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The Hawaii Department of Home Lands has returned, in large part, to the practice of issuing non-traditional land leases to beneficiaries on its home waiting list.
DHHL plans to resume issuing undivided interest lease grants, which are sometimes referred to as “paper leases” and essentially promise home leases at an uncertain future date for a specific subdivision project where the land is not ready for near-term use because it lacks infrastructure. For roads and utilities.
Callie Watson, the former DHHL director who was tapped in 2023 to lead the agency again, told members of a state House committee during a January briefing that he plans to issue undivided interest leases this year, and later clarified that he aims to issue nearly 3,700 An award like this in many projects envisaged with uncertain financing prospects and development timelines.
The planned move represents a revival of a nearly 20-year-old program in which nearly half of all such leases have never been converted into live-on leases.
Watson's initiative also comes as DHHL is already working to speed up batch deliveries with $600 million allocated by the Legislature in 2022 under the Wait List Reduction Act.
There are good intentions behind the split-interest rental program, and support from many beneficiaries. But DHHL's past performance and the uncertain timing of converting a new round of these leases into housing for beneficiaries is also reviving some dim views about the practice.
“I don’t think it’s the best idea,” said Leona Calima, a DHHL beneficiary who was the lead plaintiff in a landmark lawsuit against the agency over Homestead’s claims that the state underpaid for $328 million in 2023. A policeman comes out.”
Paper rental path
DHHL's previous use of undivided interest leases occurred in 2005 and 2006 when 1,434 such leases were granted at seven planned subdivision projects on Oahu, Maui, Hawaii Island and Kauai.
One of the program's stated benefits is to give recipients, who pay $1 a year to rent a lot but must pay for their homes, time to improve their financial circumstances to qualify for a home loan.
Another stated feature and goal is to allow beneficiaries, who must be at least 50% Hawaiian residents, to pass a paper lease to a family member who is less than 50% Hawaiian but at least 25% in cases where the tenant dies. Many of the beneficiaries on the waiting list have died, and in such circumstances they cannot be replaced by successors numbering less than 50% of the Hawaiian population.
However, some observers viewed DHHL in the mid-2000s as using the program to reduce the awkward size of its waiting list, which around 2005 had about 22,000 applicants.
From 2003 to 2006, during Republican Gov. Linda Lingle's administration, the agency announced the award of nearly 2,300 residential leases compared to 5,941 contracts awarded in the 82-year history of the Hawaii Home Commission Act.
However, more than half of the compensation during those four years was undivided leases.
Officials in the Lingle administration rejected criticism that the program was motivated by reducing the size of the waiting list with unrealistic expectations of converting undivided interests into home leases.
“We will not hand over the undivided interest award until we know the financing (for the subdivision development) is secure,” Lloyd Yoninaka, a DHHL spokesman, said in 2007. “They have a timeline.”
Blossom Viterra, an advocate for waitlisted beneficiaries, questioned in 2007 whether DHHL had the resources to make the promised volumes a reality.
“It's nice to go out there and talk about this and start giving out all these great awards,” she said at the time. “But if you don't have the money to support you, how long will we have to wait for those awards?”
At the start of the program under Micah Kane, then DHHL director, the agency's goal was to have land parcels ready for delivery within 10 years, although officials said the typical conversion of non-subdivided interest leases into ready-to-use home lots was expected to It takes a long time. Three years.
Actual results were much lower.
After about 16 years, 774 of the 1,434 undivided interest leases granted in 2005 and 2006 had not been converted into home leases with beneficiaries moving into new homes as of June 30, 2022, according to DHHL's latest annual report.
One project that took a decade to transform is the 45-lot Kakaina subdivision in Waimanalo, where undivided leases were granted in 2006 and initial lots were granted in 2016. However, today the subdivision is only partially filled with homes.
Other projects from 2005 and 2006 with undivided leases include East Kapolei I on Oahu, Wai'hule on Maui, Anahola on Kauai and Villages 4 and 5 on Laie Opua on the island of Hawai'i.
Under the Undivided Interest Award Program, a grantee who accepts a paper lease for a project has a one-time option to cancel the award and return to the waiting list in its original location by the application date.
Those in charge of the programme
All of the 2005 and 2006 undivided interest lease awards occurred after Watson's first term at DHHL, which ran from 1995 to 1998 under then-Gov. Ben Cayetano. But Watson described it in 2007 as an innovative and smart approach because it gives recipients a concrete goal.
“Now you have a large number of homeowners who are excited and looking forward to that date, getting ready to make their dreams a reality versus just sitting on a waiting list, dying and having nothing to move,” he said. the time.
During a January briefing to the House Finance Committee, Watson said introducing new undivided rental grants would prevent more relatives of recipients on the waiting list from losing their home leases.
“We will do it this year,” he said, noting that such rentals are planned for a future phase of DHHL’s East Kapolei II project under financing.
Watson told the committee that Undivided Interest Award recipients can look at the model homes of the current phase and see a lot of plans they might like.
“They can also have assurances that they will get a lease, and if the unfortunate situation arises (of the death of a paper tenant), they at least have the opportunity for a successor to take over,” he said.
At least 2,100 recipients have died while on DHHL's waiting list, which now includes nearly 28,700 applicants.
One policy recommendation from the organization in 2022 is to the then-gubernatorial candidate and current governor, said Robin Danner, immediate past president of the Sovereign Council of Homestead Associations of Hawaii. Josh Green was asking DHHL to issue undivided interest leases to every eligible person on the agency's waiting list.
KipuKai Kuali'i, the current president of SCHHA, strongly supports the granting of undivided interest-only leases to address the succession issue.
“As president of SCHHA, I would say for myself and many of the house leaders, we have always been deeply concerned that waitlist recipients on the state DHHL waiting list have died without being able to leave the award of Old Hawaiian parcels to their successors,” he said. In an email message. “It is a devastating loss for the descendants who will succeed them for generations to come forever. … If anything, I think of it as a kind of insurance and a way to provide a sense of peace for these kupuna in knowing that all the years of waiting have not been in vain; that they are able to preserve their heritage.” In “Ohana”.
Waiting time
How long a paper renter may wait for a home lease can be incredibly uncertain, and often does not match the beneficiary's expectations.
According to a 2020 DHHL statewide survey, 43% of undivided interest recipients expected more to be available in one year.
The next highest expectations for wait times from survey respondents were two years (18%), less than a year (13%), and four to five years (13%). Only 4% expected that much would be available after eight years.
Watson's vision includes granting undivided interest leases this year for 250 plots of land in DHHL's East Kapolei II project conditional on receiving $60 million for phase development, which would be subsequent to the development of 450 plots at East Kapolei II already financed at a cost of $145 million from The project. 2023 Legislative adoption.
During the House Finance Committee briefing, Rep. Micah Ayo (D, Moanalua-Aliyamanu-Foster Village) wanted to get an idea of when the funded phase of 450 lots might be delivered, but was unable to get an answer after pressing for an answer. many times.
DHHL expects to be able to use $600 million in 2022 appropriations to produce 2,180 pieces, and Watson said existing paper tenants will have priority for those. The agency also has long-term plans to produce another 3,659 lots worth an estimated $626 million if it can obtain such funding from state and federal sources, and Watson aims to issue undivided interest leases for these.
“When you look at the history of the program over 100 years, we have about 10,000 (home rentals),” Watson said at the news conference. “That's about 100 a year, which is not impressive. We're trying to change that.”