2023-01 Office of Housing and Community Development Affordable Housing Credits

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While not memorialized in writing, OHCD said historically, they were advised not to interfere with private -party credit transactions. However, credits have significant potential values. When used as intended, credits provide developers with a means to liquidity, which in turn contributes to housing production. However, when bought and held, the lack of liquidity means less overall capital investing in developments, and production suffers. As public stewards, behaviors, actions, and decisions must be made in the public's best interest. OHCD should have a solid understanding of credits' impact on production. The program has underserved communities around the island. Excess credits are bought and held for long periods rather than used to produce housing units. For OHCD to successfully achieve its mission of providing affordable housing, foundational reforms must accompany improvements to its internal control system. While this audit discusses program deficiencies at length, our report intends to provide OHCD with meaningful recommendations that, when implemented, will provide department personnel, management, administration, elected officials, and the public with reasonable assurance that the actual performance aligns with expectations. Our report offers seven recommendations, including clarifying county code, establishing administrative rules, updating and enforcing written policies and procedures, increasing monitoring and program oversight, using technology as a monitoring tool, segregating incompatible duties, and providing training. In response to a draft of this report, management expressed general agreement with our audit results. A copy of management's complete response can be found in Chapter 4. We want to express our sincere appreciation to the Office of Housing and Community Development for their assistance and cooperation during the audit process. We greatly appreciate their valuable time and effort in providing us with information. To improve government accountability and ensure audit recommendations are implemented or resolved, we will continuously monitor the status of recommendations using our remediation tracker. To view the department's status, visit us at: https://www.Hawai`icounty.gov/our-county/legislative/office-of-the-county-auditor. If you have any questions or concerns about the status of the recommendations discussed, feel free to contact me at 961-8386. Thank you. Respectfully, Tyler J. Benner County Auditor