Council passes forced leasehold conversion
By Treena Shapiro
Advertiser Staff Writer
After more than nine hours of emotional testimony and debate, the City Council last night voted 5-4 to pave the way for lessees at three condominium projects to purchase the land under their condos.
Council member Gary Okino, who will be the council chairman after Jan. 2, promised that he will form a task force to review whether the 1992 mandatory leasehold-to-fee condominium ordinance is flawed.
The council voted to clear the way for the purchases by condemning the land under three Honolulu condominium projects the Kahala Beach Apartments, the Admiral Thomas Apartments and the Camelot.
The votes are based on the 1992 ordinance that allows for condominium lessees to purchase the land under their buildings at a price set by the courts. A Hawai'i Supreme Court decision in May upheld the ordinance's constitutionality but reignited the controversy over the ordinance by ruling that the law was misinterpreted by the city to make it easier for the lessees to purchase the land.
When the council tried to amend the law to match the city's interpretation, the Queen Lili'uokalani Trust and other Hawaiian groups lobbied against the amendment and called for the repeal of the ordinance.
Many who opposed the ordinance also showed up yesterday to try to derail the current efforts by lessees to purchase the land under the three condominium projects.
The five who voted for the condemnations were Okino, John Henry Felix, Steve Holmes, Jon Yoshimura and Duke Bainum.
Kamehameha Schools, the charitable trust that owns the beachfront property under the Kahala Beach condominium, brought out executives, staff and students, who provided the bulk of the testimony opposing the conversions.
Gov. Linda Lingle also urged the council to consider the issue further before making a decision.
"The original intent of land reform legislation was to break up land holdings of large landowners and increase market competition to make housing more affordable for Hawai'i's families," she said in a statement read by her senior policy adviser, Randy Roth.
"Our state's social and economic landscape has evolved dramatically, and I am extremely concerned about the impact mandatory lease-to-fee conversion could have on small landowners, charitable trusts, and Hawai'i's already anti-business reputation."
Yoshimura asked questions to determine the impact of condemnation on Kamehameha Schools' income. Eric Yeaman, Kamehameha Schools' chief operating and financial officer, said the schools receive about $150 million a year from land leases, most of that commercial. About $3.2 million of the $10 million the charitable trust received last year from residential leases is from the Kahala Beach property, he said.
The lease rent is "stable and predictable revenue" that allows the schools to deliver programs in perpetuity, said chief executive Hamilton McCubbin.
Council members Romy Cachola, Ann Kobayashi and Darrlyn Bunda wanted to defer the decision to determine whether they are mandated to initiate the condemnation.
Referring to testimony from opponents, Kobayashi pointed out that "for years they've been coming out to testify, so there must be something wrong with this law that every time we discuss it so many people come out.
"There must be something unfair."
Council chairman John DeSoto, who has opposed mandatory leasehold conversion since the council first began discussing the ordinance more than a decade ago, voted against the conversion.
Okino, who agreed that the council will have to revisit the issue, said the city has a valid law on the books. "Don't the lessees also have rights to a fair and expeditious application of the law?" he asked.
Lessees who will benefit from yesterday's action include Ruth Rand, a Kahala Beach condo owner, who urged the council to vote in favor of conversion. She said she's a widow on a fixed income and fears that she will lose her home if the measures aren't approved.
"I know I could never afford to pay a hike in the lease rent like the last one," she said. "To lose my home and move at the age of 80 years will be extremely traumatic and devastating."
The meeting was the last for members DeSoto, Bunda, Yoshimura, Felix, Holmes and Bainum.
Reach Treena Shapiro at firstname.lastname@example.org or 525-8070.