Homesteaders eye dispute between Fevella, Aila

Hawaii Tribune-Herald

“I understand the frustration, because there’s nothing the department has created except controversy.”

Keaukaha Community President Patrick Kahawaiolaa was referring to a letter sent Monday by state Sen. Kurt Fevella, the Senate minority leader, to U.S. Attorney General Merrick Garland and Interior Secretary Deb Haaland requesting a federal investigation of the state Department of Hawaiian Home Lands.

Fevella, the Senate’s lone Republican, believes the DHHL should be using $125 million in trust funds appropriated by the state Legislature to build homestead lots for Native Hawaiian beneficiaries who are on a lengthy wait list.

He said in a statement Wednesday the DHHL’s decision to deposit the funds into a savings account “highlights the need for reform and renewed leadership at DHHL.”

“Your assistance is needed to review and investigate the actions of DHHL and determine whether DHHL has met its fiduciary duty to the Native Hawaiians beneficiaries,” wrote Fevella, who represents Oahu’s Ewa Plain, in his letter to Garland and Haaland.

Fevella — who actively opposed an unsuccessful bill in the Legislature to build a casino on DHHL land in Kapolei, Oahu — called it “disingenuous and misleading” for the department to seek additional state and federal funds “when they already possess a large sum of monies that can be used to build homes and construct needed infrastructure for beneficiaries.”

“If Fevella is right that the Legislature gave that money for infrastructure, and (the DHHL) failed to do it, then it’s exacerbating the problems of the people on the wait list on this island. It’s statewide, but on this island, as well,” Kahawaiolaa said Thursday.

William Aila, Hawaiian Homelands Commission chairman and DHHL director, said in a statement Monday the development of over 4,000 new homestead lots since 1995 leaves the DHHL with “over a half a billion dollars in private lending contingent liability that it is responsible for,” and the deposit of the $125 million is consistent with the Legislature’s Act 14 settlement in 1995 “to establish an endowment to serve the trust.”

Act 14 required the Legislature to pay $600 million to DHHL in 20 yearly payments of $30 million.

“It is our fiduciary kuleana to be sure the trust has enough money in its reserve to mitigate this risk against the state,” said Aila. “This commission, as well as previous commissions, has acted prudently in its fiduciary responsibility of this trust to ensure that homestead lots are developed in perpetuity.”

The DHHL said it was allocated $78 million by the Legislature for capital improvement projects this past legislative session — the largest capital improvement budget appropriation in the program’s history, but less than the $460 million the department said is needed.

Kahawaiolaa called the dispute between Fevella and Aila “sad.”

“I think there’s just a misunderstanding on Fevella’s part, but he’s on the right track. Fevella does not have obligations to the Native Hawaiian. Aila does. And that’s the missing part of the equation,” Kahawaiolaa said.

“They, the Department of Hawaiian Homes, were required to create a fund by the state Legislature for risk mitigation, for people who borrowed money from private lenders,” he said. “In ’83, I got a loan from the (DHHL) to build a home. At that particular point in time, they were morphing into ‘go borrow money from the outside.’”

Kahawaiolaa said it’s difficult for homesteaders to get loans from commercial lenders because the land is on 99-year leases for $1 a year and title belongs to the DHHL.

“On that type of loan, the lender cannot foreclose,” he said.

County Councilwoman Sue Lee Loy, who lives with her husband, Ian, on a Panaewa homestead lot, also noted “the lending problem that we have on Hawaiian Home Lands.”

“A lot of conventional mortgages are not available to beneficiaries on Hawaiian Home Lands because the banks don’t want to lend on leasehold, especially DHHL,” Lee Loy said. “And so DHHL is kind of stuck by saying, ‘OK, we’ll carry the mortgage for you folks.’”

Lee Loy didn’t take sides in the Fevella-Aila dust-up, but noted Big Island DHHL projects are in need of financing.

“We have a number of opportunities right here on the Big Island, whether it’s the project out in Honomu (or the) scattered lots program in Panaewa and some other programs that could use the funding and help Native Hawaiian beneficiaries realize housing,” she said.

The Honomu project for subsistence agriculture lots is in the environmental review process, where it’s been for a number of years.

“Honomu’s been waiting. That came up four years ago and there’s nothing going on there,” Kahawaiolaa said. “You’re going to put people on there without road and water? In 2021, we’re asking people, ‘Hey, we’ve got land out here in Honomu, but we’re going to do it with gravel roads and water catchment?

“There may be people who want to live that way, but I’m not one of those, nor would I want my children to do that.”

Six bids were received in March for the Panaewa project, which involves subdividing a 10-acre parcels on Mahiai Street into 16 subsistence ag lots with a new road and infrastructure improvements.

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