Hawaii’s Big Fix to Its Housing Shortage for Native Hawaiians? A Casino.

The state Department of Hawaiian Home Lands is pushing a plan to build a casino on ancestral land to raise money for more housing. This happened just after the Star-Advertiser and ProPublica found chronic problems in the state’s native land program.

by Rob Perez, Honolulu Star-Advertiser, and Agnel Philip, ProPublica, Dec. 24, 2020 (Reprinted under Creative Commons License)

This fall, as the state Department of Hawaiian Home Lands faced mounting criticism over its handling of a century-old program to return Native Hawaiians to their ancestral lands, top officials asked their staff to come up with bold solutions.

The Star-Advertiser and ProPublica had reported in October that DHHL was failing to meet a crushing demand for housing. Under state law, anyone who is at least half Hawaiian and 18 or older is considered a beneficiary of a state-controlled land trust and entitled to get a homestead in a “prompt and efficient manner.” The department had developed just 3,300 residential lots statewide since 1995, though, while its residential waitlist ballooned to 23,000. If DHHL continued at the same pace, it would take 182 years to accommodate the so-called waitlisters, some of whom have waited for decades, the news organizations reported.

Shaken by the reporting, Tyler Gomes, deputy to the department’s top executive, challenged his staffers to “think outside of the box” to come up with one big move that could make a difference over the next 100 years. On Monday, at a meeting of the Hawaiian Homes Commission, he outlined their proposal: a resort-casino on Native Hawaiian land.

The casino project, he argued, could generate the revenue the department needs to build more housing at a quicker clip amid a worsening fiscal climate. The pandemic has battered Hawaii’s tourist-driven economy, and state agencies are bracing for budget cuts.

“The status quo is not working for our department,” Gomes told commissioners, citing the investigation by the Star-Advertiser and ProPublica. “The status quo is not working for our beneficiaries,” the group of people who are at least half Hawaiian and entitled to homesteads.

Several commissioners pushed back, saying that they were caught off guard by the abruptness of the proposal and needed more time to consult with beneficiaries and understand the ramifications of the proposed project. On Tuesday, however, the commission narrowly approved the measure by a 5-4 vote.

Proponents acknowledged it was a “last-minute initiative,” but they urged policymakers to support legislation that would authorize the development of a single casino on a commercial parcel that is part of the land trust created a century ago to return Hawaiians to their native lands. (A casino cannot be built without support of the Legislature, which meets beginning in January. Gambling is currently against the law in the state.)

“If we wait, it’s going to be next to impossible” to get a bill passed, said commission Chairman William J. Aila Jr. “This is the time — or they’ll be no time.”

A spokesperson for Gov. David Ige, however, said on Wednesday that he was opposed to gambling in Hawaii, and legislative leaders expressed concerns about DHHL’s proposal.

Nevertheless, the casino measure underscores a growing realization within DHHL that the homesteading program’s problems are worse than previously thought — and far from being fixed. While state and federal watchdogs have long criticized the department, the investigation by the Star-Advertiser and ProPublica marked the first time DHHL’s development strategy has been extensively examined, and many of the findings were new — even to DHHL.

Beneficiaries apply for a 99-year land lease and then, upon award, either build or buy a home on the parcel. But by focusing on developing expensive single-family subdivisions, the department has left thousands of low-income and homeless Native Hawaiian behind while exhausting large portions of its limited land holdings. Officials are now scrambling to explore radical ideas to reduce the waitlist, even as hundreds continue to join each year.

This week, DHHL officials said a casino could generate at least $30 million annually for the department, and potentially much more. The bulk of the money would go toward housing development and land acquisitions.

The proposal has proved divisive in the beneficiary community though, and some Native Hawaiian advocates are speaking out against it.

On Tuesday, approximately 25 protesters demonstrated outside the headquarters of the Hawaiian Homes Commission. They held a prayer, then marched and waved Hawaiian flags and signs that said: “No future in a casino,” “Family before profit” and “Delayed justice is no justice.” Drivers passing by honked their horns.

“I don’t want no casino,” Kamalani Kaliikuli of Laie said. “There’s been a big problem for illegal gambling and drug trafficking already with a lot of the homesteads, and I just want to prevent any more from coming in. It’s not the right answer; it’s not the right time. People need homes.”

The department received more than 100 written testimonies to the casino proposal, and over 90% opposed the measure.

But commissioners who approved the proposal this week said DHHL has few options left to fulfill its mission.

In response to critical lawmakers, Dennis Neves of Kauai noted that the department has received appropriations far short of what it sought and wondered how DHHL was supposed to make up the difference, which has been in the tens of millions of dollars annually in recent years. “If you don’t give us the money,” he asked of the legislators, “where do you think we’re getting it from?”

Even commissioners who opposed the casino measure acknowledged that DHHL cannot expect anyone else to bail it out. Randy Awo, a Maui commissioner, said more time was needed to consult beneficiaries but recognized the reality of the department’s dire fiscal situation. “The evidence is all around us that the cavalry is not coming any time soon,” he said.

Applicants must contend with long waits, sometimes lasting decades, before their names are called and they are offered a 99-year lease. In fact, more than 2,000 beneficiaires have already died without receiving a homestead, the Star-Advertiser and ProPublica found.

On Monday, the commission approved a separate proposal aimed at addressing the waitlist problem on Oahu, the state’s most populous island, while DHHL continues to develop subdivisions and other housing.

In a dramatic departure from the current model, DHHL will launch a $1.5 million pilot program to provide down-payment assistance to help eligible Hawaiians purchase housing on Oahu on the open market, not on land specifically set aside for homesteading.

The details of the program still have to be hashed out, but the department says it’s targeting waitlisters who are almost ready to purchase homes but need help with the down payment.

As the news organizations reported, the situation is most dire on Oahu, where the department doesn’t have enough land to satisfy housing demand. About half of those on the statewide residential waitlist, roughly 11,000 people, want to live there. But just 575 acres remain in the land trust that are suitable for housing — enough to supply less than a third of the waitlisters under DHHL’s current development model.

Supporters of the pilot program said using these DHHL funds for down payment assistance was a faster and more efficient way to help waitlisters than developing homestead lots, which take years to build and require costly infrastructure.

According to the basic framework of the program, the trust would be repaid its contribution if the home is sold. The department also would have the right to purchase the home, and that property would be added to DHHL’s inventory of available homesteading lands.

“It would allow us to grow the trust over time, one parcel at a time,” said Jobie Masagatani, a DHHL executive.

If the pilot program proves successful, DHHL intends to expand it.

“I think this is an excellent idea,” said state Sen. Maile Shimabukuro, who heads the Senate Committee on Hawaiian Affairs.

It is not, however, a panacea. Just like the subdivision strategy, the down payment initiative will mostly help waitlisters who have the means — or fall just short — to purchase homes. Those who don’t would likely continue to languish. The department says lower-income waitlisters still would have access to more affordable options, such as vacant lots on which they can build homes suited to their budgets.