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The Honolulu Advertiser

Posted on: Friday, August 6, 2004

Bill would repeal leasehold law

By Johnny Brannon
Advertiser Staff Writer

After months of quiet simmering, the lengthy and volatile dispute over the city's condominium leasehold conversion law is heating up once again.

Leasehold timeline

1991: City Council approves ordinance known as Chapter 38, allowing city to force landowners to sell qualified condominium owners the fee interest in land under their units.

1998: U.S. Supreme Court upholds Chapter 38 by rejecting challenge from the Bishop Estate, now known as Kamehameha Schools.

2002: Hawai'i Supreme Court affirms that city lease-to-fee conversion program is valid and enforceable, but effectively reduces the number of lessees eligible for conversion.

2002: Former City Council chairman John DeSoto calls for repeal of Chapter 38, but does not have sufficient support from colleagues.

City Councilman Mike Gabbard has introduced a bill that would repeal the 1991 law, known as Chapter 38. It allows the city to force landowners to sell qualified condominium owners the fee interest in the land under their units.

The measure is popular with many people who want full ownership of the condos they live in, but is staunchly opposed by some landowners, including Kamehameha Schools and other large trusts that benefit Hawaiian children.

Thousands of condo units are subject to conversion under Chapter 38, including some on valuable land in Kahala and other pricey neighborhoods.

"Unless it is a true emergency or absolutely necessary, the government should not use its power to take private property from one landowner and transfer it to another landowner," said Gabbard, who represents Leeward O'ahu but is leaving office this year and running for the 2nd Congressional District.

"There was a time when the lease-to-fee conversion law fulfilled a need, but that time has come and gone," he said. "Now the pendulum has swung and the law has become counterproductive, divisive and unfair."

Michael Pang, a real estate broker who favors Chapter 38, said repealing the law would undo years of efforts at land reform that improved an antiquated system of ownership on O'ahu.

"It's unfortunate that through political motivation, it seems like all this progress is going to be put by the wayside," he said.

The law has weathered repeated court challenges since it was adopted. Other council members have sought to weaken or repeal the law in years past but could not secure the necessary support from colleagues.

But faces on the council have changed since then, and there are indications that the time is ripe for a new attempt, said council chairman Donovan Dela Cruz, who supports a repeal.

It would take five of the council's nine votes to repeal the law, and six votes to overturn a veto if Mayor Jeremy Harris objected. Gabbard said he had not yet sought support from other council members, but believes it is important to repeal the law before he leaves office.

Previous City Hall discussions about Chapter 38 have triggered hours of impassioned testimony from all sides. A six-member task force representing landowners and lessees met for six months to consider ways to change the law, but reached no consensus.

More than 9,000 units in 127 buildings on O'ahu are on land that could be subject to conversion under Chapter 38, according to a report the task force issued in April. An additional 13,000 leasehold units remain in 388 buildings that otherwise converted.

Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.