Lawmakers Propose $600 Million to Fix Housing Program for Native Hawaiians

Legislative leaders in Hawaii are calling for the appropriation of $600 million to help house Native Hawaiians through a chronically underfunded homesteading program that has fallen short of its promise to return native people to their ancestral lands.

As the state government faces what is expected to be a budget surplus, House Speaker Scott Saiki on Wednesday proposed what he called historic legislation to provide the so-called Hawaiian Homes program with funding to address a huge demand for affordable housing among Native Hawaiians. The appropriation would be more than seven times the amount the legislature provided the Department of Hawaiian Home Lands, the state agency that administers the program, for construction last year.

Under the program, beneficiaries — defined as those who are at least 50% Hawaiian — can apply for a 99-year land lease and then, upon award, either build a home on the parcel or buy one from a developer. The price is roughly half the cost of comparable housing because beneficiaries are not paying for the land. But, as the Honolulu Star-Advertiser and ProPublica reported in 2020, tens of thousands of people face an ever-lengthening waitlist. Today, more than 28,700 applicants are seeking homesteads on land set aside by the federal government and now managed by the state. Some beneficiaries have waited on the list for decades. More than 2,000 have died while waiting, according to the news organizations’ first-of-its-kind analysis.

Over the past two years, the Star-Advertiser and ProPublica have found a number of structural shortcomings in the program, including that it had developed subdivision housing too expensive for many low-income beneficiaries. The news organizations also highlighted the failure of the state and federal governments to fulfill a 1995 settlement intended to compensate the program for land that was taken from the trust in the past. The program lacks the land it needs on Oahu, the island with the greatest demand for residential homesteads.

Saiki said in an email that the news organizations’ coverage “was absolutely a factor” in the House leadership’s decision to propose a one-time infusion of $600 million, citing the heightened awareness, caused by the reporting, of the state’s obligation to fulfill terms of the Hawaiian Homes Commission Act, the 1921 federal law that created the program. The state, via the Department of Hawaiian Home Lands, took over responsibility for the program as a condition of statehood.

In an opening-day address to the Legislature, which meets until early May, Saiki noted that Native Hawaiians have been the demographic group hardest hit by an affordable housing crisis. The proposed appropriation would enable trust beneficiaries to acquire their own homes, he said. “It is time to give the Department of Hawaiian Home Lands the resources it needs to fulfill its fiduciary duty,” Saiki said.

Though details of the proposed funding still have to be worked out and written into legislation, the amount already has backing in the state Senate.

Sen. Jarrett Keohokalole, co-chair of the Native Hawaiian Caucus in the Legislature, said the group has been meeting with the speaker to discuss the proposal. “We’re very interested in doing this this year,” Keohokalole said. He also noted that “surplus years don’t come around very often, and that’s the situation we’re in right now.”

If a measure passes the Legislature, it would go to Gov. David Ige for his consideration. Ige could not be reached for comment, but he previously told the Star-Advertiser and ProPublica that fulfilling the state’s obligations to the Hawaiian Homes program is a priority for his administration. Because of the state’s improved financial picture, the governor has proposed putting $1 billion into a rainy day fund. His idea has received pushback from legislators, who want to use the surplus now to address such problems as Hawaii’s homeless crisis, which is, in part, tied to the Hawaiian Homes program. In a 2020 survey of roughly 1,200 unsheltered homeless people on Oahu, 1 in 5 was eligible for the homesteading program and 7% were on the waitlist.

The improved financial picture, boosted by rebounding visitor arrivals and strong consumer spending, is a far cry from what it looked like a year ago, when legislators opened their session wondering whether the state’s unemployment insurance fund would become insolvent and hundreds of teachers would lose their jobs.

Despite that fiscal environment, lawmakers appropriated about $78 million — a record amount — in construction funding for DHHL to develop more than 700 homestead lots statewide to address the waitlist problem. Legislators cited the news organizations’ coverage in approving the funding last year.

The amount under consideration now would dwarf last year’s appropriation. “That’s going to be orders of magnitude larger than the largest infusion of funds we’ve ever given DHHL in a single year,” Keohokalole said. Historic funding shortfalls have contributed to the slow pace of homestead development. To maintain operations, officials diverted money from construction to administrative costs, resulting in fewer residential awards. In 2018, only six such leases were awarded, though the pace has picked up since then.

William J. Aila Jr., DHHL director and chair of the Hawaiian Homes Commission that oversees the agency, applauded the legislative proposal. “An investment of $600 million ... would be a historic infusion of resources to address the needs of potentially thousands of beneficiaries on the Department of Hawaiian Home Lands waiting list,” he said in a statement. “DHHL continues to be open to all measures that would return Native Hawaiians to the land.”

Beneficiaries also celebrated the proposal.

“I think what the Legislature is doing is long overdue,” said Richard Soo, an Oahu beneficiary who was awarded a residential homestead in 2001.

“This is a huge opportunity for beneficiaries as well as the department to be able to meet their needs,” said Blossom Feiteira, a beneficiary leader on Maui.

The $600 million mirrors what the Legislature approved in 1995 as part of a settlement to resolve the trust’s claims against the state, money that was paid out in annual installments over the next 20 years. With that settlement money, the agency was able to develop more than 4,000 new homestead lots — close to half the total developed over the past century.

In recent years, the department has estimated that it would need roughly $4 billion to exhaust a waitlist of 28,000 applicants, basing that estimate on an average cost of $150,000 to develop a residential lot. The beneficiary is responsible for buying or building a home on the lot.

Keohokalole and other legislators said the new $600 million infusion could be used to develop lots and acquire additional land, but the priority will be assisting those beneficiaries who cannot afford to purchase homes — the group of Native Hawaiians who were featured in the Star-Advertiser/ProPublica reporting.

That could mean more money for a unique pilot program that could help get Hawaiians off the waitlist, according to legislators. The program, which DHHL is still developing, would provide beneficiaries with down-payment assistance to buy homes on Oahu that aren’t located on trust land. Such assistance would require the recipients to give up their spots on the waitlist.

The project was approved by the commission in late 2020, following the Star-Advertiser and ProPublica’s initial story, and came after DHHL leadership challenged staff to “think outside of the box” to come up with bold solutions. The boldest one: a resort casino on DHHL land. That idea died during last year’s legislative session.