Posted on: Friday, February 14, 2003

No consensus as council starts talks on leasehold law

By Treena Shapiro
Advertiser Staff Writer

The City Council yesterday began discussing ways to study the controversial leasehold conversion law for condominiums.

For six new City Council members who took office last month, this was their first hearing on the law that had been the topic of months of heated debate. The law allows the city to compel landowners to sell qualified condominium owners the fee interest in the land under their units.

During yesterday's executive matters committee meeting, eight of nine council members debated the merits of two proposals that would create a group of lessees and lessors to discuss the issue. Chairman Gary Okino, who was absent, had pledged in December to organize a task force on the issue.

Committee Chairman Romy Cachola said the issue has polarized stakeholders on both sides and forced the city to spend resources defending the 1991 law in court. "I believe the crux of this issue, simply put, is the concern that, one, lessees will lose their homes or investment upon expiration of their leases and, number two, the renegotiated lease rents will escalate substantially in the future," he said.

One proposed resolution would create a five-member advisory committee with two members representing lessees, two representing lessors and an independent chairman casting the deciding vote in the case of a tie. A majority vote would be required to approve an action.

The other resolution calls for a seven-member task group with three members representing each side and a nonvoting independent mediator. The task group would be required to reach a consensus to approve a recommendation.

Eleven individuals testifying on both sides of the leasehold-conversion issue were unable to reach a consensus on which resolution the council should consider, or even whether the council should set up the groups at all. Three people representing apartment owners were in favor of a task force, while Ben Kudo, representing the Queen Lili'uokalani Trust, preferred an advisory group.

The Lili'uokalani Trust last year mobilized landowners and ali'i trust beneficiaries in a fight for a repeal of Chapter 38, which allows the leasehold conversions.

The loose coalition, which included Kamehameha Schools, was successful in persuading the previous council to set aside Bill 53, which was introduced to address a May 30 ruling by the Hawai'i Supreme Court that makes it more difficult for condo owners to force a sale.

The high court ruled that the city misinterpreted the leasehold-to-fee conversion ordinance by requiring 50 percent of the owner-occupants of a condominium project or 25 of them to force the sale of the land. The high court said the percentage should be applied to all condo owners in a project, not just owner-occupants.

Kudo and attorney James Case, who has represented lessees at some 30 cooperatives and condominiums since 1991, disagreed on what form the group should take, but agreed that the two sides would be unlikely to reach consensus on the basic issues.

Case pointed out that it would be difficult for the two sides even to agree on definitions, such as the term "owner-occupant."

Councilwoman Ann Kobayashi asked whether the group could be a fact-finding group that would come up with a report that would not require a vote. But Kudo pointed out that the council did not need a fact-finding task force in the long-standing dispute. "There are hardened positions. The issues are well-known to most of us," he said.

He suggested coming up with a task force that would look at the original goal of the bill and determine whether the goal has been accomplished, and if not, what changes need to be made.

Linda O'Day, Kamehameha Schools government liaison manager, objected to only two or three representatives on each side of the issue.

"The lessors are not monolithic in their viewpoints, and we would guess the same would be true with the lessees as well," she said. "Even if the group members themselves come to an agreement, this does not necessarily mean there is a 'buy-in' by the larger constituencies that they supposedly represent."

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