Tow Service Contract Default

The Department of Customer Services has completed an audit of questionable towing fees. The audit of invoices from January 2023 to June 2023 revealed numerous instances of inappropriate charges for removing vehicles from off-road locations.
This page provides information about how the city is responding to the audit.
City's Statement on Towing Contract Notice of Default
HONOLULU – Upon the completion of an audit of questionable towing fees by the city’s towing contractor, the Department of Customer Services Director Kim Hashiro issued today the following statement:
The city has taken the first step toward terminating its towing service contractor, All Island Wreckers, Inc. by issuing a notice of default. The default notice is based on an audit of 782 invoices issued between January 2023 and June 2023 that found inappropriate charges for towing services. These invoices revealed the mishandling of a $900 fee allowed under the contract. That fee is limited by contract and by law to situations that required excavating or removing vehicles from off-road locations, including ravines and streams. The company is only authorized to charge a reasonable amount in those instances, in spite of the contract provision that allows up to $900 for every 15 minutes of hook-up work after an initial 15 minutes. Furthermore, the contract clearly states that the director of the Department of Customer Services is the sole authority on determining reasonable amounts that can be charged for removing vehicles from hazardous off-road locations. For that reason, 782 invoices have been disapproved, and the registered owners of the vehicles are entitled to a refund for being improperly charged. The city’s towing contractor has also been given 10 calendar days from July 1, 2024 to correct the default, including funding and developing a procedure to facilitate the refunds. If the default is not corrected, the contract will be terminated. In addition, the city has sent letters to the affected registered owners, briefly explaining the situation, including steps being taken to issue them a refund for the improper charge, and the need for them to provide proof of payment. Registered owners who paid an invoice for a $900 towing fee between January 2023 and June 2023 are also encouraged to contact the department by sending an email to csd@honolulu.gov, or calling (808) 768-4381. When contacting our department, registered owners should provide a name, phone number, email and license plate number.
Director Hashiro's Star-Advertiser Column, July 7, 2024
The city will not tolerate government contractors who improperly charge the public. Fixing the city’s towing contractor’s incorrect charges to motor vehicle owners is the latest example of our city Department of Customer Services’ commitment to responsiveness to residents across the island.
Allegations of All Island’s improper assessment of towing fees for Honolulu Police Department-initiated tows called for clarification — and an investigation by our department.
Our review and audit revealed that the city’s towing service vendor wrongly charged more than 780 motorists a fee, limited by contract and by law, unreasonable amounts for removing their vehicles from off-road locations, including ravines, streams, drainage canals and other bodies of water.
Based upon the audited invoices, All Island either charged the fee for vehicles that were not off the road or charged an unreasonable amount. The improper charges range from $150 to $4,500 per invoice, with an average refund being $840. The total refunds amount to $656,175, but this could increase as we intend to audit invoices from July 2023 to present.
We are taking corrective action to ensure refunds are given to registered owners who have paid these incorrect charges. The city has issued a default notice to All Island, which has been given 10 calendar days from July 1 to remedy its misapplication of these towing charges by, among other things, developing a plan for issuing refunds and funding 100% of the costs for the refunds.
To ensure available funds for these refunds, the city is withholding contractual payments to All Island. Our immediate attention has now turned toward: securing refunds to those who were improperly charged $900 for every 15 minutes of hook-up work (after an initial 15 minutes of towing services) over a six-month period, starting in January 2023; and auditing additional invoices from 2023 to present that have been requested from All Island.
While procurement rules were followed when the towing contract was awarded, the reality is that All Island misapplied a towing charge affecting hundreds of motorists. Better oversight is needed and will be implemented.
Moving forward, the towing contract will be separated into two types of tows: abandoned and derelict vehicle tows that will be managed by my department; and law enforcement initiated tows that will be managed by HPD. In addition, to the extent possible, towing services for these different types of tows will be separated into geographical districts, allowing for more than one tow company to service the City and County of Honolulu.
In a city where qualified towing services are concentrated in a few hands, it is very important to recognize where things have gone wrong. Our priority now is to work with the city’s towing vendor to right a wrong.
For the past year, a legitimate point has been raised by registered owners who have been let down, and now need to see us working together and owning the responsibility of fixing the inappropriate charges and providing some welcome peace of mind.
Kim Hashiro is director of the city’s Department of Customer Services.
Questions about the Towing Service Contract Situation
What is the city telling its towing service contractor?
City is telling its towing contractor that it has defaulted on its towing service contract for inappropriate charges for towing services, and has to correct the default, including funding and developing a procedure to facilitate the refunds. The deadline to correct the default has been extended to July 31, 2024 to allow for further discussions on resolving the matter.
How many people were charged the “non-statutory and difficult hook up" charge (the extra fee on top of the standard tow fee)?
Our review of invoices from January 2023 to June 2023 show that more than 780 registered owners were inappropriately charged for the non-statutory and difficult hook.
Will all of them get refunds?
An estimated 99 percent of the registered owners who paid an invoice for a $900 towing fee between January 2023 and June 2023 will get refunds. Only a few others are under review. We need more information to understand the basis for the fees charged.
What was the total charged in these extra fees?
The total charge in those extra fees exceeds $650,000.
What is the range of individual refunds? (The $900 extra charge applied to the first 15 minutes, so presumably there are people who were charged more than $900.)
The range of the individual refunds is from $150 to $4,500 per refund, with an average refund being $840.
Did the city’s towing contractor ever cease charging the fee, or is it still in effect now?
Once the city received complaints about the questionable towing fees in June 2023, the towing vendor was instructed to stop charging the fee and to provide the city with all invoices in which the fee was charged. The contractor was later allowed to resume performing that tow service, but was given specific criteria and parameters on what to charge.
What duration of time has the towing contractor been charging this fee?
Our investigation revealed that the fee was being charged from January 2023 to at least June 2023.
How will registered vehicle owners find out whether they are eligible for refunds?
The Department of Customer Services sent notices on Tuesday, July 2 to all of the registered owners who are eligible for refunds. The department has requested additional invoices from July 2023 to present and will be conducting a further audit. Anyone who was improperly charged during this time frame will be notified once this further audit is completed.
What is the process for obtaining a refund?
We have instructed the towing contractor to put a process in place to help facilitate the refunds. In the meantime, registered owners (or insurance companies) who paid an invoice for a $900 towing fee between January 2023 and June 2023 are encouraged to let the Department of Customer Services know by sending an email to csd@honolulu.gov or calling (808) 768-4381. When contacting our department, registered owners should provide a name, phone number, email and license plate number.
What company will have the towing contract with the city?
The details are being worked on currently. But our goal is to take an approach that makes and ensures cost-effective as well as efficient delivery of towing services to the public..
Will this type of extra charge be allowed?
The extra towing charge must be a reasonable amount for removing vehicles from off-road locations.
How long has the city worked with All Island Wreckers Inc.?
The entity that operates under the name All Island Wreckers Inc. has been under contract with the city since January 2023.
What is the annual amount of the city’s contract with All Island Wreckers?
The contract is based on production rather than a set amount; however, $1.2 million has been budgeted for the company’s service.
What was this company supposed to do for the city? What is their main responsibility for towing services?
The contract calls for the company to remove abandoned and derelict vehicles from public roadways. In addition, the contract calls for the company to assist the Honolulu Police Department with towing services stemming from traffic violations, traffic accidents, and any other incidents deemed necessary for tow services such as stolen vehicles.
When did the issues over inappropriate charges come to light?
The issue with inappropriate charges first came to the attention of the Department of Customer Services administration during a town hall meeting hosted by Mayor Rick Blangiardi at Mililani High School on April 6, 2023, when a resident’s complaint prompted the department to further look into the matter.
Meanwhile, what is the towing company’s recourse in all of this? Can they appeal to the city or to the state? If so, to which agency?
There is no appeals process for the notice of default.
Notification from Department of Customer Services to Contractor
Notice of Default and Demand for Cure
Need Help or Have Questions:
Public Communication Division’s Customer Care Section
(808) 768-4381
csd@honolulu.gov