In a shrub area, I found about ten sand mounds about 1-inch diameter with a
hole in the center about 5-mm. I also notice bee-like insects with black and
yellow stripes flying into the holes. They are about 1-cm long, smaller than
an average bee. Plus, the nest looks nothing like a bee nest (on high places
buzzing with activities).

Any idea what this insect is?

http://www.smugmug.com/gallery/672644
The arrows point to the mounds and in the middle of the red circle is one of
those bugs hovering in the air -- please click on "original" to see it; it's
kind of blurry.