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City should avoid
liability in repeal
of land conversion

THE ISSUE The City Council is expected to repeal the city's condominium leasehold conversion ordinance.

MANDATORY conversion of condominium land to homeowners is virtually certain to be stricken from the city's ordinances, but the City Council should avoid placing the city at risk. A group of leaseholders in a Kahala Avenue building has filed a lawsuit against the city in anticipation of tonight's Council vote, and more suits are sure to follow. The Council needs to tailor repeal of the conversion law to limit the city's liability.

The City Council is expected to vote this evening to repeal the 1991 ordinance requiring condo landowners to offer the land for sale to condo owner-occupants. Under the ordinance, the condo owners qualify for the conversion by petitioning the city to use its condemnation powers to compel the landowners to sell at a price determined by a third party. Mayor Hannemann has indicated he will sign the bill into law.

Many condo land parcels have been sold under the leasehold-conversion system, which has survived court challenges. The law has caused Kamehameha Schools to voluntarily sell nearly all of its condo leasehold land to the condo owners.

The process for a condo owner to purchase the land from a reluctant landowner is cumbersome and costly, including public hearings. The Council bill to repeal the law would leave many of those condo owners in mid-process, having spent money and effort toward obtaining the land.

In anticipation of tonight's Council vote, three dozen condo owners in a nearly 200-unit building on Kahala Avenue filed a lawsuit this week against the city. The suit maintains that the city will have breached its contract with the condo owners in the building who have been going through the condemnation process.

The Council already has rejected a proposal that would allow the process to continue for those who have begun the condemnation process. As the Executive Matters Committee, it approved an amendment last week that would make it impossible for any pending leasehold conversions not already approved by the City Council to continue.

Councilman Charles Djou is proposing a more limited measure, allowing those who have gone through the public-hearing stage of the process to complete their acquisitions.

Djou says his amendment would allow condo owners at the Discovery Bay and Wailana buildings in Waikiki, the Admiral Thomas building in Makiki and a cooperative housing project in Kahala to proceed. More than 100 applicants at those buildings have been in the pipeline toward obtaining land ownership.

Those condo owners have endured the leasehold-conversion process nearly to completion and would be justified in being compensated if denied land ownership. The more practical approach for the City Council would be to allow those few pending conversions to be completed, thus shielding taxpayers from liability costs.