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Archived News: Vets caught in dispute over water catchment systems
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By Derrick DePledge, Star Advertiser

A bureaucratic scuffle between the U.S. Department of Veterans Affairs and the state Department of Health is leaving veterans unable to qualify for VA loans or refinance existing VA loans at lower interest rates.

The VA has declined to approve home loans on properties with rainwater catchment systems in Hawaii because the state does not recognize the water as safe for drinking or food preparation.

The VA has suggested the Health Department amend its policy and declare catchment water potable if tested by department-approved laboratories, while the state has urged the VA to grant a waiver for Hawaii. The stalemate has dragged on since late 2011.

Veterans are eligible for other federally backed home loans or loans through conventional private lenders. But the VA loan program is tailored to helping active-duty servicemen and veterans become homeowners, by backing loans that often require no down payment or private mortgage insurance.

"Look, we’re not against having safety and health issues being taken care of for the veterans and for our residents in the state of Hawaii, but we have a very simple fix,” said Paul L’Ecuyer, director of business development at Veterans United in Wai­pio, which specializes in VA loans.

L’Ecuyer said certification, through the catchment water testing that the VA has proposed, would solve the problem. "That’s the simple fix,” he said.

An estimated 40,000 to 60,000 residents in Hawaii are on rainwater catchment systems, primarily in the Puna, Kau and Hama­kua districts of Hawaii island.

According to the Department of Health, there is no government oversight of the catchment systems, which are considered private and are approved by the counties in areas not served by municipal water systems.

Gary Gill, the department’s deputy director, in charge of the environmental health administration, told the VA in a letter last August that thousands of homes have been built in Hawaii over many decades using rainwater catchment systems as the only source of fresh water "with little known incidence of
adverse health effects.”

Gill noted that the VA had approved loans on properties with catchment water systems in Hawaii for more than 20 years without incident. He asked that the VA grant a waiver for Hawaii "as a service to Hawaii’s veterans.”

But the VA has explained that the Department of Health, on its website and as a matter of policy, has said that catchment systems are not recognized as potable water. The state has advised homeowners not to use catchment water for direct consumption or food preparation.

The VA’s minimum property requirements for appraisal in Hawaii include having a continuing supply of safe and potable water for drinking and other household uses.

The state does offer homeowners subsidized testing for lead and copper in catchment systems once a year. The state, however, has said that as there are no uniform standards for the construction of catchment systems, the water could contain chemicals or other contaminants that are not covered under the state law regulating public — or potable — water systems.

Research by the University of Hawaii at Manoa has concluded that with proper design, maintenance and water treatment, catchment systems can provide water that is relatively free from contamination and can be used for drinking, bathing, washing and other household purposes.

Tracey Betts, director of the VA’s Hono­lulu regional office, suggested in an email to state officials in May that the state could amend its policy to declare catchment water that is tested and meets the department’s requirements safe for drinking. The testing would be done at department-approved labs at the expense of homeowners or prospective buyers within 90 days prior to the loan closing date.

Blake Oshiro, deputy chief of staff to Gov. Neil Abercrombie, said the state might have to amend its administrative rules to accomplish a policy change, a potentially time-consuming process.

"It’s not something that can happen overnight,” he said.

Oshiro said that is why the Department of Health has urged the VA to grant Hawaii a waiver.

State Rep. Bob McDermott (R, Ewa Beach-Iroquois Point), who has been seeking a resolution for months, praised Oshiro for his attempts to help but accused the Abercrombie administration of bureaucratic foot-dragging.

McDermott said Thursday that the state’s policy on catchment systems was the work of a "nameless, faceless midlevel bureaucrat.”

He said the Department of Health’s posting of the policy on its website likely caught the VA’s attention in 2011. He said the policy is not a state law or administrative rule and should be easy to change.

"The state of Hawaii is disenfranchising veterans. And I have asked the governor to fix this problem that his administration created,” said McDermott, a former Marine who served in the Persian Gulf War.

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