HONOLULU — Aloha Stadium’s managers have failed to consistently enforce rules for swap meet vendors, allowing some of them to neglect paying excise taxes and otherwise operate illegally, the Hawaii state auditor said in a report released Thursday.
HONOLULU — Aloha Stadium’s managers have failed to consistently enforce rules for swap meet vendors, allowing some of them to neglect paying excise taxes and otherwise operate illegally, the Hawaii state auditor said in a report released Thursday.
The report addresses how the state agency, the Stadium Authority, and a contractor, Centerplate, have failed to adequately oversee Aloha Stadium, a 50,000-seat facility in Honolulu that hosts the NFL’s Pro Bowl and University of Hawaii football games.
A major focus of the report is the alleged mismanagement of the swap meet, a thrice-weekly outdoor bazaar where locals and tourists alike gather to scoop up T-shirts and cheap souvenirs.
The swap meet generated $4.8 million more than two-thirds of the authority’s revenues in the fiscal year ended in June 2010.
Almost one-third of the top 450 vendors avoided filing general excise tax returns in 2007, 2008 and the first half of 2009, the report said.
The vendors failed to pay the tax even though they evidently were generating revenue at the swap meet, as indicated by rent payments they made totaling between $3,561and $236,810. Other vendors were found to underpay their taxes.
The auditor uncovered the delinquents by providing rental payment data to the state Department of Taxation, the report said. The top 450 vendors account for most of the business the rent they paid accounted for 97.5 percent of the stall rental income generated by the meet.
Further, none of the vendors displayed a general excise tax license as required by law when auditors visited their stalls in 2009, the report said.
The auditor says the stadium manager ignored his responsibilities to ensure Centerplate is managing swap meet operations effectively.
The stadium authority acknowledged Centerplate inconsistently enforced the requirement that vendors keep current with and display their permits and licenses, including general excise tax licenses.
“Verification of general excise tax licenses is an important part of the swap meet contractor’s scope of work,” Chairman Nelsen Oyadomari and Vice Chairman Kenneth Marcus wrote State Auditor Marion Higa in a letter.
The letter said Centerplate had updated its procedures and notified vendors of expired or canceled licenses.
Further, the report said the authority has failed to obtain federal approval to operate the swap meets, something it needs because the Department of the Interior handed the land over to the city under the condition the property be used for public recreation and not commercial activities.
The federal government could take back the land if it finds the swap meets violate that agreement.
The state should also receive federal approval for future projects, including the planned construction of a rail station on the land, the report said.
The authority responded that the Interior Department authorized swap meet activities in 1979 and said they could continue so long as the activities were similar to those originally approved and didn’t conflict with regularly scheduled events at the stadium. The swap meets still adhere to these rules, the authority said.