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Editor’s note:��The Civil Beat Editorial Board and reporters spoke with William Aila Jr., chairman of the Hawaiian Homes Commission and director of the Department of Hawaiian Home Lands. The interview has been edited for length and clarity, and some material will be used for related news stories. Aila began by noting that 2021 marks the 100th anniversary of the Hawaiian Homes Commission Act, which was advocated by Prince Jonah Kuhio Kalanianaole, a non-voting delegate to Congress from the Territory of Hawaii. The act, which calls for the administering of Hawaiian homelands for qualified homesteaders, was adopted in the Hawaii Constitution as a provision of statehood in 1959.

William Aila Jr.: The state would not exist if the responsibility for the homesteading program had not been agreed to, not only by the political leaders at the time, but also the ratification vote by the people of Hawaii at the time. It’s also important because there are sub-political entities called counties, and we’re in this constant education mode with the counties to help them understand that, hey, you’re part of this commitment.

So oftentimes we get treated like a regular developer and we’re not a regular developer and we shouldn’t be treated like a regular developer when it comes to zoning. And of course, because of it starting as a federal program, we control our zoning, so the counties can’t control anything that has to do with our zoning of our properties.

But, we want to be good neighbors, right? So we run into situations where you have, usually at the turn of administrations where they bring in new people, and then you have to educate them. It also has to do with getting water credits, because we have a very difficult time developing our lands if we don’t have water or access to water.

So this last year we’ve been in an education mode again — thanks to Ernie Lau, who’s helping us out with the other boards of water supply leaders — to help them understand that as a sub-political entity of the state government, you also took on this responsibility of assisting with this program.

So it’s an important part because I don’t think we’ve done a good job of reminding other government agencies, and just the people of Hawaii in general, that, hey, there’s this compact. And we’ve been shortchanged for a long time, so it’s time to bring this back up.

And then I would only add that the last Constitutional Convention that we had, in 1978, there was a word that was changed — which was supposed to mean something, right? — that the Legislature “may” provide sufficient sums to “shall” provide sufficient sums. However, until recently, that has not had very much play.

But I think with the Nelson lawsuit, and I think with the discussion that occurred around the gaming issue, it allowed us to effectively communicate to legislators and others — including legislators at the federal level — of this change and of the compact and of the responsibility that has fallen to the wayside. And as a result, as we talk further down, there will be examples of how I think things have changed in terms of financial resources coming to the Department of Hawaiian Home Lands.

Briefly on Nelson (v. Hawaiian Homes Commission) — educate us as to where that stood. My recollection is that a judge hearing the case did recognize the difference between may and shall, but that still the Legislature really has the upper hand when it comes to signing off on the funding (for DHHL). Is that an accurate way to put it?

That judge, based upon the evidence presented at a trial, made a determination for 2016, that’s all they were looking at — for the year of 2016.

Specific to that appropriation? Not beyond.

Yeah, because the lawsuit involved just that year. So the judge (First Circuit Court Judge Jeannette Castagnetti) ruled that, based upon all the evidence placed in front of her, that the department should have been funded at around $28 million a year (for general funds). Prior to that, all of the funding for the department had been special funds or trust funds. So money that the department was able to basically make off of revenue from leasing lands.

And is it the $28 million figure to this day that’s still coming in for operating funds generally?

No. So what happened was, I think at the time following the Nelson decision, we’ve been allocated about — it gets a little complicated because there is the direct funding for employees, and then there was like $5 million for the benefits … the fringe benefits. That first year they combined the two and then we had to transfer money to some other budget and finance account to cover that. Subsequently to that, (the Legislature) allocated about $18 million for personnel costs and the $5 million went into sort of this general pool that the Legislature appropriates to take care of everybody’s fringe. So we’ve been getting, for employee costs and for administrative costs of paying for some of the electricity, things like that, we’ve been getting just under $20 million since that time.

You’re now entering your second century of this agreement. I’m wondering what that must mean to you, as a citizen of Hawaii, as a Native Hawaiian, how significant this is, then, to be heading the agency at this time?

Me personally? Not as the director?

Sure.

It makes me feel sad because we have not fulfilled the promises. We have not been able to fulfill the promises of this act. Because the first 85 years, there was basically no funding. So the department was funded by the sugar leases and the ranch leases that were already in play.

And for the department, access to those lands because of the way that it was set up, didn’t come back to the department until after those leases had expired. So the leases on sugar lands, leases on ranch lands actually provided the operating costs for the department at the time, which didn’t leave much for capital costs.

So development was very, very measured. I think there was an appropriation by Congress to do some work on the Molokai irrigation system. There might have been like small allocations from the Legislature — a million dollars here or a million dollars there. The department did its best at that time with the amount of money that it had, and up until the settlement — it started under the Waihee administration but it was carried out through the Cayetano administration (Act 14 provided money and land to DHHL against the state) — (when funding went) to $30 million a year for 20 years. Up until that time there was not a significant rate of increase of lots being provided to homesteaders because there was no money to do this.

You counter that with a lot of our lands are remote. So they’re hard to get to. Not enough water resources. It’s difficult to develop water resources in the rural areas. I’ll give you a good example. When you drive around Hawaii Kai to Waimanalo — it’s a beautiful cliff face; it’s very majestic. That’s in our inventory. How are we going to build homes there? And there are other lands like that in our inventory that are the same way. So you have difficult lands to develop that are remote, and then you don’t have resources in order to develop, up until maybe 20 years ago.

So the first 80 years or so of the department’s performance, of course, is understandable because if I gave you 20 bucks and said you see what you can do with 20 bucks — you’re not going to get much done.

The settlement allowed for an increase in the number of units to be produced. And I think we’ve been able to keep that pipeline going. Now when I say pipeline, many of the beneficiaries from the waitlist ask why is it taking so long? We are a state agency. We’re not independent, and so we get an allocation from the Legislature, usually a capital improvement project allocation. We have to go through the process of getting the governor and Budget and Finance to release that money — that normally takes about a year. Then we do the environmental entitlements. Once we get that done — and sometimes simultaneously we can get planning design done — that’s another two years. Then construction bids go out. If there’s a protest, that could take up to a year. Now we’re into three or four years. And then the actual construction may take a year or a little bit more than that.

We’ve been shortchanged for a long time, so it’s time to bring this back up.

Now we’ve got the level flat land that has water, electricity, sewer, roads, and then we either enter into a development agreement with the developer to build turnkey homes or, as we’ve done recently, we offer vacant lots. The reason that we’ve gone to vacant land offerings is because a turnkey home is financially difficult for people, for a segment of our beneficiaries on the waitlist, because financially they’re not ready for it. Financially, they’re on fixed income or they can’t do that.

In response to one of the criticisms — you know, “you just bypass everybody on the waitlist and you only get into the younger guys who can afford these turnkey homes” — we changed the program around to offer a number of offerings. We can do a limited number of Habitat for Humanity, Self Help (Housing Corp.).

My wife is actually a lessee and we hired a contractor friend and, because my family knew how to do certain things, we joined with the contractor and we built a 3-bedroom, 2-bath — this is 20-something years now — for $80,000. Very affordable to me, who was a harbor master at the time living off of a small state salary. So it was perfect for me and my family.

We are trying to replicate that now so we don’t bypass the folks on the waitlist who are marginalized because they can’t buy a turnkey, but they can afford to build a kit home, a one-bedroom — even allowing for a tiny — we have tiny homes now. We give you the lot, you can only afford to build a tiny home, go for it as long as it meets the city and county requirements. We’re good. It adds an additional option for folks who have been bypassed traditionally on the waitlist for a number of years.

The first 85 years, not so good, the last 15, especially with the agreement under the Waihee and Cayetano administrations, things have improved and under your tenure as well. Is the waitlist still 28,000 (beneficiaries)?

Yes. The waitlist will always increase when we have an offering, because Native Hawaiians right now are not in — we have the cream of the crop that can compete with anybody else who can afford the $1 million home. Then we have the those who cannot. So getting Hawaiian Homes opportunity for a lot or turnkey is like winning the lottery for them because they can’t financially compete outside.

That waitlist number will stay consistent in part because of just natural population growth?

I would say it’ll stay consistent because, at the rate of funding that we’re getting, we can only do 300 to 400 lots a year.

However, I would say that in addition to getting people off the waitlist, there has been pressure from Congress and from the Legislature to those folks who will never be able to afford even a turnkey or a Habitat home — getting some rentals for some Hawaiians out there so that they don’t become homeless. So now we’ve had this added to our plate, which we’re doing with the Bowl-O-Drome and some other projects.

Sometimes there’s a perception out there that when people complain about the waitlist, or say “Sonny’s still waiting” from the Henry Kapono song, that people don’t fully realize how difficult it is to do this. And it sounds like you’re saying you’re issuing as many lots and getting as many people on those lots as you can, given the current structure of the current financing.

And we’re getting more creative, especially on the neighbor islands, because on the neighbor islands, nobody wants to live in an apartment. They don’t even want a 5,000-square-foot lot. They want a 10,000-square-foot lot or an acre. That’s the neighbor island mentality. And there’s so much land, right? So we’re actually again retooling the list of options that are available to look at doing more kuleana land awards.

What that does for the department is it allows us to work with the counties to put in infrastructure that is sort of rural infrastructure so they don’t have to have the paved roads and concrete sidewalks and the street lights and all of that. And some of our folks are actually asking for that, especially on the neighbor islands.

We have currently on the island of Maui, we have an area called Kahikinui. Those guys have been doing it for about 20 years. They’re the real homesteaders. And part of it is because they asked for it. They said if you give us that stuff, we’re going to show you we can do it and we’re going to reforest the lands back there so the streams flow again. So 20-something years ago, it was an awesome experiment. There’s about 30 families who actually have thrived out there, they’ve sent their kids to college, they’ve lived off the grid and now we have more people on the waitlists saying, “you know what, I’m tired of waiting. I don’t need the paved road. I don’t need all that. So let’s do a kuleana (homestead lot). So we’re looking at kuleana in Anahola (Kauai), and then we’re looking at kuleana on Molokai on the east end — Ualapue.

Very briefly, explain structurally how the Hawaiian Homes Commission works. You’re the chair of the commission and you report to the nine-member board.

Yeah, I’m part of the nine.

You’re part of that, so you don’t act unilaterally. It’s something (where) you have to have agreement. Some people say you’re running Hawaiian Home Lands, but in fact, it’s nine members. Is that right?

They’re appointed by the governor. They’re confirmed by the Senate. Even though people are fond of criticizing me on social media, I do not act unilaterally. I need five votes to get anything done. And oftentimes I will defer to the commissioners because that’s one area where we’re very different from any other state agency. The commission is the authority. This governor clearly understands that. He has no influence over land dispositions or the department other than making appointments and things like that.

This governor, I will have to say, has been very, very honorable in terms of letting the commission really create the policies and (letting) the department implement what we feel is the right solution and what beneficiaries advise us are the directions in which we should go. We take beneficiary consultation seriously. However, each one of us at that level has a fiduciary duty to the trust, not the beneficiaries, but the trust in perpetuity. And that’s often been misunderstood.

Representative Kai Kahele introduced a bill in Congress to reduce the blood quantum. It’s 50% to qualify. Do you have an update on where we are? I know it’s brand new.

He introduced a bill not to change the 50% for issuing of the original lease, but to reduce the successorship from 25% to one-thirty-second. It would allow for, I think, four more generations down the road to be able to succeed to a homestead lease. It’s also the compromise that Prince Kuhio actually was shooting for. First (Congress) said zero (percent), Hawaiians are Hawaiians, then one-sixteenth. Sugar planters, ranchers on this other side (want) 100%, and then Congress decided 50%. And later on, the successorship was changed to 25%.

It’s the homesteaders who are in the oldest communities who are asking for this change because now they’re five generations, six generations on the road, and they’re starting to see that perhaps their descendants are not going to be 25%. They’ve put in generations of work on their homestead.

People think that Prince Kuhio was just all about the people, getting people on the map. But what Prince Kuhio was also observing is that the land was being neglected and the land was being abused. So from a Hawaiian perspective, it’s a relationship between the people and the land.

So some people will say they’ve had five generations, give somebody else a chance. But that’s not what his original — I believe — was his original thought process, because he wanted to get people pili (get connected) to the land so they would take care of it generation after generation after generation. Because we’ve still got plenty more land if we had resources to take care of those other 50-percenters.

It sounds like (Kahele) has some support. Hard to say how Congress will move, but you like the idea?

We supported that. I testified actually in a subcommittee hearing in support.

Speaking of finances, a supplemental budget is due next month. What’s going to come from your agency? It’s all part of the governor’s package, of course.

Correct. Go back to last year’s budget. You can see what’s proposed for the second half. We’re hoping that we’re going to be surprised, that the governor is going to add something we’ve asked for every year.

So here’s another outcome of Nelson. The Nelson decision found that the Department of Hawaiian Home Lands failed in its trust duties to ask (the Legislature) for what it needs. So every year we actually submit two budgets. We submit a sufficient sums budget that’s usually up in the range of about $250 million, $270 million a year. And then there’s the governor’s budget that comes back and he takes that $270 million — you know, last year that gave us $30 million for capital improvement projects, $5 million for maintenance projects and gave us just shy of $19 million for funding salaries.

About $55 million or so.

About there. Which is an increase. We’re not complaining, we’ve just got a long way more to go.

You’d like more, though?

Of course. (The commission and the department are required to ask.) So usually, you know, we are treated tongue in cheek when we go to the Legislature and say, I’ve got to ask for this. They smile and say, OK, well, we understand that you have to ask for that. But we got only so much money this year, so we’ll see at the end of the session what you get.

I was intrigued by this bill to retain independent legal counsel. My understanding is that it’s because sometimes you may be at odds with the (Hawaii) attorney general. And this has been proposed before to allow you to do this. Is it correct that there will be a request for that bill again?

Yes.

Anything you want to add as to why that’s so important?

Well, there are times when, because we’re such a complex agency and we are managed actually by a commission, that our wants and desires and needs are different from the state’s wants and desires and needs. And so having independent counsel, I think, would provide us with better advice in terms of getting our agenda forward.

This bill is interesting to me. “Any homestead development would be exempt from the general excise tax.” That’s something that I think has been proposed before, as well. Is that right?

It was proposed last year. When the gaming discussion (for a casino on DHHL land) was going on, we were looking at all the other ways that we could save money, i.e., increase revenue, increase opportunities for lot development. So we were able to get a four-year exemption from the Department of Education’s impact fees — that is around $8 million to $9 million. The GET tax would be about $9 million to $10 million. It was actually poised to pass last year. The problem was when the federal Covid-19 relief funds came, the wording of the language in the federal funds would not allow us to use those federal funds in a way such that the state could reduce tax revenue.

You mentioned water being so critical. I didn’t realize that you would like to be represented on the state Commission on Water Resource Management. Is that right? Or have someone who’s a Native Hawaiian water rights expert? Maybe that’s the better way to phrase it.

No, I think we want somebody from our department.

We need to remind the Water Commission that, as part of statehood, they need to take a more active role in protecting and advocating our position to get water.

Is there any more important infrastructure than water?

Not really, because you can do without electricity to live off the grid, but without water, it’s hard.

Another bill that I believe is on your list: historic preservation reviews (for developments), you’d like to actually bypass the Department of Land and Natural Resources to streamline (the process).

We’d like to take on the responsibility.

Has that been frustrating in the past — that you have to go through another agency for that?

I have worn both hats, right? I was in charge of the DLNR, so I know that there is a strong need for protection, but also in that strong need of protection I think that we could protect burials and protect historic sites a little bit more efficiently. And there is also (the federal) Native American Graves Protection and Repatriation Act. So here’s how complex we are. We’re a state agency, but for some purposes, with federal lands. So for the purposes of NAGPRA, we’ve been told (that applies to) federal lands.

A lot of our lands are remote. So they’re hard to get to. Not enough water resources.

NAGPRA burial issues used to be run through HRS Chapter 6 E, which is through the burial council. However, since being told that no, no, no, for the purposes of NAGPRA you’re federal lands and you have the responsibility to do that, so now we’ve had to educate our staff if there’s a burial that’s found on DHHL lands. We have that responsibility to deal with those iwi kupuna (ancestral remains) or artifacts.

But we also want the ability to be able — and it’s counterintuitive because, you know, on one hand, we’re a developer and we would be seen as sort of controlling the ability to develop outside of (State of Hawaii) Historic Preservation (Division). So what we would have done is we would have likely hired a third party to provide some transparency so that we’re fulfilling our duties, but at the same time don’t have that — sometimes that six-year period can be seven or eight years because of some archeologists saying, oh, no, we need you to do that study again.

The only other item I had on the legislative agenda is cesspools. It’s been a problem statewide. I don’t think there’s another state that has a bigger problem with cesspools, but it looks like you’re looking to maybe get some financial assistance to offer low-interest loans to help people (upgrade or convert to septic tanks).

Yes, we’re hoping that the Department of Health will set up a revolving loan fund, not just for Native Hawaiians but for everyone, because everybody in Hawaii is going to have to deal with this situation sooner rather than later.

I go to Longs all the time in Moiliili and I see the former Bowl-O-Drome, which has been abandoned for years. Stanford Carr, I believe, is a developer and working on affordable housing. Where are we with that? It looks like a very ambitious plan. It’s going through, isn’t it?

It’s in an (environmental assessment) now. We have capacity in this�� — water, sewer, streets — so he should have no issues with that. He’s finishing the EA, finishing his financing. I believe construction is set for late 2024 or early 2025. So it’s on its way.

For beneficiaries only?

That would have to be for beneficiaries only (affordable rentals based on 2019 rules).

We have a Civil Beat series called Home Grown. I hadn’t heard much about your Subsistence Agriculture Program for homestead lots. Might you address that?

Sure. What we found historically is that we give out agricultural leases and then, sometimes through no fault of their own because that person has been waiting on the waitlist and they’re in their ’60s or ’70s now, they’re not able to carry out the requirement of cultivating two-thirds of their lot. So what we’ve done is retool the toolkit. And so we’re offering a subsistence agriculture lot where two-thirds cultivation is not required. You may build the house on it. You’re not required to build a house on it. You are required to plant — crops, forests, subsistence. If you get really, really good, and these lots range from one to three acres, if you get a really, really good and you love it, there’s nothing preventing you from selling it.

It’s hard to characterize all the homestead lands. What is the acreage — over 200,000?

Two-hundred three thousand, plus or minus.

A lot of it is arid, a lot of it is in dry areas that only grow so much, right?

Weeds and grass, until you bring in water.

The weeds and the grass actually cost us money because we have to make sure we have firebreaks. There’s actually money that we could spend on the increase in the number of lots, but we have to spend it on firebreaks. We have to spend it on drainage. This last rain, Waimanalo didn’t flood because of the work that we did last year. Bell Street didn’t flood, so it was an amazing thing. Bell Street, in Waimanalo, has a history of flooding.

We maintain roads that haven’t been turned over to the county. We maintain sewers that haven’t been turned over to the county to the tune of approximately $10 million to $15 million a year, where if we could get the county to take these infrastructure costs, so if we just had the $10 million from the GET tax, the $9 million from that and $15 million from the county, that’s an additional $35 million that we can put in to operate even without thinking. But it was the gaming discussion that allowed us to have this discussion on these other issues.

Related to firebreaks — you’ve mentioned this idea about edible firebreak. How do we push that idea forward?

Yes. So if you plant the right tree crops and you do it wide enough, then what will happen is those trees will shade out the understory and then there’ll be no fuel load.

I think there are a lot of nonprofits that would pick that up if they just had some resources applied to it. So like Kaala Farms continues to write grants so that you can plant an edible firebreak to prevent the fires that occur, from lower grasslands up into the forest lane. So I know that they’ve been writing grants, but there are many other nonprofits who are eligible or would be willing to take that on should there become resources.

I’m super curious about a controversy that came up during the protests about the Mauna Kea Access Road and whether or not the state had actually lived up to its obligations where they’re supposed to compensate the trust. Can you tell me what the status of that is? And did it turn into a larger issue as you folks review what was and wasn’t done years ago?

Let me just say that some of our beneficiaries and nonbeneficiary Hawaiians are making it a bigger issue. A recent court ruling, I think it was about a week ago, or maybe a little bit longer than a week ago, where the plaintiffs filed for summary judgment in that case and the judge did not award them summary judgment.

Basically, the judge says, hey, Act 14 settled all of the issues about the road. The road belongs to the Department of Transportation. DHHL, you still own the land under the road, and we have to figure out how to pay compensation.

Why it’s confusing is you cannot alienate DHHL lands. If you picture the dirt and then you picture whoever came by, you know, 30 years ago and scraped the dirt and then put some base course down and then put some asphalt down over the base course and the asphalt is DOT’s. The dirt in the land is DHHL’s.

I guess I was less interested in the lawsuit than I was in the whole idea that that you’re owed money and that if you weren’t compensated for this particular road, then perhaps you were not compensated for other assets that you should have been and where that stands.

Now that we have this decision, I can move forward with the meeting of a task force that the Legislature asked us to create, in which we will identify those types of issues, how much we’re owed. And in this particular case, the governor and our attorney general (Claire Connors) who’s going to become the U.S. attorney, agreed with us that we need outside counsel. So we actually have outside counsel and we will be meeting, I think, shortly to discuss the impact of this judge’s ruling on the balance of the Act 14 settlement.

Do you believe you are owed money?

Yes.

And do you believe it’s a substantial sum, or is it chump change?

Anything to us right now is a substantial sum, so even chump change is good.

Well, have you identified a claim that they owe you for?

Let’s just say it’s going to be a challenge identifying the use of the road versus appraising. How do you appraise for the use of the road? And that’s where I think additional discussion is going to occur.