At issue is a 1991 city ordinance that sets up a process by which lessees of condominium units can gain title to the land under their units when the landowner refuses to sell the fee interest or no purchase price can be agreed upon. The Department of Housing and Community Development could proceed with condemnation action with petitions from 50 percent of owner-occupants of a project.

That means if a project at 100 units and 40 lessees were owner-occupants, all it would take for action was 20 applicants.

Under the Supreme Court decision, however, the interpretation of 50 percent is that they would need either 25 owner-occupants or 50 percent of the owners of all units in the project.

"The city is studying the impact of the ruling," Corporation Counsel David Arakawa said. "It appears that this ruling may deprive a significant number of Honolulu's condominium lessees of any chance to convert to fee simple.

"The ruling may also result in the dismissal of some lease-fee conversion cases that are presently pending if it is determined that they failed to meet the new standard required by the Hawai'i Supreme Court's decision.

"If such dismissals occur, the court may require the city to pay certain expenses incurred by the landowners in those cases."

Kamehameha Schools filed the legal challenge ruled on by the Supreme Court. "Kamehameha Schools appreciates the state Supreme Court's affirmation that the rules that have been established to govern mandatory lease-to-fee conversion need to be followed," a spokesman said yesterday.