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The Honolulu Advertiser
Posted on: Tuesday, March 25, 2003

Leasehold measure wins vote in House

By Gordon Y.K. Pang
Advertiser Capitol Bureau

The Honolulu City Council would no longer be allowed to use its condemnation powers to convert condominiums from leasehold to fee simple under a bill moving through the state Legislature.

Yesterday was the 39th day of the 60-day session.
The latest draft of Senate Bill 1468 won a key vote when it passed second reading in the House on Friday by a 34-10 vote with seven excused. It is expected to be heard jointly by the Judiciary and Consumer Protection and Commerce committees, although no hearing had been scheduled as of yesterday.

It was one of those odd votes that did not fall along mostly partisan lines. Instead, the House was split largely between those whose districts represent larger concentrations of condominium units and those whose don't.

Mandatory leasehold conversion for condominium units has been a source of controversy at City Hall in recent years. Under the law, a minimum number of lessees can petition the Council to use its eminent domain powers to force a landowner to sell the fee interest at a price determined by an independent appraiser.

Proponents say lessees should be given a chance to rid themselves of the uncertainty of what happens with their units after their leases run out by giving them a fair shot at gaining the fee interest. Opponents say landowners are unjustly being forced to sell, and to sell at prices not of their choosing.

Water, Land Use and Hawaiian Affairs Chairman Ezra Kanoho said the measure was necessary "to overturn the unconscionable policy of taking from one to give to another." While the Legislature allowed for mandatory conversion for single-family homes decades ago in the face of land ownership concentrated on a few, that oligopoly does not exist for condominiums, he said.

But state Rep. K. Mark Takai, D-34th (Pearl City, Newtown, Royal Summit), said mandatory conversion of leasehold condominiums has served a legitimate purpose in promoting home ownership and is a practice upheld by the U.S. Supreme Court. "If this bill passes in this form, it would effectively eliminate the right for lessees on O'ahu to validly negotiate fair market prices and will expose them to the loss of their homes when the leases terminate," he told fellow lawmakers.

Rep. Cynthia Thielen, R-50th (Kailua, Mokapu) accused Kanoho, D-15th (Lihu'e, Koloa), of moving the bill out of his committee without a fair hearing. Neither side of the mandatory conversion issue has had a chance to testify since the language of the bill's initial intent had nothing to do with condominiums, she said. The original contents of the Senate bill, which referred to a separate issue, was removed and replaced with language taking away the Council's authority without interested parties of the issue on both sides ever being notified, she said.

"Because the issue has been so intensely debated, there should have been proper notice of a hearing," Thielen said.

But Kanoho said he wanted to rush the bill out to make Friday's lateral crossing deadline for bills referred to more than one committee. The public can give its views if it is heard in the joint Judiciary and Consumer Protection and Commerce hearing later this week, he said.

Kanoho also noted that the original House bill stripping the Council of its condemnation powers over leasehold condominiums moved out of his committee after a full hearing. It failed to pass over to the Senate because he had not rushed it along based on the assumption that the Senate was working on a similar bill. Instead, the Senate also failed to act on its original bill, Kanoho said.

House Majority Whip Brian Schatz, D-25th (Makiki, Tantalus), said that while he is opposed to the bill, Thielen's objections are specious because Kanoho's actions were neither unusual nor inappropriate.

Properties converted or in the condemnation process would not be affected by the proposed legislation.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.