Special Electricity Could Have Shocking Charges for Vacant Land Buyers

Even in a down market, a staggering number of vacant parcels still change hands each year. These days, investors are snapping up well-priced properties quickly. Because inventory is high, buying opportunities are the best they have been in over a decade. Unless there’s something special about a property, competitive pricing is the fastest way to ensure a sale.

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Interesting thing about vacant land listings, we rarely know if they are being shown. Most agents just assume the parcel is available if it’s still listed in the Multiple Listing Service. The risk of having a buyer disappointed after having been presented a lot for their consideration is fairly slim.

Power to Vacant Lot May Require Special Provision

If buying in Puna, especially. Because pricing is so critical, buyers (and sellers hoping to be competitive) must remember to factor in the “hidden cost” of the Special Subdivision Power Provision (SSPP). While not unique to vacant land, it’s certainly a bigger issue when the charge to connect to power is part of the future cost to develop the property. This is especially important when considering a purchase in Puna. 

Take a typical Hawaiian Paradise Park (HPP) lot, for example. Several possibilities may exist regarding payment (if any) for power poles along the roadway. The power may be “regular” power, which means no charge attaches. The property could, however, belong to an SSPP. This means that HELCO has outlined an area in which a cost-share charge applies and has been established for each parcel along that SSPP.

Unless an owner makes a conscious decision to participate, the charge is not assessed until a connection to permanent power is established. The charge for a typical HPP lot usually ranges from $2,000-$3,000. I have, however, known of charges in excess of $8,000 in Hawaiian Acres. As owners connect along each line, the charge decreases. Don’t forget that these charges can apply to residential sales as well.

Special Charges Can Be Made More Affordable

HELCO will allow owners to spread the payments over several years, making the charge very affordable (normally around $30 per month in addition to use charges). SSPP charges under $2,000 must be paid lump sum, and for participants with appropriate balances, must be paid upon transfer.

No matter where you buy on Hawaii Island, it’s a good idea to inquire if a SSPP exists. Most real estate offices have a record of affected properties listed by TMK. The list is updated online or you may verify if a SSPP applies by calling HELCO Engineering. It’s important to check because, after all, you don’t want the cost of electricity to turn a simple purchase into a truly “shocking” experience!