Arica Lynn Souza knew she was running out of time.

It was August 2023, and she was nervously watching as a wildfire inched ever closer to her idyllic oceanside town of Lahaina in West Maui. She was home with her two children and pregnant with a third, waiting for her husband, Matthew, to return from work before making an escape. But as smoke engulfed their house, Ms. Souza couldn’t wait any longer. She stuffed her 4-year-old son, Silas, and her 2-year-old daughter, Ayla, underneath her shirt and drove down barricaded roads to safety. Matthew, who was stuck in standstill traffic, watched from his car as the fire destroyed his town, killing 102 people in the process.

The family spent a year living in Matthew’s grandmother’s house in another part of Maui. But when she died in mid-2024, the house went on the market, and the Souzas had to find another place immediately. Before the fire, they’d lived in affordable work force housing, thanks to Ms. Souza’s job as a public school teacher. Now, they were using insurance money to rebuild. Maui’s skyrocketing prices put renting out of the question. “I was worried we were about to be homeless,” Ms. Souza said.

Then she heard about an experimental housing development on the edge of Lahaina for people who, like her family, had not gotten federal assistance. Backed by $185 million in funding from the state of Hawaii and the Hawaii Community Foundation, Ka La‘i Ola — translated as “the place of peaceful recovery” — is a temporary community of 450 modular homes that will house as many as 1,500 wildfire victims through 2029.

Disaster survivors are often cycled through far-flung shelters, hotels and short-term lodging, while facing federal requirements that disqualify millions of people from aid. Ka La‘i Ola represents a new model. Since the Trump administration made cuts to the Federal Emergency Management Agency, it’s also a test of what happens when states try to fill in the gaps.

Ms. Souza worried about returning to the site of so much loss. But in August last year, without options, the Souzas packed up and returned to Lahaina.

Even before the fires, Hawaii’s housing crisis was severe. The high cost of living, relatively low wages, and glut of vacation rentals made the state increasingly unaffordable for those who clean its luxury hotels and mow its immaculate golf courses. Hawaii consistently ranked among the worst states for homelessness; since the fire tripled the number of people in shelters, it’s become the worst.

Upon taking office in December 2022, Gov. Josh Green, a former emergency room physician, proclaimed homelessness an emergency and suspended certain building regulations to fast-track the construction of tiny home villages for unhoused people, in a project called the Kauhale Initiative. That initiative, modeled after a similar effort in Texas, was already underway when the Maui fires broke out and displaced more than 8,000 people. The governor and his team decided a similar approach was needed.

Early on, the state was reportedly spending $56 million every month on hotels for people without FEMA assistance, which Governor Green said was unsustainable. “Building a village became an obvious choice for us,” he said.

The governor issued another emergency proclamation, clearing regulatory hurdles to house wildfire survivors. He tapped the nonprofit leading the Kauhale Initiative, HomeAid Hawaii, to manage the project. Kimo Carvalho, the nonprofit’s chief executive, had grown up in Hawaii, but was working as a paramedic in New Orleans when Hurricane Katrina hit, responding to emergency calls from FEMA’s toxic trailer parks. There was more to disaster housing, he learned, than putting a roof over people’s heads.

After an extensive search for a place to settle survivors, the state decided on a 57-acre plot overlooking Lahaina. Although the proximity was sensitive for people who had lost homes nearby, it was also important. “People rely on their networks after a disaster,” said Andrew Rumbach, who studies housing and climate change as a senior fellow at the Urban Institute. “Breaking up those networks can be the disaster after the disaster.”

But the location caused controversy. The plot was on ceded land, which had been taken from Native Hawaiians by the United States, and is now held in trust by the state to house them; most of Lahaina’s displaced residents are Hispanic and Filipino. Yet much of the land in the trust had gone undeveloped, leaving more than 20,000 Native Hawaiians stuck on an interminable wait-list.

Mr. Carvalho, a Native Hawaiian himself, understood the concern. “We care deeply about our culture,” he said. “At the same time, people need housing.”

The governor’s office struck a deal: The state’s Department of Human Services would lease the land for Ka La‘i Ola for five years and invest in making it habitable, and then transfer the land, including new housing and other infrastructure, to the Hawaiian Home Lands Department to permanently house Native Hawaiians. The state says the emergency plan shaved 17 years off the permanent development timeline.

Finding the right homes was crucial. Modular housing offered a way to speed past labor and supply chain snags. Mr. Carvalho traveled to factories in China, South Korea and the mainland United States, seeking vendors who could quickly deliver homes durable enough to last. The state settled on five different units, from a minimalist studio made in Vietnam to a futuristic three-bedroom sold by a father-son team in Oahu.

Construction began eight months after the fires, with vendors rushing to welcome the community’s early residents the day after the disaster’s anniversary. In went new storm-water basins and a $14 million water tank. Towering cranes dropped the homes into place, and the long dirt road running along the property was paved over.

Many Lahaina residents had used that road to escape the fires. Now, they’d use it to get home.

On a blindingly bright afternoon in July, Ms. Souza’s home at Ka La‘i Ola was buzzing. Silas and Ayla jumped wildly on their parents’ bed, while Ms. Souza bounced her youngest son, now just over a year old, on her hip and their dog ran circles around the narrow living room. Every inch of the 580-square-foot three-bedroom was stuffed — with baby dolls and books and every variation of snack puff. A basket full of kids’ shoes overflowed by the front door.

The Souzas were among the first families to move into Ka La‘i Ola in August 2024. Their tiny unit resembles a sleek, white U.F.O. “My son looked at it and went, ‘We’re living in a rocket ship?’” Ms. Souza said.

Back then, there were just 10 units on the property. As of September, there were 352, housing nearly 900 people.

Earle Kukahiko moved in late last year, after spending most of his life living down the road. His parents had bought their home when he was 9 years old, and in the 1980s built a cottage for him out back. The fire destroyed both houses as well as the one next door, where Mr. Kukahiko’s daughter and granddaughter lived. Afterward, the family spread out across hotel rooms and condos, while Mr. Kukahiko, now 67, slept under a tent in his sister’s backyard.

The first night in Ka La‘i Ola, where he lives with his wife, daughter and granddaughter, was “a relief,” he said with an exhale. “We finally got someplace where we would be OK for the duration.”

The homes are organized in clusters, dotted with vegetable gardens, grills and picnic tables designed to evoke a neighborhood. HomeAid hosts regular events — a summer bash and an “equipment rodeo” where kids ride bulldozers — often with a local health partner providing access to mental health and other resources.

Zoe Chesson, who moved into the unit across from Mr. Kukahiko in January, also grew up in Lahaina and feared living so close to her ruined hometown. But Ka La‘i Ola has restored the spirit of community she missed while living in hotels and Airbnbs. Her son, Bishop, and Ms. Souza’s son, Silas, have bonded over shared interests, like being 6 and loving Minecraft. “When we first moved back, I couldn’t keep my kids inside,” Ms. Chesson said. “I feel like it’s supposed to be like that.”

But life in a tiny home is not easy. Storage is nonexistent. No one has an oven. Some units leak. Others show signs of settling, and the U.F.O.-type units are developing rusty-looking patches that HomeAid says are just construction dust.

All of this would be minor if the state wasn’t hoping to repurpose these homes as long-term housing. But the life span of the modular homes has never been tested at this scale against the West Maui elements. The fear of failure sometimes keeps Mr. Carvalho up at night.

The project’s expenses are now 60 percent above initial estimates, with the average cost per unit, including infrastructure, exceeding $400,000. Some have criticized the state for spending so much on temporary homes. “We didn’t have the luxury to just wait,” Governor Green said. When people become homeless, he added, “their costs go through the roof.”

Governor Green noted that Ka La‘i Ola cost less than FEMA’s nearby community, Kilohana. That village, a series of 167 mostly identical modular homes, is scheduled to house wildfire victims only until 2026, without many of Ka La‘i Ola’s community elements. It also charges rent. Ka La‘i Ola will remain rent-free until February of 2026 and may charge a yet-to-be-determined “nominal” fee after that, the governor said. FEMA did not respond to The New York Times’s requests for comment.

Ka La‘i Ola’s promise depends in part on people moving out. Three households already have. But the permanent rebuild of Lahaina has been plagued by permitting issues and community infighting. Two years since the fires, just 60 homes and 2 commercial buildings have been completed.

Meanwhile, rental prices on Maui are substantially higher than before the fires, making it challenging for many residents to find permanent homes. Coupled with the high costs of rebuilding, this has fueled concerns that for some, “the five-year timeline may actually be too short to fully recover from the damage,” said JoonYup Park, an assistant professor focused on housing economics at the University of Hawaiʻi at Mānoa.

While it isn’t the only housing development Hawaii funded after the fires, Ka La‘i Ola is the largest. But even with hundreds of units, according to HomeAid, thousands more households applied for interim housing from the state.

Dr. Park argues that Ka La‘i Ola has provided an important bridge for Lahaina residents and a valuable model for other disaster areas that have the resources and nearby land on which to build. And if the state succeeds in turning it into permanent housing, Dr. Park said, “it could meaningfully reduce homelessness.”

Mr. Kukahiko has no intention of overstaying his welcome at Ka La‘i Ola. He spends most days on the empty lot where his homes once stood, tending to his papaya trees and catching some shade under a series of heavy-duty sheds. HomeAid will soon start a pilot to place a small number of units designated for Ka La‘i Ola on residents’ property. He intends to be first in line while his house is being rebuilt.

Ms. Souza, too, is counting down the days until her house is finished, which could happen this fall. A few times a week, she brings Silas and Ayla down to the park behind their old house for play dates and to track progress. Those visits have helped with the family’s healing process, Ms. Souza said. But she still can’t wait to be home.

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