The state Department of Hawaiian Home Lands wants to reduce a backlog of beneficiaries waiting for homesteads by offering a new kind of land lease: small farm sites.

The agency proposes turning 766 acres of former sugar cane plantation land it owns on Hawaii island into 375 parcels where beneficiaries could build a home on 1- to 3-acre lots and raise crops or animals for themselves or for sale.

Under the plan, these parcels that DHHL calls “subsistence agricultural” homesteads would be leased to beneficiaries who would have to cultivate the land within three years. Building a home would be optional.

DHHL said the planned subdivision, in Honomu about 10 miles north of Hilo and partially bordering Akaka Falls State Park, would be the first of its kind since the Hawaiian Homes Commission approved such homesteads last year.

The agency in the past offered large agricultural land leases for commercial farming, but had relatively poor success despite high interest from beneficiaries wanting to lease farmland. DHHL hasn’t offered agricultural homesteads in nearly 20 years.

By offering smaller ag lots, the agency anticipates that it can serve beneficiaries who are interested in agriculture but lack the resources to develop big commercial farms. At the same time, the subsistence agricultural homesteads would also help beneficiaries be more self­-sufficient and reduce the agency’s backlog of roughly 44,000 Native Hawaiians waiting for homestead leases.

Hokulei Lindsey, DHHL administrative rules officer, explained in a video that the idea ties back to a 2000 task force recommendation to satisfy demand from beneficiaries who are interested in a rural lifestyle, particularly on the neighbor islands.

Of the 44,000 homestead applications, the single largest demand is for residential leases on Oahu, representing about 11,000 applications, according to DHHL data. The second highest demand is for ag leases on Hawaii island at about 7,100.

“But most of these people don’t want commercial ag,” Lindsey said in the video. “They want rural lifestyle. The subsistence ag lot is aiming to address that demand. If you can imagine a 1-acre-size lot with a house, a vegetable garden or mixed crops, maybe some chickens or a goat — that kind of thing.”

There is some public sentiment that DHHL’s subsistence ag lots represent potential creation of “gentlemen farm” subdivisions that some private developers in Hawaii have created for buyers. In those cases, the buyers can build homes on land zoned for agriculture without engaging in any substantial farming because county zoning laws allow the homes as accessories to agricultural activities but don’t define farming or verify that it takes place.

At a community meeting last year in Honomu, some residents expressed concern with DHHL’s plan because lots in the area are typically at least 20 acres.

“This doesn’t fit the existing community” was one comment received at the meeting, according to DHHL notes. Another comment was: “If homes come in, all the agriculture will stop.”

In response to those comments, the agency said it has a responsibility to serve Hawaiians with opportunities that include economic self-sufficiency, and that developing small ag lots is a way to do that.

“Many families do not have the resources to put large acreages into production,” DHHL said. “Additionally, larger lot sizes mean that fewer families have an opportunity to get on the land.”

DHHL also noted that it is not subject to county zoning laws, and said it is going to ensure that lessees comply with the farming requirement.

The agency also plans to help lessees with farming by paying for a University of Hawaii College of Tropical Agriculture and Human Resources extension agent for technical services.

Depending on how the Honomu project shapes up, it could become a model for similar homestead subdivisions. But this determination could be many years off.

According to a draft environment assessment filed recently with the state Office of Environmental Quality Control outlining the project, work on an initial phase of 15 lots is expected to begin early next year. However, DHHL has no estimate yet for costs to develop infrastructure including roads and electrical utilities. The plan also calls for developing recreation spaces and a commercial area near Akaka Falls that could serve tourists.

DHHL spokeswoman Paula Aila said in an email that there is no timetable for when initial lease awards could be made.

The agency said it will offer Honomu leases to its top 500 applicants for Hawaii island agricultural homesteads, a group that applied for leases between 1952 and 1985.

The report said DHHL will work toward awarding all Honomu leases by 2032, and that design and development lessons learned in the first phase will be applied to subsequent phases.

Currently, two short-term lessees use most of the property for pasture. Some small-scale vegetable farming also exists, and about a quarter of the site is vacant, the report said.

DHHL beneficiaries can obtain 99-year homestead leases for $1 a year, and are responsible for financing home construction. The Honomu plan calls for lessees who desire a home to build their own water catchment and wastewater treatment systems.

Water for crops is expected mostly from rainfall that typically reaches around 205 inches per year, according to the report, which also said soil quality is good and that catchment systems could provide supplemental crop irrigation.