The Honolulu Authority for Rapid Transportation on Thursday admitted that it may have overpaid for relocating people in the path of the Kapolei-to-Ala Moana rail line and violated a federal relocations law in the process.

The problem may end up costing taxpayers about $3.8 million and represents the latest headache involving the city’s troubled 20-mile elevated rail line.

Andrew Robbins, HART executive director and CEO, sent a letter to Federal Transit Administration officials Thursday informing them that his agency “has discovered facts and circumstances that cause it to believe that HART may have paid relocation expenses in excess of what is allowable.”

HART received reimbursements from the federal agency for the excess relocation expenses. To remedy the situation, HART has proposed that it will forgo future reimbursements from the FTA amounting to $3.8 million. Giving up those future reimbursements would help make up for the overpayments, HART said.

It’s unclear if the overpayments will affect the Full Funding Grant Agreement that provides HART with up to $1.55 billion in federal dollars for the estimated $8 billion-plus rail project.

Robbins’ letter does not suggest that there may have been purposeful or criminal intent on the part of HART employees or contractors and noted “the present HART executive team with responsibility for real estate acquisitions for the project and associated relocations … is not aware of any wrongdoing or improper conduct by any recipient of relocation payments.”

A review conducted in 2017 by a new relocation consultant, W.D. Schock Co. “identified potential deficiencies in 15 of … 18 files due to missing, inadequate, and/or inconsistent documentation; mathematical errors; and payments made without sufficient justification,” Robbins said in his letter to FTA.

The review initially identified “potential problems” when it looked into one particular relocation file, Robbins said, and then was asked by HART to look into 18 of the “most complex, high-dollar relocations” out of approximately 103 completed relocation files.

The problematic relocations spanned several years, involved both residences and businesses and were handled by a variety of relocation agents both in-house and tied to HART’s previous relocation consultant.

It’s uncertain what penalties or fines may be tied to the overpayments. The law covering relocations tied to federally funded projects says a local agency shall “take whatever corrective action is necessary” to come into compliance. Sanctions also may be placed on a local agency in non-compliance, according to the law, known as the Uniform Relocation Assistance and Real Property Acquisition Policies Act.

Seeking to be proactive in addressing the issue, Robbins said that HART will not seek reimbursement for $3.82 million for other expenses that it otherwise would be eligible to receive compensation.

In calculating that amount, HART said it had spent approximately $13.17 million on relocation expenses to date. Typically, such expenditures would allow a local agency to receive between 28 and 30 percent of that amount, Robbins said.

“In an effort to address any concern that federal funds may have been mistakenly reimbursed or applied, HART proposes to offset the full amount of the FTA relocation reimbursements to date,” Robbins said.

PROGRAM REVIEW

Additionally, HART is reviewing the procedures, oversight and staffing of its relocation program, Robbins said. “HART has requested review and recommendations from several experienced URA specialists and commits to incorporating recommended changes into its program in close coordination with the FTA.

HART further is seeking to restructure its Right-of-Way staff, noting that the new director of planning, permitting and right-of-way was hired in late December 2016, is seeking to hire a new deputy director for that staff, and is creating a new acquisition and relocation program manager.

Robbins issued the news publicly in a prepared statement he read during Thursday’s monthly HART board meeting after a closed-door session that lasted over an hour. Robbins later issued the statement to media.

“HART, through its own internal review, has cause to believe that HART may have paid relocation expenses in excess of what’s allowed” under the URA Act and then sought and received reimbursements from the FTA, Robbins said.

HART “has an obligation to report this situation,” Robbins said.

“While HART’s focus is on assuring compliance going forward, HART is also committed to identifying and correcting any past non-compliance actions,” he said.

“For that reason, we are in the process of furthering our internal reviews. HART will work with the FTA on any further inquiries it may have, and on developing appropriate corrective actions,” Robbins said. “To the extent permitted by the law, we will keep the board appraised of the status of the FTA’s review and our progress in resolving this matter.”

In a December report to the FTA and the City Council, HART reported that it had completed 105 relocations under URA, and that there are nine active relocations. Of the 114 total relocations, 71 were in the “City Center” segment, 27 in the West Oahu/Farrington segment, 11 in the Airport segment and five in the Kamehameha segment. No cost figures were included in the report.

In all, HART needed to acquire or gain right-of-ways to 219 parcels totaling 14.7 million square feet, and had completed acquisitions to 121 parcels totaling 9.2 million square feet, the same report said.

HART, in the fall, also submitted its operating and capital improvements budgets for the 2019 fiscal year that begins July 1. The agency budgeted $240 million for all right-of-way acquisitions and projected that it had spent $146.7 million to date.

Mayor Kirk Caldwell, in a statement, said he supports HART’s decision to review the matter more fully in cooperation of the FTA and the inspector general “so that corrective action can be taken in a timely manner.”

Star-Advertiser reporter Nanea Kalani contributed to this report.