporation and bylaws "are located in our office in plain sight."
He also said that "all information (including our bylaws)" is also located in binders provided to each board member at the Wailuku Main Street office.
Cannon said Clark was told the documents he requested could not be sent to him because that would conflict with a "board policy" to keep them in the office. Clark was told his questions would be answered if he attended a board "orientation" session, but he refused, Cannon said.
University of Hawaii Richardson School of Law professor Randy Roth, an expert in trusts, federal taxation and nonprofits, said nonprofit board members would normally have access to any records they think they need to fulfill their duty to oversee the organization.
"They are the boss of the executive director, not the other way around," Roth said. "So the executive can't simply tell them what they're allowed to see. Typically, a board faced with that insubordination would relieve that executive and appoint a new one."
Wailuku Main Street came under fire last year by a group including Wailuku attorney Isaac Hall, who questioned why the organization was being held to different reporting standards than other grant recipients and why it continued to receive grants when it was accumulating hundreds of thousands of dollars in unspent funds.
* Ilima Loomis can be reached at firstname.lastname@example.org.