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Hawaiian homelands lots may be offered for the first time in Kailua under a proposal introduced at the Honolulu City Council on Tuesday.

Council members want to sell a 10-acre lot on a hillside near Kalaheo High School to the Department of Hawaiian Home Lands for $500,000. The property is worth an estimated $10 million. 

At least 20 single-family lots could be developed on that site on Iliaina Street. Development could still be at least five years away, DHHL Chair Kali Watson said at a press conference announcing the proposal. DHHL does not plan to build multi-family buildings on the site in keeping with the character of the surrounding neighborhood.

Officials see the land transfer as an opportunity to eventually help reduce the DHHL waitlist that now has more than 29,000 individual applicants waiting for homestead lots. The state has struggled to develop enough lots to serve beneficiaries, many of whom have died waiting.

“The program historically has been very challenged. Most of our inventory of land is in very isolated areas, very expensive, not as desirable,” Watson said. “We’re very excited in the sense of creating not only a homestead community, but more than that, addressing the waitlist.”

There’s much left to be determined before development can start. DHHL needs to conduct environmental assessments before starting the permitting process.

Watson said that retaining walls may need to be installed because most of the property is on a slope.

Council member Esther Kiaaina, who introduced the resolution with council chair Tommy Waters, estimates that 35 to 60 homes could eventually be built.

How many housing lots are actually created there could be dependent on a number of factors including sewer capacity and availability of potable water, Kiaaina said.

Recently, DHHL discovered that a property it received from the federal government does not have as much developable land as it had once thought. A lack of infrastructure or problems with the majority of the 200,000 acres of land in DHHL’s inventory has stymied development in the past.

There’s also drainage issues on the Kailua land that DHHL will need to address, Watson said. Traffic may also be an issue since only two streets connect to the lot.

“There’s a lot of work that still has to be done, in terms of assessments. But we are going to do our best to figure out how the city can partner on this. We don’t want to lose this opportunity,” Denise Iseri-Matsubara, executive director of the Honolulu Office of Housing, said in an interview.

Last year, the city set aside $20 million for housing developments. That money has since gone unused, and Kiaaina wants to let DHHL use it to kick-off development. The money has to be spent before June 30, 2025, according to Kiaaina.

“Because Kali (Watson) has development experience, we believe they can go in and execute expeditiously,” Kiaaina said, adding that the city has never provided funding to DHHL.

“We hope to make this the new normal,” she said.