July 2008 | Small Business News
While the State has made progress in getting more families and inviduals on to Hawaiian Homestead lands, the long term outlook for the program and its beneficiaries is bleak unless changes are made. There should be more initiatives and tax incentives for self-sustainability, private development, zoning changes for innovative housing and fee simple ownership of land.
Hawaiian Homes: Time for Change
By Sam Slom,
President, Small Business Hawaii
On June 5, 2008, the state Office of Hawaiian Affairs (OHA) announced it would front $90 million to the state Department of Hawaiian Home Lands (DHHL) over the next thirty years in what was described as “an historic partnership,” uniting state land with state (taxpayer) money. The funding would permit DHHL to deliver up to 500 residential house lots — nearly double the current rate — to Native Hawaiians hungering for a home of their own. Some state leaders were ecstatic calling this a “bold step.”
But is it?
It is true that the two high cost taxpayer-financed state agencies, who are supposed to be serving the same constituencies, have failed to work in concert in the past. It is also true that the Lingle Administration and DHHL executive director, Micah Kane, has accelerated the process of placing more Hawaiians on home lands than past administrations, but is this really progress? Is there any change here?
DHHL since 1994 has been receiving $30 million annually from the Legislature. That grant, based on a land settlement agreement, is scheduled to end in 2015. However, DHHL also receives about $12 million annually from its commercial land leases. That amount is expected to increase substantially with massive Kapolei development proposed. And DHHL seeks even more revenue sources.
OHA receives millions more annually, directly and indirectly, from all Hawaii taxpayers. The Lingle Administration has maintained a very close and special relationship with OHA, supporting OHA programs, land acquisition, budgets and legislative initiatives such as the Akaka Bill (Native Hawaiian Federal Recognition). A ceded lands agreement proposed by Lingle and OHA this past legislative session would have bestowed another $200 million to OHA, in land and cash, and $15 million a year (at least) in perpetuity. The deal fell apart when Native Hawaiian beneficiaries, excluded from the secret negotiations, balked at the arrangement in which they did not play a part. They wanted even more money. A lot more. And the continued right to sue.
A legislative proposal this year, inquiring into OHA’s financial dealings and requiring a detailed financial and management audit of OHA was opposed vehemently by OHA and the executive branch, led by state attorney general Mark Bennett.
Under terms of this new alliance, DHHL will borrow more than $40 million in revenue bonds (to be sold to private investors by year’s end) while OHA will guarantee DHHL $3 million per year for the next 30 years. Th 2008 State Legislature provided DHHL the authority to issue up to $100 million in development bonds. The bonds will be used by DHHL for infrastructure for the house lots statewide.
Years earlier, the Lingle administration had targeted 6,000 new land leases by the end of 2008. Despite two past aggressive years, the total at mid-year amounts to less than 3,000 new leases. Funding constraints and reduced revenue estimates are responsible for the reduced number of 500 lots. It is relevant to note that since the Hawaiian Home Lands Act was passed by the U.S.Congress in 1920, only about 5,900 lots were developed for lease during the previous 82 years before Lingle (2002).
Currently, there are more than 20,000 Native Hawaiians on a wait list for a state government land lease.
Many have been waiting for decades.
Do the math; these state agency financial development plans are not going to meaningfully reduce Hawaiian home demand in the forseeable future. This is not a bold new initiative. Bond and financing costs will be substantial. Actual new homes will be minimal. There is no real change being proposed, just more taxpayer guarantees and a lot of government development activity.
Native Hawaiians should not be looking to government or politicians to give them relief. If they do, they will continue to be frustrated and disappointed. If we truly desire change and bold action, there should be more initiatives and tax incentives for self-sustainability (the current buzz word of the state), private development, zoning changes for innovative housing and finally, fee simple ownership of land by the Hawaiians. More Hawaiian homes will only come with less dependence on government developers and landlords.
Hawaiians need more housing, not more government land deals.
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