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A report released Friday paints a damning picture of the ’s efforts to compensate businesses and tenants displaced by the future transit line.

The local rail agency largely failed to follow federal law when relocating those parties, according to the July 30 report by Hill International, which oversees Honolulu rail for the . Most of HART’s relocation files are so incomplete that they’re beyond recovery, and nearly half of the people displaced were “likely harmed as a result.”

The firm’s assessment comes after HART received in February a federal Grand Jury subpoena demanding that the agency provide records related to its relocation practices.

Hill earlier this year sent a team to Hawaii to review 100 of HART’s relocation files after the rail agency self-reported in 2018 widespread errors and missing documents required under the federal .

Those 100 files reviewed by Hill represent the vast majority of the relocation work needed for rail, HART spokesman Bill Brennan said Friday.

In its report, Hill found more than 20% of the parties relocated were overpaid, and that agents working for the Honolulu Authority for Rapid Transportation “either did not understand the payment calculation or disregarded the (federal relocation) requirements altogether.”

Conversely, about 16% of those displaced were either underpaid or weren’t offered relocation benefits for which they were eligible.

In some cases the documentation was so shoddy that investigators simply couldn’t tell whether HART had followed proper procedure or not.

“Many of the files reviewed contained so little information or documentation that it was difficult or not possible to determine what occurred,” the Hill report states.

As a result, the FTA declared that Honolulu rail won’t get any federal dollars toward its relocation program.

In 2018, when HART self-reported the problems, it also reimbursed the FTA the full $4 million it had contributed to the program. But a Sept. 23 letter from FTA Acting Associate Administrator for Program Management Bruce Robinson makes clear that HART is now officially barred from receiving federal relocation dollars.

The local agency will have to rely on the rail project’s state tax dollars instead.

Furthermore, HART must now essentially start over on relocation and retrace its steps.

The FTA, which has leverage over funding for the whole project, is demanding that HART reach out to all those it compensated for relocation and follow the federal process correctly this time, documenting each step for the feds to see.

In a statement Friday, HART said it is committed to correcting those problems.

The agency “will work with FTA to develop and execute a corrective action plan that will ensure that all the individuals and businesses that were relocated as part of the project during the time period reviewed are treated fairly and consistently,” it stated.

‘Potential Deficiencies’ Flagged Two Years Ago

HART has experienced extensive turnover in recent years. That includes five different deputy directors for right-of-way and property acquisition since 2015 — the position that largely monitors relocation work.

Most of the work in question took place by the end of 2016 under its former right-of-way consultant, Paragon Partners.

In February 2017, a new consultant, W.D. Schock, flagged problems with that work, specifically payments that weren’t eligible under federal law.

HART and its attorneys then spent much of 2017 investigating whether they had a bigger problem on their hands, with more widespread relocation payments for rail that violated the federal Uniform Relocation Act.

They examined 18 samples, representing less than 20% of rail’s total relocation files and representing “some of the most complex, high-dollar” payments to owners and tenants along the rail line.

In 15 of those 18 cases, HART says it found “potential deficiencies” — missing documents and math errors.

Then, when HART was hit with a series of federal subpoenas this past February, among the items it had to provide were records for the “18 relocation files,” including their title work, appraisals, offers to owners, and negotiation files.

Separately, the Hill investigation examined 100 files, which HART says represents the vast majority of the relocation work.

Nearly half the files “lacked the most basic or minimal record to demonstrate that appropriate advisory services were provided to displaced persons,” the Hill report states.

Some 57% lacked the proper record-keeping.

Often the files failed to explain why a displaced person failed to claim payments they were eligible for, and “the reviewer could not determine if the displaced person chose not to make a claim or did not know about their eligibility,” the report added.

Overall, Hill determined 75% of the files were so incomplete that there was no way they could be brought back into compliance.

“The reviewers acknowledge that some noncompliance cannot be fixed after the fact. However, HART can undertake corrective actions to provide the proper payments in the proper amounts,” the report stated.

So far, the issue has cost HART at least $4 million in federal reimbursements on a project now slated to cost more than $9 billion.

Nonetheless, the Hill report sheds light on the institutional problems that plagued the agency under prior leadership, consistent with management problems flagged by various city and state audits.

Facing intense public scrutiny, the agency has made some structural reforms under its most recent executive director, Andrew Robbins, and Robbins’ predecessor, interim executive director Krishniah Murthy.

It remains to be seen whether those efforts will finally keep the costs in check, however. The next major construction contract to build the transit line’s most challenging 4-mile stretch through town is slated to be awarded early next year.

Read Hill International’s full report here:

Read the FTA’s letter on how it expects HART to resolve the situation here: