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Monday, January 06, 2020
DHHL Leaseholds--many vacant or abandoned
By Andrew Walden @ 5:24 PM :: 1716 Views :: DHHL

by Andrew Walden

Politicians have been talking about the DHHL “waiting list” for nearly 100 years.  It only gets longer.

But what happens when beneficiaries receive their leasehold?

It turns out many lie vacant or abandoned—and the problem may be much larger than DHHL officials realize.

Could the real estate market put 100s of Hawaiian families into the DHHL homes they have been waiting for?

Perhaps, but DHHL policy creates obstacles.  In contrast to the fee-simple market, lessees cannot rent out their homes—even to other beneficiaries.  Lessees who sell their homes or return them to DHHL for reassignment are then relegated to the bottom of the waiting list for a new house if they reapply.

DHHL has an exact number of waitlisters--26,079 adults on the DHHL ‘waiting list’ as of Dec 31, 2017, according to DHHL’s website. 

DHHL spokesman Cedric Duarte tells Hawai’i Free Press the Department has 9,917 lessees as of November 17, 2019.

But when it comes to vacant and abandoned units among those 9,917, estimates vary widely and nobody has anything remotely like an accurate statewide count.

The January, 2020, edition of Ka Wai Ola includes six classified ads for DHHL homes starting at $259K.  A mid-December search of Oahure.com shows 17 DHHL leasehold homes on Oahu --5 available and 12 in escrow-- with prices ranging from $265K to $650K.  Any DHHL beneficiary can buy one of these homes and bypass the waiting list.

Separate from these, Duarte says, “26 homes are in the process of being offered to beneficiaries on the wait list (and another) 30 houses are in the appraisal process where the Department will determine if the house needs to repaired or demolished due to health or safety reasons. Once this process has been completed, DHHL will pay the previous lessee any Net Proceeds and then move forward with offering the house/lot to the next person on the wait list.”

In a December 30, 2019 news release DHHL acknowledges asking only 33 lessees to leave their homesteads due to mortgage foreclosure over the last five years.  The news release responds to the Sovereign Council of Hawaiian Homestead Associations (SCHHA) which complains DHHL 'allows' too many foreclosures.  In contrast, a 2013 report from the Hawaii State Auditor criticizes DHHL for failure to “collect delinquencies or cancel accompanying leases,” stating that it runs counter to the trustee duty of impartiality by elevating an individual delinquent lessee’s interest above other beneficiaries.    

The vacancy rate may vary substantially from one subdivision to the next.  In July, 2019, DHHL offered two homes—one in Papakolea and one in Kaupe’a—for sale to beneficiaries at $114K and $322K respectively. 

Contacted by Hawai’i Free Press, DHHL Deputy Director Michele Kauhane describes her home subdivision:  “Kaupe’a (a 52-acre subdivision in Kapolei) currently has one vacant home (out of 326) that has been vacant for over a year.  My understanding is that the family returned the lease to DHHL but I do not know the details or specific reasons for their decision.  …Just recently DHHL has offered the home to eligible beneficiaries on the waitlist.”

Kauhane adds: “(At Kaupe’a) 326 homes were built - we currently have no vacant lots or homes under construction.  (Vacancies) may be common in subdivisions awarded through undivided interest leases where no income qualification was required to receive a lease. Homes in these developments are constructed as beneficiaries are financially qualified to purchase or build a home.   Kaupea was a turnkey Development.  Beneficiaries were required to qualify for the turnkey models marketed.  We selected homes based on the amount of loan we were pre-approved for at the time of lot selection.”

As Kauhane suggests, other subdivisions have a bigger problem.

Lilia Kapuniai, Executive Director of Papakolea Community Development, tells Hawai’i Free Press, “Papakolea has seen an increase of abandoned and/or vacant homes, right now we are at our highest number - a little over 30.” 

In an October 27, 2019, letter to legislators, Napua Hueu, a dissident resident of Kahikinui subdivision on the southern slope of Haleakala writes, “There were 75 lots issued under the terms of kuleana homestead leases by the DHHL for Kahikinui in 1999. An approximate 40 leaseholders remain active on their lots in a full or part-time manner. Of those 40 active leaseholders only about 13 families live on the mountain as full-time homesteaders, all others tend to their lots in a part-time homesteader capacity making it out to Kahikinui to tend to their lots a few times per week, on weekends or long holidays.”

The Star-Advertiser, December 1, 2019, reports: “(DHHL) is pushing for compliance (with a requirement for Kahikinui lessees to build a home and occupy it) in part because demand for pastoral lots on Maui has increased substantially since the Kahikinui leases were issued 20 years ago. The number of beneficiaries on the ranching waitlist has nearly doubled, totaling more than 620 as of June 2018, according to DHHL data.” 

Maku’u Farm Lots in the Puna District of the Big Island is notoriously vacant (see Google satellite).  According to a 2010 DHHL report 59 residents live in 22 homes in a subdivision of 127 lots.

Asked about Maku’u, Duarte explains: “A 1983 Federal-State Task Force on the Hawaiian Homes Commission Act stated DHHL needed to issue leases faster and cheaper. In response to the Task Forces’ recommendation, DHHL created the Kuleana Homestead Program and the Acceleration Program.

“The goal of the Acceleration Program was to award 2,500 homestead lots over the course of three years. This program included residential and agricultural awards, some of which were lots that were not subdivided and had no improvements. Lots in Maku’u were offered as part of the Acceleration and many lots did not have access to water and were covered in lava rock.

“There are currently 121 agricultural lessees in Maku’u and DHHL expects to offer 30 lots Maku’u in 2020.  Beneficiaries are not required to build a home on an agricultural lot.”

According to Duarte, DHHL assigned 2,629 Accelerated Lease Awards between 1984 and 1987: 1,671 residential, 731 Agricultural, and 227 Pastoral.

  *   *   *   *   *

Questions and Answers from DHHL’s Cedric Duarte:

Q-- What happens to beneficiaries who abandon their leaseholds?

A-- If a lessee chooses to abandon their lease, the Department would request from the Hawaiian Homes Commission to accept the abandonment of the lease. The Department would appraise the home and offer it to the next person on the waiting list. DHHL would then pay the previous lessee any net proceeds from the sale of their home.

Q-- What happens to beneficiaries who sell their leaseholds? Do they return to their previous place on the 'Waiting list' or are they sent to the bottom of the list?  Are they prohibited from returning to the list?

A-- A beneficiary who sells or surrenders their lease may place their name back onto the waitlist, but they would be at the bottom of the list. They are not prohibited from placing their name back on to the list.

Q-- What are the rules regarding unoccupied and/or abandoned homes?

A-- Per the lease agreement, a lessee must occupy their home.

When DHHL hears from the community about unoccupied houses, the Department will have staff investigate and determine the status of the property. If it is determined that the property is unoccupied and/or abandoned, DHHL staff will request a contested case hearing from the Hawaiian Homes Commission to proceed with cancelling the lease on that property. Once the lessees due process has been exhausted and the lease is cancelled, the Department would take back the property to offer to the next person on wait list.

Q-- What are the rules regarding leasehold lots with no home constructed?

A-- Per the lease agreement, lessees have 1-year to construct a dwelling on their homestead lot after receiving their lot.  DHHL has recently hire new staff to assist beneficiaries with the home building process on their vacant lots. In the last 6-months, DHHL has offered vacant lots on Lanai and in two subdivisions on Oahu. A vacant lot award allows a beneficiary to build a home that is suitable to their needs, which could include a tiny home.

Q-- Are lessees allowed to rent out their homes?  (To the general public or only to other beneficiaries?)

A-- Per their lease agreement, a lessee must occupy their home.  They may rent a room in their house to a native Hawaiian as defined by the Hawaiian Homes Commission Act.

Q-- I have seen realtors advertising DHHL leaseholds for sale to other beneficiaries.  What is the Department’s policy on such sales?  What is the Department doing to encourage lessees to utilize the real estate marketplace to buy/sell/trade their un-used leasehold in order to find one that they can utilize?

A-- The sale of a house on Hawaiian Home Lands is considered a private matter between the buyer and the seller until such time an agreement is made between the two parties and a transfer of the DHHL lease is requested. At that time, the Department will confirm that the buyer meets the qualifications as a native Hawaiian as defined by the Hawaiian Homes Commission Act.

Q— Which DHHL subdivisions were created or expanded under the Acceleration Program and Kuleana Homestead Program?

A-- Here are the areas that we offered to beneficiaries during the Accelerated Lots Program.

OAHU

  • Waimanalo
  • Nanakuli
  • Lualualei
  • Waianae

HAWAII

  • Keaukaha
  • Waiakea
  • Kawaihae
  • Puupulehu
  • Panaewa
  • Makuu
  • Kamaoa
  • Puukapu

MAUI

  • Paukukalo
  • Waiehu
  • Kula

KAUAI

  • Anahola
  • Kekaha

MOLOKAI

  • Hoolehua
  • Kalamaula
  • One Alii

---30---

Related: DHHL Defends Mortgage Lending Practices

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