Hawaiian Home Lands pushes home construction; lawmakers push back

A conceptual idea to dramatically alter how the state Department of Hawaiian Home Lands spends a historic $600 million appropriation from the Legislature in 2022 hasn’t been well received by some lawmakers.

Members of two Senate committees on Thursday evening were left with a lot of unanswered questions during a briefing largely focused on how new DHHL leadership under recently elected Gov. Josh Green intends to deviate from a spending plan submitted to the Legislature in December by the agency’s former administration.

Ikaika Anderson, named DHHL director by Green less than three weeks ago, said the goal that he and Green have is to build many homes using the unprecedented funding so that beneficiaries can buy, or in some cases rent, finished homes.

The prior administration’s plan dedicated the vast majority of the $600 million in state general fund revenue, about $505 million, to developing 2,727 homestead lots mostly for residential use that would allow for future construction of homes to be bought by beneficiaries.

An additional $35 million in the plan is slated for land or project acquisitions, and $60 million is for other beneficiary aid that could include help with down payments to buy a home and rental assistance.

Anderson called the prior administration’s plan a foundation and said the vision he is pursuing would “maximize and enhance” the effort to serve beneficiaries of DHHL, which has a waitlist of roughly 28,700 applicants seeking homesteads.

“The vision will build upon the foundation set by the previous administration,” he told members of the Ways and Means Committee and Hawaiian Affairs Committee on Thursday. “We’re keeping the existing plan … as a foundation, and what we are looking at as far as deviating is to build homes.”

Anderson does not yet have an estimate for how many homes he aims to have built — or where they would be located and under what time frame — using much of the $600 million. He also could not tell members of the committees how many of the planned homestead lots at about 20 subdivision projects in the prior administration’s plan might be retained or cut from a revised plan.

Nani Medeiros, chief housing officer in Green’s administration, appeared before the two committees and told members that using a majority of the $600 million to develop homestead lots isn’t optimal. She said DHHL can seek other types of state funds, such as bond financing from the Legislature or money from an affordable-housing fund controlled by the Hawaii Housing Finance and Development Corp., to pay for lot development.

Sen. Donovan Dela Cruz, Ways and Means chair, expressed frustration with what is so far only a conceptual vision from the new administration to alter DHHL’s spending plan, especially because any portion of the $600 million not encumbered, or contracted for spending, by June 20, 2025, automatically returns to the state’s general fund.

“So, you’re willing to put the $600 million at risk by delaying?” asked Dela Cruz (D, Wahiawa-­Whitmore-Mililani Mauka).

“No,” Anderson replied. “We’re starting to talk as a team and looking at properties to develop. We started doing that over the last 16 days.”

DHHL’s existing plan, or an amended one, does not need approval by the Legislature.

However, the agency is seeking an extension to the three-year deadline to use the $600 million. DHHL has drafted a bill for introduction at the Legislature aimed at obtaining an unspecified extension, and on Tuesday obtained approval from the Hawaiian Homes Commission for the extension request.

Committee members were told Thursday that the state Department of Budget and Finance notified DHHL that if more than $172 million is encumbered and more than $52 million is spent in the fiscal year ending June 30, then the state may have to pay back $412 million in federal coronavirus relief funding for education under a condition for that aid.

Dela Cruz told Anderson that he’s not inclined to pass an extension.

Sen. Gilbert Keith-Agaran, Ways and Means vice chair, suggested that an extension based on the risk of using too much money in the current fiscal year would be premature.

“If you’re asking for an extension, we can still wait to see how far you get,” said Keith-Agaran (D, Wailuku- Kahului-Waihee). “You don’t need the extension now.”

DHHL officials could not say how much of the $600 million was likely to be encumbered by June 30, though the figure to date was $13 million and should go to at least $50 million.

Sen. Donna Mercado Kim (D, Kalihi-Fort Shafter-Red Hill) dismissed DHHL’s need for an extension.

“You can’t (use the $172 million) by June, and people are waiting,” she said. “You know, that’s a tragedy right there.”

Under the Hawaiian homestead program, created in 1921 by federal law and administered by the state since 1959, DHHL beneficiaries must be at least 50% Native Hawaiian and can receive 99-year land leases for $1 a year but pay for or build their own houses.

The agency has about 10,000 lot lessees but has struggled for over 60 years under state control to do more, in part because of relatively meager funding and expensive infrastructure costs to develop its land, which is often outside urban areas.

DHHL and the Legislature have long been criticized for neglecting beneficiaries, including many who have spent decades on the waitlist and more than 2,000 who have died while on the list.

The agency’s $600 million spending plan submitted to lawmakers in December was heavily focused on accelerating homestead lot development at 20 existing projects already in various stages of production — from planning to design to permitting to contracting for construction.

These projects include 781 lots at East Kapolei II and 600 lots in Ewa Beach on Oahu, 400 lots at Laio­pua Village on Hawaii island, 250 lots at Leialii on Maui, infrastructure for 75 lots on Lanai, 16 agricultural lots on Molokai and 115 farming or ranching lots on Kauai.

Anderson emphasized to members of the committee that a new priority is producing homes for beneficiaries.

“The Green administration goal is to put kanaka in homes, actual homes,” he said.