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Homestead networks urge commission to reject data‑migration and trust‑fund lending proposals, warn of legal risks
Summary
A coalition representing homestead beneficiaries told the commission it should defer or reject agenda items C2–C4, arguing that software migration risks breaking audit trails (KLMA v. State), advancing $25.232 million from the trust to lend mortgages exposes the trust to default risk, and proposed statutory flexibility could unlawfully allow fund transfers.
A representative of Homestead networks told the Department of Hawaiian Home Lands commission that three agenda items on DHHL’s package present legal and fiduciary dangers and should be deferred or rejected.
Speaking during public testimony, the speaker said DHHL’s proposed C2 (a software/cloud data migration) lacks demonstrated benefits and risks entombing legacy wait‑list records in automated systems, which she argued would make it harder for beneficiaries to establish administrative standing in trust‑related litigation. "Sloppy recordkeeping causes catastrophic legal harm," the representative said, invoking the landmark KLMA v. State settlement as context for why audit trails matter.
On item C3 the networks’ representative said the department planned to advance $25.232 million from the trust to act as a primary mortgage lender — a program the speaker described as exposing the trust corpus to unrecovered default risk and an apparent $615,000 per‑home subsidy in the example presented. The testimony referenced Ahuna v. DHHL and argued that fiduciary duties constrain the commission from draining core trust capital or absorbing full default risk when alternatives such as HUD Section 184A private‑lender guarantees exist.
The speaker said C4 (draft legislative language) would expand executive flexibility to reallocate trust accounts without public hearings and legislative appropriation, which she argued would violate the Hawaiian Homes Commission Act and the state constitution’s appropriation rules. She urged the commission to defer C2 and C3, reject any C4 language that dilutes commission oversight, and consider a resolution explicitly prohibiting cross‑transfers of funds without public hearings.
Commissioners heard the testimony during the public‑comment portion of the meeting; no immediate vote on those specific items was recorded during the session.
