Lawmakers defer DHHL funding bills after hours of testimony on accountability and use of state funds

HONOLULU — Lawmakers in a joint session of the Senate committees on Housing, Public Safety and Military Affairs, and Hawaiian Affairs heard several hours of testimony Tuesday, March 11, on House Bill 606 (HD1), which would extend the Act 279 special fund for the Department of Hawaiian Homelands (DHHL), along with related measures that would change how Hawaiian Home Lands projects use state housing dollars. Committee members deferred decision making to March 18 to allow more information to be provided.

The bills matter because they would affect hundreds of millions in state appropriations and alter how DHHL and related agencies manage and deploy housing funds intended to reduce the DHHL wait list and develop homestead and workforce housing.

Witnesses from beneficiaries, lessees, commissioners and community groups gave sharply divided testimony. Several testifiers urged more funding to address a large DHHL wait list; others criticized DHHL for insufficient transparency and results. Melinda Heilani, representing Kalahoe Hawaii, told the committee, “There are currently 29,000 Hawaiians on the DHHL wait list,” and urged continued appropriations to clear that backlog. Multiple beneficiaries and lessees, including Jermaine Myers (Nanakuli Hawaiian homestead lessee) and Patty Kahanamoku Teruya (DHHL commissioner and beneficiary), said they oppose further funding until DHHL demonstrates stronger financial controls and clearer project accountability. Teruya asked, “Where is our money going?” and urged greater oversight.

DHHL staff and the department’s land-development administrator defended the department’s progress and described the status of projects and funds. Kalani Franda, acting administrator for DHHL’s Land Development Division, told senators the funds encumbered to date have primarily gone to infrastructure and that leases are beginning to be issued: “Please note that the monies that were encumbered are used for infrastructure. We are now…in the process of actually issuing leases.” Franda also testified that some appropriated funds remain to be encumbered and that the department expects additional lease awards this year, including a planned Kapolei award described as roughly 700 leases.

Committee members pressed officials for concrete, audited counts of completed lease awards and precise encumbrances. Senator (committee members) repeatedly sought a clear accounting of the original $600,000,000 appropriation from 2022 and what portion has been spent, encumbered or converted into issued leases. DHHL witnesses said approximately $335,000,000 had been spent and that roughly $554,000,000 had been encumbered toward projects and programs to date, while also stressing that not all of the initial appropriation has been fully expended and that lease issuance is ongoing.

Public commenters expressed contrasting views. Angela Melody Young, representing CARES, said the Act 279 appropriation “is not money coming from Hawaiian homes beneficiaries. This is money coming from the state’s budget,” and described the extension as allowing additional time to acquire properties and work with developers. Other community members, including Maisana Aldegar and Kuilan Souza Atua Levao, said DHHL must show a detailed plan, measurable goals and anti-mismanagement safeguards before receiving more money.

Two related measures drew scrutiny in the same hearing: HB 576, which would adjust HHFDC (Hawaii Housing Finance and Development Corporation) restrictions for certain DHHL projects, and HB 1408, which would allow DHHL to use the dwelling unit revolving fund (DIRF) as collateral under a HUD Section 184(a) financing structure. HHFDC staff warned that removing affordability restrictions could create perceived loopholes; a HHFDC representative (Katie) noted that DHHL borrowers must still repay HHFDC loans and that an exemption in the bill would apply to for‑sale projects and certain rent‑to‑own arrangements. Committee members expressed concern that exempting HHFDC conditions without clear parameters could reduce affordable inventory.

After extended questioning and more than two hours of public testimony, committee members said they needed additional briefings and documents — including audited accounting of encumbrances, contracts and an explanation of how DHHL plans to convert appropriations into completed homes — before voting. The committees formally deferred decision making on HB 606, HB 576 and HB 1408 to a March 18, 2025 decision‑making session at 1 p.m. in Room 225. The chairs said the postponement would give staff time to produce the requested documentation and for senators to consider technical amendments.

What’s next: Committees expect updated briefings and written materials from DHHL and HHFDC before the March 18 decision meeting. The deferral preserves the bills for further action while signaling lawmakers’ insistence on clearer accounting and program controls before agreeing to new appropriations or statutory exemptions.