Editor’s Note: This article was produced for ProPublica’s Local Reporting Network in partnership with the Honolulu Star-Advertiser.
Hawaii hired a developer to build homes to deliver on a century-old promise of reparations to Native Hawaiians. But the state didn’t inspect construction. Homeowners said they’ve had water damage, air conditioning breakdowns and other issues.
When Steven Moniz Jr. and his wife, Sheri, got the keys to their new home in 2013, their kids were so happy that they made “snow angels” on the carpet. It was the first time the couple had ever owned property, and they too were overjoyed.
For years, they had rented an apartment in a low-income housing project on Oahu, unable to afford a house amid the island’s booming real estate market. But then, because Steven is Native Hawaiian, they were able to purchase a new residence at roughly half the going rate through a unique homesteading program created a century ago to return Hawaii’s Indigenous people to their ancestral lands.
With the help of a federal grant, the Moniz family bought a three-bedroom house for $281,000 in a West Oahu subdivision built specifically for the program. The couple cried at their good fortune, knowing that thousands of other Hawaiians are still waiting for such an opportunity. “For us, it was like tears of joy,” Sheri said.
The elation didn’t last long.
Within months of moving in, she said, the wall near a window frame in the master bedroom started to swell and mold began growing as water seeped through the frame. Their central air conditioning stopped working. And, when a family member climbed into the attic to inspect the AC system, he discovered that one of the main wood beams supporting the roof was cracked in half.
“How could they have missed that?” Moniz asked.
Dozens of other Native Hawaiian homeowners have found themselves asking similar questions, alleging problems with their new homes, according to a Honolulu Star-Advertiser-ProPublica survey of nearly 80 residents.
The state Department of Hawaiian Home Lands, which administers the homesteading program, has the right to inspect new construction under its contracts with builders. But DHHL never inspected the Monizes’ new home or the hundreds like it that cropped up over roughly the past decade in their subdivision and another one nearby. Instead, the agency relied on the developer it hired to inspect the properties and vouch for the quality of the work.
DHHL is a unique entity: It exists to manage a trust that returns people who are at least 50% Native Hawaiian to their ancestral land, recompense for the government’s history of taking property. And the agency says that inspections conducted by the builder and the city are sufficient to protect the buyers’ interests.
But legal scholars and former DHHL officials disagree with the state agency’s view. They say that as a trustee, DHHL has a heightened legal duty to act in the best interests of Steven Moniz and the thousands of other beneficiaries eligible for homesteads. And by forgoing inspections, they say, the agency is shirking that responsibility, leaving no one who represents only the buyers, some of whom waited decades for homesteads.
“Inviting beneficiaries to put their life savings into homes that the department has never bothered to inspect is not a close question,” said attorney Carl Varady, who along with a colleague has successfully sued the state and DHHL for breach of trust in a separate matter. DHHL “can’t delegate that.”
Moreover, the department has no system in place for tracking complaints once beneficiaries move into their new residences. Instead, DHHL directs homeowners to the private developers who built the homes.
Given questions about the department’s responsibilities to Hawaiians and its approach to construction oversight, the Star-Advertiser and ProPublica undertook to find out how satisfied beneficiary homeowners were. The news organizations canvassed the two most recent homesteading subdivisions in Kapolei, a region of former sugar cane land where much of Oahu’s single-family housing has been built the past several decades. Gentry Kapolei Development began building in one subdivision in 2009, the other in 2018.
Through our survey, we found dozens of homeowners claiming multiple problems with their residences, including some that started within days or months of moving in. Many residents criticized DHHL’s lack of oversight, and some sought help from the agency but were turned away. And while the builder, Gentry, ultimately fixed many of the problems, some homeowners said they ended up spending hundreds or thousands of dollars on repairs not covered by warranties.
“I’ve been running across problem after problem since we’ve been in this house,” said Peter Kamealoha, who described a range of issues in his 2010 Kanehili home, including a cracked air-conditioning duct and cracks in the ceiling. “A brand-new home shouldn’t have problems like this.”
Gentry, which has built more than 14,000 homes in Hawaii over half a century, says it takes pride in delivering quality homes to Native Hawaiians and would not jeopardize its reputation for the sake of small, short-term gains. “It’s an honor to build these homes,” said Gentry President Quentin Machida. A spokesperson also said the company is responsive to homeowner complaints and has performed many “courtesy” repairs beyond the warranty periods, including for Moniz and Kamealoha.
The homeowner experiences are adding to many beneficiaries’ frustration with DHHL’s management of the program. As the Star-Advertiser and ProPublica previously reported, the historically underfunded agency has consistently failed to meet its main mission of getting Hawaiians onto trust-held land on a timely basis. Now, the news organizations have found that the agency, in the eyes of many beneficiaries, is failing even some who get housing.
“They’re telling beneficiaries F you,” said Mike Kahikina, a trust beneficiary and former member of the Hawaiian Homes Commission that oversees DHHL. “We’re treated as fourth-class citizens.”
The newsrooms’ investigation comes as the Legislature considers whether to appropriate a record $600 million to help DHHL address the needs of the thousands of Hawaiians waiting for homesteads, particularly those who cannot afford to purchase their own homes. The proposal was sparked in part by the news organizations’ coverage, including the revelation that at least 2,000 beneficiaries have died while waiting.
‘THE BENEFICIARIES DESERVE MORE’
Under the homesteading program, Hawaiian beneficiaries apply for a 99-year land lease from DHHL. Upon award, they then take one of two primary routes to housing: hiring a contractor to construct a home on the parcel, or buying a completed home from a developer hired by the department. The latter is by far the most common option.
Home inspections emerged as a major issue in the mid-1990s after a number of legal settlements with beneficiaries who sued DHHL over allegations of shoddy construction.
In one case, the agency paid out $1.5 million to settle claims involving a 50-home development in Panaewa, located on the Big Island’s eastern shoreline. Homeowners alleged they were given substandard septic tanks, defective concrete foundations and keys that opened multiple houses.
Following the settlements, DHHL said in 1996 it would step up oversight, beginning twice-weekly inspections of construction projects. Then-Director Kali Watson told reporters that the measure was designed to prevent another Panaewa. Today, Watson, who heads a nonprofit developer of affordable housing, still believes DHHL should handle inspections. “They do need people with a lot more expertise to actually monitor construction and make sure it’s done well,” he said in an interview.
In the intervening decades, the agency spent more than $200 million on Kapolei projects, including an unprecedented effort to develop four subdivisions totaling more than 1,000 homes.
Sometimes DHHL served directly as the developer for new units, and in those cases it did continue the inspection system. But other times, like in the two most recently built subdivisions, Kanehili and Kauluokahai, it hired a private developer who was also responsible for the inspections.
Still, the development contracts DHHL signed with Gentry in 2008 and 2018 included a provision giving the agency the right to inspect the homes during construction. The provision was standard in DHHL’s development agreements.
But given the layer of inspections already in place, including those done by the builder and city, DHHL decided not to exercise that right. Doing so “would take additional resources, depriving or reducing service to the other class of beneficiaries, those on the waitlist,” said William J. Aila Jr., the department’s director and chair of the commission that oversees it. DHHL could not say how much it saved by forgoing inspections. Aila also said Gentry had done excellent work in the two subdivisions.
Attorneys versed in trust law, however, say DHHL is obligated to do inspections as part of its legal duty as trustee.
“With respect to the duty of loyalty owed to the beneficiaries, the beneficiaries deserve more,” said Susan Gary, a retired University of Oregon law professor with expertise in trust law. “And I think that’s where the problem is. That’s not something you can delegate.”
David Kauila Kopper, litigation director of the Native Hawaiian Legal Corp., said courts have required the state to protect beneficiary interests in other matters related to trust duties. In 2000, for example, the Hawaii Supreme Court ruled that the state could not delegate to a developer the state’s trust responsibility to determine whether a planned Big Island project protected the customary and traditional rights of Native Hawaiians to access the property for cultural practices. And in 2019, the high court determined that the state breached its trust duty to care for public lands by failing to conduct regular inspections of Hawaii Island property that the military was leasing for live-fire training exercises. In nearly 50 years, the state had only inspected the land a few times. “It all stems from the same trustee obligation,” Kopper said.
When it comes to DHHL and homestead construction, “an argument could be made that by relying on Gentry or the city and putting your hands up and saying, ‘Well, that’s good enough,’ you’re delegating the duty to further the best interests of your beneficiaries to entities that perhaps don’t have that in mind — and that’s not their job,” Kopper added.
DHHL counters that it only has a constitutional obligation to provide beneficiaries with a buildable vacant lot, not a home. Therefore, officials say, the department has no duty to check the houses themselves. Beneficiaries, the agency noted, purchase homes directly from the builder, who must comply with government code under its development agreement with DHHL.
For the two Kapolei subdivisions, Gentry used in-house and third-party inspectors. The company said the level of monitoring, including daily checks by Gentry superintendents, was thorough and matched what is done at its private developments. Additionally, the buyer is able to walk through the home after it’s completed to do a final check.
John Merriman, vice president of Mid Pac Engineering, one of the outside companies used by Gentry, said, “There are multiple people out there who want the quality to be high enough that those homeowners don’t have issues.”
Regarding the Moniz case, Gentry said that if the support beam had been cracked before the home was sold, the problem would have been caught during the inspection process. The company told the Star-Advertiser and ProPublica that it reinforced the beam after the homeowner complained.
‘THEY DID DO A BUM JOB’
DHHL says it has no jurisdiction over homeowners’ construction-defect claims because the transaction is between the buyer and the builder, so the department typically doesn’t investigate or track such complaints. Gentry, however, conducts regular surveys of its customers and said the overall feedback from their DHHL projects has been positive.
For our own survey, the Star-Advertiser and ProPublica reached out to the occupants of the roughly 500 developer-built homes in the two newest homestead communities in Kapolei. Over the course of several months, the news organizations sent mailers and emails, made phone calls, knocked on over 100 doors, advertised on social media, spoke at a homeowner meeting and published a questionnaire on the websites for both media outlets. Seventy-eight people responded, including 53 who reported two or more problems or concerns with their residences. The majority of those raising multiple issues were from Kanehili, the older of the two subdivisions. The issues ranged from simply cosmetic — hairline cracks in the ceiling, for instance — to more serious, such as mold growing inside the home or flooring damaged by sewage backups.
Gentry provides a warranty that covers the cost of parts and labor for all repairs during the first year, as well as similar coverage for electrical and plumbing issues for another year. And some manufacturer warranties for specific items extend beyond that, though the length of the guarantees vary and they typically cover parts only.
In an interview, Aila, the head of DHHL, stressed that homeowners have the responsibility to properly maintain their residences. If they don’t do so and the warranties expire, “three or four years later, they can’t come back and make accusations that there’s poor quality because the faucet is leaking and now the cabinet is rotten,” he said.
Dozens of respondents, however, told the news organizations that their problems emerged within about a year of moving in. And many said they were surprised when they had to spend hundreds or thousands of dollars on repairs not covered by warranties in the first few years. DHHL declined to comment on the cases, except to say the house is the responsibility of the homeowner.
One respondent who reported issues was Marlena Brown-Clemente, who said her AC unit stopped working just over a year after moving in. When she called DHHL to complain, she said the agency directed her to Gentry. The company told her the problem was her responsibility, she said, so she ultimately paid about $1,000 to fix it. Still, problems persisted. That was not what Brown-Clemente expected when, in 2016, she inherited her late father’s rights to pick a lot in Kauluokahai, which at the time had no homes. Two years later, she and her husband purchased a four-bedroom, three-bath house there for about $360,000. As luck would have it, the home model was called The Lena, the nickname Brown-Clemente’s father used for her. “I looked at my husband and cried,” she said in an interview. “I said, ‘Whatever you do, you have to get me that house.’”
Gentry said it had no records of calls about air conditioning from Brown-Clemente, and that the system performs well if regular maintenance is done. Brown-Clemente, 49, a full-time volunteer for her church, said the couple hires a company to service the system every six months, like Gentry recommends. “I came into this thinking I’m just lucky to have it, so I didn’t complain too much,” she told the Star-Advertiser and ProPublica. “But now I’m looking back: Yeah, they did do a bum job on my house.”
Air conditioning, which is all but essential in Kapolei during the humid summers, was the most commonly cited problem in the Star-Advertiser/ProPublica survey, mentioned by nearly 40 respondents.
Plumbing was another top concern, flagged by more than two dozen.
Kealii Cabrera, a construction supervisor who bought his new $390,000 Kanehili home in 2020, said his problems started almost immediately. A week after moving in, he said, sewage started backing up through a downstairs shower drain, flooding part of the first floor. Cabrera said he had to relocate his family to a hotel for a month while repairs were made to the flooring and walls.
He said he complained to DHHL multiple times. At first, the department referred him to Gentry, which initially refused to take responsibility for the damage. When conversations with the builder stalled, Cabrera said he went back to DHHL, which told him the department couldn’t get involved. He said he asked the department whether it had a quality control system, and it responded no. “That’s the root of the problem,” Cabrera said.
In response to written questions from the news organizations, a Gentry spokesperson said the company ultimately paid Cabrera over $50,000 to cover cleanup, temporary housing and other costs, after reviewing his request and the circumstances around the incident. The spokesperson described the temporary housing payment as “a very rare occurrence.”
In the Moniz case, Gentry said it performed many “courtesy” repairs beyond the warranty periods, including paying for refrigerator and AC fixes in 2017 and 2018, in addition to reinforcing the beam.
Some respondents to the news organizations’ survey lauded Gentry for its customer service and quality of work. About 18 reported no or only minor problems, including nearly a dozen who said they were very happy with their homes. “It’s like the promised land for us,” John Gora said of the Kauluokahai house he and his wife, Melissa-Ann Gora, purchased last summer after she spent nearly 40 years on the waitlist.
NO FORUM FOR HELP
If homeowners are unable to resolve disputes over alleged defects with the builder, they usually can’t expect help from DHHL. The agency provides no forum for owners to pursue such claims — even when DHHL served as the developer and oversaw inspections.
Timothy McBrayer and Iwalani Laybon-McBrayer learned that firsthand.
For more than a decade, the couple has unsuccessfully sought DHHL’s help to resolve alleged construction defects that they say have been present almost from the time they moved into their new home in 2007. Shioi Construction, which built the home, disputed their claims and noted that the city and a DHHL special inspector had checked the dwelling.
The couple live in Kaupea, a Kapolei subdivision that was constructed just before Kanehili and for which DHHL served as the developer. The department hired Shioi to build homes and a project manager to monitor the work.
In the first year or two, the McBrayers said they experienced plumbing, mold and electrical problems that they reported to Shioi and DHHL. The problems largely continue to this day. The couple can no longer get homeowner’s insurance.
The McBrayers kept a log showing they sought assistance from 25 different DHHL representatives since 2007, and they said they received multiple assurances that the agency would deal with the situation.
Eric Seitz, their attorney, told DHHL in August that the couple relied on those promises. And DHHL, which supervised the builder, owed the McBrayers a fiduciary duty that went well beyond a normal home transaction, Seitz said. “The department is there to provide a service to Hawaiians, to help them, not merely to sell them a house and say, ‘You’re on your own,’” he said in an interview. “When complaints are brought to them, they have a much deeper and overriding responsibility to help.”
But when the McBrayers tried to take their case to the commission, their request was denied because DHHL lacked jurisdiction, a position the agency took repeatedly with the couple, its records show.
Still, some commissioners have raised concerns. At a February 2019 meeting, one questioned why the McBrayer problems have taken so long to resolve. Another, Zachary Helm, cited the case to highlight the need for greater oversight of construction. As contractors build more homes, “we can do a little better job in monitoring the work these people do,” said Helm, who recently declined additional comment.
DHHL also declined to comment.
‘THE WILD, WILD WEST’
Some beneficiary families remain skeptical of DHHL’s ability to remedy their concerns. Kepa Maly, one of the original homeowners in the Panaewa development plagued by problems, recently sold the house he and his wife shared for 30 years. “Our children didn’t want anything to do with it,” Maly wrote in an email. “And given the choice, I doubt we would ever live in a DHHL-developed project again. They’ve demonstrated incompetence and a lack of common decency throughout their history.”
Former Gov. John Waihee, the only Native Hawaiian to serve as the state’s top executive, said the solution is simple: DHHL should hire an inspector or two. The costs, he said, would be negligible.
But Robin Danner, who heads the largest beneficiary organization in Hawaii, says that after decades of state mismanagement, something more is needed: greater federal oversight. That could come in two forms. One, the U.S. government could sue the state for breach of trust, a step it has never taken. Or two, it could further specify how DHHL implements the Hawaiian Homes Commission Act, the federal law that created the program a century ago. As written now, the law is vague about a range of issues, including quality control.
In fact, the homesteading program, which was taken over by the state as a condition of statehood, ran for more than 90 years without a single federal regulation in place.
At the request of Danner’s group, the Sovereign Council of Hawaiian Homestead Associations, the Obama administration in 2016 adopted the first two federal regulations in the program’s history. But neither dealt with housing; one established procedures for land exchanges and the other a process for amending the 1921 law. No more have been adopted since, continuing to leave large sections of the law open to interpretation. And that has enabled DHHL to undermine its fiduciary obligation to beneficiaries, according to Danner, who says the federal government should adopt a rule requiring DHHL to perform inspections.
“When federal regulations are silent, that’s when you get the wild, wild west,” Danner said.
She and other Native Hawaiians are now looking to President Joe Biden, who has vowed to fulfill “Federal trust and treaty responsibilities” to Indigenous people and appointed Deb Haaland to lead the Interior Department, which oversees the Native Hawaiian land trust. As the first Native American to lead the department, Haaland has pledged to champion Indigenous issues.
But it’s unclear what, if any, action will come from Washington.
Haaland’s office has not made her available for an interview, despite several requests since June. But an Interior spokesperson issued a statement in response to questions from the Star-Advertiser and ProPublica. “Both the state and the federal government have roles in administering the laws governing the Hawaiian Home Lands trust,” he said. “However, the day-to-day administration of the trust and the governance of home inspections are the responsibility of the state.”
The news organizations also reached out to Hawaii’s four members of Congress, but three of them declined comment or did not respond. Sen. Mazie Hirono issued a statement. “DHHL has an important obligation to provide access to affordable, safe housing for Hawaii’s Native Hawaiian community,” she said. “I remain committed to supporting the Native Hawaiian community and working to ensure that both the state of Hawaii and the federal government meet their obligations under the Hawaiian Homes Commission Act.”
Hirono did not address the question of greater federal oversight.
Laybon-McBrayer, who is president of the Kaupea Homestead Association, said the situation leaves families like hers to go it alone. “I just say, ‘Lord, keep us safe,’” she said. “I gotta trust in a higher power rather than a broken system.”
Beena Raghavendran and Agnel Philip of ProPublica contributed reporting. Kacie Yamamoto of the Honolulu Star-Advertiser contributed research.
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