Ka Wai Ola - Office of Hawaiian Affairs, Volume 11, Number 7, 1 July 1994 — Eonomie study: DHHL could have produced more $, homesteads [ARTICLE]

Eonomie study: DHHL could have produced more $, homesteads

by Deborah L. Ward A study on the administration of the homestead trust found the state Department of Hawaiian Home Lands received $422.8 million in revenues between 1959 and 1988. But, the study suggests, if certain resources had been available, and decisions had been made to optimize earnings and investments. DHHL could have received approximately $196.6 million more. Those additional revenues could have produced at least 2,365 additional homesteads, it claimed. Eeonomie experts Thomas A. Loudat, Ph.D.. A. Roy Hom and Robert Lucas were hired by the Hawaiian Home Lands Individual Claims Review Panel to gather and analyze raw data, then project what might have happened if the trust resources had been managed optimally. The economists evaluated the following revenue sources: DHHL trust lands, general leases and revocab!e permits, appropriations (including those that lapsed) and higher appropriation levels, interest earnings on loans and investments, and sugar lease rents and water license fees. (See chart.) They also calculated potential revenues from set-aside lands. contested lands and illegall\ used lands. They further studied how DHHL spent its money and the costs of homestead development. Why didn't DHHL get the revenues the study seems to suggest īt might have? Although many complex factors were involved, Hawaiian Claims Office executive director Melody MacKenzie noted that: • legislative appropriations to DHHL. especially in the past, have never been supported at a level sufficient for greater homesteads development; • management of homestead trust lands in the past by DLNR was not geared to getting the highest

lease rents; • trust lands were used by the state at very little or no ineome to DHHL; and • state policy was to support the sugar industry with low Iease rents. MacKenzie notes, "The state has a fiduciary responsibility under the trust law to get the highest and best use of the land. The problem is, not before the 1970s did the state take seriously the idea they were dealing with a trust." DHHL's initial response to the "Historical Performance Review of the Hawaiian Home Lands Trust" and its eeonomie analysis has been critical. Hawaiian Homes Commission director Hoaliku L. Drake said in a statement, "Our review of the executive summary of the eeonomie study ... leads us to believe that the consultants have used statistics to oversimplify a very eomplex issue. They have not factored in the eeonomie, social and political considerations — among others — that affected the homestead program during the period covered by the report. "What is presented is highly speculative and conjectural." Drake said DHHL was not given the opportunity to review the report before it was issued so it could have corrected misunderstandings or misinterpretation of the data. MacKenzie said the consultants did a "very good job," given the difficulties they faced in obtaining consistent and reliable data, and in interpreting a very eomplex body of information. The Individual Claims Review Panel will hold an administrative hearing on the study findings August 24-30 in State Office Tower Room 303 to hear eomments from claimants and state agencies. The Individual Claims Review Panel will then decide whether there has been a breach

of trust in managing the Hawaiian homelands program, resulting in beneficiaries having to wait to be awarded homesteads. "DHHL will have the ehanee to bring its information and responses to the panel hearing and to show areas that raise questions in their minds. ... This was not meant as an attack on current or past administrations of DHHL. Economists looked at the data and said, 'This looks like what happened.' The economists used the best information they were able to obtain. They did say they wanted more in-depth study in certain areas," MacKenzie said. There may be other factors, she added, that were overlooked. MacKenzie said the panel will then determine how many more homesteads DHHL could have produced between 1959 and 1988 and apply that finding to eaeh elaim and make recommen-

dations to the Legislature. Native Hawaiian beneficiaries have unlil August 1995 to file claims. The Hawaiian Claims Office then has until the 1997 Legislature to finish its claims. At the current rate, she says, the HCO and panel ean probably

make the deadline unless many more claims eome as a result of the eeonomie study. Even if the Legislature accepts the panel's recommendation, it has no authority to tell DHHL what continued page 15

Homestead study from page 5

to do. "TTiat's why," she says, "it's important the next governor understand Hawaiian issues and be willing to cooperate. "If not, the panel's work may be for naught." For individual beneficiaries, the study may result in decisions by the panel and legislators that will result in corrective action and/or monetary damages for their specific elaim. Though many say they don't want money — they just want a homestead — McKenzie notes that it could help older homesteaders who have been waiting a long time and who might have trouble raising a down payment. "The broader view of having this issue brought out is that it may result in (greater) political awareness and movement for supporting the homestead program." The Hawaiian Home Lands Trust

Individual Claims Review Panel was appointed in 1992 to receive and review claims by individual native Hawaiian beneficiaries for actual or out-of-pocket losses suffered due to a breach of the Hawaiian Home Lands trust. The breach of trust must have occurred between Aug. 21, 1959 and June 30, 1988, and have been caused by "an act or omission of a state employee in the management or disposition of trust resources under the Hawaiian Homes Commission Act of 1920." Its five members are: Peter Liholiho Trask, chairperson; Alexander A.S. Ahuna, Monsignor Charles A. Kekumano, Marie A. McDonald and Warren C.R. Perry. The panel is not part of DHHL. Its work is carried out by the Hawaiian Claims Office. For information eall (808) 5862826.