An arbitrary state Department of Health ruling effectively blocks Veterans Affairs loans to homes with rainwater catchment systems, many of them in Hawaii County.
This declaration by the DOH, that rain catchment water is non-potable, has stopped all VA loans and refinancing on homes with county-approved catchment systems. This could affect up to 60,000 of the most affordable homes on the Big Island. It has locked in existing VA home mortgages at higher rates and blocked veterans who own existing homes from refinancing at the current low rates with no money down.
According to the 2000 Census, there are 16,298 veterans on Hawaii island. Of those, the VA estimates, 4,500 are directly affected by the catchment issue.
My office was first apprised of the problem by VA loan administrators, who pointed out that the policy statement on the DOH website was causing the VA to balk at home loans and refinancing for homes with catchment systems. They were also concerned that other lenders such as Fannie Mae and Freddie Mac might follow suit, paralyzing mortgage lending for a huge segment of the Big Island real estate inventory.
This policy isn’t a law or an administrative rule. It is just a policy promulgation that has become de facto state of Hawaii policy. This occurred without any legislative discussion or oversight.
Another state authority, the University of Hawaii, has stated the opposite opinion, saying catchment systems that are properly maintained produce potable water acceptable for home use. Further, homeowners in the Hilo and Puna districts have used rainwater catchment systems for decades without any major health issues arising.
The typical catchment system uses a sealed storage tank and a series of filters, usually culminating in the UV or reverse osmosis purification process. Catchment is so widely used because the county has not provided the necessary infrastructure to deliver water to many residential areas.
I have suggested a solution: Remove the offending copy from the DOH website and replace it with a simple policy that requires testing the catchment water system for safety — at the owner’s expense — prior to the completion of loans.
In fact, the local regional director for the VA agreed and suggested wording for a new policy statement that would provide a solution to the problem:
"A catchment system tested by an approved State Department of Health lab and deemed to meet accepted Department of Health requirements as potable water. This system is considered to supply safe drinking water based on the test findings. This testing is done at the expense of the owner of record, and/or purchaser of the property and should be completed within no more than 90 days prior to the date of loan closing."
The counties can issue permitting and perform inspections for catchment systems the same way that they do for septic systems. These are not illegal installations that should be penalized.
It is unfair to deny our veterans financing on what are some of Hawaii’s most affordable homes, because of this arbitrary entry on the state’s website.
I would think that given Gov. Neil Abercrombie’s personal narrative relating to our military and our troops, he would bend over backwards to help. Clearly, this is not the case. He should direct his Department of Health to correct this arbitrary policy statement that keeps our veterans from getting the low-interest rate loans that they have earned through their VA benefits.
