Condo dispute heating up

By Treena Shapiro
Advertiser Staff Writer

The city's lease-to-fee ordinance will come before a City Council committee in a special meeting Oct. 9 that is likely to draw strong testimony.

Council member John Henry Felix, who wants to amend the ordinance in response to a recent Hawai'i Supreme Court ruling, said he is cautiously optimistic the council can compromise and adopt a measure before members' terms expire in January.

If Bill 53 wins approval by the executive matters committee, which Felix heads, it will go before the full council for a vote.

At issue is the 1991 city ordinance, authored by Felix, that establishes the process by which owner-occupants of O'ahu leasehold condominiums can buy the land under their buildings when the owner refuses to sell or no purchase price can be agreed upon.

In June, the state Supreme Court ruled that the city law, while valid, had been misinterpreted. The city understood the ordinance to mean the lease-to-fee process could begin if 50 percent of the owners living in the condominium units wanted to buy the land. The high court said the 50 percent figure applied to all the condominium owners, whether or not they lived in the units — effectively making it more difficult for owner-occupants to buy the fee interest.

Felix said yesterday that the law's original intent was to require a minimum number of owner-occupants to initiate the conversion process, and he wants to amend the ordinance to reflect that intent.

But the move to amend the ordinance has drawn opposition, particularly from Native Hawaiians, who say land-owning trusts that benefit Hawaiians will lose revenue from their leasehold condominiums.

Much of the focus has been on lands previously owned by Queen Lili'uokalani, such as the 142-unit Foster Towers. The revenues from the leases go to the Queen Lili'uokalani Trust, which benefits orphans and destitute children, particularly Hawaiians.

Trust supporters say the amendment will lead to the forced sale of trust lands and also threaten small private landowners who don't want to sell their property.

However, Michael Pang, principal broker for Monarch Properties, which represents condo owners hoping to buy the land under their buildings, said selling benefits lessors. He pointed out that Kamehameha Schools voluntarily sold some of its leased-fee investments to expand its programs and help more beneficiaries.

Pang said if the bill does not pass, "the qualifications will be so stringent that 89 percent of the leasehold condominium projects would be ineligible."

If the bill passes, about 363 O'ahu condominium projects will qualify for the the lease-to-fee conversion, Pang said.

But since owners make up only 30 percent of condo occupants, on average, following the state Supreme Court guideline will leave far fewer projects qualified for conversion.

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.