Real estate was always at the heart of the Native Hawaiian trust fund the Office of Hawaiian Affairs administered because the basis of the trust is a share of revenue from Hawaiian kingdom lands that were ceded to the U.S. upon annexation.

But its core mission has been the deployment of those funds for programs to benefit Native Hawaiians. Now the imperative to manage some of its more recent additions to the real estate portfolio, worth more than $421 million, has come into focus as well.

And, according to state Auditor Les Kondo, OHA, as governed by its Board of Trustees, has not yet risen to the challenge.

As laid out in the auditor’s report released last week, the agency has much to prove. What brings this into more prominent public view is the recent debate over the development of OHA’s Kakaako Makai holdings, currently in limbo because lawmakers are not enabling the proposal for high-rise residential towers.

The audit’s principal finding is that OHA’s lack of a real estate strategy or land development policies has led to an “ad hoc approach” in identifying and acquiring commercial properties. The lack of such a blueprint, according to the report, is “raising questions about the prudence of trustee action.”

The audit identifies the 2012 conveyance of Kakaako Makai’s 30 acres from the state to OHA in a settlement of long-standing claims as the starting point for the real-estate expansion, but without a strategy in place. There were also the purchases of Na Lama Kukui of nearly 5 acres and 511 acres of Galbraith Estate lands, and the donation of Palauea Cultural Preserve on Maui.

The lack of criteria and policies to guide the investments persisted despite the hiring of a consultant to develop a real estate business plan before 2008. The state auditor reports on OHA every four years — this audit period was 2019 to 2021 — and the issue keeps resurfacing.

But while OHA recognized the importance of the strategy, business plan, investment policy and a balanced portfolio of holdings, they were not developed, according to the report.

The auditor recommends the adoption of policies aligning with its strategic plan related to real property and the development of conceptual master plans specifically for OHA’s Kakaako, Nimitz and Iwilei properties.

For its part, OHA has responded by pointing out that its trustees have approved governance and policy frameworks previously and that organizational work is already in progress to address additional recommendations of the audit.

The written response included a timeline of the trustees’ review and consulting with a permitted interaction groups to plan the Kakaako Makai project, most recently dubbed “Hakuone.” Its other citations include the 2019 Board Governance and 2021 Policy Frameworks, with implementation work to be addressed “in the coming calendar year.”

So yes, it appears OHA is well aware of the issue. The problem is, as the auditor suggests, the elapse of so many years in which better progress should have been made on land holdings, so that revenues and other benefits to the community and Native Hawaiians could be realized quicker.

The Hakuone project, for example, has languished while OHA repeatedly has petitioned the Legislature to lift the restriction on residential development in the makai properties it owns. It’s long past time for OHA to settle on a plan that yields an actual asset.

Trustee Keli‘i Akina acknowledged the report pinpoints where “the glass is half empty” on land management but wished the auditor had recognized the half-full status as well.

Perhaps. Better still would be if OHA fills the glass the rest of the way.