Palamanui campus saved — Regents approve reallocated funding


HILO — A community college for West Hawaii moved a step closer Thursday when the University of Hawaii Board of Regents approved “repurposing” money left over from an Oahu project to pay higher-than-expected construction costs.

The board voted to use $6.5 million in leftover revenue bonds for the Palamanui campus to be located north and mauka of Kona International Airport. The money will be added to $7.5 million in previously approved state funding and $9.68 million from developer Palamanui LLC. Palamanui LLC is also providing about $10 million in infrastructure.

But the board didn’t let go of the money easily. Several members grilled John Morton, vice president for community colleges, on why the bids came in almost 40 percent higher than estimated.

The board is especially sensitive to cost overruns after a contractor working on a University of Hawaii at Hilo student housing project in testimony to the state Legislature last week accused Capital Projects Director Brian Minaai of “blatant mismanagement,” saying he “gave away millions of dollars” and tried to funnel work to his friends. The state attorney general is looking into those allegations and the board took up the issue in executive session Thursday.

Regent Benjamin Kudo voted against using the money, after first asking the board to delay the vote until it could figure out why three contractors came in at around the same price, all significantly higher than estimated.

“We are under public scrutiny about how we spend our money,” Kudo said.

He chafed at hearing the board must commit the leftover bond money by June 30 or it must be reauthorized by the Legislature, pushing the project another year into the future.

“I want to express my concerns about proceeding with this project because we have a gun to our head,” Kudo said. “I’m not quite sure we’ve done our job, done our homework.”

The project’s low bidder, Nan Inc., had submitted a bid of $21.5 million, which was about $4 million more than the university and a private developer had set aside for the first phase. Nan Inc. withdrew its bid last month. The next lowest bid, from F&H Construction, was for about $25.5 million, leaving the $8 million gap between funding and cost.

Morton told the board he would work with the contractor to try to bring the cost down to $23 million. If there is a significant redesign, the project will have to go back out to bid. Some regents wanted to do just that, but they ended up voting in favor after pleas from other regents.

“I don’t think if we go out and rebid we’re going to get a lower bid,” said Regent James Lee. “We shouldn’t hold up this project any further. It’s 25 years in the making.”

Dozens of West Hawaii residents submitted written testimony urging the board to approve the money. Beth Sanders, interim director of the University Center at West Hawaii, brought along a petition signed by 140 students and staff who were on campus Wednesday at the Kealakekua shopping center.

“We consider us at a tipping point,” Sanders said. “The community is behind it and Palamanaui is stepping up to help with this.”

Mayor Billy Kenoi addressed the board on another topic, naming the UH-Hilo College of Pharmacy after the late U.S. Sen, Daniel Inouye. But Kenoi didn’t lobby for the Palamanui campus on Thursday.

Steve Colon, Hawaii division president of Hunt Cos., a Palamanui partner, urged the board to move the project forward.

“We have built a road, a great road. We’ve got the site all set up for you,” Colon said. “At the end of the day, we end up with a $20 million commitment. We’ve developed a world-class facility here that’s going to be a tremendous campus. … We did our part and we’re asking you to do your part.”

Colon said after the meeting that the first phase of the project will be a culinary arts building and a health science and student services building. The first phase, which will bring all of the current Kealakekua campus over to the Palamanui site, should be ready for classes January 2015, he said.

“We’re very, very pleased with the vote,” Colon said. “We’ve come so far and it’s just such a long journey.”