Leasehold conversion ruling is upheld
Some owners were not eligible to force Kamehameha to sell its fee interest
The state Supreme Court has ruled that a lawsuit seeking mandatory leasehold conversion at the Kahala Beach condominium did not have the required number of owners needed to proceed.
The opinion signed by all five justices and written by Chief Justice Ronald Moon affirms a lower-court decision tossing out the lawsuit that could have forced Kamehameha Schools to sell the fee interest in the property to leasehold condominium owners.
The justices, however, said the city and Kamehameha Schools must still argue over who should pay the school's legal costs of more than $500,000, and sent that issue back to court.
Yesterday's ruling stems from a 2003 mandatory condemnation lawsuit filed by the city against Kamehameha Schools.
Attorneys for Kamehameha Schools and its trustees argued successfully that some of the Kahala Beach owners who initiated the lawsuit were not qualified to participate in the mandatory conversion process. With the minimum number of owners not met, the court ruled in favor of Kamehameha Schools.
Since the lawsuit, the City Council has repealed the mandatory leasehold conversion law.
Mayor Mufi Hannemann agreed yesterday with the ruling.
"I've always been one who's believed that mandatory lease-to-fee conversion was not something in the best interest of the people of Honolulu, and therefore I think what (the Supreme Court has) done is just validate what my feeling has been all along. I feel for folks out in Kahala, but that's the law."
Attorneys for the condo owners could not be reached for comment.
"We're very pleased with this decision," Colleen Wong, vice president for legal services at Kamehameha Schools, said in a news release. "The land at the Kahala Beach is part of a 6-acre stretch of oceanfront property and provides significant support to our educational mission."
Kamehameha Schools said it collects $3.2 million a year in lease rent from the Kahala Beach condominiums.