City trying to fix leasehold-to-fee law

By Walter Wright
Advertiser Staff Writer

The City Council yesterday forwarded to its Policy Committee a measure intended to fix legal flaws that the Hawai'i Supreme Court found last month in the city's law helping owner-occupants of leasehold apartment units to buy the fee interest in the land.

Fixing the existing law could help an estimated 8,000 owner-occupants in O'ahu's 32,000 leasehold condominium units force their landlords to sell them an interest in the land.

While affirming that the city's lease-to-fee conversion program is valid and enforceable, the high court's decision May 30 effectively reduced the number of lessees eligible for conversion.

Councilman John Henry Felix said yesterday it was a single word in the law that caused the problem and it could be fixed.

He urged council members to simply defer action on pending condemnation resolutions involving four condominium buildings. That way, Felix said, the council could talk to its hired legal expert, Lex Smith, about how to remedy the problem cited by the Supreme Court.

But Councilman Romy Cachola insisted it was better to kill the pending resolutions entirely, then restart them under any new law enacted.

At issue is a 1991 city ordinance that set 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 city interpreted the ordinance to mean that the lease-to-fee process could start if 50 percent of the owners who live in the condo units want to purchase the fee interest.

But the high court interpreted the ordinance to say that 50 percent of all the condo owners — not only the ones living in the units — is necessary for the conversion process.

Reach Walter Wright at wwright@honoluluadvertiser.com or 525-8054.