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ANALYSIS: Geothermal Relocations Taking Millions From Fund (Part 2 of 2)

June 7, 2013, 3:43 PM HST (Updated July 22, 2013, 8:36 AM)
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In an earlier analysis, Big Island Now detailed the recent shift in how geothermal royalties are being spent by Hawaii County.

The program that relocated residents from near the Puna Geothermal Venture power plant and provided millions of dollars in benefits for the Puna community at large is now being spent entirely on relocations.

That is despite the fact that all but one of the owners of the homes now under consideration for county purchase acquired their properties after the plant’s construction in 1989 — despite the program’s stated priority for homes already in place when PGV was built.

We now examine how the sudden surge in relocation requests may have happened, and whether there is any end in sight to the relocation program itself.

Sudden Rush

As described in our previous analysis, since 2012 the Planning Department has designated 25 homes for purchase using the county’s Geothermal Relocation and Community Benefits Fund at a tentative cost of nearly $5.5 million. That is in contrast to the six homes approved for purchase between 1998 and 2012 at a cost of just under $700,000.

According to former Planning Department Director Bobby Jean Leithead-Todd, “22 or 23” of the 27 applications filed in 2012 (two of the 27 were rejected) occurred during a short period of time in the summer of that year.

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That unprecedented surge is difficult to explain, though a variety of factors may have been at play.

Former County Council Chairman Dominic Yagong. Photo by Dave Smith.

Former County Council Chairman Dominic Yagong. Photo by Dave Smith.

In June of 2012, then-County Council Chairman Dominic Yagong introduced two geothermal-related bills that would have significantly altered the way royalties were spent.

Under Yagong’s proposed changes, the county would have been stripped of the ability to use royalty funds for community benefits in Puna, limiting the fund’s use to relocations and health-related studies. Yagong’s proposals also would have prevented the county from re-selling properties it purchased in an effort to create a one-mile “buffer” around the geothermal plant.

Although both of Yagong’s bills were later vetoed by Mayor Billy Kenoi, their introduction sparked many hours of public testimony over the relocation program and the alleged health threats posed by the geothermal plant which included residents complaining of everything from memory loss to general fatigue and weakness.

The increased publicity surrounding both the alleged health threats and the availability of the geothermal relocation program itself may have played a role in the spike in applications that summer, although Leithead-Todd speculated that other factors may have contributed.

According to Leithead-Todd, some of the applicants seeking relocations that summer had indicated they learned of the program after being personally approached by individuals suggesting they make use of it.

Asked whether anyone  might have sought — during times of falling home prices — to profit from the program’s rules which pay homeowners 130% of the house’s assessed value, Leithead-Todd indicated that it appeared at least one applicant had purchased a home close to PGV with full knowledge the plant was there, though she refused “to name names.”

Dollars and Sense

Can the county afford all the approved relocations? Eventually, yes.

According to planning department staff, only five of the 25 homes approved for purchase are currently in the process of being funded, at a total cost of $828,620.

The remaining 20 will be addressed as funds continue to be made available from geothermal royalties. At a council meeting in April of this year, Leithead-Todd explained there are $2.1 million in funds still available.

The Puna Geothermal Venture plant in Pohoiki in lower Puna. Photo courtesy of PGV.

The Puna Geothermal Venture plant in Pohoiki in lower Puna. Photo courtesy of PGV.

With the county estimating about $600,000 to $700,000 per year in royalty revenue from PGV, Leithead-Todd expected the county to complete all the currently approved purchases within approximately three years. Of course, rising property values or an influx of pre-1989 applications could change that, because, according to the former director, homes built before that date “would move to the top of the list.”

Under current practice, homes approved for purchase have their transactions with the county finalized via a real estate agent, then are eventually auctioned off by the county, with proceeds going back into the relocation program itself.

Apart from the $2.1 million available, the county code requires $1 million to be held in reserve in the Geothermal Relocation and Community Benefits Fund. At the council’s April meeting, Leithead-Todd noted her frustration that despite all the pending relocations, “there’s nothing within the county code that gives me a mechanism to touch the million dollars.”

Leithead-Todd explained that unless the county code is amended by the council to provide more clarity, that $1 million would perpetually be held, unusable, in the fund.

Where Does it End?

As there was never a concrete sunset date for the relocation program in either the county code or the planning department’s original rules, the applications by Puna homeowners could conceivably stretch on for years, though Leithead-Todd has said she knew of only one such application in the last six months.

Another result of the vague guidelines set forth by the county has been a very low threshold for homeowners to qualify for the repurchase program.

As Leithead-Todd described it, “applicants don’t even have to give a reason for wanting to relocate” so long as they are “owner-occupants.”

No ill health effects have to be alleged either, according to the former director, who explained that applicants must simply say they want to be relocated.

Even the one-mile proximity to PGV is listed in the rules as a priority rather than a requirement, meaning that in theory the relocations could also be applied to residents outside that one-mile radius.

Puna Councilman Greggor Illagan.

Puna Councilman Greggor Ilagan.

The most recent attempt to change or clarify the program was made by Puna Councilman Greggor Ilagan, who withdrew a measure on May 29th that would have limited access to the relocations to existing homeowners in the area.

Illagan is seeking additional community input from constituents, some of whom apparently thought he was attempting to end relocations entirely. The Puna councilman had earlier indicated his focus was to prevent new incoming home buyers from taking advantage of the relocation program, rather than preventing existing residents from applying.

Apart from occasional attempts by the council to amend how royalties are spent, the Planning Department has worked to prevent properties the county purchases from getting recycled through the program.

According to department staff, any home auctioned off by the county under the relocation program cannot qualify a second time.

How long the relocation program persists into the future will depend on actions by the County Council, and how the planning department interprets both existing rules and any future changes.

After the publication of our first analysis of the geothermal royalty fund, Leithead-Todd was transferred to director of the Department of Environmental Management, replaced as planning director by Duane Kanuha.

Big Island Now contacted Kanuha’s office in an attempt to gauge his  interpretations of the geothermal relocation program.

No response was received as of press time.

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