SCHHA is Working to Address the Affordable Housing Crisis

The Sovereign Council of Hawaiian Homestead Association (SCHHA) is working to help address the state’s affordable housing crisis. At our Homesteader Relief Roundtable in October of 2023, we debuted our Permanently Affordable Rental Unit Strategy (PARUS). We highlighted the early successes of that strategy at our Annual Leadership Conference a few months later in January 2024 where U.S. Rep. Jill Tokuda praised our progress and encouraged us to do more.

PARUS was created as a tool for our homestead leaders to play a meaningful role in the long-term recovery of families displaced by the Maui wildfires and to help address the ongoing affordable housing crisis. PARUS has been our approach to acquiring existing residential properties on a regular basis, for dedication to permanent affordability.

We’ve done this by leveraging capital from banks and other lenders: the government and philanthropic funders. Through our Homestead Community Development Corporation (HCDC) nonprofit development arm, we have purchased numerous rental properties across the state, including six units on Kauaʻi and eight units on Maui. So far, a total of 14 units owned and operated by homesteaders have been rented out affordably.

Hawaiʻi has been, and will probably always be, a high value residential property state, attracting investors and property owners seeking to maximize rental income. PARUS helps us to disrupt this cycle with SCHHA acquiring residential properties that would otherwise be purchased by investors solely interested in maximizing their profits.

Through PARUS, we have been inserting ourselves into the marketplace as a nonprofit buyer, acquiring rental properties by leveraging three different sources of capital to purchase them: conventional loans or debt; government subsidies; and philanthropic subsidies.

In short, we have been utilizing subsidies to buy down the purchase price to a level where affordable rental income can cover the cost of the loan over time.

Because of inflationary interest rates, we have been limited to taking on conventional loans or debt up to 40% of purchase price – meaning the subsidies part of our capital stack would need to include 30% each from both government and philanthropic sources (60% altogether) to ensure the rents are no more than the U.S. Housing and Urban Development Department (HUD) allowable 80% Area Median Income (AMI).

In 2020, SCHHA also founded its own Hawaiian Lending & Investment (HLI) community development financial institution to deliver financial services and capital to residents, farms, ranches and mercantile businesses on or near Hawaiian Home Lands.

We know having access to capital facilitates economic prosperity in our homestead communities so we’re delivering financial assessments and trainings to homesteaders and investing in their capacity. We’re also delivering grants as they become available from funding partners improving homesteaders financial stability. These grants may be for down payment assistance on home purchases and/or new construction.

Finally, through HLI, we’re originating consumer, housing, agricultural, and clean energy loans. Please contact us at hli@hawaiianhomesteads.org for more information.

Founded in 1987, the Sovereign Council of Hawaiian Homestead Associations (SCHHA) is the oldest and largest governing homestead association registered with the Department of Interior, exercising sovereignty on the trust lands established under the Hawaiian Homes Commission Act of 1920. For information contact policy@hawaiianhomesteads.org.