Soon after Leeward Auto Wreckers began its island-wide contract for police initiated tows last year on Nov. 1, alarms bells rang.
"They had a difficult time in training their personnel, in ensuring that the right rates were used (and) in calculating mileage," said Sheri Kajiwara, director of the Department of Customer Services.
Once the problem was brought to light by the Honolulu Star-Advertiser in December, the city began auditing Leeward and the overcharges were corrected. A total of 643 customers received refunds averaging $15 each.
Leeward general manager Albert Ternora admitted Wednesday during a Budget Committee hearing that it was human error that resulted in overpayment. He said he looked at an outdated document when setting rates, and not a revised contract that was eventually accepted by the city.
"I take blame for that," Ternora told the committee. "I failed to look further into what we had put into our best and final offer."
Under the current contract, Leeward is allowed to charge a maximum hook-up fee of $165. However, the company can charge customers overtime for off-hour service, as well as a $25 per day storage fee.
"If you claim your vehicle within 24 hours, then that fee would be $25," explains customer services executive secretary Randy Leong. "If it's over seven days from that, then it goes down to $20 per day."
In addition to overcharging customers, Leeward experienced difficulty in paying the city a $60,000 per month premium, twice bouncing checks in January and February.
"We agreed that they would pay us an additional $15,000 per month, in addition to their $60,000, until we're made whole," said Kajiwara. Adding to the company's woes, Leeward was evicted from one of its storage lots, causing the city to question whether it could maintain the 1,900 parking stalls required under the contract.
After the long list of problems the city and the tow company agreed to end their contract, but not until a new agreement is in place, which is expected in mid-October. Kajiwara said Leeward would be allowed to rebid, but must continue to fulfill the terms of its current contract with the city. If not, an emergency contract could be issued, but that would likely result in added costs to consumers.
"We really would lose control over the rates charged to the public, and we couldn't guarantee that the public would pay $165 per tow," she said. "It could double."
Budget chairwoman Ann Kobayashi said the city may have no choice but to revert to towing contracts that are divided into zones, and not a single vendor.
"When you just have one company doing everything, there's the possibility of abuse," said Kobayashi. "It's the customer who doesn't know a lot of these rules about no drop charge (and) your car should go to the nearest lot, and they're just paying."
The city's new bid request is expected to be issued in two to three weeks. Kajiwara said it would be focused on customer service.
"The bottom line is service to the public and maintaining lower rates with the public, that's where our priority is going to be," she said.
Company keeps towing despite overchargesUPDATED 7:47 AM HST Jun 27, 2013
Soon after Leeward Auto Wreckers began its island-wide contract for police initiated tows last year on Nov. 1, alarms bells rang.Recommended