Credit unions help their members through a long list of life’s most cherished events, from saving for college to buying a home or other long-term financial goals. It’s not just about personal banking, though. Credit unions can also assist members with finding new housing arrangements when unexpected, unwanted life events occur — like recovering from the aftermath of a natural disaster.
Many Hawaiian residents are dealing with one of those unexpected and unwanted natural disasters right now. A volcanic eruption on the archipelago’s Big Island in early May sent lava flowing down from Mount Kilauea into nearby communities, causing severe damage to homes and properties and forcing nearly 2,000 residents to evacuate the area.
Although the volcano first erupted three months ago, it’s still spilling lava onto the island. The lava flow has already caused roughly $372 million in private property damage, by some estimates, and has cost Hawaii’s tourism market roughly $222 million in losses.
In addition to emergency agencies, the volcanic activities have prompted local credit unions, like Hawaii First Federal Credit Union, to mobilize and help affected residents. In a recent interview with PYMNTS, Laura Aguirre, president and CEO of Hawaii First FCU, discussed how the CU, which serves more than 8,000 members and holds approximately $40.1 million in assets, is reaching out to the public to help stabilize their financial lives — and why the first priority is often finding housing solutions for residents who have been displaced.
A Big Push for Small Housing Units
One of the biggest roadblocks for impacted residents working to repair their communities is the uncertainty surrounding the current situation.
Many homeowners are stuck waiting for word on the extent of the damage to their properties, and assessors must review it before disaster relief or insurance claims can be paid.
Unfortunately, the ongoing lava flow makes this a particularly challenging task for residents, emergency responders, damage assessment teams and insurance companies. Even taking a helicopter to the affected region can be costly and dangerous because of the smoke and poor air quality, Aguirre pointed out.
“Everyone’s in a stagnant place right now, waiting to see what to do to, because there’s no going back,” she said.
To make matters worse for those displaced, finding affordable housing can be a tall order. Rental properties are in short supply, Aguirre said, so residents must rely on temporary shelters.
Hawaii First is approaching the housing crunch by thinking small. The credit union recently launched its Pathways to Rebuilding Lives (PRL) program, designed to address the needs of members impacted by lava flows. Its mission is to explore new housing solutions for displaced residents by reaching out to contractors who are willing to develop “efficiency dwellings.” These units are small — approximately 400 square feet — and include a kitchen and a carport.
These smaller homes can provide an alternative housing solution to emergency shelters. Because of their size and lower profit potential, however, many traditional lenders do not want to fund loans for these types of properties. That reticence means these homes present a way for CUs and other community-minded organizations to get involved. Nonprofit groups, including Hawaii Island United Way, have also funded small housing projects.
“As a small credit union, we may be able to fund these mortgages,” Aguirre said.
In addition to small housing developments, Hawaii First is also awaiting word from Hawaii County and the state of Hawaii regarding the potential of offering direct access to land parcels for displaced residents. This land would then be used for temporary housing or other relief efforts.
Popping up to Help Members
Kilauea’s eruption has damaged more than just homes in the region, though. Images have caused tourists to cancel vacations, which has taken a toll on local residents’ incomes.
“A lot of these people work for the hospitality industry as tour bus drivers or at a hotel,” Aguirre explained. “When the hotel reservations go down, their hours are cut. So, it’s having an overall effect on the island.”
To retain tourists, government officials are working to raise awareness that the state is still open for business. In the meantime, Hawaii First is holding pop-up events to meet with members in person and provide them with financial aid and a fiscal snapshot via its PRL program.
Aguirre said Hawaii First’s staff has a chance to work with locals at these events and assess their financial status and goals. Its PRL program then uses financial planning software to help individuals establish their own financial goals based on their unique situation, regardless of how the volcano has impacted those plans.
“We put together goals and the objectives to get through the next week,” she said. “Once those are done, we are able to fund them some money.”
The funds range from $500 to $2,000 per family, and are unrelated to any future damage assessment payments. They can be used to help residents make a deposit on a new housing arrangement, make a utility payment or buy basic living supplies.
An ‘Opportunity’ to Assist Members
While the recent eruption is hurting Hawaii’s economy, it isn’t the first time the state has dealt with economic hardship. Aguirre said the challenge posed by the volcano’s impact matches that of the economic downturn in 2008 – an event that, like the volcano, forced many consumers to cancel or suspend vacation plans.
“That affected everyone on the island, when everyone stopped travelling,” she said.
Its effects may not be unprecedented, but Kilauea’s eruption has forced Hawaii First to consider new approaches and resources to address displaced members’ needs, get lives back on track and find a way to make finances more stable.
“We’ve never faced an opportunity like this,” Aguirre said. “This is just bringing out the very best, as we consider new and different ways to assist the displaced.”
It’s also an opportunity for Hawaii First to engage with the community through pop-up events, and ask affected individuals how the CU can step in and help them to recover. Perhaps most importantly, it offers the credit union and others in the area the chance to showcase how they rise to the occasion to address many of life’s unexpected challenges.