A city-contracted tow company has not responded in the wake of the city’s decision that it must refund more than $650,000 in extra fees to hundreds of registered vehicle owners on Oahu or see its annual, three-year contract with the city terminated.

The Honolulu Department of Customer Services says it determined Aiea-based All Island Wreckers Inc. — also doing business as All Island Towing — committed “inappropriate charges” for towing services, following an audit of 782 invoices issued between January 2023 and June 2023.

“These invoices revealed the mishandling of a $900 fee allowed under the contract. That fee is limited by contract and by law to situations that required excavating or removing vehicles from off-road locations, including ravines and streams,” the city said in a written statement issued Wednesday . “The company is only authorized to charge a reasonable amount in those instances, in spite of the contract provision that allows up to $900 for every 15 minutes of hook-up work after an initial 15 minutes.”

The city noted “the contract clearly states that the director of the Department of Customer Services is the sole authority on determining reasonable amounts that can be charged for removing vehicles from hazardous off-road locations.”

“For that reason, 782 invoices have been disapproved, and the registered owners of the vehicles are entitled to a refund for being improperly charged,” the city said. “The city’s towing contractor has also been given 10 calendar days from July 1, 2024 to correct the default, including funding and developing a procedure to facilitate the refunds.”

If the default is not corrected by July 11, the contract will be terminated, the city said.

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“The city has taken the first step toward terminating its towing service contractor, All Island Wreckers Inc. by issuing a notice of default,” the city’s statement reads.

Kanoelani Perry, president of All Island towing, could not immediately be reached for comment on the city’s allegations.

Meanwhile, the city said its sent letters to affected vehicle owners, “briefly explaining the situation, including steps being taken to issue them a refund for the improper charge, and the need for them to provide proof of payment.”

According to the city, registered owners who paid an invoice for a $900 towing fee between January 2023 and June 2023 are also encouraged to contact the department by sending an email to csd@honolulu.gov, or calling 808-768-4381.

Individual refunds are expected to range from $150 to $4,500 per refund, according to the city.

The entity that operates under the name All Island Wreckers Inc. has been under contract with the city since January 2023, according to Harold Nedd, the department’s spokesperson.

He told the Honolulu Star-Advertiser the city’s contract with All Island is based on production — removal of abandoned or derelict vehicles found on public roadways — rather than “a set amount.”

“However, $1.2 million has been budgeted for the company’s service,” Nedd said. “In addition, the contract calls for the company to assist the Honolulu Police Department with towing services stemming from traffic violations, traffic accidents, and any other incidents deemed necessary for the service.”

Asked whether the city might pursue criminal charges against the tow company, Nedd said “procurement rules were followed” in this contract.

“The issue is that charges were misapplied for removing vehicles from off-road locations,” he said. “The city’s immediate focus is on resolving the matter on behalf of the public by working with the company to develop a procedure to facilitate refunds for the registered vehicle owners who were inappropriately charged.”

With regard to the city’s allegations against the company, All Towing has no formal appeals process or stated recourse to fight the city’s claims, according to Nedd.

“The towing company has until July 11 to correct the default, including funding and developing a procedure to facilitate the refunds,” he said.

Nedd asserted the overbilling issue was first brought to the attention of the city during one of Mayor Rick Blangiardi’s community town hall meeting events at Mililani High School on April 6, 2023, “when a resident’s complaint prompted the department to further look into the matter.”

Meanwhile, City Council Chair Tommy Waters weighed in on the matter. “The council supports the administration’s efforts to assess and clarify this issue for our residents who have been impacted,” Waters told the Star-Advertiser via email.

The city’s statement this week followed a similar warning letter to Perry’s tow company last year.

On June 28, 2023, city CSD Director Kimberly Hashiro stated that the city “has recently become aware of and is very concerned with complaints from registered motor vehicle owners All Island is applying the ‘non-statutory and difficult hook up’ charge beyond what is permitted in” its city contract.

She noted that type of charge involves “use of multiple tow vehicles, recovery from hazardous locations such as off-road, ravines, streams, shorelines, and canals,” Hashiro wrote.

“The city reminds All Island that this charge is limited to these types of situations and must not be applied to other types of circumstances,” she wrote.

At the time, Hashiro’s letter stated the city would investigate All Island’s application of this charge for the first six months of 2023, to all registered vehicle owners as well as HPD.

“As you are aware, ‘the city shall be the sole judge of approving or disapproving an off-road hook up,’” the letter states.