Fitch Affirms DHHL Revenue Bonds at ‘A’

Posted on Aug 11, 2011 in Department of Hawaiian Home Lands, Media Releases

Fitch Affirms Department of Hawaiian Home Lands Revenue Bonds at ‘A’, Outlook Stable

NEW YORK–(BUSINESS WIRE)–Fitch Ratings takes the following action on the State of Hawaii’s Department of Hawaiian Home Lands bonds as part of its continuous surveillance effort:

–$41.205 million revenue bonds, series 2009 affirmed at ‘A’.

The Rating Outlook is Stable.


–The bonds are secured by a gross pledge on certain Department of Hawaiian Home Lands (the department) revenues, which provide sound debt service coverage. Additional security exists in the form of a debt service reserve fund and additional reserve holdings in a pledged fund.

–While not pledged to the bonds, debt service is expected to be funded through monies from the Office of Hawaiian Affairs, pursuant to an executed Memorandum of Agreement between the two entities.

–The department controls significant balances and, while not available to bondholders, these funds offer the department operating flexibility.

–The department is a cabinet level agency with a popularly supported mandate; extensive planning is evident.

–No direct state support is pledged to bondholders.


The bonds are special, limited obligations of the department, secured by a gross pledge on general lease and license and permit fee revenues, as well as interest income generated by the department’s administration account.


The ‘A’ rating reflects sound debt service coverage provided by the pledged revenue stream, the additional security provided by a debt service reserve as well as a supplemental reserve, the department’s overall financial resources which afford significant operating flexibility, and the state’s demonstrated support of the department’s mission. The rating also considers cash flow pursuant to a Memorandum of Agreement between the department and the state’s Office of Hawaiian Affairs that, while not pledged to the bonds, is the intended repayment source. Pledged revenues are derived largely from general lease payments received on department lands leased to commercial and industrial entities.

The department is a cabinet-level entity in Hawaii’s state government, directed by the Hawaiian Homes Commission, which operates pursuant to the Hawaiian Homes Commission Act of 1920. Members of the Commission are appointed by the Governor with the consent of the State Senate. The Chairman of the Commission serves as the department’s administrator. The department manages more than 200,000 acres of land held in trust as Hawaiian Home Lands, and the department’s primary mission is to provide qualified native Hawaiians the opportunity to own homes on the trust’s lands. The series 2009 bonds financed capital improvements necessary to advance the department’s goal of providing new homestead awards over a five-year period. Portions of the department’s lands are leased for commercial and industrial development purposes while others are utilized under license and permit arrangements for various purposes, and associated revenues generated are applied toward furthering homestead projects.