Two years into a three-year plan for the state Department of Hawaiian Home Lands to use $600 million primarily for developing homestead lots for beneficiaries, the agency’s plan is still very much in flux.

DHHL has recently shuffled projected spending for development of certain projects as it also pursues use of more money to buy land that is suited for quicker development but might need extra future funding to produce homestead lots.

Kali Watson, the agency’s director, on Thursday briefed a state House of Representatives panel about DHHL’s plan to spend the historic amount of money appropriated by the Legislature in 2022 through Act 279.

“This is an ongoing process,” he told the panel. “It’s an evolving process.”

Roughly 28,700 Native Hawaiian DHHL beneficiaries are on a waitlist for homesteads, and the record amount of funding was aimed at helping the agency speed up homestead production.

Under the program, beneficiaries receive 99-year land leases costing $1 a year but have to pay for their own homes on residential, agricultural or pastoral lease lots.

DHHL plans to develop about 3,000 homesteads spread over roughly 30 projects statewide with the $600 million appropriation.

Recent changes to earlier versions of DHHL’s spending plan include committing less funding to one project on Maui and one on Hawaii island, pushing back spending for a project on Oahu and perhaps developing one project on Kauai on a different part of the island.

The Maui project, slated for 207 lots in Wailuku, previously had $45 million earmarked for use in 2023 that included $5 million to buy the project site from Maui development firm Dowling Co.

Now funding for the Wailuku project has been reduced to $12.3 million. DHHL said in an email that the balance was shifted to prioritize other projects where homestead lots and homes can be developed more quickly.

“The $12.3 million is allocated for the beginning stages, but further funding will be necessary to complete the full project and deliver the 207 lots,” the agency said.

On Hawaii island an even greater funding shift has been made to a 635-lot project called La‘i ‘Opua. Originally, DHHL budgeted $67 million for use in the first two years of its plan, but now it intends to encumber $39.2 million during the third year, the current fiscal year, which began July 1.

The $39.2 million budgeted for La‘i ‘Opua is expected to deliver only a portion of the 635 planned lots.

On Oahu, DHHL used $8.3 million in Act 279 funding to buy land for a 60-lot second phase of its existing Kaupea homestead community, and the agency initially budgeted another $14.8 million for use in the 2024 fiscal year, which ended June 30.

Spending to develop the new Kaupea lots has now been changed to $13.7 million for use in the current fiscal year, which ends June 30.

On Kauai, Watson told the House panel that he would like to relocate a planned 115-lot subsistence agriculture project from Anahola to Wailua because the Anahola site has no access to potable water and therefore is an impediment to beneficiaries being able to build a house where they also would produce their own food.

DHHL had budgeted $5 million for the Anahola lots, where design work had been underway as of January.

“I’ll probably get some pushback from the beneficiaries,” he said. “But I think if we swap that out for a site where not only would they get subsistence ag lots, but it’d be a better location closer to the roads and all that other stuff. Personally, I think it’s a lot better because if you can build your house on your subsistence ag lot, there’s a real benefit.”

Watson told the House panel that a permitted interaction group comprising a few members of the Hawaiian Homes Commission is intended to be set up later this month to consider the Kauai project change and other adjustments to the agency’s $600 million spending plan.

Under Act 279, DHHL has flexibility and control over how to spend the Legislature’s appropriation. No approval from lawmakers is required, though a working group of House members was formed in 2023 to stay appraised of the agency’s plans and progress.

House Majority Leader Rep. Nadine Nakamura (D, Hanalei-Princeville-Kapaa) chairs the panel and thanked Watson at the end of Thursday’s briefing for such a detailed presentation covering all of the agency’s projects slated for Act 279 funding.

“We really appreciate this level of briefing, your clear knowledge of the projects and the challenges relating to each one of these, because we know development takes time and it’s a long process,” Naka­mura said.

Nakamura also said DHHL could do a better job giving panel members information about when homestead lots are expected to be delivered, and priorities among projects.

For decades DHHL has developed homestead lots at a rather abysmal pace, partly due to low funding and high costs for putting in infrastructure on its land, which is largely outside urban areas and not well suited for homestead construction.

Under Act 279, DHHL has a deadline to encumber, or contract to spend, the $600 million and must return to the state’s general fund any money that isn’t encumbered by the deadline.

The deadline was intended to be June 30, 2025, but a flaw in the 2022 act resulted in the deadline being June 30, 2024. Lawmakers passed a new bill in May to extend the deadline to June 30, 2026, and the bill became law June 28, giving DHHL four years instead of three to encumber all of the historic appropriation.