But first Kali Watson, an affordable housing developer who is the governor’s second pick for the job, must be confirmed by the Senate.

Kali Watson was in the room for what Gov. Josh Green called a “Valentine’s massacre” of Ikaika Anderson, who withdrew his nomination to lead the Department of Hawaiian Home Lands after it was rejected by the Senate Hawaiian Affairs Committee.

About a week later, on Feb. 22, Watson accepted Green’s offer to step into the role of DHHL director, a post he held between 1994 and 1998 under former Gov. Ben Cayetano. The first time around, Watson’s nomination won unanimous support in the Senate.

“It made a lot of sense for me to come back,” Watson said. “There was this tremendous need.”

His confirmation hearing this time around may prove to be much tougher considering the fate of Green’s first pick for the job. The governor said earlier this week that he believes Watson will ultimately win confirmation.

Developer Kali Watson is Gov. Josh Green’s latest nominee to lead the state Department of Hawaiian Home Lands. (David Croxford/Civil Beat/2023)

The Senate Hawaiian Affairs Committee has scheduled a hearing for Watson’s nomination on March 16.

“Kali has already done the job before,” Green said on the Honolulu Star-Advertiser’s “Spotlight Hawaii” program on Monday “He’s well regarded in the community. He’s a developer in addition to an advocate. He’ll do well.”

Past Controversy

Watson faced some controversy during his last tenure as DHHL director. Ranchers sued the department over the management of pastoral lands.

The plight of homesteaders who spent years dealing with shoddy home construction also came to a head in 1996 when Kauai homesteader Hilbert Kahale Smith lit himself on fire in his home during an eviction after spending years fighting DHHL in the courts.

If he’s confirmed, Watson will again be tasked with threading the needle between appeasing the senators whose job it is to confirm him; the governor, who has an aggressive housing agenda of his own; and the Hawaiian beneficiaries who the department was created to serve.

Watson defended his accomplishments as DHHL director in the 1990s during an interview on Tuesday at the downtown offices of the Hawaiian Community Development Board, a nonprofit Watson helped establish 20 years ago that specializes in affordable housing developments.

He also said he has big plans to spend $600 million allocated by the Legislature to help the agency do more to help whittle down a waitlist of more than 28,000 applicants for homestead land.

Concerns over how Anderson proposed to spend the $600 million was one reason senators cited in rejecting his nomination. In January, Anderson raised the possibility of altering a plan already set in place by the Hawaiian Homes Commission last year.

The current plan would devote most of the money, about $475 million, to develop 2,863 lots currently barren in the DHHL inventory. It also sets aside $35 million to purchase 300 additional lots. The remaining funds would go to other DHHL programs like rent and mortgage assistance.

The department is on a tight deadline to spend those funds, and the possibility that spending might be delayed because of changes in the plan worried lawmakers. Anderson seemed poised to incorporate proposals from the Sovereign Council of Hawaiian Homestead Associations, an organization that advocates for waitlisters and put out its own spending plan to counter the department’s last year.

The SCHHA plan envisioned purchasing lands and housing units, developing various rental options and leveraging private investment for housing developments.

Watson’s plans include some of those ideas, but he said the goal is to develop lots under the commission’s current plan first.

Watson said he would like to speed up the timeline for the development of the more than 3,000 lots slated for construction under the current plan and leverage private and public financing to expand on developments already approved by the Hawaiian Homes Commission.

“I expect the department to be one of the largest developers in the state in the coming years,” Watson said.

His plan involves pursuing funds from private developers and other state, county and federal agencies to secure more money in addition to the $600 million. He pointed specifically to the $300 million recently allocated to the Hawaii Housing Finance and Development Corp.’s rental housing revolving fund.

He also wants the department and developers that work with it to take advantage of housing credits offered by HHFDC as well as federal grants.

In addition to housing lots, Watson wants the department to develop rental units for DHHL waitlisters with low incomes. For those who wouldn’t qualify for the low-income housing but still couldn’t afford a mortgage, Watson proposed mortgage assistance.

He also floated the idea of adding to the DHHL’s land inventory that currently sits at just over 200,000 acres.

DHHL sign
Watson wants to expand on current plans to spend $600 million allocated to DHHL. (Department of Hawaiian Home Lands)

Watson believes many more Hawaiians who qualify for the homesteads have not applied for leases yet. If the developments are successful, Watson anticipates more Hawaiians signing up for the DHHL waitlist, which he said happened in the 1990s.

“The more Hawaiians we can get into homestead areas, the better that is,” he said.

Watson chalked up his approach to his development experience, which “made me realize there’s so much more ways to do development effectively, especially when it comes to financing development.”

Watson is executive director of the nonprofit Hawaiian Community Development Board, which has partnered with for-profit entities and other developers to build affordable housing units. The HCDB lists projects completed in Maili, Nanakuli, Halawa and elsewhere in the state.

“I expect the department to be one of the largest developers in the state in the coming years.”

DHHL Director Kali Watson

A lawsuit brought by Maili residents against Watson and his partners nearly torpedoed one development, Hale Makana O Maili, but that legal challenge was dismissed in 2021. The units are now all occupied.

Watson said he would leave his position at the HCDB if he is confirmed by the Senate. HCDB’s most recent 990 form available online showed Watson earned $73,500 as executive director of the nonprofit, which reported more than $4.7 million in total assets.

HCDB is working on at least one DHHL housing project, the redevelopment of rental units in Maili called Ulu Ke Kukui. Watson was pursuing funding from the department and other state agencies for the project last year.

He said HCDB is also looking into the development of an industrial park in Kalaeloa for Hawaiian beneficiaires.

Watson would recuse himself from future commission votes involving the nonprofit.

A New Lawsuit

On Wednesday, Watson was named as a defendant in a civil lawsuit involving a teenage surfer who was badly injured during an incident at the Tonggs surf spot, near the Outrigger Canoe Club in Waikiki.

Kai Keuning was surfing the break in 2021 when a canoe piloted by Watson, Christopher Flaherty and Christopher Kuaiwa struck Keuning in the head, according to the civil complaint from Keuning and his parents, David and Manami.

Keuning spent nine days in the hospital and weeks more at rehabilitation facilities. Jim Bickerton, the Keunings’ attorney, said medical bills are at an estimated $548,000.

The civil lawsuit alleges one count of negligence and one count of nuisance against the three defendants. The plaintiffs are asking for a trial and damages in an unspecified amount.

“We were devastated by this accident and are truly happy that Kai is back in school. Given that this is a lawsuit, we cannot comment further,” Watson said in a written statement.

How much the new legal battle will weigh in terms of Watson’s confirmation is not clear.

Sen. Maile Shimabukuro, who will oversee Watson’s confirmation hearing, said she doesn’t think it will be a factor for her. She called the incident a tragedy, but an accident.

“I don’t feel that this will impact the confirmation,” she said. “It’s not something done with ill intent.”

Former Director

Watson graduated from Kamehameha Schools in 1969 and earned a law degree from the University of Hawaii William S. Richardson School of Law in 1979.

He was part of a group of law students who interned for the Hawaiian Affairs Committee during the 1978 Constitutional Convention, which saw the creation of the Office of Hawaiian Affairs and the enshrinement of environmental protections in the state constitution.

Watson worked for DHHL as a deputy attorney general assigned to the department before going into private practice. Cayetano appointed him in 1995.

Watson had some early wins. He helped secured funding for a $600 million DHHL settlement that disbursed annual payments of $30 million to DHHL over a 20-year period. He saw the Hawaiian Home Lands Recovery Act pass Congress, which led to the transfer of more than 16,000 acres of land to the DHHL land trust.

Llewellyn Kumalae, a former Hawaiian Homes commissioner during Watson’s term, described Watson as a “fair person.”

“I think his relationship, to me, with the Hawaiian homestead communities — I thought was real good,” Kumalae said. “I think personally I would support his nomination againt to be the director and chairman.”

Kumalae said Watson was also opinionated.

“He had his own ideas, but he allowed people to discuss freely,” he said.

But his term was not without controversy.

The suicide of the Kauai homesteader punctuated tensions between homesteaders and the department. In a newspaper column after Smith’s death, Watson joined calls for an investigation into the incident.

Patrick Kahawaiolaa, president of the Keaukaha Community Association who said he was a friend of Smith’s, described his relationship with Watson as adversarial. In his opinion, the department is only responsible for providing land to homesteaders, but not necessarily turn-key homes.

“I don’t know what a developer has to do with giving people the land,” he said.

Cayetano, whose wife Vicky Cayetano ran against Green in the gubernatorial election last year, chose not to nominate Watson to a second term. Watson wouldn’t say why.

“You’ll have to talk to him for his reasons,” Watson said. “I’m just glad he gave me a chance.”

Cayetano said he and Watson had “differences of opinion.”

“I think he had a problem dealing with the fact he was not the governor,” Cayetano said.

The former governor pointed to land transfers Watson negotiated without informing Cayetano. “He was doing things on his own without clearing it with me,” Cayetano said. “That is not the way I personally wanted to operate.”

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