Luxury home tax pitch to fund Hawaiian Homes flopped. Now what?

The state Department of Hawaiian Home Lands is in charge of implementing a federal law that entitles Hawaiians who can prove a 50 percent blood quantum to a homestead lot. Over the years, it has struggled to keep up with demand as its housing waitlist grew to around 30,000 applicants. Watson said it would cost the state $6 billion to complete enough homestead developments to house everyone on the list.

Despite the lack of a permanent revenue source, Watson believes the department made out fairly well this year. It was one of a handful of state departments to not only avoid budget cuts but see a multimillion-dollar budget increase, according to an analysis from the Hawaiʻi Appleseed Center for Law & Economic Justice.

The Legislature allocated more than $34 million in infrastructure funding to the department. That includes $18.3 million for design and construction of 40 subsistence agricultural lots in Honomū on the Big Island as well as the last $3 million to complete construction of 82 residential lots in Hanapēpē on Kauaʻi. 

The Legislature also allocated $2.5 million to develop 15 currently vacant lots in Nānākuli and $6 million in funding from the new tax on tourists known as the green fee. That includes $2 million for reducing wildfire risk around homestead communities, and $4 million to convert cesspools in the Keaukaha neighborhood just outside of Hilo.

State courts have ruled that the Legislature is responsible for sufficiently funding the department. Last year, DHHL determined that it would need $286 million this year to keep on track with development. It received a fraction of that, just $40.3 million.