Two advocacy groups for existing and future Hawaiian homesteaders are challenging a tentative state Department of Hawaiian Home Lands plan to spend a recently appropriated historic $600 million helping beneficiaries.

The Sovereign Council of Hawaiian Homestead Associations and the Association of Hawaiians for Homestead Lands are producing a competing spending plan the two groups will try to have implemented by possibly new DHHL administrators after Hawaii’s next governor takes office in December following the Nov. 8 election.

SCHHA and AHHL recently published core elements of a draft plan with a critique of DHHL’s draft plan.

The two advocacy groups blasted what DHHL refers to as its “preliminary strategic approach” — calling the agency’s plan myopic and lacking connection to reality.

“If it was a great plan, we say yeah,” Robin Danner, SCHHA chair, said in an interview about DHHL’s draft plan. “It’s not a great plan.”

DHHL’s draft plan channels $475 million, or 79% of the $600 million in state general fund revenue approved by the Legislature in May, to develop 2,863 house lots in already planned or partially developed homestead subdivisions.

This draft plan was unanimously approved in August by the Hawaiian Homes Commission, the agency’s governing board. A final plan must be delivered to the Legislature by Dec. 10.

Under the Hawaiian homestead program, created in 1921 by federal law and administered by the state since 1959, DHHL beneficiaries must be at least 50% Hawaiian and can receive 99-year land leases for $1 a year but pay for or build their own houses.

Roughly 28,700 applicants are on a waitlist for homesteads, and more than 2,000 beneficiaries have died while on the list, according to an analysis by the Honolulu Star-­Advertiser and ProPublica.

SCHHA and AHHL contend that DHHL should put the $600 million mostly toward expanding its land holdings and helping beneficiaries pay for homes leveraged by private capital, while relying on the Legislature to provide more bond financing to pay for lot development on land the agency already owns.

“We want them to build lots,” Danner said, adding that using the record $600 million appropriation of general fund money to do so is a waste when bond financing could be provided by lawmakers to develop the same number of lots.

“They’re spending sherbet-flavored ice cream like it’s vanilla,” she said.

DHHL Director William Aila Jr. said in a statement that the agency is working with what it has and that several parts of the plan from the two advocacy groups are unrealistic.

“The preliminary approach that has been crafted by the Department of Hawaiian Home Lands and approved by the Hawaiian Homes Commission is a plan that is based on information that we know,” he said. “We know that we have new homestead projects on every island that are either shovel ready or have completed environmental compliance and will develop homesteads for native Hawaiians on Hawaiian Home Lands. These new lots with infrastructure will result in much needed housing units within the state of Hawaii.”

Regarding capital improvement bond financing, DHHL has received $25 million annually in recent years and $78 million in this year’s budget, though most of this money is allocated for use, according to the agency.

Many options

Lawmakers gave DHHL wide latitude to spend the $600 million under House Bill 2511, which in July became Act 279, also referred to as the Waitlist Reduction Act.

The money can be spent on developing or buying lots and homes, principal residence mortgage or rental subsidies for beneficiaries, funding to help waitlist applicants buy a home, and “other services as necessary to address the waiting list.”

Any amount not encumbered within three years reverts to the state general fund.

Danner said SCHHA, a 35-year-old coalition of homestead associations, and AHHL, founded in 2008 to represent nearly 10,000 trust land lessees and beneficiaries on the waitlist, decided to produce their own plan because they have lost faith in DHHL to best serve beneficiaries.

The two groups engaged policy analysts along with advisers in residential development and financing to produce a “beneficiary- driven” plan during several planning sessions since May.

“It was dynamic and productive,” Kammy Purdy, a SCHHA leader from Molokai with the Hoolehua Homestead Association, said in a statement in August describing the effort. “My family is fifth-generation on Molokai homesteads (and) since founding the SCHHA, we have endured the last five governors and all their DHHL directors that rarely have had any background in the (Hawaiian Homes Commission Act) or in the meaning of a fiduciary land trust to an Indigenous people.”

Mike Kahikina, AHHL chairman, described the summit as powerful in the same written announcement about the work.

“People translated truly, decades of hurt, of disappointment in state government, into hope and possibilities,” he said.

SCHHA and AHHL intend to adopt a more detailed final plan at a meeting scheduled for Nov. 17.

Rival plan

The draft plan from the two organizations estimates that it can generate 13,663 lots or homes for beneficiaries, or $43,914 on average, in large part by leveraging private capital.

Most of the money in the plan — $350 million — is directed to buy land that can be used for residential, ranching or farm-ing homesteads.

Such acquisitions, the plan states, could include existing rental housing complexes, home foreclosures, lots and the 55,000-acre Molokai Ranch, which was listed for sale several years at $260 million. According to the plan, 6,363 lots or homes could be acquired for $350 million, or $55,000 per unit on average.

By comparison, DHHL’s plan anticipates using $35 million to acquire land, including a state-owned site in Kapolei for 300 lots. DHHL’s plan also includes $30 million to produce homes off its land in partnership with developers leveraging other financing.

SCHHA and AHHL call the $35 million DHHL envisions spending to acquire land “timid,” and contend that the agency’s 203,000-acre land trust inventory is much too small to address the waitlist backlog.

“SCHHA policy and housing experts contend that the flexibility of Act 279 purposes is a rare opportunity to increase the size of the Hawaiian Home Land trust and should represent the highest allocation of the $600M,” the plan states.

Aila counters that real estate acquisition is an uncertain prospect and that low-priced land requires costly investments in infrastructure, while lots ready for homebuilding are expensive.

As an example, DHHL said it cost $150,000 on average per lot to develop homesteads on fairly flat land in Kapolei, and about $300,000 in a more hilly area in Waiohuli, Maui.

The next-highest allocation under the SCHHA and AHHL plan is $175 million for largely cash assistance to help beneficiaries buy homes on or off DHHL land. The two groups contend that average assistance of $34,000 could be leveraged by roughly 5,000 beneficiaries to make them homeowners.

DHHL’s plan envisions providing $60 million for down payment assistance, though some of this money could go toward rental assistance.

Aila suggested that the amount of mortgage assistance promoted by SCHHA and AHHL would largely go unused because there are fewer than 5,000 Hawaii homes listed for sale, according to Zillow, and the median sale price is $1.2 million for single-family properties.

SCHHA and AHHL propose dedicating $55 million to help expand housing in already developed homestead subdivisions, including construction of multifamily rentals and tiny homes as well as helping existing homesteaders build additional dwellings, including rental units, on their leased lots. Doing this, the plan states, could produce 2,300 more homes if the $55 million is leveraged with other financing.

Another spending initiative in the competing plan would direct $13 million to waitlist applicants to help pay for school, job training and child care that can help applicants save money for homeownership.

The smallest spending item in the competing plan is $7 million to improve DHHL’s records management system, loan program, procurement and homestead association support.

After a final plan is finished in November, the two groups intend to pitch it to Hawaii’s next governor, who takes office Dec. 5.

“It is incumbent on us as homestead associations to be at the table, to be a part of the solution, and it is incumbent on our state and federal officials to genuinely hear the manao (ideas) of homestead leaders,” Kipukai Kualii, SCHHA policy chair, said in a statement in August as the draft plan was taking shape. “We can no longer afford to allow government agencies to ignore the wisdom of its citizens, the waitlist, where my own father is 88 years old, pure Hawaiian, an expert farmer and rancher, (and) has waited well over half his life for a simple allotment of land.”

COMPARISON OF PLANS

The state Department of Hawaiian Home Lands and two advocacy groups — Sovereign Council of Hawaiian Homestead Associations and Association of Hawaiians for Homestead Lands — have vastly different ideas on how to best spend $600 million to further the agency’s mission helping beneficiaries. Here’s a spending breakdown:

Acquiring land/homes: DHHL $35M, SCCHA/AHHL $350M

Home purchase aid: DHHL $60M*, SCCHA/AHHL $175M

Lot/home development: DHHL $505M (mainly lots**), SCCHA/AHHL $55M

Existing home ownership/rent subsidy: DHHL $0, SCCHA/AHHL $0

Other: DHHL $0, SCCHA/AHHL $20M

* Could partly be for rent assistance

** $475 M on lots