Corey Park, attorney for 49 Kuapa Isle townhouse leaseholders, was stunned by the deferral.
City Council members on the prevailing side of last night's 6-3 deferral vote said they want to wait until the courts rule on the city's mandatory lease-to-fee conversion law for condominiums.
The vote came after a six-hour meeting of the Policy Committee, in which all nine Council members participated. Those voting for deferral said they want to wait until a lawsuit by Bishop Estate and other landowners against the city for the mandatory conversion law is resolved. The matter is before the 9th Circuit Court of Appeals.
A similar legal battle waged by Bishop Estate against the 1967 Hawaii Land Reform Act, which allows the purchase of leasehold land under single-family homes, took 17 years to resolve.
The Council approved its lease-to-fee law in 1993 on a 5-4 vote. There are roughly 35,000 leasehold condominium units on Oahu.
The law allows the city to force landowners to sell property beneath leasehold condominiums at a fair market price determined in the courts. A key provision is that the leaseholders be owner-occupants who own no other property.
The Kuapa Isle leaseholders say mandatory conversion is the only way to control landowners from charging exorbitant prices. But Bishop Estate says the city is abusing its condemnation powers because there is no public purpose to leasehold conversion.
The estate had offered to sell the fee interest for between $144,000 and $159,000 for a lot. Homeowners say their market analyses put the lot values at between $35,000 and $42,000.
Bishop Estate, the state's largest private landowner, has flooded the media with a "stop the stealing" campaign while lessees have been attacking the issue on the opinion pages of local newspapers.
Committee Chairman Jon Yoshimura, who recommended the deferral, cautioned that both sides should not read too much into the deferral. "I don't think we're talking about repealing the law vxxx all we're asking for is a deferral," he said.
He believes there are a number of other questions that need to be answered, including the potential liability to Council members by voting a certain way.
But Hawaii Kai Councilman John Henry Felix, who has spearheaded the lease-to-fee conversion battle, called the Council's decision "tantamount to a 'no' vote." He said when the state's leasehold conversion law for single-family homes was being fought in the courts, more than a thousand conversions were allowed to take place.
Both Felix and Councilman Steve Holmes predicted there would be "dire consequences" because of the Council's action, noting lessees have until July 11 to get approval for the conversion.
Both sides believe the matter is far from over and that it probably will go to the U.S. Supreme Court.
"Obviously there are a lot of questions about the legality of the issue and we think (deferral) is the prudent thing to do," Yadao said.
The matter needs to be resolved in court and, assuming it loses at the appeals level, Bishop Estate intends to take the matter to the Supreme Court, she said.
Park said he was shocked by the deferral because he assumed the Council was going to rule on the qualifications of the leaseholders seeking condemnation.
If Council members had intended to decide the merits of mandatory conversion, they should have sought a repeal of the original ordinance through a new bill, Park said.
Close to 100 people testified during the hearing, which ran past 10 p.m.
Only a handful of those testifying favored the bill. The crowd consisted largely of Bishop Estate supporters, many wearing T-shirts with the inscription, "Stop the stealing."