Owners of secondary homes damaged, destroyed or isolated by the 2018 Kilauea eruption will get smaller payouts than expected after Hawaii County adjusted the terms of its housing buyout program.
The county Recovery Office announced Friday that its Voluntary Housing Buyout Program will now only award a maximum payout of $142,000 to secondary homeowners enrolled in the program, a decline from the previous maximum of $230,000.
Initiated in 2021, the program allows those whose homes were impacted by the eruption in lower Puna to have the county buy their properties based on the land’s assessed pre-eruption value. The program operated in three phases — phase 1 was for owners of primary residences, phase 2 for owners of secondary residences, and phase 3 for owners of undeveloped properties — and each phase initially promised maximum payouts of $230,000.
However, the program had to reduce payouts once already. In 2022, the Recovery Office announced that people applying to have undeveloped properties bought out by the county could only get a maximum payout of $22,000 — again, down from the previous $230,000 cap.
At that time, Recovery Officer Douglas Le said the payout structure had to be adjusted in order to serve as many applicants at once, which he said Friday is also the reason for the latest change.
“We’ve had a lot of unexpected interest in the program,” Le said, estimating it has about $38 million left out of its initial $107 million budget after mostly wrapping up the first phase of buyouts.
That first phase, which solely includes applicants seeking to have their primary residential properties bought, should finally be completed by the second quarter of this year, Le said. Of the 311 applications in that phase, 37 remain unresolved.
Le said the county will begin initiating the phase 2 buyouts next month as the phase 1 buyouts draw to a close. But the county received 195 applications for secondary homes and 293 for undeveloped properties, meaning the county has to spread the money over potentially 500 more properties.
According to county recovery statistics, more than $54 million already has been spent on phase 1 buyouts, but Le said there are further costs to consider.
“We’ve acquired about 300 properties so far, and of those, about 20 need some kind of demolition work,” Le said.
The U.S. Department of Housing and Urban Development, which provided the funding for the buyouts, requires that all properties purchased through the program have all structures removed. That removal, Le said, also takes up part of the program’s budget, with about $10 million earmarked for such costs.
With so much money already expended, and with the average payout for primary residences hovering around $190,000, Le said the phase 2 payouts had to be adjusted so that the program has enough money to make it to the phase 3 buyouts of undeveloped properties.
Complicating matters further is the HUD stipulation that the program focus on property owners in the low- to moderate-income range.
While Le said the Recovery Office loosely estimates that about 10% to 15% of phase 2 applicants fall in that range, he guessed that phase 3 applicants probably more closely mirror the income distribution of the broader Puna area — which is to say, nearly 50% could be in the low- to moderate-income range.
“If we continued on the path that we were going, we wouldn’t be able to serve a significant portion of phase 2 folks and that would have left a lot of people without getting the aid they need,” said Recovery spokeswoman Jennifer Myers. “These are hard choices but we are making them so we can serve as many folks as possible, especially those who are (low- to moderate-income).”
The change only applies to phase 2 payouts, with phases 1 and 3 still operating under their respective maximum payouts of $230,000 and $22,000. Le said he doesn’t expect the program will have to reduce phase 3 payouts again.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.