Developers propose donating 22.7 acres near Kapolei to DHHL; commission asked to authorize negotiations amid beneficiary concern

Kalani Anahole Development told the Hawaiian Homes Commission on Dec. 16 that it intends to donate about 22.7 acres near Fort Weaver Road and Kapolei to the Department of Hawaiian Home Lands (DHHL) while the developer’s affiliated entity would hold a ground lease to build and operate a commercial project.

The department asked the commission to authorize staff to negotiate an agreement to accept the donation, subject to specified lease terms and beneficiary consultation. Commissioners and a string of homestead leaders and beneficiaries asked for more detail on valuation, the department’s revenue share and how beneficiaries would be consulted.

DHHL staff said the requested authorization is the first step and that the department would return to the commission for approval of any negotiated lease. The item generated extended public testimony both supporting and opposing the proposal, and commissioners asked staff to confirm legal parcel references (TMKs) and to complete beneficiary consultation before any final acceptance.

Kalani Anahole CEO Patty Tancayo described the offer during the presentation: “This property is worth $6,000,000. We’re gonna donate it to the department,” and said her development team would pursue a mixed commercial plan and include a community benefits package and set-asides for kupuna and local small businesses.

Department staff outlined the deal framework they want authority to negotiate: DHHL would take title to the land; the developer-affiliated special-purpose entity (named in the presentation as Kuai Hale LLC) would hold a ground lease for up to a 65‑year term; minimum lease rents would be set by an independent appraisal paid for by the developer; and DHHL would participate in a share of net sublease income under DHHL’s sublease rent participation policy. Staff said the department seeks a maximum 65‑year initial lease term and a 50% participation in net sublease revenues after allowable operating expenses are deducted, subject to carve-outs in the department’s policy.

Supporters who testified told commissioners that donated commercial property could expand DHHL’s income-producing portfolio and that a beneficiary CEO leading the project should be encouraged. A beneficiary speaker at the meeting said the proposal could create a template attracting other donors and developers to work with DHHL. Other speakers urged caution: they asked for a written relocation plan for any residents whose occupancy might be affected by development, detailed and itemized estimates of DHHL’s expected revenue from the project, and explicit beneficiary consultation before any final action. One longtime homestead leader warned against using DHHL status to circumvent County of Honolulu zoning processes and said the proposal raised “a lot of holes that need answers.”

Commissioners pressed the developer and staff on key details. Questions and clarifications included: - Which TMKs exactly are part of the donation (the proposal began as 19.354 acres in submittals and the developers said they would amend that to 22.7 acres and return with corrected TMK references). - How DHHL’s sublease rent participation policy would operate here (staff said the policy allows the developer to net operating expenses and that DHHL’s share is 50% of net sublease income subject to the policy’s carve-outs). - Whether community benefits would be meaningful and which beneficiary associations would be identified to receive benefits (staff said beneficiary consultation would identify impacted homestead communities and associated benefits). - Whether environmental, archaeological and flood‑risk due diligence would be required before acceptance (staff said such due diligence would be part of the donation negotiation and the department could refuse the gift if liabilities or untenable operational burdens were found).

No final acceptance vote was taken at the meeting. Department staff asked to confirm TMKs and to return to the commission for a formal vote once negotiations and beneficiary consultation proceed; at the meeting staff said they expected to return the next day to request a vote after correcting TMK references.

Why this matters: donating developable land to DHHL can expand the trust’s portfolio and produce revenue for beneficiaries, but it also raises questions about land‑use control, zoning, the department’s capacity to manage complex commercial leases and the adequacy of beneficiary consultation. Commissioners signaled they will require clearer, written lease terms, an independent appraisal, and an explicit community benefits plan before agreeing to accept the donation.

Next steps: DHHL staff will confirm and correct TMK numbers for the parcels, continue beneficiary consultation, complete due diligence (appraisal, environmental and cultural reviews) and return the negotiated donation and lease terms to the commission for formal approval.