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Hawaiian housing market, types of housing units desired and affordable to this market, alternative methods of financing, alternative methods of reducing costs, passing certain improvement costs to the applicant (possibly on ability to pay basis), and an assessment of the impact on current methods of appraising homes at the time of surrender or death with no qualified/interested heirs. DHHL does not have sufficient funds to cover this cost at present.

b. Finding: Determine if alternatives to direct loans are feasible such as some type of guaranteed subsidized loan program using commercial funding sources (page 42).

Comment: DHHL recognizes the need to identify and pursue alternative methods'of financing. DHHL currently provides direct loans and loan guarantees. Public program funds are very limited. The situation is not likely to improve. Informal discussions with commercial funding sources over the past year have not been successful. Major concerns raised are the non-alienation lease provisions and closed native Hawaiian market. It is agreed that this area must be examined further. Other alternatives may exist and need to be explored and developed. Certain options may be available to select segments of the native Hawaiian market. A complete study of sufficient scope and depth is necessary and costly.

2. Farm and Ranch Homesteading Programs

a. Finding: There are many reasons why the native Hawaiian farming and ranching program has not progressed rapidly (page 35).

Comment: The discussion of farming and ranching homesteading program in the draft report demonstrates a general lack of understanding of the dynamics of agriculture in Hawaii. Simple and incomplete indicators of success are used. Agriculture in Hawaii, primarily in the form of family-run operations, is constantly in a state of flux and is highly sensitive to market and general economic conditions. Corporate agribusiness on the mainland is highly mechanized, located on large tracts of land, enjoy the benefits of economies-of-scale, and are supported by a wide range of governmental support services including price supports.

Native Hawaiian homestead farmers and ranchers and DHHL's program are affected by many factors which are beyond direct control. There are risks involved in any business venture. The native Hawaiian lessee, of course, assumes responsibility for decisions made in the normal course of business operations.

The list of eight reasons cited on pp. 35-36 are not complete. Other factors include:

  • Weather conditions such as severe flooding and drought experience over the past three years by native Hawaiian lessees in Hilo and Puukapu.
  • A small local market and competition from other Hawaii farmers and ranchers, mainland and foreign operators. Panaewa farmers are experiencing a difficult marketing problem for guavas.
  • The absence of economies-of-scale, high labor costs, and high per unit production costs.
  • The lack of agricultural support services in certain locations such as research and experimental facilities, private credit, monitoring of disease and pest problems.

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