EDITORIAL
Council should move on lease conversions

On the face of it, a vote before the Honolulu City Council today to condemn the leasehold land under three condominiums for fee simple purchase appears to be a slam dunk.

Courts have upheld the constitutionality of the lease-to-fee conversion law. And public purpose seems obvious: Honolulu is full of aging leasehold condominiums. If the apartment owners in these buildings are forced to give up their homes when the current leases expire, there would be tremendous pressure on the housing market as well as myriad social problems.

So the council should have no trouble approving resolutions ordering the condemnation of those three parcels. But will it?

A firestorm of emotional opposition to these conversions — indeed, to the conversion law in general — has lit up over the past several months. And their arguments have substantial appeal.

Particularly compelling are the nonprofits, such as The Queen Lili'uokalani Trust, which uses lease income from the Foster Towers complex in Waikiki to support its efforts on behalf of orphans and destitute children.

Emotional opposition also comes from small family landowners who have developed individual parcels into modest apartments but want to hold on to the land for future generations.

There's no denying the power of the arguments advanced by opponents, but they should not sway the council from well-settled public policy.

Hawai'i went through the same emotional debate years ago with the state law that forced the lease-to-fee conversion of land under single-family homes. Opponents, most notably Kamehameha Schools/Bishop Estate, were adamant that they did not want to give up the land base that made up the bulk of the trust.

As it turned out, the cash flow from conversions allowed Kamehameha Schools to expand both its programs and its investment portfolio.

Some opponents have asked the current council, which is about to step down, to leave this to the next council, which will have four years to deal with the policy implications. That's a fair argument, and the current council should give it serious consideration.

But if council members decide to go ahead with the condemnation on these three parcels, it should be with the clear understanding that the price paid will reflect true and fair market value. As Bishop Estate found out in single-home conversions, the sum value of a home and fee simple land often turned out to be worth more than its parts, and some homeowners enjoyed a windfall profit.

The purpose of this law should not be to simply transfer equity from one private entity to another. The purpose is to create social stability without causing financial harm to the original landowners.

If the council is convinced that is indeed what will happen, then it should move ahead on grounds that this makes sound public policy.