Posted on: Sunday, August 8, 2004

EDITORIAL
Leasehold conversion should be retained

Few issues are as difficult for city officials as leasehold conversion for condominium apartments. The arguments on both sides are powerful, emotional and compelling.

Conversion of leasehold land to fee simple, proponents argue, fosters social stability and home ownership.

Opponents, who range from big landowners to small family groups, insist mandatory conversion forces them to sell property they do not wish to sell to the benefit of others.

Ultimately, however, a policy decision must be made. Honolulu has chosen to endorse lease-to-fee conversion for condos and apartments. Both the U.S. Supreme Court and our own Supreme Court have upheld the basic law.

Now, Honolulu City Councilman Mike Gabbard has introduced a bill to repeal the law. If there was a need for the law at one point, Gabbard argues, that need has disappeared.

Our position is that the council should leave the law intact. It has withstood both the test of time and the test of numerous court challenges.

If something must be done, it should not be repealed but adjusted to ensure it operates fairly. This should not be a government-mandated transfer of equity from one party to another.

In the early days of the state's lease-to-fee conversion law, which focused on single-family homes, a transfer of equity or value from the original owner to someone else is precisely what happened in many cases. Homeowners bought their fee interest and then resold their property for far more than the combined value.

If the council chooses to let the current conversion law remain, and it should, it should take time to ensure that conversion prices represent real, fair and up-to-date values.